Ethics in Procurement Report: The Ethics Alliance
Ethics in Procurement examines the ethical issues and tensions that arise in payment of suppliers, and provides a framework for ensuring fair transactions.
The Ethics Alliance is a corporate community, designed to share challenges and take a collaborative approach to finding solutions. At our inaugural gathering, an Alliance member called out the crippling impact late payments was having on his business. Through conversation, it became evident this was an issue shared by many members and unintentionally caused by others, and was a problem we wanted to help solve.
This guidebook came together after a series of interviews with members and a follow up roundtable discussion that explored both systemic and principle-based solutions. It examines some of the procurement-based issues identified through that process, looking at the causes of ethical tension and offering frameworks for each stage of the procurement process.
Formulated as a practical solution, the paper considers common challenges including:
- Should companies have an open tender and invite all to bid, or save time and money by targeting known suppliers?
- Should companies accept the cheapest complying bid, or pay more to a company that distributes a proportion of its profits to a good cause?
- Should companies be transparent in their dealings with suppliers, or will this open them up to disputes?
- Is it reasonable for companies to impose a significant administrative burden in the first round of a tender process by asking for information which is not directly relevant to the project in question?
Plus, it provides a framework to make payment processes fair, practical and ethical.
"Organisations that are buying goods or services can encounter many forks in the road, requiring decisions on how to respond. By viewing those questions through an ethical lens, we are more able to make decisions that align with the purpose, values, and principles that our organisations are committed to - and that we may hold as individuals."
WHAT'S INSIDE?
Ensuring a fair transaction
Looking after your suppliers
Practical issues to be solved
Reasons you might have a problem
A practical framework
An ethical framework
AUTHORS
Contributors
Writing and Research
Ben Robinson lead the writing and research for this report. He has worked in various roles at The Ethics Centre since 2016. Ben studied Philosophy and Political Economy at the University of Sydney, and is a Graduate Ethics and Sustainability Consultant at Deloitte.
Member contributions
The following Ethics Alliance members generously gave their time to talk to us about the procurement issues affecting their business: Shell Australia, Macquarie Bank, Clayton Utz, The Reserve Bank of Australia, Allianz, TrinityP3, The Business Council of Australia, AIA Australia and Insurance Australia Group (IAG).
A special thank you to Shell Australia who generously shared their market leading approach to procurement with The Ethics Alliance, providing the context and structure for the practical framework offered in this report.
