Social and Ethical Auditing Standards in Global Supply Chains

The Sedex SMETA (Sedex Members Ethical Trade Audit) is one of the most popular auditing methods for social and ethical audits in global supply chains. Developed by the UK-based non-profit Sedex (Supplier Ethical Data Exchange), SMETA provides a standardized structure to ensure businesses comply with ethical, labour, health, safety and environmental standards in the production and supply of goods.

Sedex and its role in the supply chain

Sedex is a collaborative platform that supports businesses to share and manage information related to social responsibility, business ethics and transparency in the supply chain. Tens of thousands of businesses in more than 180 countries have been using Sedex to demonstrate their commitment to customers, investors and consumers in terms of labor standards and business ethics.

Sedex does not directly perform audits but acts as a bridge, providing the platform, standards and tools for third parties to conduct audits and assessments. Through the Sedex Advance platform, businesses can manage audit data, share information with partners as well as track progress to improve audit findings.

What is SMETA?

SMETA (Sedex Members Ethical Trade Audit) is an audit methodology developed by Sedex, designed to evaluate businesses in the supply chain in terms of the following aspects: labor, health and safety, environment, business ethics. SMETA is not a certification standard, but an audit process to determine the level of compliance with ethical requirements in production and business activities.

SMETA focuses on four main pillars:

• Labour Standards
• Health & Safety
• Environment
• Business Ethics

Organizations can choose to audit SMETA 2 pillars (labor and health & safety) or 4 pillars (including environment and business ethics), depending on customer requirements or industry specifics.

SMETA Audit Process

The SMETA audit process typically includes the following key steps:

• Preparation and planning: The production facility and the audit unit agree on the date, scope and prepare relevant documents. The audited entity needs to provide necessary information about its operations, personnel, policies and working conditions.
• On-site inspection: A team of auditors will go directly to the facility to observe the facts, interview workers, check records, documents and evaluate working conditions, safety, hygiene, fire protection, conduct anonymous interviews, and inspect production areas.
• Audit report: Upon completion, the auditor will prepare a report using the standardized SMETA form, clearly stating the findings, compliance points, and remaining issues.
• Corrective Action Plan: If a non-conformity is detected, the business must make a corrective plan, commit to an improvement roadmap, and re-examine if necessary.

SMETA reports are shared via the Sedex platform, allowing customers and partners to access and track the supplier’s improvement process.

Benefits of SMETA audits

SMETA brings many practical benefits to businesses and partners:

• Enhance credibility: Demonstrate a commitment to transparency, social responsibility and ethical compliance with global partners.
• Risk reduction: Early detection of labor, environmental, and ethical issues; thereby proactively improving before the crisis occurs.
• Easy to meet customer requirements: SMETA reports are highly popular, many major brands require suppliers to pass SMETA audits.
• Promoting continuous improvement: The audit process and remediation plan create motivation for businesses to regularly improve working conditions and governance.
• Take advantage of shared data: The Sedex platform allows storing, updating, and analyzing audit data for sustainable development strategies.

SMETA Evaluation Criteria

SMETA examines and evaluates many criteria, including:

• Labor standards: No use of child labor, forced labor, minimum wage, reasonable working hours, non-discrimination, freedom of association and collective bargaining.
• Health and safety: Ensure a safe and hygienic working environment, have protective equipment, training in occupational safety, fire prevention and fighting, and hazardous waste treatment.
• Environment: Water, energy, waste, chemical management; minimizing negative impacts on the environment.
• Business ethics: Anti-bribery, privacy protection, transparency in business activities, fight against fraud.

Subjects of application and requirements

SMETA audit is suitable for all businesses in the supply chain, especially in the textile, footwear, electronics, food, agriculture, FMCG manufacturing, etc. Enterprises actively register for audits or comply with the requirements of international customers/partners.

Basic requirements when participating in an audit:

• Provide full records, books, personnel policies, labor contracts, payrolls, safety permits, environmental monitoring books, etc.
• Ensure cooperation and honesty in the audit process.
• Take corrective actions (if any) and periodically report on the progress of improvement.

Challenges of implementing SMETA

Despite the many benefits, businesses also face certain challenges:

• It is necessary to standardize and continuously update policies and processes on labor and environmental management according to international standards.
• The cost of auditing, training, and improving working conditions can be high, especially for small and medium-sized enterprises.
• It requires close coordination between departments and commitment from the top leadership.
• Frequent changes in legal regulations and market standards require businesses to flexibly adapt.

SMETA has become a popular and valuable global auditing standard, contributing to improving standards of social responsibility, labor, environment and business ethics in the supply chain. The application of SMETA not only helps businesses meet the strict requirements of international customers but also builds a sustainable, transparent and responsible brand for the community and society.