Certain countries around the world have made significant progress towards improving working conditions but further progress is expected by all stakeholders and not all facilities have achieved expected levels of compliance. There are also many good, well-run companies in those same countries which produce excellent products and treat their employees and the environment well. Conducting a social compliance audit can provide the peace of mind for your management, and for your customers, should you choose to publish where your products are made.
Developing good, solid brand recognition takes time, a considerable investment and effort. It can take years to establish a brand but it may only take a few days or weeks to destroy that value and brand name. History shows instances of brands whose reputations were destroyed. Having a social compliance certification can provide evidence that your company is conducting ongoing due diligence in your supply chain to ensure your products are made under legal and ethical conditions.
Investors are becoming savvier about the companies in which they invest and more demanding. Some companies that have been called out for poor social compliance records have seen a negative impact on their marketability and some argue their enterprise value. A growing number of investment funds have publicized that ESG (environment, social, governance) is playing a larger role in their investment decisions. Having third-party validation of your policies and practices can help maintain and even enhance the overall standing of the company in the eyes of markets with potential for possible increases in returns to shareholders.
Companies with established Corporate Social Responsibility (CSR) programs are increasingly requiring suppliers of all sizes and volume to select and submit audit reports from recognized audit programs such as SMETA® (Sedex®), WRAP®, SLCP and engage in sustainable initiatives and share progress via programs such as the Higg Index. Adopting these programs' requirements and creating internal management systems to support their implementation inside organizations signal to retailers, brands and customers the company's committment to better, more efficient and effective operations.
Studies have shown that a company’s reputation, along with their social and environmental performance, are increasingly important to those who are now entering the job market or are looking to change jobs. With today’s tight labor market employees can pick and choose the companies they want to work for. Having a strong social compliance program is an effective way to demonstrate to applicants and existing employees values which are increasingly considered when selecting an employer. Some recent studies have shown that reputation is the number one factor in new hires accepting a new position.
A company with a strong social compliance program is able to leverage their certifications and involvement into a differentiating factor relative to their competitors. As has been shown time and time again at major trade shows, factories and brands that devote the time and resources to having their supply chain audited, and working with those factories to achieve full compliance, has led to new customers and long-standing relationships that their competitors do not have.