SMETA 4-Pillar Audit Guidance for Suppliers for ExtendedEnvironment and Business Ethics Assessments(Version 1 September 2012)

This Guide for Suppliers has been produced by the current members of the Associate Auditor Group (AAG) to assist suppliers inpreparing for Environment and Business Ethics assessment in a SMETA audit

It is one of a series of documents which support a 4-Pillar audit process which include

l SMETA Best Practice Guidance version 40 2 4-Pillar audit

l SMETA 2 4-Pillar Audit Report and CAPR

The above are available on the public section of the Sedex website

l Guidance for suppliers (this document)

l Guidance for auditors to assist auditors in the types of checks they should be doing for Environment and Business Ethics assessments

The above two documents are available for Sedex member only

2

Guidance for Suppliers for Extended Environment and Business EthicsAssessments

INTRODUCTION Suppliers may be familiar with the Sedex Members Ethical Trade Audit (SMETA) process which has been used by Sedex members for measuring a supplierrsquosperformance in the area of Labour Standards and Health amp Safety

Reflecting the widening nature of Corporate Social Responsibility and following requests from Sedex members the scope of the SMETA protocol has beenincreased to include Environment and Business Ethics This can be found as the new SMETA Best Practice Guidance (BPG) audit report and CAPR version 4(May 2012) on the public section of the Sedex website these now cover the established pillars of labour standards and Health amp Safety (2-pillar) as well as theadditional modules of Environment and Business Ethics (4-pillar)

The additional modules of Environment and Business Ethics may not be required by all Sedex members and it is important that suppliers and customers areclear when these supplementary modules are required additions They have been designed so that customerssuppliers may choose whether to add one orboth and together they are designed to take a total of 05 auditor days when added to a SMETA procedure

Note These assessments may not meet the level of a complete environment andor Business Ethics audit and this will depend on individual members and howthey define those terms This will incur an additional audit cost and so it is important that members are clear when the additions are necessary They cannot beconsidered as a substitute for full environmental and Business Ethics audits but this assessment process may assist members in deciding if a full audit forEnvironment and Business Ethics is required Suppliers should check with their customers whether they require this addition

Although the 2 modules together should take no more than 05 auditor days when added to a SMETA process which covers Labour Standards and Health andSafety in the case where one or both is requested separately it is likely to take a full auditor day

SMETA 4-Pillar Audit Guidance for Suppliers for Extended Environment and Business Ethics Assessments (Version 1 September 2012)

3

The AAG has produced supplements to assist the process as follows

l Guidance for Auditors which will inform the auditors of what checks they should be making

l Guidance for Suppliers (this document) which gives details to suppliers of what the auditor will be checking and how the supplier canprepare themselvesfor the assessment process

Note from the AAG We have found from experience that many sites demonstrate non compliances because they are not aware of the types of issues theaudit is covering We hope to minimise this effect by making these guidance documents available to suppliers prior to the assessments All the above canbe obtained from your ultimate customer who may be requesting these additional modules or your chosen auditor They will also be available on thelsquoMembers Resources Sectionrsquo of the Sedex website

METHODOLOGY The intention of the 2 new modules is to be an Assessment not an Audit process and the information will help the supply chain decide whether any furtheraction is required following this assessment

l They will not be mandatory but will be included with SMETA at the request of the customer andor supplier

l They are designed to take no more than 025 auditor days each and so are an assessment rather than a full auditNote where Environment andor Business Ethics are requested separately from a standard SMETA it is likely to require 1 full auditor day alternatively itmay be possible to limit to the agreed half a day if included in a follow up audit

l For environment they will concentrate on capturing whether or not the site is aware of and meeting all relevant local and national laws as well as whatcertifications andor management systems sites already have

l For Business Ethics the guidance details the assessment criteria but in all cases any information gathered will be recorded as lsquoobservationsrsquo not lsquononcompliancesrsquo and this will form the basis of on-going membership consultations to define appropriate standards over time Supply chains are encouragedto be open about local challenges and context in the area of Business Ethics

SMETA 4-Pillar Audit Guidance for Suppliers for Extended Environment and Business Ethics Assessments (Version 1 September 2012)

