Why audits are still necessary for a responsible supply chain
Audits remain an integral aspect of the responsible sourcing program of any customers’ business. However, in recent times, the use of audits has been questioned – are audits still a necessary part of the sustainability portfolio? Or have audits become outdated with other tools becoming more favourable?
Sedex Members Ethical Trade Audit (SMETA) is one of the most widely used social and ethical audit methodologies worldwide. Up to 20,000 SMETA audits are uploaded on the Sedex platform every year and an estimated 60,000 audits are conducted for Sedex members and non-members for offline use.
Audits are a catalyst for positive change
Recent analysis of audit methodologies provides evidence that audits create positive change in the workplace – improving working conditions, health and safety, environmental sustainability and anti-corruption and bribery.
Based on Sedex’s research, companies that undergo regular audits are more likely to decrease their incidents of non-compliance, and therefore make positive improvements in their working conditions. For example, 20 years ago, child labour in China was found in 2 – 5% of audits of companies who regularly undertook audits. Today, child labour is found in less than half a per cent of those companies. According to auditing company ELEVATE, in businesses where child labour violations have been found, only 2.5% of these organisations re-offended the following year. This suggests that regular audits prompt companies to make change for the positive as it encourages suppliers to improve their business operations and management systems.
“The SMETA audit gives us a detailed and comprehensive report of where our company is and highlights the areas we are doing well and where improvements need to be made so we can improve as a business and further benefit the conditions and lives of the people who work for us.”Jonathan Mason, Group Ethical Trade Manager, AG Thames Ltd
Regular audits can help decrease non-compliances over time
Audits provide crucial information for the reporting on health and safety. Insight on health and safety is very important for Sedex members to be able to make informed and effective decisions throughout their supply chains. Sedex research indicates that the increased amount of audit data about health and safety leads to a decrease in incidents of non-compliances with health and safety legislation.
Whilst there is no denying that audits are only a snapshot in time, it is important to acknowledge that this snapshot is a step toward progress. Audits provide a thorough indication of how a company can improve business practices.
Continually evaluating a workplace is an important step toward reaching a cycle of continuous improvement. As audits take place all over the world, and across thousands of companies, sometimes report consistency can be compromised. Poorer quality audits do not mean that audits, as a general tool, are not helpful. Rather, it is a case of fixing the quality of those audits so that the data is more reliable. A part of this development includes the use of professional and well-trained auditors, who are independently monitored to ensure their knowledge is continually maintained.
Audits increase a company’s credibility and reliability
Diverse cultures mean that businesses in different countries can have different values and expectations about how to operate. In many places, business owners believe that they are great employers – because perhaps they are in their local context. However, the audit can help them to discover if they are actually meeting the national or international laws. Therefore, increased training and education for an auditor is very important, not only in general auditing practice but also in having an understanding of a local law and social customs in the areas they operate. Upskilling auditors to ensure they don’t overlook processes which have simply become the ‘industry norm’, will help these businesses reach requirements from an international perspective.
Audits can demonstrate to consumers, buyers and suppliers that a company is aiming to be compliant and is a trustworthy business. It also demonstrates the business’ commitment to having a transparent and responsible supply chain. This will ultimately strengthen the relationship between buyers and suppliers – enabling collaboration and making it easier to address risk. This helps improve a company’s brand reputation and drive revenue in the long-term.
Audits improve business relationships
Ultimately, audits are a catalyst for driving positive and sustainable change in global supply chains. Audits do not fix all the issues, but they are a way to objectively measure risks, foster dialogue between buyers and suppliers, and start a positive conversation.
The wealth of information from a SMETA audit report helps companies to understand their own strengths, weaknesses, opportunities, and threats, in terms of their own internal systems. This can help growing organisations create more robust systems to help develop their business over time and allow access to trade in global markets.