When companies look to improve visibility within their supply chains, they often focus on inventory and transportation. But examining suppliers’ labor practices through social audits can be just as important, especially when seeking to maintain high corporate social responsibility (CSR) standards.
Social audits can provide this visibility to improve product quality, the health and safety of those within the supply chain, and your brand’s image. This article covers the most important types of social audits, why they are necessary, and their purpose.
A social audit is an investigation to ensure suppliers meet global, regional, or company standards of ethical labor and supply chain practices.
The priority of a social audit is to ensure fair and safe working conditions for everyone involved in the supply chain.
There are multiple types of social audits to choose from, depending on sector, purpose, or corporate requirements, including amfori BSCI, SMETA, ICS, and more.
A social audit, also known as an ethical audit, is an investigation to ensure suppliers meet global, regional, or company standards regarding corporate social responsibility. The ethical auditing process applies to all parts of the supply chain, but is often particularly focused on supplier practices and sourcing.
Social audits typically assess the following:
Occupational hygiene, health, and safety
Child and forced labor
General labor practices (discrimination, disciplinary procedures, and more)
Working hours and wages
Social audits can help manufacturers maintain safe and fair working environments for their employees. Better working conditions improve product quality and enhance relationships with partners throughout the supply chain.
The priority of a social audit is to ensure fair and safe working conditions for everyone involved in the supply chain. This is important to maintain brand image, align with customers’ values, and comply with emerging legal requirements on human rights due diligence around the world. In this section, we’ll review the main benefits of conducting a social audit.
Social audits can uncover human rights violations by sending assessors to check health, safety, labor practices, and more in a facility. Workers’ rights are becoming increasingly important, and customers are reluctant to support companies that don’t address these issues.
Human rights due diligence legislation has steadily emerged since 2015 across the globe. Starting with the UK Modern Slavery Act and French Corporate Duty of Vigilance law, many other countries now have or are preparing legislation tackling human rights abuses in global supply chains. As other countries create their own legislation based on these examples, companies are becoming increasingly responsible for their sourcing decisions.
Supply chain visibility includes understanding if your suppliers are outsourcing production without authorization. Unauthorized subcontracting can put a company at risk by utilizing suppliers with unfair and unsafe working conditions. Uncovering these practices and assessing the next steps with professional auditors is essential.
Companies can benefit from social audits when assessing or onboarding new suppliers and maintaining relationships with current suppliers. When performed regularly, you can ensure and measure the ethical compliance of your manufacturers. With QIMA, you will receive a custom compliance dashboard to track progress and see the status of your supply chain.
Along with visibility, a social audit opens up communication and collaboration with your suppliers. During annual reviews, your team should set aside time to discuss all findings and suggestions for improvements regarding ethical compliance. Taking a continuous improvement approach shows that you value the partnership and want to succeed together.
When human rights abuses make it to the news, a company’s image can be damaged, potentially irreparably. Beyond heavy fines, penalties, and prosecution, customers will be less willing to purchase from a company with violations linked to human rights issues. On the other hand, consumers and stakeholders have shown the importance of corporate citizenship initiatives by supporting companies with high moral and ethical values.
There are multiple types of social audits to choose from, depending on sector, purpose or corporate requirements.
amfori established BSCI in 2003 to improve social performance in complex, global supply chains. It pulls from the International Labor Organization principles, the UN Charter of Human Rights, and other key international regulations. It is considered a fundamental audit by many companies and examines a variety of human rights and labor practices.
Read more: What Is the BSCI Code of Conduct?
SMETA is an internationally-recognized methodology that provides visibility into all responsible business practices. The audits are broken into four pillars that utilize the ETI base code (more information below). Labor standards and health and safety are mandatory pillars, while comprehensive environmental assessments and business ethics are add-ons.
The Ethical Trading Initiative (ETI) is an organization made up of corporations, trade unions, and NGOs. Members are expected to adopt the base code of labor practice based on the International Labor Organization (ILO) standards. The mission is to empower workers globally, raise awareness of workers’ rights, and tackle the issues found in supply chains.
The ICS is specifically for textile, retail, footwear, electronics, and furniture companies. The goal of an ICS audit is to improve working conditions along global supply chains in these sectors. Members have access to an extensive shared database that includes “mutualized” audit results and corrective action plans. This helps reduce the need for individual manufacturers or suppliers to continually undergo audits, as results can be shared.
The Higg Facility Social and Labor Module (Higg FSLM), created by the Sustainable Apparel Coalition, works to promote fair labor conditions for workers in the textile, footwear, and apparel industries. A Higg Index audit helps ensure compliance with the FSLM. Each yearly assessment takes approximately 3-6 weeks to complete.
The Higg FSLM is also integrated with the Social & Labor Convergence Program (SLCP) Converged Assessment Framework, a data-sharing program working to increase consistency across audits and improve social responsibility in the industry as a whole.
The International Council of Toy Industries (ICTI) is a non-profit membership organization comprised of national toy associations across more than 20 countries. The organization focuses on progressing safety and social rights for toy factory workers, encouraging the adoption of toy safety standards, and removing barriers of entry in trade.
To become a member of ICTI, members must sign on to ICTI’s Code of Conduct. The organization has also expanded its Code of Business Practices, which seeks to promote compliance with ethical standards in global toy supply chains. An ICTI ethical toy audit certifies that its Code of Business Practices is being followed in toy factories.
The Responsible Jewelry Council (RJC) was formed by the leading mining and retail companies in the jewelry industry to set ethical standards for the watch and jewelry industry. The RJC developed their Code of Practices (COP) to unify the industry in fair business practices and sustainability across jewelry companies’ supply chains.
An RJC audit process begins with a company self-assessment to evaluate compliance internally before an audit. When your company is ready, an auditor you hire will evaluate your facility to ensure compliance with the COP. If there are any areas of non-conformance, a Corrective Action Plan (CAP) will be issued to bring your company into compliance. An RJC audit helps demonstrate your commitment to ethical practices to your customers.
After an audit, you will review the results and corrective action plan with experts. The next step will be to address any major or minor issues with your team and the supplier. Your supplier managers should conduct regular check-ins on corrective action plans and ensure compliance with yearly social audits.
Social audits will give your company visibility and transparency into human rights issues that may harm your workers and damage your brand. An experienced QIMA auditor can provide your team with an unbiased and honest review of your manufacturers' practices to protect your company and improve your supply chain down the line.
QIMA Ethical Audits: Compliance, Trends, Procedures, and Outcomes–Learn about the processes involved in a social audit program.
What Happens in a Social Compliance Audit?– Understand how QIMA experts perform a social audit.
Ethical Audits (EA)– Explore QIMA’s programs related to social audits.
Mandatory Human Rights & Environmental Due Diligence: How to Get Prepared– Read about the future of responsible business practices and how to implement due diligence frameworks.
A Step-by-Step Guide on Implementing Your ESG Risk Strategy – Learn how successful businesses can implement a comprehensive ESG strategy to avoid risk.
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