4

AUDIT EXECUTIONAuditors will

l Check the site performance against the previously completed Sedex SAQ

l Be aware of the environmental laws in the sitersquos areas of operation

l Assess whether the site is meeting legal and regulatory requirements

l Check whether the site is aware of its major environmental impacts andor Business Ethics risks

l Where possible establish any client requirementscodes for environment andor Business Ethics

l Check whether the site is aware of any client requirementscodes for environment andor Business Ethics

l Check whether the site has a system in place to monitor their performance against any legalcustomer requirements

l The auditor will use an assessment process as detailed

AUDIT CHECKS AND EVIDENCE GATHERING The auditor will assess documentary evidence by reviewing appropriate records or documents in conjunction with the management The auditor will checkdocumentary evidence by interviewing relevant personnel Choice of the relevant personnel is at the discretion of the auditorsupplier but as a minimum theauditor will cross check information by interview with the individual(s) identified by the site as responsible for environmental andor Business Ethicsperformance

Worker interview The auditor will seek to establish that policies and procedures are carried out in practice Critical points will include areas of legal compliancesuch as in the environment module contents of waste water discharge Interviews with workers responsible for checking these contents will be carried out asevidence of procedures correctly implemented

NB Selection of interviewees will depend on the topic For environment where a check is procedure related eg testing of waste water discharge the auditorwillinterview as a minimum the operator responsible for making checks

For Business Ethics discussions will focus on personnel where Business Ethics is most relevant eg sales service management logistics departments

Note it is important that these appropriate personnel are present on the day of audit

SMETA 4-Pillar Audit Guidance for Suppliers for Extended Environment and Business Ethics Assessments (Version 1 September 2012)

5

RECORDING FINDINGS Definitions of non-compliancesobservationsgood examples are as follows

For Environment non-compliances will be recorded

l Where a site fails to meet local and national regulatory requirements

For environment observations will be raised

l Where there are customer requirementscodes covering environment and a site is unaware of them

l Where there are customer requirementscodes covering environment and the site does not have a system in place to monitor their performance againstthese

l Where there are practices which fail to meet a good practice standard but which do not contravene laws or clients requirements

l Where a site is unaware of its major environmental impacts

For environment good examples will be raised

l Where a supplier is exhibiting exceptionally good performance in excess of requirements in these areas

Note where a supplier is monitoring environmental and Business Ethics standards of its own supplierssubcontractors this can be viewed as a goodexamplerdquo

This is in line with Global Social Compliance Programme (GSCP) Environmental Module Level 1 which proposes that ldquoa minimum requirement is to becompliant with applicable legal standardsrdquo see httpwwwgscpnetcom

GSCP is a business driven programme for companies who wish to harmonise their efforts to improve working conditions and environmental performance intheir supply chains For more information on GSCP see httpwwwciesnetcom2-wwedo22-programmes22gscpbackgroundasp

For Business Ethics only observations and good examples should be recorded

l All findings will be recorded as Observations or Good examples

l The group recommends that since laws on Business Ethics are less clear than those on environment all issues should be observations rather than noncompliances The data collected as observations will form the basis of an on-going consultation with the Sedex membership to agree standards over time

For more information on Business Ethics see httpwwwtransparencyorg

SMETA 4-Pillar Audit Guidance for Suppliers for Extended Environment and Business Ethics Assessments (Version 1 September 2012)

2

Guidance for Suppliers for Extended Environment and Business EthicsAssessments

INTRODUCTION Suppliers may be familiar with the Sedex Members Ethical Trade Audit (SMETA) process which has been used by Sedex members for measuring a supplierrsquosperformance in the area of Labour Standards and Health amp Safety

Reflecting the widening nature of Corporate Social Responsibility and following requests from Sedex members the scope of the SMETA protocol has beenincreased to include Environment and Business Ethics This can be found as the new SMETA Best Practice Guidance (BPG) audit report and CAPR version 4(May 2012) on the public section of the Sedex website these now cover the established pillars of labour standards and Health amp Safety (2-pillar) as well as theadditional modules of Environment and Business Ethics (4-pillar)

The additional modules of Environment and Business Ethics may not be required by all Sedex members and it is important that suppliers and customers areclear when these supplementary modules are required additions They have been designed so that customerssuppliers may choose whether to add one orboth and together they are designed to take a total of 05 auditor days when added to a SMETA procedure

