SMETA Audits vs In-house social compliance audits
Tomas Novotny
Solutions Expert
15 Jul 2025
About 6 mins
When it comes to ethical supply chain management, organisations face a critical choice: should they develop their own in-house auditing programme or embrace the globally recognised SMETA (Sedex Members Ethical Trade Audit) standard? This decision affects not just compliance costs, but market access, stakeholder trust, and operational efficiency. Here’s what you need to know to make the right choice for your organisation.
Understanding Your Options
SMETA is a standardised social audit methodology developed by Sedex that evaluates compliance across four pillars: labour standards, health and safety, environment, and business ethics. It’s conducted by approved third-party auditors and results can be shared across multiple buyers.
In-house social auditing programmes are internally developed and managed systems that organisations create to monitor their own compliance and risk management processes. These are designed and implemented by internal teams, offering greater customisation and control.
The Appeal of Going It Alone
At first glance, in-house auditing programmes have some appeal. They offer control over the audit process and allow customisation to specific business needs. Internal auditors have knowledge of company operations and culture, and programmes can theoretically provide continuous monitoring rather than periodic assessments.
For organisations with highly specialised operations or unique regulatory requirements, in-house programmes might seem to offer advantages in terms of customisation and control.
The Credibility Problem
As industry experts note, in-house audits essentially involve “marking one’s own homework” – a fundamental credibility issue that stakeholders increasingly reject. This internal bias undermines the objectivity that regulators, investors, and business partners demand in today’s transparency-focused business environment.
The True Cost Reality
While organisations assume keeping audits in-house saves money, the reality tells a different story. Initial investments can range from £5,000 to £15,000 for system development and staff training. But the real costs are ongoing: qualified auditor salaries, travel expenses (typically $2,000 per site), continuous training and quality management systems.
Research reveals that when all indirect costs are calculated, internal audit engagements can cost hundreds of thousands of dollars. Even large organisations with multiple facilities find that the cumulative costs of maintaining qualified internal audit teams often exceed the benefits.
Scalability and Market Access Barriers
Perhaps most critically, in-house programmes create significant barriers to market access. Major retailers and brands increasingly require recognised third-party audits, making internal assessments inadequate for supplier qualification. The administrative burden of managing different audit requirements for different customers becomes overwhelming as organisations grow.
SMETA: The Strategic Advantage
Universal Market Access and Recognition
SMETA transforms the audit landscape by offering universal acceptance. With recognition from major retailers including Walmart, Target, Amazon, Costco, and Whole Foods, SMETA provides immediate access to global supply chains that in-house programmes simply cannot deliver.
A single SMETA audit report can be shared with multiple customers via the Sedex platform, eliminating the need for separate assessments for each buyer relationship. Suppliers own and pay for their SMETA audits, saving buying organisations significant money compared to funding internal audit programmes. The entire audit process is centralised through one platform, eliminating the administrative complexity of managing multiple audit systems and relationships.
“DS Smith uses SMETA and the Sedex platform to monitor over 230 sites, integrating risk into daily operations while enhancing supplier engagement”
Samantha Upham, Senior Sustainability Manager at DS Smith.
(Source: Sedex Case Study)
Unmatched Supplier Leverage
SMETA creates shared supplier responsibility that in-house programmes cannot match. When multiple customers require the same SMETA standard, suppliers face unified pressure to maintain ethical practices. Industry experience confirms that companies like Costco and Walmart actively require SMETA 4-pillar audits, creating collective leverage that transforms supplier behaviour far more effectively than isolated internal assessments.
Gold Standard Quality and Credibility
Only Sedex-approved Affiliate Audit Companies can conduct SMETA audits, ensuring consistent, high-quality standards. The methodology is grounded in the Ethical Trading Initiative (ETI) Base Code and International Labour Organization (ILO) conventions, with regular updates like the recent SMETA 7.0 revision keeping it current with best practices.
Sedex reinforces this quality through its Audit Quality Programme (AQP), which “isn’t just about ticking boxes; it’s about boosting the confidence and credibility of our Approved Audit Companies (AACs). By rigorously monitoring your performance to our buyer members, we ensure the unwavering application of SMETA standards and demonstrate transparency on this.”
The programme has strategically reduced approved audit companies and requires APSCA membership, ensuring only the highest calibre professionals conduct assessments.
Rapid Implementation and Global Scalability
SMETA’s established infrastructure means organisations can achieve compliance quickly, with audits scheduled within weeks rather than the months required to build internal capabilities. For global operations, SMETA provides consistent standards across diverse regulatory environments – something in-house programmes struggle to achieve across different legal frameworks and cultural contexts.
Comprehensive Coverage Without the Overhead
SMETA provides comprehensive oversight across four key pillars: labour standards, health and safety, environment, and business ethics. This holistic approach ensures organisations don’t miss critical areas while benefiting from continuous methodology evolution based on global best practices.
The beauty lies in achieving this comprehensive coverage without maintaining internal expertise across all domains. Organisations can focus resources on implementing improvements rather than developing and maintaining audit capabilities.
When Might In-House Audits Still Apply?
While SMETA represents the optimal choice for most situations, there are limited scenarios where in-house audits might complement (not replace) SMETA:
- Highly classified operations where external access is restricted by security requirements
- Continuous improvement programmes that use internal audits for real-time monitoring between SMETA cycles
- Specialised compliance areas not covered by SMETA’s four pillars
However, even in these cases, SMETA should form the foundation of external validation and stakeholder credibility, with in-house programmes serving supplementary roles.
The Strategic Choice
For the vast majority of organisations, SMETA offers a compelling combination of cost efficiency, market access, credibility, and operational simplicity that in-house programmes struggle to match.
Where supply chain transparency is essential and stakeholder scrutiny is intense, SMETA provides the global standard that opens doors, builds trust, and drives meaningful change in supplier behaviour. Rather than investing in internal capabilities that lack market credibility and scalability, forward-thinking organisations are choosing SMETA as their pathway to ethical excellence and commercial success.
The choice isn’t just about auditing, it’s about positioning your organisation for success in a world where recognised ethical standards are the price of entry to global markets. With SMETA, that price becomes not just affordable, but strategically advantageous.
Ready to unlock the strategic advantages of SMETA?
Contact our team today to learn how SMETA can reduce your audit costs, improve supplier leverage, and provide the global recognition your stakeholders demand.
