Ethical Performance
inside intelligence for responsible business


KPMG introduces code of conduct for suppliers

July 2008

KPMG in Europe is claiming to have become the first large accountancy group to produce a supplier code of conduct.

The business, a limited liability partnership, has asked all its main contract suppliers to endorse the code, which states ten core principles relating to business conduct, labour conditions, human rights and the environment.

The code covers KPMG's operations in Germany, the Netherlands and the UK. In the UK alone KPMG has 22 offices, 11,000 partners and staff, a turnover of £1.6billion ($3.16bn) and 6000 suppliers. Throughout Europe it spends around £600million a year on goods and services, with the largest sums spent on facilities, marketing and events, technology and travel.

The code forbids suppliers from making use of child, forced or bonded labour, expects them to provide a safe working environment and to support the occupational health of employees, and requires them to allow staff the freedom to associate and have 'effective ways of collective negotiations'. It also calls for a reduction in environmental impact through 'developing and using environmentally friendly technologies'.

The code makes mention of KPMG's support of the United Nations Global Compact, although it does not specifically ask suppliers to become signatories too.

Proposals for a complementary auditing and inspection programme based on adherence to the code will be put to the board and implemented by the end of the year, focusing on suppliers and products thought to pose the greatest risks.

Mike Kelly, KPMG's head of corporate social responsibility, told EP: 'We felt it was about time we took a more systematic and strategic view of things. In the past we've considered many of these issues in individual tenders but haven't had a system in place that guarantees they are looked at.

'We may, for instance, have talked to our suppliers about their energy efficiency when putting out a tender for new laptops, but the danger was that, without a code of conduct, other issues such as recyclability or whether the laptops could be used by anyone with a disability may have been omitted. This way we're making life easier for ourselves and our suppliers.'

Kelly said one reason why accountancy businesses have been slow to consider ethical supply chain management is that their reputational risks are relatively small.

'We're not in the public eye in the same way as, say, an extractives sector company, but that doesn't mean we shouldn't act,' he said. 'In any case we've found there is increasing pressure from clients and employees, who often ask about these issues.'

Kelly expects the code to be the catalyst for improved business practices among suppliers and within KPMG. 'We believe it has the potential to unlock extra value in the supply chain by creating engagement with our suppliers on these issues and encouraging innovation', he said.

KPMG | Europe | Codes of conduct


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