Importers are facing more pressure from customers to ensure that their products are, at least to a certain extent, ethically produced.
However, actively monitoring working conditions in a country far away, costs millions of dollars. In other words, ensuring social compliance in China is out of reach for any company that’s not on the Fortune 500.
That’s where BSCI and Sedex comes in.
What is BSCI?
Business Social Compliance Initiative (BSCI) is a system meant to make supply chains more transparent and fair.
Importers and manufacturers anywhere in the world can become BSCI members, which requires them to comply with the 11 core BSCI principles:
- The Rights of Freedom of Association and Collective Bargaining
- Fair Remuneration
- Occupational Health and Safety
- Special Protection for Young Workers
- No Bonded Labour
- Ethical Business Behaviour
- Decent Working Hours
- No Child Labour
- No Precarious Employment
- Protection of the Environment
Audits are carried out, by accredited companies such as Intertek, to verify that the supplier complies with these principles.
Each audit rates the supplier in one of the following categories:
- A (Outstanding)
- B (Good)
- C (Acceptable)
- D (Insufficient)
- E (Unacceptable)
However, BSCI is not a certification scheme. It’s based on gradual improvements over time.
What is Sedex?
Supplier Ethical Data Exchange (Sedex) is a non-profit membership organization that sets social compliance standards for both manufacturers and buyer’s.
Similar to BSCI, Sedex is not auditing or certification suppliers. Instead, they develop a platform for social compliance standards, while accredited companies execute the on site inspections.
A supplier or buyer can join Sedex by paying a yearly fee of around US$120.
The membership gives the supplier access to an online platform for managing their social compliance data, and the Sedex e-learning databank.
However, what really matters to Importers is whether a supplier has passed a SMETA audit.
The Sedex Members Ethical Trade Audit (SMETA) covers the following:
- Health and safety
- Labour standards
- Environment (optional)
- Business ethics (optional)
SMETA is also divided into a two tier system:
- 2-Pillar SMETA
- 4-Pillar SMETA
4-Pillar SMETA also includes an environmental audit.
What does it mean when a supplier BSCI or Sedex audited?
A supplier can either pass or fail a BSCI or SMETA audit. Assuming they have passed, it means that they have passed an on site inspection carried out by an accredited company.
The audit may have been ordered by another buyer, or the supplier itself.
Either way, this has the following implications for you:
a. A supplier that can pass social compliance audits are generally larger and better organized. This often goes hand in hand with decent quality systems and product compliance capability.
b. You can save yourself the cost of paying for a BSCI or SMETA report, as the supplier already passed the audit.
c. If you plan to sell to retailers in the US or Europe, you can expect them to require that you present audit reports proving that your suppliers in Asia passed a BSCI, SMETA or SA8000 audit.
Where can I find a sample BSCI or SMETA report?
Below follows two PDF sample reports:
How do I know if the audit report is valid and authentic?
The first thing you have to check is the supplier name, which should be stated on the first page of the audit report.
Many trading companies, and even factories, send audit reports valid for completely unrelated companies, just to pass the screening process from prospective customers.
The report must for obvious reasons be valid for the same supplier you are planning to buy products from.
Second, you should always get the audit report verified.
You can contact BSCI and Sedex directly to verify if the report is authentic and still valid.
Also notice that BSCI and SMETA audit reports are only valid for a certain time, and may require that the supplier pass a follow up audit at a later date.
How can I find BSCI or SMETA audited suppliers?
Alibaba.com and Globalsources.com enables users to filter suppliers based various factors, such as ISO 9001 and BSCI. All you need to do is to do a supplier search and then tick the BSCI box.
Now you will only suppliers that claim to have passed a BSCI audit report.
Some suppliers also upload their BSCI or SMETA audit reports, for everyone to download.
But, as explained above, you must still verify if that is actually the case.
If you attend trade shows in Mainland China or Hong Kong, you will also notice that BSCI and Sedex suppliers advertise this by showing the logo of these organizations.
Is BSCI and SMETA audits common among suppliers in China?
No, it’s only a small fraction of all manufacturers in China that have passed a BSCI or SMETA audit. Most likely because most cannot pass a BSCI or SMETA audit.
If you are looking specifically for social compliance audited suppliers, you need to limit your supplier selection to those that can provide valid audit reports.
Can our company pay to make a supplier BSCI or Sedex certified?
Yes, you can order a SMETA or BSCI audit from Intertek, Asia Inspection and other accredited inspection companies.
However, only the more sophisticated suppliers in China (and other developing Asian countries) can pass a social compliance audit report.
If you order an audit for a random supplier you’ve found online, you will probably end up wasting your money.
BSCI and SMETA audits can be fairly expensive, often costing more than $800.
As such, you better have a good reason to pay for an unproven supplier to go through a BSCI or SMETA audit.
Personally, I think it’s easier to just go to a supplier that has already passed an audit.
How much does an BSCI or Sedex audit cost?
Social compliance audits generally start from around $650 per factory audit.
There may companies offering such audits for less, but keep in mind that a report is only of value if it’s issued by an accredited company.
Why are not all suppliers BSCI or Sedex audited?
The simple answer is that the vast majority of manufacturers cannot pass a BSCI or SMETA audit.
A supplier must actively implement and enforce the protocols developed by either BSCI or Sedex to be able to pass an audit.
However, the number of ‘BSCI and Sedex suppliers’ in China is growing, as more and more Importers (and their customers at home) demand that products are at least somewhat ethically produced.
Can BSCI and SMETA audits be conducted in any industry?
Yes, at least when it comes to consumer products.
However, based on my experience, BSCI and SMETA audits are more common among textiles and children’s products suppliers.
For example, I find it far less common to find a BSCI or SMETA audited electronics manufacturer.
Probably because buyer’s in these industries care more about social compliance, compared to others.