Corporate Responsibility with a Social Compliance Audit

Corporate Responsibility with a Social Compliance AuditDoes your manufacturer comply with international safety and labor laws? Find out what you need to know about social compliance audits. Consumer ProductsEthical Audit (EA)Corporate Responsibility with a Social Compliance AuditWhat We Help You Achieve• Risk mitigation. Identify forced labor, unsafe conditions & human-rights violations.• Regulatory compliance. Align with SMETA, BSCI, WRAP, ILO and local laws.• Supplier accountability. Enforce corrective-action plans and ongoing improvements.• Brand protection. Demonstrate ethical sourcing to consumers & investors. 5 Key Procedures in a Social Compliance AuditAre you confident that your suppliers are not abusing its workers?Are your suppliers complying with local labor laws?Do you know whether your products are being manufactured in a safe environment where human rights are not being violated?You can answer these important questions, and more, with a social compliance auditIn this article, we'll explain what a social compliance audit is and the five key procedures that are always included in the audit.Need more information?By contacting QIMA you agree to our privacy policy and terms and conditions.What is Social Compliance Audit?A social compliance audit, also known as an ethical audit, is an audit of an external production house, factory, farm, or packaging facility to verify whether the operation complies with social and ethical responsibilities, health and safety regulations, and labor laws. Audit Standards & Scope?In order to ensure transparency, social compliance audits are usually performed by independent auditors that follow a set of international standards. These standards may vary depending on the location of the facility and the type of audit required.International standards for social compliance audits include:SA 8000 – the leading social certification standard for factories and organizations worldwideSMETA - Sedex Members Ethical Trade Auditamfori BSCI – a Business Social Compliance Initiative for social compliance and improvements within the factories and farmsETI - ILO Ethical Trading InitiativeRJC - Responsible Jewellery CouncilICS - Initiative for Compliance and SustainabilityFCD - French Federation of Commerce and Distribution5-Step Audit WorkflowThe audits may be scheduled ahead of time or conducted unannounced. The precise workflow of a social audit may differ depending on the standards used, but will always include the following key procedures:Opening Meeting. Auditors brief managers, set timelines and confirm health & safety checkpoints.Health & Safety Tour. Inspect production, warehouse, canteen, and dormitories for safety, ventilation, and emergency exits.Documentation Review. Verify employment records, payroll, working hours, overtime, and environmental permits.Employee Interviews. Private, stress-monitored Q&As on working conditions, child or forced labor and discrimination.Closing Meeting. Present non-conformances, agree on corrective-action plans and schedule follow-up.1. Opening MeetingIf the audit is unannounced, auditors will explain the purpose of their visit to the facility’s managers and specify a time when the audit must begin, which should be a short time after their arrival.The factory manager and human resource personnel should be present at the opening meeting. If that's not possible, the factory representative must be someone with the authority to provide the documents needed and answer the auditor’s questions.Potential IssuesIf the facility’s managers don’t allow the audit to occur within the specified timeframe, the event is recorded as an audit refusal.2. Health & Safety TourThis gives auditors insight regarding the physical working conditions as well as any health and safety issues. They 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 should also inspect the dormitories.Health & Safety Tour ChecklistAuditors typically check for the following during a walkthrough:Sufficient space to move about and work in production areasAdequate ventilationEasily accessible emergency exitsSanitation in cafeterias and restroomsAccess to potable waterExposed or unmarked electrical wiringExposure to chemicalsPersonal protective equipmentEmergency response planFire suppression equipment and evacuation plansPotential Health & Safety IssuesCommon issues found during health and safety tours include:Lack of proper safety equipmentExposed or unmarked electrical wiringChemicals that lack warning and information labelsLack of adequate personal protective equipment (PPE)3. Employee Documentation ReviewThe social compliance auditors go through employment records and related documents to verify compliance with labor regulations.A thorough investigation gives auditors an overview of the facility’s official hiring and firing policies and can bring to light any issues regarding minimum wage, working hours, overtime, discrimination, and disciplinary action.Transparency, or lack of, in the facility’s record-keeping gives auditors an indication of the management's policies, and how those policies might affect employees’ attitude and working conditions.Employee Documentation Checklist ExamplesEmployee attendance recordsPayroll records over the previous 6 to 12 monthsEmployment contractsPayroll records for peak/off-peak hours, including overtime payments and deductionsDaily start and stop times for workersSocial insurance paymentsProduction records (are workers paid by production or per piece?)Any government waivers or special permissions for work hours outside of the standard legal limitsPotential Employee Documentation IssuesCommon issues found during employee documentation reviews include:Hand-written attendance records that cannot be verifiedHours worked are not in compliance with regional labor lawsLack of proof of age documentationLack of clarity concerning how workers are paid4. Employee InterviewsAuditors interview employees that are selected at random to get a better insight into their working conditions, as well as living conditions if the employees reside at the facility.The interviews should be voluntary and conducted in private, without management or other employees present. This gives employees