Chapter 2: 5 Types of Vietnam Factory Audits and Compliance

There is significant variance in what a factory audit covers and how businesses can approach the process.

The most common types of audits are social compliance audits, quality system audits, goods manufacturing audits, as well as an environmental audit. In addition to these, there are several sub-audits, such as the SA8000 and the SMETA audits, which are a form of social compliance audits.?Check?Selecting the right social compliance standard：Amfori: BSCI, SA8000, SEDEX SMETA, RBA, WRAP?to learn more.

This article will introduce most 5 common types of compliance and audit to you: APSCA, SLCP, SEDEX, Higg Index, GRS. You can hire us to conduct several types of audits, depending on your needs as a company.

1. APSCA- Association of Professional Social Compliance Auditors

Founded in 2015, APSCA (the Association of Professional Social Compliance Auditors) is an industry association, whose members represent a substantial majority of the social compliance audit industry.

APSCA was created to help ensure the professionalism, consistency and credibility of individual auditors and organizations performing independent social compliance audits, and to promote the use of independent social compliance audits, as a tool to advance workplace conditions for workers globally.

As a practitioner-led initiative, APSCA was founded by leading social compliance audit firms including Arche Advisors, Bureau Veritas, ELEVATE, Intertek, SGS, RINA, TUV Rheinland, TUV SUD and UL.

The APSCA certification process will help ensure auditors have consistent training, education, background checks, and demonstrated competencies that are standard requirements in comparable professional auditor associations.

APSCA currently offers two types of membership for audit firms and individual auditors; respectively, Firm Membership and Auditor Membership.

APSCA’s?Competency Framework?includes the following topics:

• -Strategic and Systems Thinking
• -Professional and Ethical Behavior
• -Observation and Investigation
• -Data Collection and Analysis
• -Problem Solving and Analytical Decision Making
• -Management Systems
• -Documentation Review
• -Interview Skills
• -Communication, Relationship Management and Conflict Resolution
• -Self-Management
• -Standards, Laws and Regulations
• -Business Legitimacy and Integrity of Records
• -Underage Labour
• -Discrimination and Disciplinary Practices
• -Forced Labour
• -Working Hours and Overtime
• -Freedom of Association and Effective Recognition of the Right to Collective Bargaining
• -Harassment and Abuse Practices
• -Wages, Benefits and Terms of Employment
• -Subcontracting
• -Occupational Health and Safety

Check APSCA’s?Competency Framework:?APSCA-Competency-Framework-D-011-ENG

2. SLCP- The Social and Labor Convergence Program

The apparel and footwear industry has traditionally been required to undergo costly, time-consuming and repetitive social audits to meet varying regulations and standards. The Social and Labor Convergence Program (SLCP) is a non-profit initiative established to provide a systematic assessment and verification process for stakeholders throughout global value chains.

What does SLCP do?

SLCP has brought together diverse stakeholders to create and implement a common tool to reduce the time and money spent on social auditing. The aim of SLCP is to redirect savings from auditing to improving working conditions. SLCP, through the Converged Assessment Framework, enables manufacturers to take ownership of their own social and labor data. SLCP provides a single comparable data set and facilitates collaboration between stakeholders.

The processes involved in SLCP Verification

In a nutshell, there are 3 stages, namely Data Collection, Verification and Data Sharing, and I'll be illustrating briefly them as below:?

Stage 1 - Data Collection is handled by the facility. In most cases, the facilities are factories. As its name suggests, during the Data Collection stage, the facility has to fill in data being requested in either Excel format or with the online tools. It is important to note that even with Excel completion, the file will still be uploaded to the platforms for processing.?

Stage 2 - Verification happens when the facility selects a Verifier Body to verify the data when it is ready. A Verifier will then be sent by the selected Verifier Body to have an on-site verification of data. Once the site verification is done, verification report will be submitted to platforms and the facility will have 14 calendar days to accept or raise disputes to the verification report. It will naturally proceed to the next step if the report is accepted, but if disputed, it will be ruled by SLCP’s Verification Oversight Organization.?

Stage 3 - Data Sharing takes place once the verification report is finalised. Data is stored within the platforms but data ownership is with the facility. It’s entirely the facility’s decision to share the data with other parties, be they existing or new business partners.?

Brands, retailers and organizations that accept SLCP verified data

Find more: https://slconvergence.org/slcp-data-acceptance

Manufacturers using SLCP

There is a list of manufacturers that have implemented or are actively planning to implement SLCP in their facilities.

Find more: https://slcpgateway.sustainabilitymap.org/facilities

Our experts in Vietnam are on-site to review your corporate social responsibility and the effectiveness of its implementation and help you ensure reliable social compliance and impact assessments of both the social and labor aspects of your facility.

Assess responsible business practices in your global supply chain with Social & Labor Convergence Program (SLCP) verification from Testcoo.

3. SEDEX

Supplier Ethical Data Exchange (Sedex) is a non-profit membership organization dedicated to improving ethical business practices in global supply chains.

Sedex’s factory audit standard is known as the SMETA (Sedex Members Ethical Trade Audit). SMETA is one of the most common factory audit standards in the world—Sedex currently boasts over 74,000 members, which helps you to understand standards of labor, health and safety, environmental performance, and ethics within your own operations or at a supplier site.

SEDEX also has its own online platform, in which importers can access official audit reports and view progress on corrective actions. And auditors can upload any kind of social audit on the platform, including SA8000 audits.

