Responsible
Contracting
Project
The RCP Toolkit
The Responsible Contracting Project Toolkit is a dynamic product that operationalizes and implements the three core responsible contracting principles, the RCP Principles. It can be adapted to suit the needs and purposes of different businesses (e.g. brands and retailers or factories, farms, and manufacturing associations) and stakeholders (e.g. non-governmental organizations, multi-stakeholder initiatives, trade associations, investors, development finance organizations, public buyers, members of the legal community, and policymakers) working across different industries, geographies, and jurisdictions.
The Toolkit includes the following components (the EMCs, the SMCs, the MCCs and the Buyer Code), which can work together or be adopted independently:
MCCs 2.0
The MCCs 2.0 translate UNGPs and OECD Guidance into contractual obligations. Because they are modular, businesses can choose which clauses to adopt or adapt in their supply chain contracts.
The MCCs 2.0: An Overview of the Key Clauses
MCC 1.1, Human Rights Due Diligence: contains a joint obligation by the buyer and the supplier to carry out ongoing, risk-based HRDD.
MCC 1.1, Human Rights Due Diligence: contains a joint obligation by the buyer and the supplier to carry out ongoing, risk-based HRDD.
MCC 1.3 (a)-(f), Buyer Responsibilities: contains obligations for the buyer to engage in responsible purchasing practices; agree to a contract price that covers the costs associated with responsible business conduct; provide reasonable financial and non-financial assistance to the supplier in carrying out HRDD and upholding the buyer’s human rights standards; cooperate with the supplier when making order changes (e.g., quantity, design, delivery dates) to ensure that modifications do not undermine human rights; and exit responsibly.
MCC 2.3 (a)-(f), Remediation: contains a joint obligation by the buyer and the supplier to cooperate in providing human rights remediation to victims in proportion to their contribution to the adverse impact.
The Buyer Code
Company codes of conduct typically set out human rights standards that buyers (i.e., brands or retailers) require their suppliers to adhere to (e.g. no forced labor, no excessive overtime). These codes neither account for the role buyers play in upholding the standards, nor hold them accountable when their actions undermine the standards.
The Buyer Code is a novel contribution that sets out the steps the buyer can take to support positive human rights outcomes, in line with its own policies. It promotes the shared-responsibility approach of the UNGPs and the OECD Guidance, articulating detailed standards that fall under six categories:
1. Institutional commitments:
lays the groundwork by acknowledging the direct relationship between a buyer’s contracting and purchasing practices and human rights outcomes in the supply chain. Sets out the terms of the buyer’s responsibility, obliging the buyer to respect human rights throughout its supply chains and follow HRDD as part of every contractual decision and action taken.
2. Selecting suppliers:
clarifies the buyer’s requirements when choosing a supplier, including criteria that the supplier must meet in order to fulfill the human rights obligations under the contract. Commits the buyer to full transparency in communication with the supplier with respect to the human rights performance of the contract.
3. Negotiating the contract:
clarifies the buyer’s requirements when choosing a supplier, including criteria that the supplier must meet in order to fulfill the human rights obligations under the contract. Commits the buyer to full transparency in communication with the supplier with respect to the human rights performance of the contract.
4. Performing and renewing the contract:
specifies the buyer’s responsibilities around change orders and modifications, specifically that they must not interfere with a supplier’s ability to uphold the buyer’s human rights standards. Requires the buyer to: review and authorize all subcontractors, negotiate unforeseen cost adjustments with the supplier, seek feedback from its suppliers in order to make necessary policy improvements, and honor all payments to suppliers set out in the contract. Commits the buyer to assisting and collaborating with suppliers with regards to the human rights performance of the contract, rewarding superior performance.
5. Remediation for human rights harms:
ensures that the buyer will provide for effective grievance mechanisms for affected stakeholders in line with the UNGPs, as well as identify and address – with its suppliers – the root causes and conditions of adverse human rights impacts. Requires the buyer, when it has caused or contributed to harm, to participate in remediation.