the chance to speak up about any bad treatment or grievances which could warrant further investigation.The compliance auditors ask questions regarding hiring and firing policies, working hours and conditions, length of employment, and the employees' understanding of disciplinary policies.5. Closing MeetingThe compliance auditors conclude the visit by meeting with facility management to go through any potential non-compliance issues and suggest steps for making improvements, with a Corrective Action Plan (CAP) to be signed by the facility’s manager.Major violations that trigger audit failures include:Child laborForced laborSafety hazardsPhysical abuseBriberyWhat Issues Will Result in a Failed Audit for Social Compliance?A failed audit means that unacceptable conditions have been discovered at the factory. These can be conditions that are considered illegal in the eyes of the local authorities and/or immoral in the eyes of your consumer market. Here are five major key violations which would unequivocally lead to a failed audit:Child LaborAs labor laws vary from country to country, it is possible that people employed at the factory are younger than the minimum working age in your own country. However, in some instances, unscrupulous factory operators might completely ignore even the local labor laws and employ children considered underage by any standards.Forced LaborEven if the staff work in less than savory conditions, or receive a low wage for their labor, a standard agreement between the employer and the employee means that the employee has freely chosen to work at the factory, and is free to terminate their employment. However, if employees do not have the freedom to quit or the factory operator is holding their ID cards or passports, this is forced labor and would fail a social compliance audit.Safety HazardsIn Europe and the US, health and safety regulations are strictly enforced, and workers know their rights, but in many countries, workers face high risks of injuries from dangerous machinery, cramped conditions, and the lack of safety precautions and procedures in case of an emergency.Physical AbuseEvidence that the manufacturer abuses or physically punishes employees may come to light when auditors interview employees.BriberyA supplier that cuts corners and doesn’t follow regulations may have gotten away with bribing local authorities to turn a blind eye and could try paying off social compliance auditors as well. This, of course, should result in the supplier failing the audit. A reliable audit company must have strict anti-bribery procedures in place to ensure auditor integrity and objectivity.Why Conduct a Social Compliance Audit?The latest Risk Index Report by the British Standards Institution (BSI) says at-risk countries account for 48% of worldwide apparel production, 53% of the world’s apparel exports, and 26% of total electronics exports.China, India, Vietnam, Bangladesh, and Myanmar are considered the five highest risk countries for human rights violations, according to Forbes. Other high-risk countries include Syria, Egypt, Libya, Mali, and Guinea-Bissau.The BSI report also warns that efforts by Asian governments to boost their economies are resulting in a greater prevalence of child labor abuses in supply chains.As a result, all large British companies now have to disclose what they are doing to stop slavery and human trafficking in their supply chains, as part of their obligations under the Modern Slavery Act.Corporate Social Responsibility in the HeadlinesThe ability to demonstrate or prove that your organization is serious about corporate social responsibility (CSR) is essential for large brands that come under the spotlight, especially given the ease with which bad news can spread in today’s world that has easy access to information.Here's an example of a headline that caused negative long-term effects:“Textile workers still unsafe years after Bangladesh, Pakistan factory disasters”Several years after two fatal factory disasters in Bangladesh and Pakistan killed more than 1,300 workers, the European garment brands, whose products were made at the factory, are still facing pressure from human rights campaigners as well as legal action and compensation claims, despite already paying out millions of dollars.When news like this breaks, the damage to the brand’s reputation can be catastrophic and sales can plummet, resulting in the need for extensive damage control to get back on track.How QIMA Can Help YouQIMA's certified auditors are professionally certified to conduct social compliance audits according to major internationally recognized social audit standards.Even if your company already has a social accountability program in place, QIMA can tailor existing ethical audit programs to suit your specific needs for compliance.Our ethical audit programs cover the following aspects:Hygiene, health, and safetyWaste management.Child and young laborLabor practices, including forced labor, worker representation, disciplinary practices and discriminationWorking hours and wagesClient-Specific Ethical Audit ProtocolsLearn more about Ethical Audits here.FAQsWhat does a social compliance audit cover?Health & safety, working conditions, labor laws, environmental practices & management systems.How long is a typical audit?1–3 days on-site depending on factory size and complexity. Key TakeawaysSocial compliance audits safeguard workers and brands alike.QIMA audits follow SMETA, BSCI, WRAP, ILO and client protocols.Rigorous steps from opening meeting to closing meeting ensure full visibility. QIMA BenefitsIn-depth local knowledge with auditors attuned to the culture, laws and practices of their region.CSR experts receive regular training on regulations and best practice.Global coverage across 100 countries in Asia, Africa, Europe, North and South America.Continuous improvement approach drives long-term change and empowers suppliers to act.Online program management book audits, make payments, and download detailed reports.Custom compliance dashboard to assess supplier performance, track progress and visualize your supply network.Ranked #1 in the industry for customer satisfaction based on independent NPS measurement. 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