What Happens in a Social Compliance Audit?
October 11, 2022
Source: <https://blog.qima.com/ethical-audit/social-compliance-audit-explained> Published: Oct 11, 2022 Categories: Ethical Audits, Social Responsibility, Supplier Audits
You can find out whether or not your supplier acts responsibly with a social compliance audit.
What is a Social Compliance Audit?
A social compliance audit (also known as an ethical audit) is an examination of an organization that assesses whether or not it behaves in a socially responsible manner. By inspecting an external production house, factory, farm or packaging facility, it is possible to verify whether it complies with certain ethical responsibilities.
How is a Social Compliance Audit Conducted?
Standards include:
- Sedex Members Ethical Trade Audit (SMETA)
- amfori Business Social Compliance Initiative (BSCI)
- International Labour Organisation (ILO) Ethical Trading Initiative (ETI)
- Responsible Jewelry Council (RJC) accredited audit
- Initiative for Compliance and Sustainability (ICS) audit
- Higg Facility and Social Labor Module (FSLM)
The 5 Key Stages of a QIMA Best-in-Class Ethical Audit
1. Opening Meeting
Audits may be scheduled ahead of time or conducted unannounced.
2. Factory Tour
Auditors inspect the entire facility including production area, warehouse, canteen, and dormitories if applicable.
Checklist items:
- Sufficient space to work and move around
- Adequate ventilation
- Easily accessible emergency exits
- Access to personal protective equipment
- Emergency response plan
3. Documentation Review
Thorough investigation of employment records regarding:
- Payment amounts and conditions
- Working hours including overtime
- Disciplinary action
- Child labor, forced labor
- Discrimination
- Health and safety
4. Employee Interviews
Randomly selected employees are interviewed in complete privacy about hiring/firing policies, working hours, conditions, pay, child labor, forced labor, and health and safety.
5. Closing Meeting
Auditors meet with management to discuss findings, non-compliance issues, and introduce a Corrective Action Plan (CAP).
Major Issues Auditors Look For
- Use of child labor
- Use of forced or compulsory labor
- Physical abuse of workers
- Major health and safety violations
- Bribery and corruption
Why Do Large Brands Need Social Compliance Audits?
25% of exports to the UK come from countries with high or severe threat rating for forced labor use (BSI Supply Chain Risk Insights Report). Worker’s rights violations reached a seven-year high in 2020 (ITUC).
Regulatory Pressure
- Germany: Supply Chain Due Diligence Act (2021)
- EU: EU Supply Chain Law proposal (2022)
- UK: Modern Slavery Act
- US: Uyghur Forced Labor Prevention Act (2021)
TL;DR
- A social compliance audit reviews labour and working-condition practices, not product quality.
- It is a different exercise from a pre-shipment inspection and does not replace one.
- Buyers usually request it because a customer, marketplace or investor requires evidence.
Social compliance audit versus pre-shipment inspection
| Aspect | Social compliance audit | Pre-shipment inspection |
|---|---|---|
| What is examined | Labour practices, working hours, safety, management systems | The physical goods against a specification |
| Typical trigger | Customer, marketplace or investor requirement | Before dispatch of a production order |
| Result | Evidence of practices and any corrective actions | Accept, reject or rework decision on the shipment |
| Replaces the other? | No | No |
Do not confuse the two: a social compliance audit examines working conditions and management systems. A pre-shipment inspection examines the goods. Passing one tells you nothing about the other.
Frequently asked questions
What is a social compliance audit?
It is an assessment of a factory’s labour practices and working conditions, usually requested by a customer, marketplace or investor as a condition of doing business.
Does a social compliance audit check product quality?
No. It examines working conditions and management systems. Product quality is assessed by inspection against a specification.
Do I need a social compliance audit to import from China?
Not as a general import rule. It is normally driven by a specific customer, marketplace or financing requirement. Confirm the exact standard your counterparty accepts before booking anything.
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