Build fair and inclusive contracting processes

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To build strong, equitable partnerships, it’s essential that contract negotiations are grounded in transparency, mutual respect, and shared understanding. 

Your company’s contract process should allow for meaningful dialogue, enabling suppliers to ask questions, raise concerns, and suggest changes, before any orders are placed. All agreements need to be written down clearly, in languages that everyone understands, so there’s no confusion. 

Recognise your responsibilities within contracts

Contracts often reflect power dynamics. In many cases, purchasing companies use standard terms that shift risk and responsibility onto suppliers. But when suppliers feel they can’t challenge these terms, it becomes harder to build trust or work together to improve conditions.

Responsible contracting means sharing responsibility fairly—both for commercial risks, and for upholding human rights. It’s about creating agreements that support collaboration.

The Responsible Contracting Project offers practical tools to help companies move away from one-sided promises and towards shared responsibility for people and the planet. They highlight the difference between traditional contracts—which often expect suppliers to guarantee perfect compliance — and responsible contracts, which recognise that buyers and suppliers must work together to manage risks. RCP has developed resources, including the ‘Model Contract Clauses’, which brands can incorporate into their own contracts.

Even if a contract shifts responsibility on paper, your company still holds accountability for the rights of workers in your supply chain. In fact, overly strict or unrealistic terms can make it harder for suppliers to speak up about challenges or ask for support. A more balanced approach—that recognises responsibility on both sides—helps create the kind of partnership where problems can be addressed openly and working conditions can truly improve.

Reflect responsible purchasing commitments in supplier agreements

Responsible purchasing practices are a key part of supporting decent working conditions across your supply chain. But for these commitments to have real impact, they need to be reflected in your contracts with suppliers—not just in policy statements or internal goals.

Responsible purchasing doesn’t mean everything will always go to plan. It means being ready to respond fairly when things don’t. Your contracts should include clear commitments that give suppliers access to compensation or remediation when disruptions occur. This kind of security helps suppliers plan ahead, invest in better working conditions, and make stronger commitments to their workers.

Embedding these responsibilities into supplier agreements shows that your company is serious about partnership, fairness, and continuous improvement—not just in words, but in practice. 

In this video: Lotta Amsen, Head of Sustainability at Sandqvist

Lotta talks about building commitment to responsible practice into Sandqvist’s contractual agreements (with support from the Responsible Contracting Project’s model contract clauses). She highlights:

  • Contracts reflect mutual responsibilities.
  • This includes explicit responsible purchasing commitments such as: 
    • Placing orders with due consideration of factory capacity.
    • No changes or discount requests once PO has been agreed.
    • Using open costing to fit design to budget, not to negotiate lower prices.
    • Collaborating to ensure prices cover responsible production (including labour costs).
    • Time-bound financial responsibility for fabric.
    • Giving financial compensation in the event of late payments.
  •  Payment terms include a proforma invoice submitted by the supplier when the PO is confirmed:
    • 50% of the invoice is paid within 2 weeks of the PO (before production).
    • 50% is paid 30 days after the product is shipped. 
  • Penalties can only be charged if it can be shown to be the fault of the supplier, following a root cause analysis.