Social compliance is just as important as the products produced in your supply chain when it comes to quality standards, and it says a lot about an import or export firm or brand. But what does it signify, and why should you be concerned about it?
Workplace health and safety have always been crucial, and there’s no justification for failing to meet specific criteria in factories and places of work where manufacturing is done. Other issues that must be considered for a firm to strengthen its grasp on social compliance and be successful are equality and working conditions.
Meeting the health and safety regulations is an important aspect of social compliance auditing.
What Is a Social Compliance Audit?
The Goal of a Social Compliance Audit
Anyone who has done business in China knows roughly what you want your supplier to make for you, what capabilities they must have, and how quickly they can do it.
The social compliance audit, on the other hand, is peeling back those layers and probing deeper into the provider. It examines how the supplier operates and how it handles its employees. So, in the industries, there are labor hours, record keeping, and safety. Is it possible that the workers will lose a hand or a finger? Or are there appropriate safeguards in place to ensure that they are not in danger of harm while at work? When doing a social compliance audit, this is what you’re searching for.
A social compliance audit, often known as a social audit or ethical audit, looks at more than simply what your supply chain produces. Whereas a production line inspection may focus on the quality of your products, a social compliance audit extends beyond that to check a factory’s working standards.
The corporation must demonstrate that it conducts business by particular social and ethical obligations, as well as local legislation. An audit examines all of these factors and more to provide you peace of mind about your supply chain. Social compliance audits are optional, and they can be conducted at the client’s convenience by a third-party quality assurance business
Social Compliance Audit Checklist
The social compliance audit checklist includes:
- Prison or forced labor
- Collective bargaining
- Health and safety
- Excessive work hours
- Harassment and abuse
- Freedom of association
- Underage labor
Why Is Social Compliance Important?
It is critical for businesses and organizations to be ethical, fair to their employees and clients, and conscious of their surroundings. Sustainability is critical for any organization, and demonstrating good waste, pollution, and environmental procedures should be standard procedures.
Businesses that take social compliance seriously pay closer attention to worker health and safety, training, and development, as well as making attempts to improve worker-management communication. These efforts add up to higher job satisfaction, loyalty, motivation, retention, and, ultimately, productivity.
While China continues to be the world’s largest producer of textiles and apparel, it is no secret that the country has faced several obstacles in recent years that have put its position in jeopardy. Rising labor costs, combined with labor shortages and a strengthening of the Renminbi, have moved a significant amount of production out of China and into neighboring regions such as Southeast Asia.
While many of these dynamics are outside the control of individual manufacturing facilities, others can be influenced more directly through the implementation of strong social compliance systems that can result in both economic and social benefits for employees and management.
The organization will have contended workers if factories take good care of their people, empower them, and listen to them, which is what Corporate Social Responsibility is all about. This optimism will eventually contribute to improved productivity.
International Standards for Social Compliance Audits
Social compliance audits are normally carried out by independent auditors who adhere to a set of international criteria to ensure openness. These requirements may differ depending on the facility’s location and the type of audit required.
A. SA8000® Standard – Social Accountability Certification
What is SA8000 Certification?
SA8000 is the leading social certification standard for factories and organizations worldwide. They provide a standard framework depending upon all the organization. The certification is valid in any country, and it ensures that the basic human rights and ethics are adhered to while the business is functioning.
How Does SA8000 Certification Work?
The SA8000 certificate promotes and encourages the agencies and organizations to follow, maintain and practice the socially acceptable standards in accordance with social welfare compliance.
The SA8000 Standard is the most widely used social certification scheme in the world. The SA8000 Standard and Certification System provides a framework for enterprises of all types, in any industry, and in any country to conduct business fairly and decently for workers. It has dominated the market for almost 20 years, having been founded by SAI in 1997 as the first legitimate social certification.
Elements of the Standards include:
- Child Labor
- Compulsory or Forced Labor
- Health and Safety
- Freedom of Association & Collective Bargaining Rights
- Disciplinary Practices
- Working Hours
- Management System
B. SMETA (Sedex Members Ethical Trade Audit)
SMETA audits the organizations based on the standard of labor, working conditions, business environment, and the health and safety protocols in place.
There are four key legal factors in SMETA that include:
- Labor standards
- Health and safety standards
- Business ethics
- Environment ethics
C. Responsible Business Alliance (RBA) Code of Conduct Assessments
This encourages fair and healthy working conditions, labor laws and protection, and production in an environmentally friendly manner.
