Are you confident that your supplier is not abusing its workers?
Is your supplier 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 audit.
In this article, we'll explain what a social compliance audit is and the five key procedures that are always included in the audit.
A social compliance audit, also known as an ethical audit, is an inspection 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.
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:
The 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:
If 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.
If the facility’s managers don’t allow the audit to occur within the specified timeframe, the event is recorded as an audit refusal.
This 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 Checklist
Auditors typically check for the following during a walkthrough:
Potential Health & Safety Issues
Common issues found during health and safety tours include:
The 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 Examples
Potential Employee Documentation Issues
Common issues found during employee documentation reviews include:
Auditors 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.
The 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.
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:
As 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.
Even 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.
In 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.
Evidence that the manufacturer abuses or physically punishes employees may come to light when auditors interview employees.
A 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.
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.
“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.
QIMA 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:
Learn more about Ethical Audits here.
With over 2,000 trained and qualified inspectors and auditors, we guarantee to be at any factory within 48 hours. We follow the strictest hiring standards, employing only university graduates, with a minimum requirement of five years experience in quality control and auditing. Each inspector and auditor is native to the area in which they work, with an unparalleled expertise in local business practices.Service Coverage Map
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