All the companies in any location can apply for the membership. SEDEX has won the favor of many large retailers and manufacturers. Many retailers, supermarkets, brand owners, suppliers and other organizations will ask cooperated farms, factories and manufactures to perform SMETA in order to be in line with the requirements of relevant ethical standards. Audit results can be recognized and shared by SEDEX membership. Thus, suppliers accept to conduct SEDEX inspection, which can avoid a lot of repeated audits from customers.

Overview of the SMETA audit

There are two types of SMETA audits to choose from：

The 2-pillar format covers

• Working practices and standards
• Health and safety

The 4-pillar format additionally covers?

• Environmental audit
• Business ethics

Verification to SMETA only testifies to the degree to which the audited organization fulfills the requirements.

The SMETA audit process

Prior to your on-site audit, you should receive and complete a pre-audit information pack that contains a Self-Assessment Questionnaire (SAQ) and all the relevant details for conducting an efficient audit.?

• -Opening meeting?
• -Site tour?
• -Interviews?
• -Review of Records?
• -Closing meeting?

Importers with no experience with social compliance might find the SMETA report harder to interpret. You might consider starting off with a simpler framework like SA8000. Then, if needed, you could consider a SMETA audit once you have a stronger grasp on your supplier’s compliance.

4. Higg Index

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The Higg Index is a suite of tools for the standardized measurement of value chain sustainability, and it is central to the SAC’s mission to transform businesses for exponential impact.

To enable systemic change, companies and organizations need a common language and platform in order to track and measure their social and environmental impacts. The Higg Index provides this language, empowering brands, retailers and manufacturers to leverage verified data in order to measure, improve and share their performance.

The methodologies of the Higg Index were developed over the course of ten years in partnership with SAC members, consultants, stakeholders, and industry experts and are continuously evolving based on the latest scientific research and data. Today, more than 21,000 organizations around the world are using the Higg Index, and its global reach and variety ensure that the SAC can now catalyze change from within the industry. Since its launch in 2011, it has become the leading environmental and social assessment in the apparel industry, which measures the whole value chain at this scale.

Over the last decade, the SAC together with its members have gathered a wealth of verified data. With this data, the industry can identify hotspots, continuously improve sustainability performance, and achieve the environmental and social transparency consumers are demanding.

Across topics such as water use, carbon emissions, and labor conditions, consumer goods brands, retailers, manufacturers, governments, NGOs, and consumers can use the Higg Index to inform their individual sustainability strategies and drive collective industry transformation.

Consumer goods production takes place at thousands of facilities around the world. Each facility plays a key role in the overall sustainability of the industry. The Higg Facility Tools offer standardized social and environmental assessments that facilitate conversations among value chain partners to socially and environmentally improve every tier in the global value chain.

Higg Facility Tools

The Higg Facility Tools measure an individual factory’s social and environmental performance. The tools are made up of two modules:

1. Higg Facility Environmental Module (Higg FEM)

The Higg Facility Environmental Module (Higg FEM) informs manufacturers, brands, and retailers about the environmental performance of their individual facilities, empowering them to scale sustainability improvements.

The Higg FEM provides facilities a clear picture of their environmental impacts. It helps them identify and prioritize opportunities for performance improvements. The Facility Environmental Module measures:

Environmental management systems

• -Energy use and greenhouse gas emissions
• -Water use
• -Wastewater
• -Emissions to air (if applicable)
• -Waste management
• -Chemical use and management

2. Higg Facility Social & Labor Module (Higg FSLM)

The Higg FSLM assesses the social and labor conditions present in a facility and the effectiveness of social management programs. Instead of focusing on compliance, they can dedicate time and resources to making lasting systemic changes. The Facility Social & Labor Module measures:

• -Recruitment and hiring
• -Working hours
• -Wages and benefits
• -Employee treatment
• -Employee involvement
• -Health and safety
• -Termination
• -Management systems
• -Facility workforce standards and those of value chain partners
• -External engagement on social and labor issues with other facilities or organizations
• -Community engagement

5. GRS

The Global Recycled Standard (GRS) is a full product standard to verify and track recycled raw materials through the supply chain. It also includes processing criteria to prevent the use of potentially hazardous chemicals, and verifies positive social or environmental production at the facilities.

GRS has been one of the widely recognized certification program in the textile industry now. The primary goal of the GRS is to increase use of recycled materials in products and reduce the harmful social, environmental, and chemical impacts of production.

The objectives of the GRS

The Global Recycled Standard is intended for use with any product that contains at least 20% Recycled Material. Each stage of production is required to be certified, beginning at the recycling stage and ending at the last seller in the final business-to-business transaction.

Material Collection and Material Concentration sites are subject to self-declaration, document collection, and on-site visits. The GRS does not address quality or legal compliance.

Social Requirements

Workers employed at facilities involved in the production of GRS products are protected by strong social responsibility policy.

01 Forced, bonded, indentured and prison labor

02 Child Labor

03 Freedom of association and effective recognition of the right to collective bargaining

04 Discrimination, harassment and abuse

05 Health and safety

06 Wages, benefits and terms of employment

07 Working Hours

Environmental Requirements

Facilities involved in the production of GRS products have strong environmental protections in place.

01 Energy use

2 Water use

3 Wastewater / Effluent

4 Emissions to Air

5 Waste management

Chemical Requirements

Chemicals used in the production of GRS products do not introduce unnecessary harm to the environment or workers.

1 Inherently problematic substances

2 Exclusion of substances and mixtures classified with particular hazard codes or risk phrases

Learn more: Global-Recycled-Standard-v4.0

How to Get Certified

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The GRS label applies to companies in the textile sector with activity in spinning knitting, printing, stitching, ginning, weaving and dyeing, but also to recyclers, distributors and brands who want to have their recycled products and their responsible practices recognized by an international label.