Understanding The Social Compliance Landscape in Australia & New Zealand

As we navigate the dynamic terrain of social compliance in Australia and New Zealand, we find a landscape in rapid evolution. With the growing demand for standardised ESG measures, increased regulatory scrutiny worldwide, and a surge in consumer demand for ethically sourced products, businesses are being pushed towards a new era of transparency and accountability.

The Evolving Nature of Social Compliance

One of the key drivers of change is the growing demand for standardised ESG measures. Businesses are increasingly looking towards established methods and standards to help them understand the risks and opportunities that lie ahead.

Rapid growth in sustainable investment mirrors this interest in standardisation. Investors prioritise companies that demonstrate responsible and ethical practices, further emphasising the significance of social compliance in the current business landscape.

A paper released at the end of 2022 by the Harvard business review states that there are four key changes in the way we do, perceive and invest with and in businesses.[1]

Your workforce is making employment decisions based on corporate purpose commitments and actions.
Your customers make purchase decisions based on corporate purpose commitments and actions. In fact, according to the 2021 Porter Novelli Purpose Premium Index (PPI), “73% of consumers say [that] to win their support, companies must show how they are supporting communities and the environment.”
Your investors make decisions based on corporate purpose and actions.
Your company’s reputation is intrinsically linked to corporate purpose and actions.

The Impact of Legislative Changes

Legislative changes are another significant factor shaping Australia’s current social compliance landscape. The recent recommendations led by Profession John McMillan AO, to update the Modern Slavery Act in Australia[2] and in New Zealand, the announcement by Deputy Prime Minister Carmel Sepuloni to introduce new modern slavery legislation to improve transparency and accountability [3] will mandate businesses to review their practices to identify and mitigate the risks of modern slavery.

Increasing regulatory scrutiny worldwide also impacts businesses in Australia and New Zealand, with new regulatory requirements such as the Supply Chain Due Diligence Act in Germany and the Modern Slavery Acts in the UK, California, Germany, and Canada.

Consumer Demand and the Global Economic Slowdown

The impact of consumer demand for ethically sourced products cannot be underestimated. As consumers demand more ethical sourcing practices from their retailers, businesses are compelled to adapt to meet these expectations.

Furthermore, the global economic slowdown caused by COVID-19 has led to increased financial pressure, bringing attention to worker welfare issues in the supply chain, leading to a renewed focus on social compliance issues.

Addressing Social Compliance Issues

While these challenges may seem daunting, they also provide opportunities for businesses to understand their supply chain risks better and take proactive steps to address social compliance issues. An article from Forbes [4] states, “Approximately 88% of the participants expressed prioritising purchases from companies that implement ethical sourcing practices.”

In this context, social compliance auditing plays a crucial role. It provides a snapshot in time and should be considered part of a systemic and comprehensive due diligence approach. For businesses and organisations committed to operating in a socially responsible way, ISO 26000:2010 provides guidance to help clarify what social responsibility is, helps businesses and organizations translate principles into effective actions and shares best practices relating to social responsibility, globally.

Approximately 88% of the participants expressed prioritising purchases from companies that implement ethical sourcing practices.

Understanding Social Compliance Auditing by a non-partial third party

As a part of a holistic and risk-based approach to understanding and remediating social issues within your supply chain, a social compliance audit assists organisations in measuring, understanding and identifying issues. It also provides detailed reporting and corrective actions aimed towards ultimately improving an organisation’s social and ethical performance within their own organisation and it’s supply chain. Social Compliance Auditing helps to quickly identify issues and develop corrective actions, protecting vulnerable workers and promote ethical business practices. Internal auditing ensures an organisation is committed to being compliant every day, but a third-party auditor will ensure claims are validated and mitigate the prospect of the risk of oranisations within the supply chain causing harm to their people and potential greenwashing by companies that want to only appear to be doing the right thing.

How Does a Social Compliance Audit Work?

The process typically starts with an opening meeting where the scope of the Audit is explained. This is followed by a preliminary document review, a site tour, worker interviews, and a review of documents related to working hours, wages, contracts, health and safety, environmental compliance, etc. The process concludes with the findings, and a corrective action plan report is prepared. Beyond the initial Audit, processes are employed to follow-up findings and corrective action plans to ensure the appropriate action has been taken.

One of the key forms of modern slavery in Australia is forced labour, which can include individuals being forced to work long hours for little or no pay, or being subjected to dangerous working conditions. This can occur in a wide range of industries, including agriculture, construction, and hospitality. Other forms of modern slavery in Australia include debt bondage, human trafficking, and forced marriage.

