Issues in production processes in the fashion industry are highly topical as recentscandals covered by the media show. However, these scandals rather involved multinationalcompanies than small and medium-sized enterprises. This study investigates, how small andmedium-sized fashion enterprises source their material ethically and implement a CSRstrategy by introducing of a code of conduct. Motives and challenges for implementing codeswill be discussed as well as possible solutions.Data was collected by conducting four semi-structured interviews with three fashion retailersand a multi-stakeholder organisation in the textile industry. In addition, documents includingsustainability reports were analysed. Results show that the motives for introducing codes ofconduct are closely linked to the company’s definition of CSR. External pressure contributedto the introduction, however, the main motivation was based on internal decisions of thecompanies. Main challenges of implementing a code of conduct included handling thecomplexity of the fashion supply chain, effective monitoring of compliance as well as culturaldifferences between suppliers and buying brands. Meeting these challenges included theinvolvement of workers, and additional measures as the introduction of complaintsmechanisms.