A Benchmarking Survey on Third-Party Codes of Conduct

Society of Corporate Compliance & Ethics

Rebecca Walker of Kaplan & Walker LLP is the author of a report on A Benchmarking Survey on Third-Party Codes of Conduct (register to download) sponsored by The Society of Corporate Compliance and Ethics. The SCCE received survey results from more than 400 compliance professionals on how they deal with third-party compliance policies. As Rebecca point out in the report: “Organizations are also subject to risks of misconduct by virtue of the actions of agents and other third parties who act on their behalf or partner with the organization in some way.”

Among the relevant findings in the survey:

  1. Only 47% of companies disseminate their internal employee code of conduct to to third parties.
  2. Only 26% of companies require that third parties certify to their codes of conduct.
  3. Of those 26%, 92% did not have a threshold as when they required certifications.
  4. Only 17% of organizations have a code of conduct that is applicable to third parties.

Rebecca points out the U.S. Sentencing Guidelines provide incentives to have your compliance programs reach out to third parties:

Sentencing Guideline §8B2.1(4):

(A) The organization shall take reasonable steps to communicate periodically and in a practical manner its standards and procedures, and other aspects of the compliance and ethics program, to the individuals referred to in subdivision (B) by conducting effective training programs and otherwise disseminating information appropriate to such individuals’ respective roles and responsibilities.

(B) The individuals referred to in subdivision (A) are the members of the governing authority, high-level personnel, substantial authority personnel, the organization’s employees, and, as appropriate, the organization’s agents.

One of the problems with pushing out your compliance program to third parties is that they may have the may have their own which differs with your program. The bigger problem is you setting the compliance standards but not enforcing them. Rebecca offers some ways to extend compliance and ethics requirements to third-parties. These are some highlights:

  • Conduct due diligence regarding business partners’ compliance and ethics programs.
  • Incorporate language into contracts with third parties requiring compliance.
  • Train third parties on the ethics and compliance program or on particular company policies or procedures.

Thanks to Corporate Compliance Insights for pointing out this survey: Third Party Controls Lacking In Ethics and Compliance Expectations Says SCCE Survey.

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2 Responses to A Benchmarking Survey on Third-Party Codes of Conduct

  1. web survey April 8, 2009 at 2:36 am #

    There is a lot of talk about compliance but how does the small business owner/manager get the information needed to implement a solid compliance program without hiring a consultant?

    • Doug Cornelius April 8, 2009 at 5:45 am #

      There is a cost to compliance in both time and money. But compliance is different for different companies in different industries.

      Some questions to think about:

      Are you in a regulated industry?
      Are you investing other people’s money?
      Are you collecting customer information?