social compliance audit - QIMA ethical audit inspector

What Happens in a Social Compliance Audit?

You can find out whether or not your supplier acts responsibly with a social compliance audit.

In this article, we'll explain what a social compliance audit is, how one can be carried out and why they’re so important.

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, for example, it is possible to verify whether it complies with certain ethical responsibilities.

How is a Social Compliance Audit Conducted?

QIMA offers ethical audits conducted according to international standards.

As well as this, we also offer audits conducted according to our client’s in-house specifications. Where a company already has a social accountability program in place, QIMA will ensure that suppliers conform to what is required under this.

Additionally, we also offer audits conducted according to our own Best-In-Class protocol.

The 5 Key Stages of a QIMA Best-in-Class Ethical Audit

QIMA Best-in-Class audits always include the following stages:

  1. An opening meeting

  2. A factory tour

  3. A documentation review

  4. Employee interviews

  5. A closing meeting

1. Opening Meeting

Audits may be scheduled ahead of time or conducted unannounced.

If an audit is unannounced, auditors will explain the purpose of their visit to the facility’s managers on arrival and specify a time when the audit must begin. Usually, this is shortly after their arrival. Otherwise, a pre-arranged opening discussion will take place.

2. Factory Tour

The factory tour gives auditors insight into, amongst other things, working conditions and health and safety management at the facility.

The auditors inspect the entire facility, including the production area or factory floor, warehouse and canteen. If employees reside at the facility, which is common practice in Asia, auditors will also inspect dormitories.

Factory Tour Checklist

Auditors check for things such as the following during the tour:

Potential Issues

Common issues found during the factory tour include:

3. Documentation Review

Auditors go through employment records and related documents to look for potential issues.

A thorough investigation is carried out in order to bring to light any issues regarding, amongst other things, payment amounts and conditions, working hours (including overtime arrangements), disciplinary action, child labor, forced or compulsory labor, discrimination and health and safety.

The levels of transparency and availability of relevant documentation and the evidence that auditors find gives an indication of what management policies are and how they might affect working conditions.

Documentation Checklist Examples

Potential Documentation Issues

4. Employee Interviews

Auditors interview employees, who are selected at random, to get a personal insight into their working conditions. They will also be questioned about their living conditions if they are resident at the facility.

The interviews are voluntary and conducted in complete privacy. Sometimes, these interviews are conducted as a worker callback service where the auditor recontacts the workers for an interview.Privacy gives employees the chance to speak up about any bad treatment or grievances which could warrant further investigation.

The compliance auditors ask questions regarding, amongst other things, hiring and firing policies, working hours and conditions, pay, length of employment, child labor, forced labor and health and safety.

5. Closing Meeting

The compliance auditors conclude their visit by meeting with the facility’s management team to go through their findings. If necessary, they will discuss non-compliance issues, suggest steps for improvement and introduce a Corrective Action Plan (CAP).

What are the Major Issues That Auditors Look For?

There is a huge range of potential issues that auditors can find when conducting an audit, whether this is a QIMA Best-in-Class audit or one conducted according to a different standard.

The objective of an audit is always to bring a positive impact to the organization that is being audited. As we just mentioned, auditors will discuss non-compliance issues with the organization and look for ways to make improvements.

While this is the case, auditors do sometimes find major issues. Among the many possible serious issues, five examples of major violations that can be uncovered in an audit are:

  1. The use of child labor

  2. The use of forced or compulsory labor

  3. Physical abuse of workers

  4. Major health and safety violations

  5. Bribery and corruption

Why Do Large Brands Need Social Compliance Audits?

When it comes to understanding why large brands need social compliance audits, the most important thing is to realize that unethical suppliers pose a serious threat.

To take the UK, for example, the latest Supply Chain Risk Insights Report by the British Standards Institution says, amongst other things, that 25% of exports to the UK come from countries with a high or severe threat rating for the use of forced labor. Additionally, according to the International Trade Union Confederation (ITUC), in 2020, worker’s rights violations were at a seven year high.

In many countries, as in the UK, imports of a huge range of consumer goods are sourced from regions where there is a serious risk that good ethical practices are not followed. As such, for many brands it is important to be vigilant about the possibility of unethical organizations finding their way into the supply chain.

Pressure to Ensure Social Responsibility

Pressure to tackle ethical issues in the supply chain, from governments, NGOs and consumers, is growing, and it often proves wise for brands to act sooner rather than later. This is particularly true where regulations are being brought in.

New Rules in Germany

For example, in Germany, major new rules related to corporate social responsibility were passed in 2021, under what is known as the Supply Chain Due Diligence Act. This piece of legislation requires businesses operating in Germany to identify, prevent and address human rights and environmental abuses within their own and their direct suppliers’ operations.

New Rules in the EU

Similarly, in February 2022, the EU presented a proposal for a new piece of legislation called the EU Supply Chain Law. This proposed act, will add to existing EU law related to supply chains and will require companies operating in the EU to ensure that they are compliant with new rules related to human rights standards and environmental protection in supply chains.

New Slavery Regulations in the UK and the U.S.

As another example, the introduction of the Modern Slavery Act in the UK brought certain changes to businesses in the UK. Under this act, businesses with an annual turnover above a certain threshold are required to publish an annual statement confirming what steps they have taken to ensure that slavery and human trafficking does not take place in their supply chain.

Also, in December 2021 U.S. President Joe Biden signed into law the Uyghur Forced Labor Prevention Act. This piece of legislation aims to ensure that goods made with forced labor in the Xinjiang Uyghur Autonomous Region of the People’s Republic of China are not sold in the U.S.

Social Compliance Audits Can Bring About Positive Changes

As well as being used to avoid the risks associated with unethical suppliers, it is worth noting that social compliance audits can be used in a collaborative way. Where brands and suppliers work together to identify and address issues, a social compliance audit can bring about positive changes.

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