6. Disengagement and responsible exit:
clarifies the buyer’s responsibility around exiting the contract due to an adverse impact, whereby the buyer must take appropriate steps to do so only as a last resort, when attempts to mitigate or improve the risks fail. Ensures that if a buyer does disengage/exit, it accounts for related potential adverse impacts, gives reasonable notice to its suppliers, and pays them all outstanding invoices and costs incurred.
How to Use the MCCs 2.0 and the Buyer Code
Companies interested in adopting the RCP Toolkit would follow these three steps:
Step 1:
Take your company’s human rights policy (Schedule P, where P stands for “policy”) and attach it as a binding schedule to your contract. If you don’t have a human rights policy, it may be helpful to consult the Building Blocks for Schedule P.
Step 2:
Decide whether to include a responsible purchasing code of conduct, aka a buyer code. If so, you can take the Buyer Code as a starting point and adapt this to suit your company’s particular context and operations. When it has been drafted, attach it as another binding schedule (Schedule Q). Alternatively, you can use the Buyer Code internally, as a voluntary policy. It can be adopted with or independently of the MCCs 2.0.
Step 3:
Select and edit the MCCs 2.0 that best operationalize your human rights policies (including, if you have one, your responsible purchasing policy) throughout the contract. These can be fully modified and adapted to your industry and specific human rights concerns, risks, and objectives. Step 3 is critical for making the Toolkit work for your company’s purposes, needs, and ambitions. Effectively implementing this step requires that disparate (and often siloed) departments – the legal team, the purchasing team, and the ethical trading team – work together towards implementing the Toolkit and achieving your company’s human rights objectives.
The European Model Clauses are designed to improve human rights in global supply chains in alignment with the German Supply Chains Due Diligence Act (LkSG), the proposed EU Corporate Sustainability Due Diligence Directive (CS3D), and similar human rights and environmental due diligence (HREDD) legislation. The clauses are the product of the European Working Group, which is composed primarily of European legal experts, including certain members of the RCP Team. Like the other tools in the RCP Toolkit, the EMCs are aligned with the UNGPs and the OECD Guidance and support a shared-responsibility approach to improving human rights and environmental outcomes in global supply chains. Like the MCCs 2.0 and the SMCs, the EMCs are modular and can be selected and adapted to suit the needs of different users. A first consultation version of the EMCs was published in October of 2023 and the final version expected to be completed after the final text of the CS3D has been agreed to. We expect the final EMCs to be published in Q4 2024-Q1 2025.
To access the consultation version of the EMCs click here.
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The Toolkit
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The Supplier Model Contract Clauses 1.0, are designed to improve human rights in apparel and textiles supply chains. Drafted by RCP for the Sustainable Terms of Trade Initiative (STTI), the SMCs were developed to address unfair contract terms and purchasing practices that often drive negative human rights outcomes in supply chains. Like the other tools in the RCP Toolkit, the SMCs support a robust HRDD process that can more effectively prevent adverse impacts and remedy the impacts that do occur.
To access the SMCs 1.0, click here.
The MCCs 2.0 translate the UN Guiding Principles on Business and Human Rights (UNGPs) and OECD Due Diligence Guidance for Responsible Business Conduct (OECD Guidance) into contractual obligations that can be included in supply contracts for the manufacturing and sale of goods. Because they are modular, businesses can choose which clauses to adopt or adapt in their supply chain contracts. The RCP team will edit and modify the MCCs 2.0 to suit the needs of different stakeholders.
To access the MCCs 2.0, click here.
Traditional codes of conduct only address suppliers and do not account for the role buyers play in upholding the standards, nor hold them accountable when their actions undermine the standards. The Buyer Code by contrast sets out steps for the buyer to take to support positive human rights outcomes. It promotes the shared-responsibility approach of the UNGPs and the OECD Guidance.
To access the Buyer Code, click here.