How to conduct a social compliance audit of a China factory.
Corporate
Social Responsibility audits, also commonly referred to as Ethical Sourcing
audits or Social Compliance audits should be an integral part of every global
supply chain. These audits are often conducted in such a way that suppliers are
evaluated in their compliance with local laws. Some brands and retailers have
additional standards and requirements that must be met by suppliers who wish to
manufacture their products.
It
is important to ensure that each participant in your supply chain (possibly
even subcontractors) is evaluated to determine the conditions that their
employees work under. Besides the obvious damage to individuals and communities
that unethical manufacturing practices can lead to, they can also cause
significant damage to your brand when they are publicized.
When
conducting a CSR audit, auditors will need to address three key aspects of the
supplier’s operation:
- The physical
facilities of the factory
- Employment
policies and other documentation on file
- Employee
interviews
Below,
I have described each aspect, and the types of common issues that are found
during CSR audits throughout mainland China.
1. Complete facility walk-through
A walk through of the entire facility – production area, warehouse,
dormitories, canteen, etc – will give your auditors insight into the physical
conditions the employees work in every day.
Local
Chinese law requires that basic amenities be upheld at all factories: Enough
space to move around and work in production areas, adequate ventilation,
clearly marked and unobstructed emergency exits, sanitary cafeterias and
restrooms, and easy access to potable water.
The
majority of a supplier's compliance issues are usually discovered during this
walkthrough. Common issues include machines lacking proper safety equipment,
exposed or unmarked electrical wiring, chemicals that lack warning and
information labels, and a lack of adequate personal protective equipment (PPE).
2. Thorough documentation review
Complimenting the facility walk-through, a documentation review will illustrate
the kinds of policies and atmosphere employees are surrounded by. These are
less tangible aspects of their employment situations (at least for observers)
that have a huge impact on their daily lives.
Complimenting
the facility walk-through, a documentation review will illustrate the kinds of
policies and atmosphere employees are surrounded by. These are less tangible
aspects of their employment situations (at least for observers) that have a huge
impact on their daily lives.
Employee
attendance records and payroll records are heavily scrutinized during this
phase of the audit. Thorough auditors will request the previous 6 to 12 months
of records for review. By comparing these records, auditors will be able to
determine if the factory is adhering to labour regulations related to minimum
wages, over time wages, and maximum working hours. Not surprisingly,
non-compliance with those exact regulations are the most commonly reported
issues from this stage of the audit.
Additionally,
auditors will request all documentation regarding hiring practices and
conditions of employment. Auditors will try to establish what the factory’s
official policies are regarding discrimination, disciplinary action, retention
of employee identification, termination conditions, and many important factors.
These can be a good barometer for the attitude of employees towards management.
3. Employee interviews
A walk-through of the facility and documentation reviews yield valuable
information, but there is no substitute for talking to the employees
themselves. CSR is inherently a human-centric issue, so the people that work (and
sometimes live) at the factory must be made a focal point of any investigation
of working conditions.
Interviews
with randomly selected workers will serve to gauge the employees understanding
of the policies they work under and their feelings on the physical conditions
as well, putting the information gathered in the steps above into much-needed
context.
If
employees report discrimination, or do not understand how their wages are
calculated, feel that they are obligated to work excessive overtime, or bring
up grievances about the state of their dormitories, these should all be
considered red flags. Such claims will warrant further investigation, and
suppliers should be counselled on how to resolve these issues as soon as
possible.
