Latest update on December 5, 2024
In a Nutshell
- SMETA, an audit method exclusively available to SEDEX members, evaluates and improves sustainability and ethical practices in the supply chain. The areas of labor, health and safety, environment and ethical performance are taken into account
- Compared to other ESG ratings (such as EcoVadis or CDP), companies are not only assessed in a SEDEX audit using a self-assessment questionnaire: there are also two interviews with an auditor and an on-site audit
- SEDEX regularly works on improving the SMETA assessment method, which is why three key factors were added to the assessment in 2024
- Following the introduction of a new self-assessment questionnaire (SAQ) in 2023, SEDEX introduced an assessment questionnaire for environmental issues (ESAQ) in 2024
With the new EU laws on supply chain monitoring and reporting (CSDDD, EU Taxonomy, CSRD) that came into force in 2023 and 2024, companies are looking for third-party organisations to monitor ESG risks and ensure compliance. One such third-party organisation is the social audit provider Supplier Ethical Data Exchange (SEDEX) with the SAQ questionnaire.
In this article, you will find a guide that explains the basics and process of SMETA, what you can expect from the process and includes a checklist to prepare your organisation to complete the SAQ questionnaire efficiently.
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.
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. SMETA's most frequent customers are large manufacturing companies and companies with global supply chains, usually in Europe, Asia and North America, who request the audit from their suppliers.
The SMETA process includes a detailed, holistic review of your organisation's sustainability policies, procedures and practices based on an on-site inspection of your facilities and interviews with a selection of employees. A further questionnaire, similar to the SAQ already completed, may also form part of the audit.
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. SMETA Audit Preparation
Read through and complete the SMETA pre-audit information pack, that contains details on how to conduct an efficient audit and the Self-Assessment Questionnaire (SAQ):
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:
- Employment is freely chosen
- Freedom of association and the right to collective bargaining are respected
- Working conditions are safe and hygienic
- Child labor shall not be used
- Living wages are paid
- Working hours are not excessive
- No discrimination is practiced
- Regular employment is provided
- No harsh or inhumane treatment is allowed
The following documents are important for preparing 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
- Relevant training certificates, e.g. occupational safety
- Time and payroll records for the past 12 months
3. The SMETA Audit
The SMETA audit takes place on your business site. The auditor carries out the following points:
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
After the physical SMETA audit, you will have a final discussion with your auditor in which the following will be discussed:
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 of the SMETA Audit
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.
The assessment is as follows:
- NCs (non-conformances/ non-compliances): Regulations are not compliant or have not been complied with
- Observations: no non-conformities (NCs) were found, but the auditor(s) see(s) a risk of non-compliance in the future
- Good examples: Regulations have been fulfilled or implemented beyond the requirements
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.
SMETA Methodology Update in 2024
The SMETA social audit assessment methodology is regularly updated to strengthen its robustness, improve comparability with other standards and provide actionable insights for a more sustainable supply chain.
To facilitate compliance and provide deeper insights into ESG risks, the SMETA methodology was improved to the current version (7.0) in 2024. The following points were added to the method:
- Management Systems Assessment: During the site review, the auditor(s) takes a deeper look into the management systems to identify potential ESG risks in the supply chain and opportunities for improvement.
- SMETA Workplace Requirements: Specific issues with the ETI Base Code are identified to ensure a consistent approach to labor standards compliance. Collaborative Action Required are defined:
- Collaborative Action Required (CAR) findings: For some violations and issues, assessment using NCs is not sufficient, as it requires a complex and collaborative solution. CARs are more complex issues that require long-term corrective action plans (possibly over several years).
2- or 4-Pillar SEDEX Audit
Companies can decide how comprehensive the audit of their suppliers (the companies to be assessed) should be. SEDEX distinguishes between the 2-pillar audit and the 4-pillar audit, with the latter providing a broad understanding of the supplier's practices.
The SMETA 2-pillar audit is a basic review of a company and covers the two core areas of labour and health and safety.
The 4-pillar audit is a more comprehensive audit of a company. In addition to the basic aspects of labour and health and safety, the audit also examines environmental aspects and aspects of business ethics.
Completing the Self Assessment Questionnaire (SAQ)
As soon as a company becomes a member of SEDEX, it must complete the Self-Assessment Questionnaire (SAQ) online. Members do not necessarily have to carry out a SMETA audit - this is only done if customers request this from the company. The SAQ questionnaire covers five categories:
- Labor — employment contracts, working hours, wages, child labor, forced labor, discrimination
- Health and safety — emergency preparedness, first aid, occupational health
- Environment — energy use, greenhouse gas emissions, waste management, water usage
- Business ethics — bribery and corruption, supply chain management, responsible sourcing
- 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.
- 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
An Environment Self-Assessment Questionnaire (ESAQ) has been in place since mid-2024. This focuses on key environmental indicators such as water consumption, greenhouse gas emissions and waste management.
SAQ Adjustments in 2023
In 2023, SEDEX has phased out the old SAQ and introduced a new version. The aim of updating the SAQ is to shorten and simplify the completion time for companies so that buyers receive faster results. There are fewer questions that require data that is difficult to collect, better guidance and clarification of the questions and greater alignment with SMETA so that companies are better prepared for the audit.
ESAQ Introduction in 2024
SEDEX introduced another change in 2024 with the introduction of a new questionnaire, the ESAQ (Environment Self-Assessment Questionnaire). The ESAQ aims to simplify the collection and analysis of environmental and social data through the SEDEX platform. Companies can be asked to answer the ESAQ as well as the SAQ.
The ESAQ questionnaire covers key environmental indicators such as water consumption, greenhouse gas emissions (Scope 1, 2 and 3) and waste management and helps companies to collect data in areas such as biodiversity, deforestation, energy and chemical management and compliance with national and local regulations.
The ESAQ's standardised framework improves the comparability of environmental performance across the entire supply chain. At the same time, integration into the SEDEX platform enables seamless linking with other questionnaires (SAQ data).
With the ESAQ, companies gain a holistic view of their supply chain, can identify weaknesses and pursue their sustainability goals more effectively.
Our Checklist for Your SAQ Answer Process
When responding to SEDEX requests and requirements, an ESG software can help companies collect and manage necessary evidence to answer the SAQ more efficiently.
Utilising ESG software, which stores all related documentation in one place and offers suggested answers based on previous assessments, facilitates the completion of the entire SAQ questionnaire.
The SMETA Audit process ncludes the preparation of a long list of required documentation. ESG software provides a centralised location for storing documentation, making the assessment process more efficient.
Ultimately, using ESG software saves time and better prepares you for your SMETA audit. Here are some of the ways Sunhat's ESG software can help you with the SMETA process:
- Create a central place to organise your documentation and policies
- Reduce the time it takes to compile documentation for the audit
- Make all documentation available to the auditor
- Maintain the required documents and keep them up to date
- Increase the professionalism of the audit, making you more attractive to future clients
If you are interested in using Sunhat for your next SAQ or ESAQ for the SMETA audit, book a demo now.