Businesses that have a sense of purpose – that is, they are motivated to provide value for all stakeholders and to improve the local and global society – tend to be more successful, generating more revenue. According to a survey, 58% of businesses that prioritize operating with purpose witnessed a 10% revenue increase in a three-year period. Social Compliance Audits is an industry-leading tool to check for consistency in offering high value to your stakeholders and operating with purpose.
Not sure where to begin? Here’s how.
What is Meant by 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, businesses that are socially compliant 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.
Difference between Corporate Social Compliance and Corporate Social Responsibility
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. While 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.
The Different Social Compliance Audit Standards
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’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 Social Compliance Audits are Conducted
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 Audit 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.
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 and 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-compliances. The auditors will then offer advice for improvements and help build a Corrective Action Plan (CAP).
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