Ethical audits in China: SMETA, BSCI and retailers
Retailers usually ask for a social audit of the factory making their own-label goods. SMETA, run by Sedex, covers labour standards, health and safety, environment and business ethics, and is a continuous-improvement methodology rather than a certification. Check the audit covers the actual production site. Cambridge China Bridge coordinates audits and follows up corrective actions.
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What your customer is actually asking for
When a retailer asks for an ethical audit, it usually names the scheme it accepts. SMETA and amfori BSCI are the two most often requested for Chinese factories. Ask your customer which scheme, which audit firms and how recent the report must be before you book anything, because an audit to the wrong scheme is paid for twice.
Sedex describes SMETA as covering four pillars: labour standards, health and safety, environment, and business ethics. It is a continuous-improvement methodology rather than a certification, so the report records findings and corrective actions rather than a pass stamped on a certificate.
| Pillar | What it covers |
|---|---|
| Labour standards | Fair treatment, safe recruitment and workers' rights |
| Health and safety | Physical and mental risks workers face on site |
| Environment | Environmental risk data, waste, water and energy |
| Business ethics | Bribery, corruption and conflict-of-interest risk |
Why UK retailers ask: the Modern Slavery Act
Section 54 of the Modern Slavery Act 2015 requires a commercial organisation that supplies goods or services and has a turnover above the threshold set by regulations to publish a slavery and human trafficking statement for each financial year. The statement sets out the steps it has taken to make sure slavery and human trafficking are not taking place in its supply chains or its own business, it must be approved by the board and signed by a director, and a company with a website must publish it there.
The Act lists what a statement may cover, including due diligence processes in the supply chain and the parts of the supply chain where there is a risk. That is why a large UK retailer asks its suppliers, including a small importer, for audit reports on the factories behind own-label goods: the reports become part of the evidence it describes. Keep the audit, the corrective action record and the production site details together, so you can answer the retailer's questionnaire quickly.
Make sure the audit covers the site making your goods
An audit covers the site that was audited. If the factory that passes the audit then places part of your order with another workshop, the report says nothing about that workshop. Name the production site in the purchase order, require notice before any subcontracting, and check at inspection that the goods are being made where the audit took place.
Our own staff in China visit the production floor during the order, so a change of site shows up while there is still time to act. Factory versus trading company explains how to confirm who actually makes the goods.
Corrective actions are the real work
Most audits find something. What matters to a retailer is that the findings are closed on time and with evidence. Agree who follows up each corrective action, what evidence closes it and the date, and keep that record with the audit report.
Cambridge China Bridge coordinates the audit with the audit firm your customer accepts, and follows up the corrective actions in the factory, alongside the factory audit, product inspection and loading checks for the same order.
Frequently asked questions
Is SMETA a certification?
No. Sedex describes SMETA as a continuous-improvement methodology rather than a certification; the report records findings and corrective actions.
What does a SMETA audit cover?
Four pillars, as Sedex describes them: labour standards, health and safety, environment, and business ethics.
Which ethical audit does a UK retailer want?
Ask the retailer. SMETA and amfori BSCI are the schemes most often requested for Chinese factories, and the customer usually names the scheme and accepted audit firms.
Why does a UK retailer need my factory audit?
Large UK retailers must publish a slavery and human trafficking statement under section 54 of the Modern Slavery Act 2015, and supplier audit reports are part of the due diligence they describe.