The Ethical Edge: Why Procurement Ethics Matters and How To Implement It

Procurement is an essential function for organizations of all sizes, involving the identification, acquisition, and management of the goods and services necessary to support and sustain their business operations. 

Whether you’re a business owner, stakeholder, or client, procurement ethics ensure fairness, transparency, and accountability, benefitting everyone involved. 

In this guide, we’ll discuss:

• What ethical procurement is 

• Why it’s important
• Steps to implement procurement ethics in your business
• Challenges you may face

What Is Procurement Ethics?

Ethical procurement represents a company’s commitment to environmental, social, and legal responsibility. It is built on guiding principles that drive businesses to prevent unethical practices across their supply chains while recognizing and fulfilling their broader societal obligations.

These principles help ensure that procurement is carried out fairly, transparently, and without corruption or bias. This safeguards both the integrity of the process and the organization’s reputation.

Following ethical procurement practices strengthens trust with suppliers, customers, and stakeholders while also reducing the risk of legal problems and protecting the company’s reputation.

 Why Is Ethical Procurement Important?

Ethical procurement represents a company’s commitment to environmental, social, and legal responsibility. It is built on guiding principles that drive businesses to prevent unethical practices across their supply chains while recognizing and fulfilling their broader societal obligations.

These principles help ensure that procurement is carried out fairly, transparently, and without corruption or bias. This safeguards both the integrity of the process and the organization’s reputation.

Following ethical procurement practices strengthens trust with suppliers, customers, and stakeholders while also reducing the risk of legal problems and protecting the company’s reputation.

Why Is Ethical Procurement Important?

In today’s business environment, running your business responsibly is just as vital as generating profits. This means procurement teams must integrate ethics into their processes alongside the traditional focus on return on investment. 

While ethical procurement carries intrinsic value as the right course of action, it also offers numerous practical benefits, including:

• Building trust with customers, stakeholders, and suppliers
• Improving company reputation and customer loyalty
• Improving retention and employee morale
• Mitigating legal and financial risks
• Reducing supply chain risks
• Ensuring regulatory compliance
• Meeting environmental, social, and corporate governance (ESG) targets
• Ensuring fair labor practices
• Contributing to community well-being

When you realize ethical procurement is important for your business but aren’t sure where to start, The Maker Group is here to get you started and keep you on the path, resulting in integrity and professionalism across the board. Reach out today to book a consultation.

What Are the Five Ethics of Procurement?

There isn’t a universal list of procurement ethics that governs every company and its interactions. However, some core ethical principles would likely include:

• Integrity
• Confidentiality
• Professional behavior
• Professional competency
• Objectivity

These principles direct procurement professionals to ensure fair competition, prevent corruption, use resources responsibly, and account for the wider social and environmental impacts of their decisions.

#1: Integrity

Integrity in procurement ethics is the commitment to honesty, fairness, and accountability throughout the sourcing process. It requires professionals to act transparently, avoid bribery, corruption, or conflicts of interest, and safeguard sensitive information. 

Integrity also means upholding high ethical and legal standards, ensuring suppliers follow fair labor and environmental practices, and standing firm in difficult situations, even when pressured otherwise. As a cornerstone of ethical procurement, integrity protects resources, promotes fair competition, and sustains the long-term trust and reputation of an organization.

#3: Confidentiality

Confidentiality in procurement ethics is the responsibility to guard sensitive information from unauthorized access or disclosure, including:

• Supplier pricing
• Trade secrets
• Propriety data
• Quotes
• And more

This duty applies throughout the entire lifecycle of information, from collection and use to storage, transfer, and eventual disposal. 

Upholding confidentiality is vital for:

• Maintaining supplier trust
• Ensuring fair competition
• Avoiding legal risks
• Protecting the organization’s reputation 

This applies not only to current and past clients but to third parties, as well, and helps to ensure employees and external advisors also respect this obligation. In the end, confidentiality means treating all non-public information as protected, reinforcing the integrity and credibility of the procurement process.

