Sedex guidance on COVID-19
Managing audits and compliance programmes during COVID-19
This section is aimed at buyers, suppliers and Affiliate Audit Companies (AACs). It aims to support our members to manage their audit programmes while their own companies and their supply chains are being impacted by COVID-19. This section of the guidance identifies what social sustainability assessment tools are best to use, how and when. It also looks at how to prioritise assessments and respond to issues raised in assessments during this time.
This section covers the following topics:
- Purpose of social sustainability assessments during COVID-19
- Summary of tools available
- Using SMETA (Sedex Members Ethical Trade Audit)
- Using Sedex Virtual Assessment (SVA) – available late May 2020
- Using – Direct Worker Reporting (DWR)
- Using Modular SAQ (Self-Assessment Questionnaire) – COVID-19 impact assessment
Section 1: Purpose of assessment and key considerations around COVID-19
It is important to consider whether an assessment should take place during COVID-19, given the strict social distancing measures that are required to contain the spread of the virus. If businesses decide to complete an assessment during the pandemic, it is crucially important to be clear why this assessment is required, and whether that reason is still important during COVID-19.
Every company has different aims for their audit programme, but broadly most audits are conducted to do the following:
- In sites where you already operate
o To identify where workers are unsafe or being exploited (shown as audit non-compliances) in order to work in partnership with suppliers to address any issues identified, prioritising issues that are urgent and remediable.
o To support suppliers to continue to function and employ workers during this time
o To ensure workers are safe from the health and economic impacts of COVID-19.
- In potential new sites:
o To identify whether the supplier meets the Code of Conduct and is able to manage the SMETA elements appropriately.
During COVID-19, workers may be at higher risk of health impacts as well as severe financial impacts. Therefore, many businesses are keen to ensure that they can assess suppliers, ensure that workers are safe where possible, and support suppliers to improve their practices.
Many businesses will be in a difficult position financially, and will initially want to prioritise supporting critical or essential suppliers to continue their business. Part of this involves working closely with buyers. It also means minimising disruption caused by audits and ensuring that any assessments completed are effective. Solutions to issues identified need to be addressed together, with effective prioritisation of remediating areas of biggest impact.
Where other non-COVID-19 related issues have been found in previous audits, they need to be addressed, however these should be carefully evaluated against what is possible at this time.
To ensure that businesses have access to tools that achieve these, Sedex has increased our range of tools to provide our members the ability to respond to these complex challenges. Please note that we will continue to develop and evolve these tools during this changing landscape.
Section 2: Summary of tools available
Sedex is offering a full suite of tools to ensure our members can continue assessing working conditions in their supply chains in a way that minimises disruption for suppliers, workers and buyers alike.
Tool 1: SMETA: SMETA remains available during the COVID-19 pandemic. However, the scheduling and execution of audits is severely impacted. SMETA offers businesses the full benefits of social auditing as well as an integrated and detailed reporting mechanism through Sedex Analytics.
Please see section 3 for further information about scheduling and managing outstanding non-compliances.
Tool 2: Virtual Assessment (available late May): The Sedex Virtual Assessment (SVA) is a new due diligence tool where a Sedex Affiliate Audit Company (AAC) assesses the compliance of a site remotely, using technology or video conferencing. SVA offers member companies an alternative way to understand compliance levels at sites without requiring the need to physically inspect the site.
See section 4 for further information.
Tool 3: Direct Worker Report: The Direct Worker Report (DRW) (via &Wider) allows members to gain direct insights into workers’ priorities and understand working conditions. The reporting is carried out through mobile calls, with no physical interaction required to set it up. DWR can be used as a stand-alone option or in combination with a virtual assessment. Reporting can be tailored to understand impacts of COVID-19 on workers’ wellbeing and working conditions.
See section 5 for further information.
Tool 4: Modular SAQ: COVID-19 Impact Assessment: The COVID-19 Impact Assessment is a short set of questions that sit alongside the Sedex SAQ and can be applied to all or some of a business’ supplier sites. The questions are centred on the specific impacts of COVID-19 and will allow Sedex members to gain insights into:
- The status of business and the workforce
- Measures taken to protect workers’ health and safety
- Measures taken to manage the workforce and impact on workers
- Business adaptation and reaction to COVID-19
The COVID-19 Impact Assessment Modular SAQ can be used to help you define which of your suppliers are most vulnerable to COVID-19 and provide insights into what makes them specifically vulnerable.
See section 6 for further information.
Decision tree for assessment during COVID-19
This diagram shows how to use the different tools to initially understand which suppliers are more vulnerable to COVID-19, and how to assess or gain insights into current working conditions.
For less vulnerable suppliers, we recommend members to manage outstanding non-compliances and consider delaying audits as much as possible.
Section 3: Using SMETA
The Sedex Best Practice Guidance (BPG) recommends the following frequency for audit:
- High risk suppliers: 1 year
- Medium risk suppliers: 2 years
- Low risk suppliers: spot check
Sedex recommends buying organisations to review their planned audits between now and August 2020 and focus primarily on their high-risk suppliers.
If high-risk suppliers are operating yet are facing difficulties due to the virus (e.g. not all workers are back at work; they are experiencing delays in merchandise or materials; or there are precautionary health measures restricting access to visitors), Sedex recommends buyers to consider delaying the audit as much as possible and review the status every three months.
If buyers decide to go ahead with an audit, we recommend using announced or semi-announced audits and working closely with audit firms and suppliers to ensure the audit takes place.
Auditors will have their own health and safety policy with regards to COVID-19. Some may have restricted travel to high-risk areas, others may have stopped travel altogether. We therefore strongly recommend a close communication process between buyers, suppliers and audit firms to ensure that the audit can take place in the best possible conditions.
