Supply Chain Assessment: Why Should You Care About Social Compliance Policy?

Testcoo/July 22, 2022

Evidence of abusive or illegal treatment within your supply chain can damage your company's brand. Likewise, showing concern for supplier sustainability can raise your corporate reputation and polish your brand.

In the best-case scenario, profits rise as consumers prefer to deal with socially responsible companies. Some brands that have begun with a sustainable outlook have done consistently well. Other legacy companies have assumed a social compliance mentality and even produced sustainable consumer products, which the public buys and leave investors more impressed.

Social compliance is one of the most important criteria of supply chain competency assessment and one of the top challenges that supply chain should focus on. Usually a supply chain conducts the social compliance policy as following:

10 Main components of social compliance policy

1. Ethical Labor Standards

The company expects its suppliers to comply with contract provisions, legal requirements, and standards of their industry under local, regional and national laws and regulations of the countries, which include treating employers with dignity, offering a safe work environment for employers and allowing employers to leave employment freely, etc. Also, any kind of corruption, fraud, embezzlement or bribery are not tolerated in supply chains.

2. No Force Labor

The working principles in the supplies are based on volunteerism and suppliers respect the rights of employees to decide to work or not. If an employee quits the job, the company should not prevent or delay it, except for any security reasons. All information of the employee should be protected and kept confidential to the extent specified by law.

3. No Child Labor

No child labor is acceptable in any business activities. Workers of the suppliers must be at least age 16 (or the mandatory age allowed by the law of the country of manufacture) or the age at which compulsory schooling has ended, whichever is greater. In situations involving hazardous working conditions, workers should be at least 18 years of age.

4. No Discrimination

Employees and their contributions should be valued. The suppliers stand against discrimination and ensure equal opportunity. A company or a factory is an institution free from discrimination or physical or verbal abuse on the basis of race, gender, colour, nationality, social origin, religion, age, disability, political opinion, or any value status protected by applicable law.

5. Working Hours & Wages

The working hours should nor exceed applicable laws or industry standards. If the employee works overtime, the supplier must compensate the overtime hours. Also the supplier must give its employees competitive wages based on the local labour market. All practices are carried out in full compliance with applicable laws and employment contracts regarding wages, working hours, overtime, and benefits. Employees have the opportunities to develop their skills and capacities and support these efforts by providing opportunities for promotion whenever possible.

6. Recruitment and Employment

Through determining the vacant positions needed by the business, employment is carried out by the company management in accordance with the laws and within the framework of certain rules (egalitarian approach, leave, wage, holiday, employment contract, etc.).

7. Employing Foreign Workers

Employment contracts for foreign nationals employees in accordance with the laws in the enterprise are written in a language they can understand. All personnel procedures, from employment to termination, are carried out in accordance with applicable legal regulations. In no case can the worker be worked on debt. The company protects the legal rights of foreign employees on working and does not employ illegal workers.

8. Health and Safety

The supplier should offer a safe and healthy workplace environment and minimize the risk of their employees being exposed to accidents, injuries, and all kinds of factors that threaten health. In the company, care is taken to provide a workplace environment free of violence, harassment, threats, abuse, and disturbing conditions. All occupational health and safety rules regulated by the legal legislation are applied in the enterprise.

9. Environmental Practices

Suppliers must adhere to all applicable environmental laws and standards regarding protection and preservation of the environment in their country.

10. Fire Safety

Fire safety takes an important role in environment safety. Every year there are many accidents related to fire, especially in factories producing electric and electrical products.A compliance checklist regarding fire safety are listed below:

Sufficient fire extinguisher

Fire extinguisher all in good condition

Fire extinguisher location list

Fire Extinguisher Service Checklist

Fire Extinguisher Colour Background Marking

Evacuation Plan in all Floor / Area

Emergency Exit

Emergency Exit on Open

Emergency Exit Signage

Fire warning system and smoke alarms

Automatic fire detection

Fire drill

TESTCOO provides many kinds of social and ethical compliance audits not only in China and SE Asia countries such as Vietnam, Cambodia and Indonesia, but also in Americas like Brazil and Mexico. TESTCOO auditors help companies to assess the suppliers’ treatment of their employees, their environmental standards and their health and safety compliance. Contact TESTCOO for supply chain social compliance audits.

Here are some examples of social and ethical compliance audits:

-SA8000 Social Accountability 8000:2014 Standard

-BSCI  Business Social Compliance Initiative

-SMETA/Sedex  Sedex Members Ethical Trade Audit

-WRAP  Worldwide Responsible Accredited Production

-FLA Fair Labour Association

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