The Role of SMETA and WCA in Social Compliance Auditing

Sedex Members Ethical Trade Audits (SMETA) and Workplace Conditions Assessment (WCA) are two of the most common audit programs in Australia.

SMETA, also known as the Sedex [5] Members Ethical Trade Audit, is a highly regarded worldwide social compliance program. It is built upon the principles of the Ethical Trade Initiative (ETI) Base Code, allowing businesses to evaluate the working conditions of their suppliers in key areas like labour, health and safety, environment, and business ethics. With SMETA, you can ensure ethical practices throughout your supply chain.

Intertek’s Workplace Conditions Assessment [6] (WCA) is a globally recognised Intertek developed audit program. It provides a powerful, web-based solution for companies and facilities seeking to improve workplace conditions efficiently and in accordance with local legislative and regulatory requirements and widely accepted industry standards and best practices such as International Labor Standards and conventions. It provides a method for quickly assessing supply chain conditions and working conditions. It gives a snapshot of the compliance level, helping businesses understand and address issues quickly.

Actionable Steps for Businesses

To navigate the evolving landscape of social compliance, businesses can take several actionable steps:

Review your current social compliance practices. Understand where you stand, identify gaps, and develop a plan to address them.
Engage with your suppliers. Foster open and transparent communication and work collaboratively to address social compliance issues.
Undertake a social compliance audit by a third party. Use this as a tool to gain better actual visibility of your supply chain and identify areas for improvement.
Leverage technology. Technology can play a crucial role in making your due diligence practices more efficient and cost-effective.

Remember, the ultimate goal of social compliance is to protect people. By focusing on continuous improvement and taking a proactive approach to address social compliance issues, businesses can ensure they act responsibly and ethically while also meeting their business objective.

References

For more information about booking in your third-party Social Compliance Audit – reach out today.

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Where do I begin with my Social Compliance Journey

The most common question we have received is, “with so many areas of focus, where do I start?” In this webinar we focus on how to begin with the Modern Slavery Framework!

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Modern Slavery Flywheel

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Modern Slavery Training

Educate your organisation, executives and supply chain on your commitment to improving and taking action against irresponsible behaviours in your supply chain.

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Assessment Types

Social Compliance Auditing is an integral part of any organisation’s wholistic approach to a social compliance governance programme.

In combination with effective due diligence process, and mechanisms such as worker voice initiatives and victim support measures.

Intertek are a founding Member Firm of the Association of Professional Social Compliance Auditors (APSCA). We are qualified and accredited to major industry associations and standards such as Intertek’s own Social Compliance programmes, including the Intertek Workplace Conditions Assessment, Workplace Conditions Assessment – Human Rights Focused, and a range of industry association programmes such as SMETA, BSCI, WRAP, SA8000, ICS, EICC, HIGG Verification, PSCI, ZDHC, SLCP and more.

SMETA Audits

SMETA (Sedex Members Ethical Trade Audit) is an ethical audit methodology which encompasses all aspects of responsible business practice. As a multi-stakeholder initiative, SMETA was designed to minimise duplication of effort and provide members and suppliers with an audit format they could easily share.

Intertek SAI Workplace Conditions Assessment (WCA)

Intertek’s Workplace Conditions Assessment (WCA) program provides a powerful, web-based solution for companies and facilities seeking to improve workplace conditions efficiently and in accordance with widely accepted industry standards and best practices

WCA is an industry-agnostic and widely accepted risk-based solution in our Supply Chain Assurance suite of services. It provides on the ground support and expertise to help companies manage Supply Chain Due Diligence specific to social and labor conditions, health and safety, environment, and business practices.

Intertek Inlight™

Intertek Inlight™ is an end-to-end supply chain risk management platform. It enables organisations to better understand their supply chain risks and protect their brand. The customisable assurance platform utilises supplier data to support global companies that require trusted information about the capabilities and compliance of their supplier partners to identify risks to their organisation.

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Following on from SAI Global’s acquisition into the Intertek Group PLC, we have expanded our services and offerings to provide a more comprehensive range of solutions and better meet our customers’ Business Assurance needs. This includes providing an end-to-end solution to help organisations manage their Sustainability Assurance goals, from training, audit & certification, corporate partnerships, and SaaS solutions.

With over 25 years of experience and a global reputation built on first-class delivery and technical support. Intertek SAI Global has partnered with Australian businesses for decades, engaging with hundreds of suppliers and contractors throughout their assessment and certification process – while making the process as seamless and simple as possible.

Adding value is at the core of our business and our processes. Let us show you how assessment and certification can add value to your business. Australia-wide, delivering over 60,000 audits each year, your local Intertek SAI Global team is equipped to support your unique requirements.