If the auditor can travel, we recommend the audit firm to:
- Verify the level of health risk at the supplier site, in line with the audit firms’ health policies.
- Confirm the supplier allows visitors on-site, ahead of the audit and that the auditor will be allowed in.
Managing outstanding non-compliances on Sedex Advance
We recommend members to focus on sites with the highest risk profile rather than individual non-compliances.
For outstanding non-compliances that were raised prior to COVID-19 and need closure, we recommend buyers focus on sites that have critical non-compliances or non-compliances that could indicate a higher risk of mismanagement during COVID-19.
- Critical non-compliances: this would include critical and business critical non-compliances.
- Indications of a higher risk of mismanagement: Some non-compliances, albeit not critical, may signal that some sites are not apt at managing the pandemic as well as others. We recommend businesses analyse the situation of every supplier and refer to the guidance Sedex has put together to assess possible mismanagement. This includes:
- Health & Safety issues related to Personal Protective Equipment (PPE), workstations, hygiene and housekeeping, accommodation and transport
- Communication between management and workers including freedom of association and grievance mechanisms
- Social insurance and wage payment
- Excessive working hours
- Workforce profile of the site: high proportion of women or migrant workers.
Following the same reasoning as above, members should contact audit firms to resolve non-compliances. Non-compliances can be verified either via desktop verification or on-site verification through a follow-up audit, as per the SMETA process. The auditor will work with the site to review progress and close the issues that are outstanding.
If a non-compliance cannot be closed-off because of COVID-19, the site will have to change the status of the non-compliance to “planned” and add the comment “COVID-19” in the comment box. The site will have to detail the reasons why this could not be addressed.
Supplier clicks on ‘Add Corrective Action’ and enters a description: Coivd-19 and selects ‘Next’
Supplier selects the status ‘Planned’ and then adds in comments to the ‘Response’ field the reasons why they have been unable to close the non-compliance.
Sedex is reviewing ways to improve the reporting and will continue to update members about progress.
If an audit cannot take place, please consider a virtual assessment, direct worker report or Modular SAQ COVID-19 Impact Assessment.
Section 4: Using Virtual Assessment (to be available in late May)
Where an audit cannot take place, we recommend members to consider using the Sedex Virtual Assessment (SVA). SVAs are a new third-party due diligence tool where a vetted Affiliate Audit Company (AAC) assesses the compliance of a site remotely, using video-conferencing and specific software.
SVAs are good alternatives to SMETA audits, when these cannot take place:
- SVAs assess sites against the core clauses of SMETA (2 or 4 pillars)
- SVAs are announced and include a thorough preparation phase to ensure the assessment goes according to plan
- SVAs include the following elements of a SMETA audit (opening meeting, site tour, management interviews, document review and workers group interviews).
SVAs can be used to replace SMETA follow-up audits or SMETA initial or periodic audits.
SVAs do have some limitations and risks, such as information security, data protection and confidentiality issues. This means that SVAs cannot be used to assess all sites. Sedex is developing the criteria for when it is appropriate to use an SVA.
Sedex will hold a series of webinars in May 2020 to raise awareness of the tool. Please contact your account manager if you wish to receive more information about SVA.
Section 5: Using Direct Worker Reporting
Sedex strongly encourages businesses consider Direct Worker Reporting (DWR) to gain insights into workers’ wellbeing and working conditions. DRW is a good alternative to hear directly about workers’ priorities at a time where travelling to sites and direct on-site engagement with workers is limited.
You can use the tool in four different ways:
- Direct worker reporting as a standalone measure. Businesses can use &Wider’s Engage tool – using the standard survey with SMETA compatible indicators or as a tailored survey to suit sector-specific needs.
- To measure the impact of COVID-19 on supply chain workers. This survey provides insight into the impacts of the virus on working conditions, livelihoods and wellbeing of workers. It allows brands and suppliers to better understand what will be needed once the threat of COVID-19 has passed.
- To measure the wellbeing of people working from home. This will help monitor the wellbeing of workers now working from home, under new pressures.
- Direct worker reporting via mobile to enhance virtual assessment. Using insight gathered directly and anonymously from workers using automated calls to workers’ mobile phones. The tool captures responses from workers, allowing brands to hear from workers directly, complementing site assessments.
Members will have access to basic reporting on Sedex Advance and full reporting through the &Wider platform.
See here for more information about Direct Worker Reporting.
Section 6: Modular SAQ – COVID-19 Impact Assessment
Businesses will be impacted in different ways due to COVID-19 and some businesses are more vulnerable to impacts than others.
Sedex has put together a modular SAQ that sits alongside the Sedex SAQ. This modular SAQ specifically focuses on helping you gain insights into COVID-19 related impacts at sites. The modular SAQ asks targeted questions on:
- Impacts of COVID-19 on business
- Health and safety measures in places to minimise the spread and infection of COVID-19 in the workplace
- Management of labour shortages and excessive hours
- Financial impacts of COVID-19 on workers
- Measures to manage stress and wellbeing of workers
- Support from customers and for suppliers.
The COVID-19 Impact Assessment will help businesses gain insights and help steer dialogue between buyers and suppliers. By using the information gathered through the modular SAQ, Sedex members will be in a better position to act responsibly towards their suppliers.
The modular SAQ COVID-19 Impact Assessment can be used independently from the SAQ. We estimate it will take less than one hour to complete the set of questions.
The modular SAQ is optional and needs to be assigned to suppliers. Please contact your account manager if you wish to receive more information about the modular SAQ. We estimate the modular SAQ will be released in early May 2020.
Estimated date of release: Early May