#4: Professional Behavior

Performing duties with competence, diligence, and due care while complying with relevant laws and regulations is what professional behavior in procurement ethics is all about. It means acting in a manner that upholds the reputation, integrity, and public trust of the profession, avoiding any actions that could discredit it. 

Key aspects include: 

• Treating others fairly and respectfully
• Refraining from harassment, discrimination, or bullying
• Ensuring that all professional activities and business relationships reflect ethical conduct and responsibility. 

By maintaining professional behavior, procurement professionals reinforce credibility, trust, and accountability in their organization and the broader industry.

#2: Professional Competency

Professional competence in procurement ethics is the commitment to performing duties with the necessary knowledge, skill, and diligence to ensure high-quality, ethical decision-making. It requires:

• Maintaining up-to-date technical and professional expertise
• Practicing sound judgment
• Adhering to relevant standards and legislation 

Ongoing professional development and proper training of team members are essential to sustain competence. This enables procurement professionals to serve their organization or clients effectively while upholding trust, accountability, and ethical standards.

#5: Objectivity

Objectivity in procurement ethics is the commitment to making fair, unbiased decisions throughout the procurement process. It requires exercising professional judgment free from:

• Conflicts of interest
• Undue influence
• Personal bias

6 Steps To Ensuring Ethical Procurement

#1: Establish Policies and a Code of Conduct

Establishing clear policies and a strong code of conduct is essential for ensuring ethical procurement. These policies should define the organization’s commitment to principles such as: 

• Fair labor
• Environmental responsibility
• Honesty
• Non-discrimination. 

By setting clear expectations, companies provide a framework that guides both employees and suppliers in making decisions that match ethical and sustainable practices.

A formal code of conduct strengthens this commitment by requiring suppliers to adhere to standards like fair wages, safe working conditions, and responsible environmental practices. To be effective, these standards must be clearly communicated to all stakeholders and included in supplier contracts, including consequences for non-compliance. 

This approach not only promotes accountability but also builds trust, ensures transparency, and reinforces the organization’s reputation for integrity in procurement.

#2: Screen Suppliers

Screening suppliers ensures their labor practices, environmental policies, and overall conduct align with responsible standards. Verify compliance with international labor requirements and look for certifications such as:

• Fair Trade
• SA8000
• ISO 14001
• ETI Base Code

Checking these compliances and certifications allows organizations to confirm suppliers are providing fair wages, safe working conditions, and sustainable practices. This all results in reducing risk and building trust across the supply chain.

#3: Train Your Team

By educating employees on ethical practices and how to identify and mitigate risks, organizations equip their teams to make responsible decisions. Procurement leaders play a critical role when they model ethical behavior. This sets the standard for their teams to follow and demonstrates that integrity is a must.

Beyond formal training, fostering a culture of open communication allows team members to raise concerns or discuss ethical gray areas without fear of judgment. Together, education, leadership, and a supportive culture create a strong foundation for maintaining integrity and accountability in procurement.

#4: Monitor and Audit Compliance

To monitor and audit compliance, it’s crucial to begin by outlining clear policies, a reporting system for non-compliance, and a risk-based approach that prioritizes high-risk suppliers or regions. Regular audits help verify adherence to the company’s code of conduct. 

It’s also important to address any issues of non-compliance promptly by working with suppliers to correct their actions and improve plans moving forward. Encourage accountability and strengthen supplier relationships by:

• Gathering performance data
• Conducting inspections
• Fostering open dialogue 

By combining consistent monitoring with corrective follow-up, organizations not only prevent fraud and unethical practices but also promote long-term trust, collaboration, and integrity.

#5: Cultivate Supplier Involvement

Cultivating supplier involvement transforms relationships from transactional deals into collaborative partnerships built on trust and transparency. By fostering strong, long-term connections, organizations can align values with their suppliers and encourage adherence to shared ethical standards. 

Practical strategies for cultivating supplier involvement include:

• Maintaining open communication through regular check-ins
• Sharing information about ethical initiatives
• Encouraging two-way feedback to address challenges and improve performance

When companies and suppliers work together toward aligned goals, they create a transparent and ethically responsible supply chain.

