Social Compliance Audit in the Food Sector – Expanding Ethical Compliance Requirements

Social Compliance Audit in the Food Sector – Expanding Ethical Compliance Requirements

This is the first in a series of articles considering the emerging requirements related to social compliance audits and broader ethical compliance expectations within the food supply chain.

The Evolution of Social Compliance Audits in Food Global Supply Chains

Over the past 25 years, social compliance audits have become fairly standard in supply chain manufacturing facilities in many parts of the world. In general, companies – particularly the largest general merchandise retailers – have taken a risk-based approach to supply chain social compliance and responsible sourcing. Historically, the focus has been on international sourcing locations with labor-intensive manufacturing for final production, where labor standards and human rights compliance risks were considered higher.

While there has historically been a recognition of compliance issues in agricultural settings, in the last two years, in part as a result of several high-profile instances, the scope of many company-driven social compliance programs has expanded. These programs now specifically consider production facilities in the food supply chain, particularly in the United States. As a result, US-based manufacturing operations in the food space are being directed to have a social compliance audit performed as part of retailer ethical compliance requirements. Attaining an acceptable result is now a mandatory condition of doing business with many key US retailers.

This expansion in program scope is in addition to historical engagement with some elements of the food supply chain, most notably packhouses in agriculture operations. Ultimately, it reflects increasing expectations around supply chain transparency and strict labor standards.

What Is a Social Compliance Audit?

Simply, a social compliance audit is an independent evaluation to ensure a company is treating its workers fairly, safely, and legally. In more detail, a Social Compliance Audit thoroughly evaluates the processes within an operation to ensure they meet a rigorous set of requirements related to working conditions, human rights, and ethical business practices.

Most commonly, this includes evaluating the following areas:

• Child Labor
• Forced Labor
• Harassment and Abuse
• Discrimination
• Right to Organize and Bargain Collectively
• Wages and Benefits
• Hours of Work
• Health and Safety
• Environment
• Subcontracting

While the specific detailed requirements are often presented in a company Code of Conduct or a collaborative program standard, the baseline rules are consistently strict. In general, these operational requirements are firmly grounded in applicable local law and international conventions.

Two Most Common Social Compliance Audit Programs for Food Industry

In the social compliance space, there are a number of collaborative programs which are generally accepted by most retailers, much as GFSI standards and certifications are accepted for food safety. Collaborative programs are based on a common standard, utilize a standard audit protocol, and manage the reporting and remediation of audit findings through a shared platform. The express intent of these programs is to support broad acceptance and reduce duplicative audit efforts across the industry.

The two most widely accepted collaborative social compliance programs are:

• Business Social Compliance Initiative (BSCI)
• Supplier Ethical Data Exchange (SEDEX)

Each program is facilitated through a membership driven organization and has a standard grounded in the core conventions of the International Labor Organization (ILO).
While neither program offers any kind of certification, each program has a standardized audit execution and reporting protocol designed to facilitate the provision of performance information to support business decision making.

With BSCI, the audit and reporting protocol is generally simply referred to as a BSCI audit and is utilized globally to evaluate working conditions across most industry sectors and supply chain tiers.
The SEDEX protocol is the SEDEX Member Ethical Trade Audit (SMETA), commonly known as a SMETA audit, which is applied globally across multiple sectors throughout the supply chain.

In each case, the protocols are designed to identify issues with compliance related to the identified elements of the standard and to support structured remediation.

How a Social Compliance Audit Is Conducted

Through the execution of the protocol – which includes management engagement, on-site observations, review of applicable policies and records, and confidential interviews with workers – issues with compliance are identified and related non-conformities reported.

In most instances, the audit report is provided to key down-stream supply chain partners to support consideration of risk and related performance requirements.

In general, the site is provided the opportunity to take appropriate actions to remediate issues in line with a continuous improvement approach. This typically includes development and implementation of a corrective action plan (CAP) – with the timing of action generally tied to the impact, severity and complexity of the non-conformity.

In most cases, retailers expect that non-conformities identified in the social compliance audit report are remediated with appropriate evidence presented demonstrating correction. Typically, this is managed through the collaborative program reporting platform, with concurrence from the audit service provider.

As with most audit systems, social compliance audits are normally performed on a cycle basis determined by the retailer. In general, these cycles range from annually to every two years depending on risk profiles, previous audit outcomes, overall supplier performance, and identified non-conformities.

The Growing Importance of Social Compliance Audits in the Food Sector

For food manufacturers and suppliers - whether operating within local markets or serving global destinations - understanding the retailer-driven expanded social compliance requirements and preparing proactively for a social compliance audit is increasing important to ensure market access.

Future articles in this series will explore:

Eurofins Assurance supports organizations throughout this entire water management journey. By combining deep technical expertise with alignment to international standards, Eurofins assists organizations in conducting:  

• How to Prepare for a Social Compliance Audit
• Interpreting Audit Results – Reading a Social Compliance Audit Report
• The Most Common Issues in Social Compliance Audits
• Next Steps After a Social Compliance Audit
• The Next Challenge for Food Manufacturers in the Social Compliance space

As retailer expectations continue to evolve, organizations that embed structured social compliance audit processes into their operations are better positioned to demonstrate ethical compliance, strengthen supply chain transparency and maintain long-term market access.

See Eurofins’ social compliance audit services or connect with us here to support readiness and alignment of your CSR programs.

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