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:

1. Multi-Perspective

Takes into account the commitment of all interested parties including NGO’s.

2. Comprehensive

Assess and present a report on all aspects of the organization’s work,   performance and compliance.

3. Regular

Repeated on the regular basis, focusing more on systematic improvement than punishing the manufacturer.

4. 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.

5. 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.

6. 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:

1. 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.

2. Gaps awareness

Management can identify gaps between performance and corporate social responsibility objectives

3. 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.

4. 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.

5. Achievements and management tools transparency

Publishing audit reports leads to better information transparency and accountability, improving the company’s public image.

6. 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:

1. 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

2. 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

3. 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,

4. 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

5. 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.

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Eastern European countries – macroeconomy facts.

For decades, we’ve been seen “Made In China” labels on almost every product. But is it always convenient and rational? It is well known that a lot of European brands have relocated their production to European countries, especially in Eastern Europe.

Driven by the entrepreneurial spirit, Eastern European countries have succeeded in building an engine for manufacturing goods.

The Czech Republic is the most globally competitive country in the researched Eastern Europe region, maintaining its position with the support of a strong education system and high levels of tech readiness among businesses and individuals. It has a growing innovation ecosystem; ranked 31st globally.

Poland (39th globally) and Hungary (60th) lag behind the Czech Republic and other European countries but are still favourable overall.

Macro-economy facts of Poland:

1. Since 2004 economy growth average rate of 3.9% per annum,
2. Growth forecast for the next years higher than the EU average,
3. Stably anchored, the EU’s main growth engine,
4. The sixth-largest EU state in terms of economic output,
5. Convenient hearth of Europe location,
6. Growing manufacturing hub
7. Established exporter of industrial products
8. Infrastructure investments, modern road network,
9. Highly skilled, motivated workforce, labour cost,
10. Attractive Public Aid Programs

Eastern European countries – investments in the region.

There are many examples of large companies choosing the region for their production relocation. Looking at only the 2016 and Transportation Technology market in Poland, please find the examples of investment below:

1. LG Chem South Korea – factory of hybrid cars batteries, the 2nd largest factory in the world after Chinese – 300 mn EUR
2. Daimler (Mercedes Benz) – engine factory – 18mn EUR
3. Ideal Automotive (Tier 1) – interior furnishing for Lamborghini, Bugatti, Porsche factory – 17mn EUR
4. VW – VW Crafter assembling factory – 800mn EUR, 1300 employees
5. Toyota – transmissions for hybrid drivers – 150mn EUR
6. Borgers – 50 mn EUR
7. Japanese Boshoku Automotive Poland – upholstery parts – 13mn USD

And examples of investments in Eastern Europe:

1. Volkswagen making its cars in Poland
2. Hyundai opened its first factory in the Czech Republic,
3. Phillips producing its lighting equipment in Hungary

If it was not favorable, no brand would decide moving its production to Eastern Europe.

Eastern European countries – a manufacturing hub

Especially for the premium brands, the region offers high-quality manufacturing hub, low work & row material cost, cheaper and highly qualified workforce, well-developed supply chain, shorter transportation distance reducing cost and time at the same time offers more flexibility, choosing the road transport they avoid also high humidity conditions and expensive consequences of that, respected European labour law and reduction of CSR audits cost.

The quality of the production can easily compete with the best and most established countries. While many Italian factories rely on a reputation built on past success, most Eastern European factories are eager to offer high standards and do not hesitate to go the extra mile.

Eastern European counties – available incentives.

Eastern European countries offer many incentives to attract foreign investment and encourage companies to build new factories. Below are listed some of them, but every case is different and shall be evaluated individually:

• Corporate tax exemption in Special Economic Zones (SEZ)
• Governmental cash grants (MASP)
• Real estate tax exemption (RETAX)
• R&D Tax Relief
• Cash Grant from EU Funds

If you think about production relocation to Eastern Europe and are looking for the factory in Poland we are the best choice company with the wide experience in industry, well known the market and the culture of the country, not mentioning about the native tongue professionals, who make your business easier to finalize avoiding all traps may happen due to a lack of necessary know-how and saving you time.

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