Note These assessments may not meet the level of a complete environment andor Business Ethics audit and this will depend on individual members and howthey define those terms This will incur an additional audit cost and so it is important that members are clear when the additions are necessary They cannot beconsidered as a substitute for full environmental and Business Ethics audits but this assessment process may assist members in deciding if a full audit forEnvironment and Business Ethics is required Suppliers should check with their customers whether they require this addition

Although the 2 modules together should take no more than 05 auditor days when added to a SMETA process which covers Labour Standards and Health andSafety in the case where one or both is requested separately it is likely to take a full auditor day

SMETA 4-Pillar Audit Guidance for Suppliers for Extended Environment and Business Ethics Assessments (Version 1 September 2012)

3

The AAG has produced supplements to assist the process as follows

l Guidance for Auditors which will inform the auditors of what checks they should be making

l Guidance for Suppliers (this document) which gives details to suppliers of what the auditor will be checking and how the supplier canprepare themselvesfor the assessment process

Note from the AAG We have found from experience that many sites demonstrate non compliances because they are not aware of the types of issues theaudit is covering We hope to minimise this effect by making these guidance documents available to suppliers prior to the assessments All the above canbe obtained from your ultimate customer who may be requesting these additional modules or your chosen auditor They will also be available on thelsquoMembers Resources Sectionrsquo of the Sedex website

METHODOLOGY The intention of the 2 new modules is to be an Assessment not an Audit process and the information will help the supply chain decide whether any furtheraction is required following this assessment

l They will not be mandatory but will be included with SMETA at the request of the customer andor supplier

l They are designed to take no more than 025 auditor days each and so are an assessment rather than a full auditNote where Environment andor Business Ethics are requested separately from a standard SMETA it is likely to require 1 full auditor day alternatively itmay be possible to limit to the agreed half a day if included in a follow up audit

l For environment they will concentrate on capturing whether or not the site is aware of and meeting all relevant local and national laws as well as whatcertifications andor management systems sites already have

l For Business Ethics the guidance details the assessment criteria but in all cases any information gathered will be recorded as lsquoobservationsrsquo not lsquononcompliancesrsquo and this will form the basis of on-going membership consultations to define appropriate standards over time Supply chains are encouragedto be open about local challenges and context in the area of Business Ethics

SMETA 4-Pillar Audit Guidance for Suppliers for Extended Environment and Business Ethics Assessments (Version 1 September 2012)

4

AUDIT EXECUTIONAuditors will

l Check the site performance against the previously completed Sedex SAQ

l Be aware of the environmental laws in the sitersquos areas of operation

l Assess whether the site is meeting legal and regulatory requirements

l Check whether the site is aware of its major environmental impacts andor Business Ethics risks

l Where possible establish any client requirementscodes for environment andor Business Ethics

l Check whether the site is aware of any client requirementscodes for environment andor Business Ethics

l Check whether the site has a system in place to monitor their performance against any legalcustomer requirements

l The auditor will use an assessment process as detailed

AUDIT CHECKS AND EVIDENCE GATHERING The auditor will assess documentary evidence by reviewing appropriate records or documents in conjunction with the management The auditor will checkdocumentary evidence by interviewing relevant personnel Choice of the relevant personnel is at the discretion of the auditorsupplier but as a minimum theauditor will cross check information by interview with the individual(s) identified by the site as responsible for environmental andor Business Ethicsperformance

Worker interview The auditor will seek to establish that policies and procedures are carried out in practice Critical points will include areas of legal compliancesuch as in the environment module contents of waste water discharge Interviews with workers responsible for checking these contents will be carried out asevidence of procedures correctly implemented

NB Selection of interviewees will depend on the topic For environment where a check is procedure related eg testing of waste water discharge the auditorwillinterview as a minimum the operator responsible for making checks

For Business Ethics discussions will focus on personnel where Business Ethics is most relevant eg sales service management logistics departments

Note it is important that these appropriate personnel are present on the day of audit

SMETA 4-Pillar Audit Guidance for Suppliers for Extended Environment and Business Ethics Assessments (Version 1 September 2012)

5

RECORDING FINDINGS Definitions of non-compliancesobservationsgood examples are as follows

