The Supplier Model Contract Clauses (SMCs) 1.0
The Supplier Model Contract Clauses 1.0 (2023), also known as the SMCs, are a set of model clauses that aim to improve human rights in the apparel and textiles industry. The apparel sector is vulnerable to human rights abuses and the SMCs are an innovative set of clauses designed to address these impacts.
Specifically, unfair contract terms and purchasing practices between buyers (e.g. brands and retailers) and their suppliers are key drivers of negative human rights outcomes in the apparel sector. This became abundantly clear during the COVID-19 pandemic when apparel brands and retailers canceled billions of dollars in clothing orders, causing layoffs and wage theft in the supply chain. These cancellations were often justified by contract terms that did not consider and thus undermined the human rights of supply chain workers. You can read more about these dynamics here and here.
The SMCs were drafted by RCP in collaboration with the Sustainable Terms of Trade Initiative (STTI), a consortium of apparel and textile suppliers and manufacturing associations that aims to drive better purchasing practices. They were developed in response to an express request from STTI members for sample or model clauses that they could bring into their negotiations and contracts with their buyer-clients. The initiative also benefits from generous pro bono counsel provided by Linklaters LLP.
The SMCs are additionally supported by the Initiative for Global Solidarity (IGS), which promotes the implementation of human rights and environmental due diligence (HREDD) in global supply chains, and FABRIC (Promotion of a Sustainable Textile and Clothing Industry in Asia), which brings together people from Asian industry, the public sector, NGOs and international buyers and promotes knowledge transfer and cooperation. IGS and FABRIC are working on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ) and are implemented by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH.
The SMCs 1.0 were released in September of 2023. We refer to them as version 1.0 to acknowledge that these clauses are an iterative product that is neither perfect nor complete as is. It is possible that, based on future feedback, a version 2.0 could be developed.
Overview of the core principles of Responsible Contracting, as reflected in the SMCs 1.0:
The SMCs draw on many of the principles contained within the Model Contract Clauses 2.0 (MCCs 2.0), including the three core principles of Responsible Contracting. The key difference between the MCCs 2.0 and the SMCs is that the SMCs are drafted specifically for the apparel sector and with apparel suppliers in mind. They contain a number of obligations, including, for example, obligations to set reasonable deadlines, pay prices high enough to cover the costs of responsible business conduct, and to exit contracts responsibly, even in the event of an unforeseen crisis like a pandemic. If readers are interested in clauses that contain more detailed ("buyer friendly") obligations for suppliers, please refer to the MCCs 2.0.
The RCP Core Principles, as reflected in the SMCs 1.0 are aligned with the UNGPs and the OECD Guidance on Due Diligence for Responsible Business Conduct and translate these guiding principles into due diligence-aligned contractual obligations.
How to Use the SMCs:
The SMCs are model contract clauses and can be revised and adapted to each supplier’s particular circumstances and needs. Additionally:
Step 1:
The SMCs are designed to be used in conjunction with a “master agreement” or “framework agreement” under which individual purchase orders are issued. The master or framework agreement is assumed to include all commercial terms, including remedies, while the SMCs are devoted to human rights due diligence (HRDD)-related obligations and remedies.
Step 2:
Rather than copying and pasting the SMCs into the contract, users should (1) select the SMCs they want to include in the contract and (2) edit and adapt them to suit their needs and specific circumstances.
Step 3:
The Codes of Conduct (CoCs) – the supplier code and the buyer code – can be added as schedules or appendices to the master agreement. When added to the master agreement, the CoCs become binding on the parties.
Step 4:
While users can choose which SMCs to include in their contracts, RCP strongly recommends including SMC 1 on Shared Responsibility to Carry Out Human Rights and Environmental Due Diligence as that clause centers HRDD and ties in with many of the other SMCs. SMC 2 sets the HRDD stage and weaves a common HRDD thread across the clauses.
Step 5:
Please refer to the Framing Memo for further instructions on how to incorporate the SCMs into contracts.
Step 6:
RCP will also be providing some drafting guidance to guide users on how to select clauses, as well as on how to make decisions concerning the various wording options offered in the SMCs using square brackets ([…]/[…]).
Find out more
The Toolkit
Explore the RCP Toolkit, which includes
model contract clauses,
a code of conduct,
implementation guidance, and policy analysis.
Where you can learn about our past and upcoming events, publications, and interviews.
In Collaboration with
