February 13, 2023
Speak-up culture toolkit: Inviting third parties to contribute
6 Min Read
Speak-up culture, at its core, is about how the people associated with an organization perceive their ability to ask questions, raise ethical concerns, and report misconduct. Do your employees and other stakeholders feel safe coming forward to report unethical behavior? Do they trust that the company will support them and they won’t face retaliation?
Traditionally, organizations have focused on building a speak-up culture internally. However, because of shifting regulatory requirements and a growing awareness that culture extends beyond the walls of an organization, speak-up culture now expands to include customers, partners, suppliers, and the wider community in which an organization operates. Creating a strong, healthy speak-up culture requires you to empower all participants — inside and outside your organization — to raise issues related to ethics and compliance.
Download ebook: How to Build a Speak-Up Culture
Why you need to open your speak-up culture to third parties
Establishing trusting relationships with third parties is critical for both business success and ethics and compliance. Regulators can hold companies responsible for the misconduct of third parties in their ecosystem – particularly those acting on the company’s behalf – so giving third parties channels for communicating potential problems makes sense. If you’ve invested in creating a speak-up culture in your organization, you already know its importance. It can help you minimize risk by spotting issues early, and it creates an environment where people value trust, responsibility, and open communication.
Opening your speak-up culture to external parties allows people outside your organization to raise issues about your company to you, and it gives you a means of learning about the conduct of the third parties you do business with. In either case, speak-up culture creates more opportunities to address and mitigate ethics violations.
What regulations play a role?
Numerous laws and regulations influence relationships between companies and third parties. Laws such as the US Foreign Corrupt Practices Act and the UK Bribery Act, and associated guidance from regulators, provide best practices for ethical conduct when dealing with third parties. Such laws speak to the role third parties play in creating a culture of ethics and compliance.
Increasingly, the regulatory climate is shifting to include more explicit requirements for how organizations address ethics with third parties. New and incoming regulations in the EU include the following (and we’ll very likely see similar laws coming into effect across the globe):
- EU Whistleblower Directive: The 2019 EU Whistleblower Directive aims to protect those who step forward to report breaches of EU law. The Directive addresses who can report, what can be reported, where issues are reported, and why, as well as retaliation prevention. It protects not only employees but a range of third parties, including contractors, temporary workers, suppliers, vendors, shareholders, and many others. The Directive requires reporting channels for third parties and protects their confidentiality.
- German Supply Chain Due Diligence Act: Germany’s Supply Chain Due Diligence Act (SCDDA), which went into effect in January 2023, focuses on third-party due diligence regarding human rights in supply chains. The SCDDA requires companies to establish risk management systems to identify and minimize risks related to human rights and the environment; to issue policies on human rights strategy; and to ensure a confidential complaints mechanism is in place for people – internal and external – to report issues and violations. Third-party trust is central to the due diligence outlined by the SCDDA, and a speak-up culture inclusive of third parties plays a major role.
- EU Corporate Sustainability Due Diligence Directive: The proposed Corporate Sustainability Due Diligence Directive has similar due diligence requirements to the SCDDA. However, the Directive will be applicable across the European Union and its proposed provisions are wider in scope. Like the SCDDA, it will include the requirement for companies to implement a complaints mechanism open to third parties.
It’s important to educate employees and third parties on these requirements so they understand the context and their respective roles in the speak-up process.
How to empower third parties to participate in your speak-up culture
The same practices that help you build a thriving internal speak-up culture can extend to third parties. Start with education and transparency about the relevant laws and regulations, your values, and company policies. Train employees and third parties on the speak-up process and share the policy on your website. Regularly communicate your standards internally and externally so all stakeholders understand your expectations and know you won’t tolerate misconduct or retaliation against whistleblowers. And finally, make reporting as simple as possible and provide a variety of channels, including the company helpline, so reporting options are accessible to everyone.
What can you do to encourage ethical behavior with your third parties?
Third-party due diligence doesn’t just protect your reputation and guard your organization against risk. It also helps you understand who you’re working with and create a more ethical business environment and world. Your ethics and compliance policies give you an opportunity to influence your business ecosystem and encourage third parties to adopt higher ethical standards. Distributing a supplier code of conduct, for example, makes every requirement for the ethics of your suppliers explicit. If your suppliers and vendors don’t have a compliance program, you can open an honest dialogue about it and share resources and training, such as hosting an ethics and compliance workshop.
Ethics and compliance are everyone’s responsibility
Third-party risk management is evolving as potential threats extend beyond the walls of any organization. Expanding speak-up culture to include suppliers, partners, customers, and other third parties will reduce risk and support the highest standards of conduct.
Remember these tips as you invite third parties to your speak-up culture:
- Laws and regulations governing supply chains, environmental responsibility, and social and human rights issues are becoming more common. Some regulations make companies accountable for misconduct by third parties they do business with.
- You need to be able to receive reports from both employees and external parties to properly identify risks and problems in your value chain so you can, in turn, mitigate and remediate risk effectively.
- Opening up your company’s speak-up program to third parties will help you create a truly robust and holistic speak-up culture and empower your third parties to be better and more trusted business partners, while also encouraging more ethical behavior across your business ecosystem.
And remember: You don’t have to manage risk and compliance alone. Download our speak-up culture ebook for a step-by-step guide on increasing awareness of your company helpline and improving reporting rates.