For Environment non-compliances will be recorded

l Where a site fails to meet local and national regulatory requirements

For environment observations will be raised

l Where there are customer requirementscodes covering environment and a site is unaware of them

l Where there are customer requirementscodes covering environment and the site does not have a system in place to monitor their performance againstthese

l Where there are practices which fail to meet a good practice standard but which do not contravene laws or clients requirements

l Where a site is unaware of its major environmental impacts

For environment good examples will be raised

l Where a supplier is exhibiting exceptionally good performance in excess of requirements in these areas

Note where a supplier is monitoring environmental and Business Ethics standards of its own supplierssubcontractors this can be viewed as a goodexamplerdquo

This is in line with Global Social Compliance Programme (GSCP) Environmental Module Level 1 which proposes that ldquoa minimum requirement is to becompliant with applicable legal standardsrdquo see httpwwwgscpnetcom

GSCP is a business driven programme for companies who wish to harmonise their efforts to improve working conditions and environmental performance intheir supply chains For more information on GSCP see httpwwwciesnetcom2-wwedo22-programmes22gscpbackgroundasp

For Business Ethics only observations and good examples should be recorded

l All findings will be recorded as Observations or Good examples

l The group recommends that since laws on Business Ethics are less clear than those on environment all issues should be observations rather than noncompliances The data collected as observations will form the basis of an on-going consultation with the Sedex membership to agree standards over time

For more information on Business Ethics see httpwwwtransparencyorg

SMETA 4-Pillar Audit Guidance for Suppliers for Extended Environment and Business Ethics Assessments (Version 1 September 2012)

3

The AAG has produced supplements to assist the process as follows

l Guidance for Auditors which will inform the auditors of what checks they should be making

l Guidance for Suppliers (this document) which gives details to suppliers of what the auditor will be checking and how the supplier canprepare themselvesfor the assessment process

Note from the AAG We have found from experience that many sites demonstrate non compliances because they are not aware of the types of issues theaudit is covering We hope to minimise this effect by making these guidance documents available to suppliers prior to the assessments All the above canbe obtained from your ultimate customer who may be requesting these additional modules or your chosen auditor They will also be available on thelsquoMembers Resources Sectionrsquo of the Sedex website

METHODOLOGY The intention of the 2 new modules is to be an Assessment not an Audit process and the information will help the supply chain decide whether any furtheraction is required following this assessment

l They will not be mandatory but will be included with SMETA at the request of the customer andor supplier

l They are designed to take no more than 025 auditor days each and so are an assessment rather than a full auditNote where Environment andor Business Ethics are requested separately from a standard SMETA it is likely to require 1 full auditor day alternatively itmay be possible to limit to the agreed half a day if included in a follow up audit

l For environment they will concentrate on capturing whether or not the site is aware of and meeting all relevant local and national laws as well as whatcertifications andor management systems sites already have

l For Business Ethics the guidance details the assessment criteria but in all cases any information gathered will be recorded as lsquoobservationsrsquo not lsquononcompliancesrsquo and this will form the basis of on-going membership consultations to define appropriate standards over time Supply chains are encouragedto be open about local challenges and context in the area of Business Ethics

SMETA 4-Pillar Audit Guidance for Suppliers for Extended Environment and Business Ethics Assessments (Version 1 September 2012)

4

AUDIT EXECUTIONAuditors will

l Check the site performance against the previously completed Sedex SAQ

l Be aware of the environmental laws in the sitersquos areas of operation

l Assess whether the site is meeting legal and regulatory requirements

l Check whether the site is aware of its major environmental impacts andor Business Ethics risks

l Where possible establish any client requirementscodes for environment andor Business Ethics

l Check whether the site is aware of any client requirementscodes for environment andor Business Ethics

l Check whether the site has a system in place to monitor their performance against any legalcustomer requirements

l The auditor will use an assessment process as detailed

AUDIT CHECKS AND EVIDENCE GATHERING The auditor will assess documentary evidence by reviewing appropriate records or documents in conjunction with the management The auditor will checkdocumentary evidence by interviewing relevant personnel Choice of the relevant personnel is at the discretion of the auditorsupplier but as a minimum theauditor will cross check information by interview with the individual(s) identified by the site as responsible for environmental andor Business Ethicsperformance

Worker interview The auditor will seek to establish that policies and procedures are carried out in practice Critical points will include areas of legal compliancesuch as in the environment module contents of waste water discharge Interviews with workers responsible for checking these contents will be carried out asevidence of procedures correctly implemented

