Summary: A social compliance audit evaluates whether a business meets ethical labor, health, safety, and environmental standards set by bodies like SEDEX, SAI, and RBA. This guide covers internal self-audit processes, external audit procedures, and key standards to help your organization maintain compliance.
A social compliance audit verifies that your business meets ethical labor, health, safety, and environmental standards set by organizations like SEDEX, SAI, and RBA. Companies that prioritize purpose-driven operations see measurable revenue gains — 58% of such businesses reported a 10% increase over three years. This guide explains how social compliance audits work and how to conduct effective self-audits.
Not sure where to begin? Here’s how.
What Is Social Compliance?
The definition of social compliance is a business’s ability to protect the rights, health, and safety of a business’s employees, members of the supply chain, as well as distribution chain.
In addition to ethical protection, socially compliant businesses also prioritize environmental sustainability, following federal and local laws, ethical sourcing, as well as community protection and growth.
When a business is compliant with international standards set out by SEDEX, SAI, RBA, and other standardizing bodies, it’s shown that worker satisfaction, retention, motivation, and loyalty increase. Also, brand reputation growth has been shown to correlate with meeting social compliance standards.
Social Compliance vs. Corporate Social Responsibility (CSR)
Corporate Social Responsibility (CSR) and Corporate Social Compliance (CSC) are similar in that they both aim to improve safety standards. However, they differ in terms of perspective. CSR is a company’s internal drive to be socially responsible. CSR is the internal motivation to do good for society and the environment. Corporate Social Compliance is externally motivated and is driven by meeting the standardized social requirements set out by regulatory bodies.
What Is a Social Compliance Audit?
Social Compliance Audits, sometimes referred to as Ethical Audits, is a critical social accountability process that gathers concrete data and guarantees that a company is meeting its socially responsible policies, labor laws, remuneration, and health and safety legislation.
Social Compliance Audit Standards: RBA, SAI, and SEDEX
Businesses have numerous options when choosing which social compliance auditing body they wish to perform the external audit. While most standardizing bodies listed below follow the guidelines of the International Labor Organization (ILO), they differ in terms of principles, industries, and numerous other factors.
Listed are a few of the internationally-recognized Social Compliance Audit standardizing bodies:
Responsible Business Alliance (RBA):
The RBA standards focus primarily on the electronic manufacturing sector and auditing targets include labor, health and safety, management practices, ethical principles, and the environment.
Social Accountability International (SAI):
SAI standards and auditing aim to verify the fair treatment of employees such as no forced labor, adequate health and safety measures, no child labor, anti-discrimination, the right to collective bargaining, and more. This standardized body is a solid option for businesses and these audits can be conducted in a wide range of industries.
SEDEX:
SEDEX’s SMETA audit covers a wide range within the consumer product industry including grocery, apparel, fresh food, home goods, as well as packaging, and chemical sectors. This internationally recognized and popular auditing is a non-certifiable audit that aims to build improvement recommendations.
The SEDEX audit services are guided by the UN Guiding Principles and cover business responsibility for human rights, living wages, discrimination, freedom of association, safe working conditions, and much more.
How to Conduct a Social Compliance Audit
While it’s important to conduct third-party audits through a standardizing body, internal audits are a viable option for businesses to uncover potential compliance issues and areas for improvement.
Internal Audit Process
Review the code of conduct and ethical standards: Make sure they are relevant and match the socially responsible objectives that the business has in place. Updates or alterations to current codes and standards may be necessary.
Build a Social Compliance Audit Team: Ensure that your Social Compliance Audit team has a clear understanding of the current social responsibilities in place, the objective of the audit, and the procedures.
Create an Easy-to-Use Social Compliance Audit Checklist: Many businesses struggle during internal Social Compliance Audits due to the setbacks that using paper checklists creates. Most issues occur because of the lengthy process of compiling data and reports that paper checklists create. This can result in missing checklist data, and meaningful social compliance data can be difficult to develop into an efficient corrective action plan.
Using an online checklist software solution will allow your team to collect consistent information in real-time. This will allow you to quickly build meaningful and easy-to-conclude audit reports that provide better proactive solutions. Options like SAI’s SA8000 Internal Audit Checklist are available for your next internal Social Compliance Audit.
Review the Audit Report: Gather your auditing team and relevant members of management to discuss the findings from the audit. With the results, you and your team will be able to either confirm your social compliance and business practices meet your standards, or that a corrective action plan is necessary for non-compliances identified.
30+ Audit and inspection checklists free for download.
External Audit Process
The external social compliance audit varies depending on the standardizing organization conducting the audit. However, below is a generalized process as to what you may expect.
Have an Opening Meeting: Opening meetings occur depending on whether the external audit was pre-scheduled, or unannounced. If the audit is scheduled, then opening meetings are not usually necessary. However, external social compliance audits typically begin soon after an opening meeting where the purpose of the visit is discussed.
Conduct Inspection: Auditors will then begin their inspection process and observe the entire facility generally for health and safety concerns, working conditions, and implemented management systems.
Other areas the auditing firm generally observes include but are not limited to:
- Emergency response plan
- Access to potable water
- Proper ventilation
- Sufficient working space
- Sanitation tools
Document Review: Auditors will examine employment and other documentation to verify that labor laws are followed. Documentation for review typically involves working hours, working wages, hiring paperwork firing policies and procedures, overtime, and more.
Employee Interviews: Randomly selected employees are asked to speak privately with the auditors to provide deeper insight into working conditions, any mistreatments, working hours, and discrimination. These interviews are private and management is to not attend these one-on-one interviews.
Audit End and Closing Meeting: The social compliance auditors will meet with the management team to discuss any identified potential or evident non-compliance. The auditors will then offer advice for improvements and help build a Corrective Action Plan (CAP).
You may also be interested in:
ESG Score: What It Is And Why It Matters
ESG Investing: Benefits And Implications For Businesses
Conducting a social compliance audit on a regular schedule helps businesses identify gaps before they become costly non-conformances or regulatory violations.
Whether you choose an internal or external social compliance audit, using digital checklist software streamlines data collection and corrective action tracking.
Organizations new to the social compliance audit process should start with an internal self-audit to benchmark their current performance before engaging an external auditor.
Frequently Asked Questions (FAQs)
What is the difference between a social compliance audit and a social audit?
A social compliance audit specifically checks whether a business meets the standardized requirements set by regulatory bodies like SEDEX, SAI, or RBA. A social audit is a broader evaluation of a company's overall social impact, including community engagement and ESG transparency.
How often should a company conduct a social compliance audit?
Most businesses conduct social compliance audits annually, though high-risk industries or supply chains may require more frequent reviews. Internal self-audits can be performed quarterly to identify and address issues before formal external audits.
What are the main social compliance audit standards?
The three most recognized standards are the Responsible Business Alliance (RBA) for electronics manufacturing, Social Accountability International (SAI) SA8000 for fair labor practices across industries, and SEDEX SMETA for consumer product sectors including grocery, apparel, and packaging.
Can a business conduct its own social compliance audit?
Yes, internal social compliance self-audits are a valuable first step. They help businesses identify potential non-conformances and areas for improvement before a formal external audit. Using digital audit checklist software simplifies data collection and report generation.
