SEDEX Social Audit: Exploring SMETA and SAQ Essentials

With new supply chain monitoring and reporting legislation coming into effect in 2023 and 2024, companies are seeking third party organizations to monitor ESG risks and compliance in their supply chains. Many use the now well-known Supplier Ethical Data Exchange (SEDEX) to request social audits from their suppliers. The social audit of SEDEX (SMETA) requires these companies to fulfill a questionnaire, prepare for an in-person audit, and ultimately commit to an improvement plan.

As a supplier, completing the questionnaire and preparing for the audit is not an easy task to conquer. You need to spend time gathering the necessary supporting documents, checking their accuracy, making revisions, and communicating back and forth with colleagues before even starting the questionnaire.

This may seem overwhelming, but don’t worry, this article will provide you with a guide explaining SMETA, what to expect from the process and a checklist to prepare your company to complete the questionnaire with efficiency.

What is the SEDEX Members Ethical Trade Audit (SMETA)?

SMETA is a social auditing methodology used by the non-profit organization Supplier Ethical Data Exchange (SEDEX) that helps companies manage and improve their supply chain sustainability and ethical practices. SMETA, short for SEDEX Members Ethical Trade Audit, is available, as the name says, only to members of the non-profit organization and provides companies with an overview of their labor, health & safety, environmental, and ethical performance.

A social audit, like SMETA, does not only assess workplace safety, but also evaluates social and ethical factors, allowing companies to make improvements that will benefit their workers, the environment, and the efficiency and effectiveness of their business.

Reporting on ethical factors is becoming more important in supply chains as awareness of and desire for better resource extraction, production, and distribution practices increases. As a result, assessment tools like SMETA are becoming common requirements from customers to their supply chain. Customers who request you join the SEDEX platform are seeking transparent communication about your sustainability status and risks, which you consequently can share with other community members or customers who are also members of the SEDEX community. Today, over 75,000 companies are SEDEX members, from industries such as retail, consumer goods, manufacturing, agriculture, food/beverage, and more.

The SMETA Process and Why to Do it 

Based in the UK, but extending their reach globally, over 300,000 SEDEX audits have already been conducted. The most common users of SMETA are large manufacturing industries and companies with global supply chains, commonly in Europe, Asia, and North America. Since SEDEX has a wide spread of members, your information can be shared with many relevant companies, with the potential to win trust and more customers.

The SMETA process includes a detailed, holistic review of your company's sustainability policies, procedures, and practices through an online questionnaire, as well as on-site inspection of your facilities and interviews with all the employees. While this approach differentiates SMETA from purely digital assessment providers, it also makes the process more lengthy and time-consuming. After your audit, you will receive a report and a corrective action plan, which includes actionable steps for changes and goals to which you must commit.

The SMETA steps are as follows:

1. Audit Preparation

Read through and complete the pre-audit information pack, that contains details on how to conduct an efficient audit and the Self-Assessment Questionnaire (SAQ): 

Self-Assessment Questionnaire (SAQ)

• Share basic information about your company through questions based on labor, health & safety, environment, and business ethics
• Supporting documentation must be uploaded
• Length of the questionnaire depends on company factors such as size and what the working site includes
• There is no minimum number of questions to respond to in order to get your risk score
• It is recommended by SEDEX to update your SAQ every 6 months

2. Opening Meeting

The auditor will visit your site and discuss important matters:

• Explain the standards/code the audit will follow (ETI Base Code requirements and other applicable laws and regulations)
• Re-confirm necessary documents and business ethics policy
• Clarify prerequisites (floor plan, permissions, organize employee interviews)

ETI Base Code:

1. Employment is freely chosen
2. Freedom of association and the right to collective bargaining are respected
3. Working conditions are safe and hygienic
4. Child labor shall not be used
5. Living wages are paid
6. Working hours are not excessive
7. No discrimination is practiced
8. Regular employment is provided
9. No harsh or inhumane treatment is allowed

Checklist for Necessary Documents to prepare for the Audit:

• Documentation of relevant management systems and processes
• Labor contracts/written employment agreements
• Employee handbook and any relevant documents detailing company policies
• A list of all the chemicals and solvents used on the site
• Training records
• Permits, operating licenses, certificates of operations, insurance etc.
• Emergency action procedures, evacuation plan and health and safety procedures
• Time and payroll records for the past 12 months

3. The SMETA Audit

A) Site tour: Observe the physical conditions and compare them with applicable standards

B) Interviews

• Manager interviews: Discuss policies and procedures as well as reflect on implementation and effectiveness of procedures
• Worker interviews: Done individually and in groups, without the presence of managers; Workers have the opportunity to share their experiences and views of the workplace to the interviewer

• Review of records: Review of requested documentation to confirm that official compliance measures are in place

4. Closing Meeting

A) Discuss findings of the audit:

• Non-compliances and root causes
• Potential corrective actions for the non-compliances
• A proposed time frame for correcting issues

B) Management signs corrective action plan (CAPR)

5. Results

• The SMETA report will be uploaded to the SEDEX platform a few days after your audit is complete, and copies can be shared with customers and suppliers.
• Although there is no official expiration period, clients typically decide how frequently a supplier should refresh their audit based on how they performed and how much improvement is needed. Typically, this results in repetition of the audit every 1 to 3 years.