NB Selection of interviewees will depend on the topic For environment where a check is procedure related eg testing of waste water discharge the auditorwillinterview as a minimum the operator responsible for making checks

For Business Ethics discussions will focus on personnel where Business Ethics is most relevant eg sales service management logistics departments

Note it is important that these appropriate personnel are present on the day of audit

SMETA 4-Pillar Audit Guidance for Suppliers for Extended Environment and Business Ethics Assessments (Version 1 September 2012)

5

RECORDING FINDINGS Definitions of non-compliancesobservationsgood examples are as follows

For Environment non-compliances will be recorded

l Where a site fails to meet local and national regulatory requirements

For environment observations will be raised

l Where there are customer requirementscodes covering environment and a site is unaware of them

l Where there are customer requirementscodes covering environment and the site does not have a system in place to monitor their performance againstthese

l Where there are practices which fail to meet a good practice standard but which do not contravene laws or clients requirements

l Where a site is unaware of its major environmental impacts

For environment good examples will be raised

l Where a supplier is exhibiting exceptionally good performance in excess of requirements in these areas

Note where a supplier is monitoring environmental and Business Ethics standards of its own supplierssubcontractors this can be viewed as a goodexamplerdquo

This is in line with Global Social Compliance Programme (GSCP) Environmental Module Level 1 which proposes that ldquoa minimum requirement is to becompliant with applicable legal standardsrdquo see httpwwwgscpnetcom

GSCP is a business driven programme for companies who wish to harmonise their efforts to improve working conditions and environmental performance intheir supply chains For more information on GSCP see httpwwwciesnetcom2-wwedo22-programmes22gscpbackgroundasp

For Business Ethics only observations and good examples should be recorded

l All findings will be recorded as Observations or Good examples

l The group recommends that since laws on Business Ethics are less clear than those on environment all issues should be observations rather than noncompliances The data collected as observations will form the basis of an on-going consultation with the Sedex membership to agree standards over time

For more information on Business Ethics see httpwwwtransparencyorg

SMETA 4-Pillar Audit Guidance for Suppliers for Extended Environment and Business Ethics Assessments (Version 1 September 2012)

4

AUDIT EXECUTIONAuditors will

l Check the site performance against the previously completed Sedex SAQ

l Be aware of the environmental laws in the sitersquos areas of operation

l Assess whether the site is meeting legal and regulatory requirements

l Check whether the site is aware of its major environmental impacts andor Business Ethics risks

l Where possible establish any client requirementscodes for environment andor Business Ethics

l Check whether the site is aware of any client requirementscodes for environment andor Business Ethics

l Check whether the site has a system in place to monitor their performance against any legalcustomer requirements

l The auditor will use an assessment process as detailed

AUDIT CHECKS AND EVIDENCE GATHERING The auditor will assess documentary evidence by reviewing appropriate records or documents in conjunction with the management The auditor will checkdocumentary evidence by interviewing relevant personnel Choice of the relevant personnel is at the discretion of the auditorsupplier but as a minimum theauditor will cross check information by interview with the individual(s) identified by the site as responsible for environmental andor Business Ethicsperformance

Worker interview The auditor will seek to establish that policies and procedures are carried out in practice Critical points will include areas of legal compliancesuch as in the environment module contents of waste water discharge Interviews with workers responsible for checking these contents will be carried out asevidence of procedures correctly implemented

NB Selection of interviewees will depend on the topic For environment where a check is procedure related eg testing of waste water discharge the auditorwillinterview as a minimum the operator responsible for making checks

For Business Ethics discussions will focus on personnel where Business Ethics is most relevant eg sales service management logistics departments

Note it is important that these appropriate personnel are present on the day of audit

SMETA 4-Pillar Audit Guidance for Suppliers for Extended Environment and Business Ethics Assessments (Version 1 September 2012)

5

RECORDING FINDINGS Definitions of non-compliancesobservationsgood examples are as follows

