In the world of manufacturing and trade, the importance of social compliance has risen. Companies face pressure – and so rightfully – from key stakeholders to ensure their supply chain is free of issues such as unfair disciplinary practices, child labor, and more.
At first, it can seem like an easy problem to solve. But while it’s easy to look at your own internal practices, it becomes harder when you’re working with suppliers. Especially if their manufacturing plants are thousands of miles away from you.
In this guide, we will take a look at compliance and explain how social compliance audits are conducted.
What Is Social Compliance?
Social compliance is the steps and measures a company takes to ensure the safety, equality, and fair treatment of its employees, as well as the working conditions and awareness of the environment.
But it also expands to the consideration of the lives of communities, and local area that exist around a business’s services and its supply chain and distribution operations.
What Are Some Examples of Social Compliance and Social Responsibility?
“Social compliance” is the term used to describe the set of policies and procedures that aim to ensure that a company’s products or services are produced under ethical conditions; meeting the standards of labor rights, fair labor laws, harvesting, conflict minerals and environmental sustainability. As such social compliance may include:
- Using sustainable materials and production methods that do not pollute or cause harm to the environment.
- Providing safe working conditions and environment for employees.
- Paying employees a fair wage.
- Do not employ children.
What Is the Difference of Social Compliance and Social Responsibility?
Social compliance and social responsibility are two terms that are often used interchangeably, but they are not the same. In simple words, social compliance is the set of policies a business has in place to ensure that it is not violating any laws or regulations. On the other hand, social responsibility relates more to the moral obligation that companies have to society and the environment.
What Is a Social Compliance Audit?
A social compliance audit—also commonly known as a social audit or ethical audit—looks at more than just what’s being produced in your supply chain. For example, an inspection might look at the quality of your products on the production line, a social compliance auditor looks beyond that to assess the working standards of a factory following a rigid set of standards and procedures.
Typically, the company should prove that it conducts its business while complying with certain social and ethical responsibilities and abide by local laws. A social compliance auditor examines all these things and more to offer peace of mind for your supply chain operation.
Below are examples of international standards for social compliance audits:
- SA 8000 – one of the leading social certification standards.
- Sedex Members Ethical Trade Audit (SMETA)
- Responsible Jewellery Council (RJC)
- ILO Ethical Trading Initiative
What Is an SA8000 Audit?
One of the most common social compliance audits is an SA8000 audit. This audit follows the internationally recognized SA8000 standard criteria stablished by the Social Accountability International organisation.
The standard includes requirements regarding the prevention of child labor, health and safety, discrimination, remuneration and more.
What Is Evaluated in a Social Compliance Audit?
A social compliance auditor can either be an in-house employee, or an independent third-party. The auditing procedure can vary, as the auditor typically would audit the business based on the aforementioned international standards.
Some of the issues an audit could uncover include unfair pay, harassment, bad health and safety, underage labor, excessive working hours, and many other factors that would be considered unacceptable.
When a social compliance audit is finished by an ethical auditor, a report will be issued which documents the findings and includes pictures. At HQTS, some of the things our social compliance audit monitors include the following:
- Child labor laws
- Forced labor laws
- Discrimination laws
- Minimum wage laws
- Worker living standards
- Working hours
- Overtime wages
- Social benefits
- Safety and health
- Protection of the environment
You can download HQTS free social compliance audit report to get a better understanding of the audit.
What Are the Procedures in a Social Compliance Audit? [Simple Social Compliance Checklist]
The following is a simplified social compliance checklist. In order to ensure your company meets the required standards, you can take these steps to get an idea about where your company stands.
- Review your company’s code of conduct and its code of ethics.
- Define your company’s “stakeholders” by identifying every individual or group that is affected by the performance or success of your business.
- Identify the social needs that affect all of your company’s stakeholders, including clean streets, crime and vagrancy reduction.
- Devise a system for identifying social targets, gathering data on addressing an issue and implementing strategies to positively affect the situation and reporting the results of those efforts.
- Contract with an independent auditing firm that specializes in social responsibility programs; meet with representatives of the audit firm to discuss your efforts and your need for an independent review.
- Allow the auditor to complete the independent verification process and then compare his results with the internal observations of the functional group leading your social responsibility effort.
What Happens if a Company Is Non-compliant?
If a company fails a social compliance audit, they may be unable to operate in a certain way until the issue is resolved. The company will also need to demonstrate that it complies once everything has been straightened out too. Corrective action will be taken if a company fails a social compliance audit, and the history of a supplier or factory will be documented in reports to show that it has previously failed an audit.
Conclusion: The Key Guide To Social Compliance and Audits
A compliance audit is performed to ensure a company adheres to certain rules and regulations of local laws or of a specific agreement. Typically, the company in question may hire a third-party social compliance auditor to overcome language barriers or cultural differences in the international trading context. At HQTS we have over 25+ experience in quality assurance – and can help you audit your supply chain for social compliance. Contact us today if you have any questions about social compliance audits.
