Face It, Find It, Fix It

What 60,000+ SMETA audits reveal about supply chain risk and resolution

Every supply chain contains risk. 

Ethical, labour and environmental concerns are impossible to avoid in procurement and sourcing. These risks undeniably affect a company’s success – from inefficiencies and product delays to labour disputes, extreme weather impacts, media scandals and more. Such issues translate into operational, reputation and financial consequences.

At the same time, supply chains are more complex than ever. Executives and their teams are operating in a turbulent landscape across both home markets and international networks, making visibility and proactive risk management extremely difficult. For severe sustainability issues with complex, systemic roots, resolution is rarely quick or simple - yet is expected by stakeholders, including governments, investors and consumers. 

But progress is possible. By leveraging the due diligence tools and technology already available, teams can scale visibility across sprawling supply chains, drawing valuable intelligence that supports both short-term demands and longer-term goals.

Leveraging scalable, site-level assessment

In combining multiple data sources and assessment methods, comparing findings and monitoring over time, teams arm themselves with insights that empower prioritisation, targeted action and wider strategy. They also build a foundation of evidence to demonstrate in-depth due diligence, proactive risk management and continuous improvement. 

Our latest analysis offers an insight into the labour, ethical and environmental concerns identified on-the-ground at supply chain worksites worldwide. Drawing on huge volumes of data from Sedex solutions - including more than 60,000 in-person SMETA audits - the findings illustrate issues not only found, but also resolved.

 

One year since a significant update to the SMETA methodology (SMETA 7), one thing is clear.

Despite uncertainty, complexity, disruptions and political-economic headwinds, many businesses maintain their efforts on supply chain due diligence and responsible sourcing. 

From small suppliers to multinational enterprises, they continue to identify risks, make changes and drive improvement - increasing both sustainable practices and resilience in the face of challenge.

1,000 serious issues found every week with SMETA


Critical and business critical issues identified in a SMETA audit - the world’s most widely used social audit - are the most severe breaches of workplace conditions and requirements. They range from immediate risks to life and limb to systemic or deliberate violations that endanger workers or others. 

These present the biggest threats to operational continuity, ethical compliance and reputation - making them priority areas to address.

Almost half of audited worksites have wage-related issues (46%)


Wage-related issues range from minor concerns, like incomplete wage slips, to serious problems such as failure to pay the minimum wage. Some are red flags for more severe exploitation, including forced labour, or can indicate other violations like hidden subcontracting. 

Wage-related issues can particularly affect vulnerable groups such as women and migrant workers. Applying these lenses to assessment findings is a powerful way to spot increased risks and impacts in a supply chain. SMETA 7 also introduced new assessment points on living wages, to support going beyond minimum pay - this is already driving positive action.

30% fewer issues at worksites that respect freedom of association

Freedom of association is a fundamental right that protects workers and lowers risks of exploitation, including forced labour. Our analysis finds that SMETA audits identify more issues at sites saying they refuse to engage with trade unions, compared to those that do engage. 

By combining regional risk insights with suppliers’ self-reported information, corporate teams can pinpoint parts of their supply chains where exploitation is highly likely but freedom of association isn’t recognised. Initiatives targeting those areas, including support for independent trade unions, could be highly effective risk mitigation.

Fewer serious issues at worksites with gender-balanced management


Supply chain worksites where at least 50% of supervisors or managers are women had fewer critical or business critical concerns raised during SMETA audits. 

Workplace gendered risks are well-documented – from power imbalance and unequal pay to increased likelihood of harassment. A gender balance in decision-making roles is essential to addressing these risks and progressing gender equality - and benefits often extend to other operational areas.

Sedex and others have actively worked to increase gender-disaggregated data from supply chains, including with SMETA 7 and updates to our supplier Self-Assessment Questionnaires. This is another area where scrutinising the data - and cross-referencing with theoretical risk - is incredibly powerful. Where are female workers more affected by absenteeism, staff turnover, or safety issues? With these insights, businesses are better equipped to address these issues.

29% of supply chain worksites don’t know their end customers’ environmental requirements

It’s well-established that the majority of a company’s environmental footprint is in its supply chain (e.g. up to 70% of emissions being Scope 3). Most businesses recognise that their supply chains are the source of both significant impacts and major continuity threats from extreme weather - offering a strong business case for addressing these concerns.

Achieving commitments made requires collaboration across a supply chain. That starts with bringing everyone onboard, agreeing shared goals and working with others to scale mitigation efforts.

Watch this space - more insights coming soon!

Sedex is a global technology company that specialises in data, insights and professional services to empower supply chain sustainability. Our Platform, tools and services enable businesses to better manage ethical, social and environmental risk and performance in their supply chains to meet their sustainability goals. Our solutions include SMETA, the world’s most widely used social audit, with over 450,000 site-level audits conducted in Sedex’s +20-year history.

For more information on Sedex, SMETA and the insights presented here, please reach out to Olivia Thomson (Sedex Communications Manager) or your usual Sedex contact.

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