Completing the Self Assessment Questionnaire (SAQ)

The first step in the SMETA process is the Self Assessment Questionnaire, or SAQ. The questionnaire covers five categories:

1. Labor — employment contracts, working hours, wages, child labor, forced labor, discrimination
2. Health and safety — emergency preparedness, first aid, occupational health
3. Environment — energy use, greenhouse gas emissions, waste management, water usage
4. Business ethics — bribery and corruption, supply chain management, responsible sourcing
5. Management — risk management, documentation, reporting

A supplier can complete the SAQ to see where they stand and how they compare to competitors, giving them the necessary information to proactively make improvements to their business practices.

SAQ Updates in 2023

In 2023, SEDEX phased out the old SAQ and implemented a new one. These changes affect Goods Providers, or companies producing physical items for customers from raw to finished materials, and don't affect service and labor providers or agents. The goal of the SAQ update is to make its completion time faster and easier for suppliers, giving buyers faster results. Thus, there are fewer questions that require data which is difficult to collect, better guidance and clarification of questions, and increased alignment with SMETA, so suppliers are more prepared for the audit. 

Some elements of the new SAQ are as follows:

• The maximum number of questions for Goods Providers have been reduced from 286 to 158; the maximum for the smallest sites (<10 workers) are 52 questions  
• From launch, the questionnaire are available in English, Chinese, Spanish, Japanese, Turkish, and Vietnamese
• Answers from the old SAQ cannot be transferred to the new one, and the entire questionnaire must be re-completed
• The new SAQ is not available for offline completion
• There remains no minimum number of completed questions to receive a risk score 

The changes to the SAQ were released in three phases in the year 2023, making sure the members could adjust for the SAQ in 2024. The first phase started on 17 May, 2023, the new SAQ became available to all new and any existing supplier sites who hadn’t yet started their SAQ in the 2023 year. The second phase began in Q3 of 2023, making the new SAQ available to all existing Buyer/Supplier and Supplier sites. The third and last phase was initiated at the end of 2023, with the implementation of a KPI dashboard for buyers and prepopulating SMETA reports with SAQ data.

The changes are quite important as once the new SAQ is implemented, the data from the old SAQ will expire after 6 months. Therefore, companies must be quick to respond again and refresh their answers. With little time between SAQ response periods, assistance from an automated system would significantly reduce time spent working through the SEDEX SAQ.

The Sunhat-Checklist for Your SMETA Preparation

When responding to SEDEX requests and requirements, Sunhat can help companies collect and manage necessary evidence to answer the SAQ more efficiently. It is recommended to complete every question, although there is no minimum number of completed questions necessary to receive a result.

Utilizing automated software which stores all related documentation in one place and offers suggested answers based on previous assessments can greatly enhance the ease of completing the entire questionnaire without getting frustrated and quitting early. This will increase your chances of receiving a better score and reduce the stress which comes with the lengthy questionnaire process and frequent renewal period.

In addition to the SAQ, the pre-audit process includes preparation of a long list of required documentation. Rather than spend hours of valuable working time sending emails back and forth between various departments and management teams trying to locate and compile the necessary information, an automated system could offer one place to store documentation, making the pre-audit process more efficient.

In the end, utilizing automated software in the pre-audit process will save you time and leave you better prepared for your SMETA audit. Sunhat’s platform helps companies prepare for social audits with confidence. Here are some of the ways Sunhat can assist you through the SMETA process:

• Provide an all-in-one place to keep your documentation and policies organized
• Guide you through the SAQ, and automate the process using inputs from previous reports and existing documentation in the platform
• Enhance the speed with which you can complete the SAQ
• Significantly reduce the time needed to gather documentation for the audit
• The Sunhat export puts all documentation together in one place for the auditor to review
• Sunhat can help you maintain and keep up to date the documents you need for the audit
• Enhance professionalism, making you more attractive to future customers

👉 If you’re interested in using Sunhat for your next SAQ for the SMETA, request a demo or contact us.