A social audit is an evaluation of a company’s employment practice. During the audit the corporate social responsibility (CSR) mission, policies, code of conduct, records, social impacts are reviewed to find out more ways they can impact society. In majority cases (it depends on the standard) employees are interviewed to confirm the conformity in practice, this part of the audit is invaluable and adds value to the overall assessment.
Social auditing is extremely important because it provides information on how well a corporation is keeping the balance between making profits and social responsibility.
At the end all nonconformities found, shall be addressed and necessary actions have to be taken to resolve them.
It is an assessment of how well the corporation is achieving its goals or benchmarks for social responsibility. Many times the CSR is misunderstood with only actions supporting the local environment or natural environmental protection or charity work, when it is more about the fair treatment of their employees and through the whole supply chain than outside environment.
A social audit is a way for a business to work out if the actions being taken are being positively or negatively received and relates that information to the company’s overall public image. It is also the way of corporate supply chain management and their CSR activity monitoring.
In the era of corporate social responsibility, corporations are often expected to deliver value to consumers and shareholders furthermore as meet environmental and social standards. Social audits on the one hand can help companies create, improve, and maintain a positive promotional material image on the other hand reduces negative impacts on earnings from bad press, share pricing, local environment and the consumers.
The social audits are performed against:
- Local labour law
- Local remuneration law
- Local health & safety law, work environment
- Local environmental protection law
- Client/Corporate code of conduct (ordered the audit)
- Clients’ special requirements with regard to the:
- business continuity plan,
- continuous improvement,
- corruption policy,
- subcontracting policy,
- transparency within the organization,
- community initiatives,
- diversity within the workplace,
- accounting and promotion transparency
The social audit is:
- Multi-Perspective
Takes into account the commitment of all interested parties including NGO’s.
- Comprehensive
Assess and present a report on all aspects of the organization’s work, performance and compliance.
- Regular
Repeated on the regular basis, focusing more on systematic improvement than punishing the manufacturer.
- Comparative
This provides a way, whereby, the organization can compare its own performance annually and against appropriate external norms or benchmarks and supply for comparisons with organizations doing similar work and reporting in a similar fashion.
- Verification
This ensures that the social accounts are audited by a suitably experienced person or third party company with no vested interest within the organization.
- Disclosure
This ensures that the audited accounts are disclosed to stakeholders and therefore the wider community within the interests of accountability and transparency.
The benefits of a social audit are:
- Mitigate the risk of business performance
It becomes a way to measure and evaluate corporate social responsibility to take mitigation steps against related risks, such as risks to its reputation, share pricing.
- Gaps awareness
Management can identify gaps between performance and corporate social responsibility objectives
- Allow continuous improvement
Companies can develop measures and set targets to improve corporate social performance, either from improving past performance or benchmarking with the industry’s best-performing companies.
- Meet interested parties expectations
Implementing improvements which helps the company meet stakeholder expectations, enabling it to build a good relationship with them in the long term.
- Achievements and management tools transparency
Publishing audit reports leads to better information transparency and accountability, improving the company’s public image.
- Attract consumers
Improved transparency and accountability towards social responsibility attract more business customers and consumers as they increasingly make their purchasing decisions based on ethical factors
The limitations of social auditing are:
- The EU Regulations with regards to data disclosure
Auditors’ access to data and information, is often limited, but experienced auditing company has their own lawful methods to get the necessary information not breaking the low at the same time
- Conflict of interest assurance
Auditors shall be independent, risk of interest have to be excluded, otherwise results can be biased and not adequate to the existing situation
- Audit organization within the organization
Strategic persons shall be present and available during the audit to allow auditors to confirm the compliance otherwise the situation will generate to many questions mark,
- Investment in the SCR program
Auditing company have to be ready to invest financial and manpower resources in order to be prepared for the audit, participate in the audit and implement corrective action after the audit
- Consumer choices
Social responsibility may not be the only reason consumers buy company products, or suppliers sell inputs to companies, but for price reason
There are a growing number of corporates, brands and retailers now using Social Audits Programs to step up their ethical business practices. Social audits are developing together with the market changing needs and will have to adopt to the stakeholders expectations. the companies are required to undertake meaningful ongoing due diligence, adapted to local contexts and with workers at the centre, rather than simply an in-and-out audit approach.