D. Worldwide Responsible Accredited Production (WRAP)
WRAP deals with the manufacturing process and emphasizes the need for fair, safe, ethical, sustainable, and lawful manufacturing procedures all around the world.
E. Code of Conduct (CoC)
It binds a company or an organization to perform business in the most lawful manner and to follow business and moral ethics.
F. Amfori Bsci
Business Social Compliance Initiative for social compliance and improvements within factories and farms
G. Social & Labor Convergence Program (SLCP)
The SLCP provides ways to keep a track of the worker’s working conditions in the supply chain across the world.
H. Ethical Trade Initiative (ETI) Audits
This ensures that there is no forced or bonded labor, no child labor, and a healthy working condition is available to the workers.
I. ISO 26000 Corporate Social Responsibility (CSR) Guidelines
- Ethical behavior.
- Respect for human rights.
- Respect for stakeholder interests.
- Respect for the rule of law.
- Respect for international norms of behavior.
How Do Companies Conduct a Social Audit?
A common social compliance checklist looks like this. You may use these procedures to obtain a sense of where your organization is in terms of meeting the needed criteria.
- Examine your company’s code of ethics and code of conduct. Include a declaration of social responsibility in these remarks. Identify areas where your organization may actively contribute to improving the quality of the internal work environment and the exterior social environment as you write your statement of social responsibility.
- Define your company’s “stakeholders” by identifying every individual or group who is impacted by your company’s performance or success. Customers, the surrounding community, local companies, and community organizations such as schools, churches, and other non-profits are all included.
- Identify the societal issues that influence all stakeholders in your organization, such as clean streets, crime reduction, and vagrancy reduction. Include topics such as extracurricular activities, charitable funding, and social initiatives. Consider concerns like flexible work hours or expanded fringe benefit programs like daycare vouchers or legal insurance for employees. For example, pollution, traffic congestion, energy conservation, hunger, and homelessness should all be addressed.
- Create a system for selecting social targets, collecting data on the issue, executing measures to improve the situation, and reporting the outcomes of those efforts. To lead the social compliance effort, form functional groups or committees. Lead a committee with a rotating membership of your company’s executives, employees, and community leaders, for example.
- Contract with a social responsibility-focused independent auditing company; meet with representatives from the firm to explain your initiatives and the need for an impartial evaluation. Allow the auditor to interview stakeholders and examine data related to your social responsibility statement and your attempts to meet your goals.
- Allow the auditor to finish the independent verification procedure before comparing his findings to the internal observations of the functional group in charge of your social responsibility initiative. Analyze, compile, and communicate your results to your stakeholders. Inform them of your program’s triumphs and flaws, as well as how you plan to resolve them in the future. Annual social compliance audits should be continued.
Important Factors Affecting Audit Results
The capacity to discover and disclose serious misstatements, showing auditor conformity with the auditor’s objectives and contents, is referred to as audit process quality. Quality is accomplished here by ensuring that audit records are prepared and documented in compliance with applicable legislation, that audit evidence is sufficiently and correctly obtained, and that the audit team follows all organizational norms and standards.
The accuracy, clarity, and timeliness of audit reports are all dependent on compliance with relevant standards and laws. Any mistakes, fraud, or gaps should be thoroughly investigated and remedied, and all comments, evaluations, and conclusions should be based on comprehensive, accurate, and trustworthy facts. Lawful, fair, objective, and reasonable audit recommendations should be made.
Audit quality may be influenced by several factors, both internal and external, including:
- auditor professional knowledge and abilities
- standard compliance
- working circumstances
- audit duration
- quality control
For instance, Audit department chiefs, audit team leaders, and individual auditors received 200 questionnaires. A total of 175 people responded to the survey. The research was terminated due to invalid replies (seven in total).
As determinants potentially affecting audit quality, a regression model was developed that included independent and dependent variables (including internal and external factors)—legal framework, auditee, knowledge, and skill, experience, professional skepticism, compliance, working conditions, audit time, quality control measures.
Both factors showed a clear link to quality: audit quality improved when the legal framework included suitable and adequate state audit legislation, auditing standards, methods, and recommendations.
Many importers are worried about social accountability in their supply chains these days. When working with manufacturers in underdeveloped nations, social audits can be useful in ensuring that the working conditions at supplier facilities are acceptable. The SA8000 standard, which includes nine core areas of social accountability, is used in the majority of social audits.
Hiring a third-party supplier audit services provider like MatchSourcing to help get an auditing service provider is important. It is a smart method to satisfy your company’s and consumers’ social accountability goals. Visit or contact MatchSourcing to discover more about their services if you want to secure a socially responsible supply chain.