#6: Seek Continuous Improvement

Organizations achieve sustained improvement by learning from: 

• Audits
• Supplier feedback
• Changes in regulations or industry standards. 

The Plan-Do-Check-Act (PDCA) cycle is a tool that can help drive progress by: 

• Planning new ethical initiatives
• Implementing them
• Measuring their effectiveness through data and assessments
• Refining them based on results

Regular training and education also play a key role in continuous improvement. When procurement teams can identify red flags and address ethical challenges, and when suppliers are educated on expectations and best practices, organizations prioritize accountability and shared responsibility.

What Are the Challenges to Ethical Procurement?

The following potential challenges to ethical procurement fall into the various categories:

Corruption and Unethical Influence

• Bribery – Offering money, gifts, or incentives to gain favorable treatment in procurement decisions
• Coercion and intimidation – Using threats of harm or loss to pressure decision-making
• Extortion – Demanding payments or benefits in exchange for favorable treatment or to cover up unethical behavior
• Influence peddling – Awarding contracts to suppliers based on compensation or incentives rather than merit
• Nepotism – Favoring friends or relatives over qualified suppliers
• Conflicts of Interest – Allowing personal or financial ties, such as gifts or side deals, to sway professional judgment

Supply Chain Challenges

• Illegal Supply Chain Practices – Procuring goods produced through unlawful or immoral means, such as child labor, stolen goods, or environmental harm, with added complexity due to differing international laws.
• Lack of transparency and traceability – Difficulty tracking materials and verifying ethical practices across global supply chains.
• Complexity of supply chains – Managing ethics consistently across vast and interconnected supplier networks.
• Data inaccuracy and risk – Depending on incomplete or unreliable information, which can lead to unintentional support of unethical practices.

Organizational and Resource Barriers

• Cost and resource constraints – Ethical sourcing often increases costs due to fair wages, safe conditions, and sustainable materials, creating tension with budget goals.
• Resistance to change – Pushback from employees or stakeholders resistant to adopting new ethical practices.
• Ineffective communication – Poor communication with suppliers weakens efforts to encourage compliance and resolve ethical issues.

Let The Maker Group Take the Guesswork Out of Creating an Effective Procurement Ethics Strategy

The Maker Group is a global firm specializing in commercial capability development, partnering with clients to enhance their strategic planning, sales, procurement, and negotiation processes to drive faster, sustainable growth.

Our procurement solutions build practical, actionable capabilities, enabling clients to be more strategic, selective, and effective across our procurement activities, like:

• PROCure 360 – Delivers enterprise-wide visibility into a company’s complete category knowledge, enabling unprecedented insights into both internal and external data.
• Third Party Risk Management Monitoring (TPRM) – Helping our clients build or enhance programs that efficiently identify risk areas, assess exposure, and evaluate performance through scorecarding within their sourcing organization.
• Procurement Capabilities – We leverage a globally informed perspective to create tailored capability roadmaps and skill development plans that enhance both team performance and value to internal clients. Transitioning from a “box-checker” role to a trusted business partner requires building trust and demonstrating competency across a spectrum of skills, from financial acumen to problem-solving and storytelling.
• Strategic Sourcing Methodology and Procurement Expert Training – Our training empowers early-career procurement professionals with the skills to create value, optimize costs, and become trusted business partners. Using a globally informed approach, we strengthen capabilities in financial acumen, problem-solving, and strategic decision-making to amplify procurement’s impact across the organization.
• Strategic Supplier Scorecarding Training – Our scoreboard training enables procurement teams to design and execute robust supplier performance measurement frameworks. By harnessing data-driven insights, we strengthen supplier relationships, reduce risks, and promote continuous improvement—ensuring procurement delivers tangible value while aligning suppliers with strategic business objectives.
• Strategic Supplier Scorecarding – Our Strategic Supplier Scorecarding training equips procurement teams to create and apply effective supplier performance measurement frameworks. Using data-driven insights, we strengthen supplier relationships, reduce risks, and drive continuous improvement—helping procurement deliver measurable value while aligning suppliers with strategic business objectives.

Book a consultation today to learn how the Maker Group can help your good organization become great.