For Environment non-compliances will be recorded

l Where a site fails to meet local and national regulatory requirements

For environment observations will be raised

l Where there are customer requirementscodes covering environment and a site is unaware of them

l Where there are customer requirementscodes covering environment and the site does not have a system in place to monitor their performance againstthese

l Where there are practices which fail to meet a good practice standard but which do not contravene laws or clients requirements

l Where a site is unaware of its major environmental impacts

For environment good examples will be raised

l Where a supplier is exhibiting exceptionally good performance in excess of requirements in these areas

Note where a supplier is monitoring environmental and Business Ethics standards of its own supplierssubcontractors this can be viewed as a goodexamplerdquo

This is in line with Global Social Compliance Programme (GSCP) Environmental Module Level 1 which proposes that ldquoa minimum requirement is to becompliant with applicable legal standardsrdquo see httpwwwgscpnetcom

GSCP is a business driven programme for companies who wish to harmonise their efforts to improve working conditions and environmental performance intheir supply chains For more information on GSCP see httpwwwciesnetcom2-wwedo22-programmes22gscpbackgroundasp

For Business Ethics only observations and good examples should be recorded

l All findings will be recorded as Observations or Good examples

l The group recommends that since laws on Business Ethics are less clear than those on environment all issues should be observations rather than noncompliances The data collected as observations will form the basis of an on-going consultation with the Sedex membership to agree standards over time

For more information on Business Ethics see httpwwwtransparencyorg

SMETA 4-Pillar Audit Guidance for Suppliers for Extended Environment and Business Ethics Assessments (Version 1 September 2012)

5

RECORDING FINDINGS Definitions of non-compliancesobservationsgood examples are as follows

For Environment non-compliances will be recorded

l Where a site fails to meet local and national regulatory requirements

For environment observations will be raised

l Where there are customer requirementscodes covering environment and a site is unaware of them

l Where there are customer requirementscodes covering environment and the site does not have a system in place to monitor their performance againstthese

l Where there are practices which fail to meet a good practice standard but which do not contravene laws or clients requirements

l Where a site is unaware of its major environmental impacts

For environment good examples will be raised

l Where a supplier is exhibiting exceptionally good performance in excess of requirements in these areas

Note where a supplier is monitoring environmental and Business Ethics standards of its own supplierssubcontractors this can be viewed as a goodexamplerdquo

This is in line with Global Social Compliance Programme (GSCP) Environmental Module Level 1 which proposes that ldquoa minimum requirement is to becompliant with applicable legal standardsrdquo see httpwwwgscpnetcom

GSCP is a business driven programme for companies who wish to harmonise their efforts to improve working conditions and environmental performance intheir supply chains For more information on GSCP see httpwwwciesnetcom2-wwedo22-programmes22gscpbackgroundasp

For Business Ethics only observations and good examples should be recorded

l All findings will be recorded as Observations or Good examples

l The group recommends that since laws on Business Ethics are less clear than those on environment all issues should be observations rather than noncompliances The data collected as observations will form the basis of an on-going consultation with the Sedex membership to agree standards over time

For more information on Business Ethics see httpwwwtransparencyorg

SMETA 4-Pillar Audit Guidance for Suppliers for Extended Environment and Business Ethics Assessments (Version 1 September 2012)

6

REPORTINGAuditors will record findings on Environment and Business Ethics on an extended audit report using the 4 pillar audit report and CAPR version 4 (May 2012)

Sedex issue titles exist on the Sedex system for environmental and business practice issues to allow the upload of audit information

CHECKLIST FOR SUPPLIERS We have laid out this section as follows

In column 1 the topic and explanation

In column 2 the typical questions the auditors will be asking

In column 3 the measures you should have in place to be able to respond to those questions

In column 4 any extra guidance websites where you can find further information

10B4 Covers Guidance for Suppliers for Environmental Assessments

10C Covers Guidance for Suppliers for Business Ethics Assessments

Please note in many cases the measures listed in column 3 may be best practice level The auditor will be registering non-compliance only where a site isnot meeting the law Any other questions are used for measurement purposes only so Sedex members can understand where a supplier is on his continuousimprovement and these findings will be recorded as observations

SMETA 4-Pillar Audit Guidance for Suppliers for Extended Environment and Business Ethics Assessments (Version 1 September 2012)

SMETA 4-Pillar Audit Guidance for Suppliers for Extended Environment and Business Ethics Assessments (Version 1 September 2012)

7

0 ENVIRONMENTAL MANAGEMENT SYSTEM (EMS)

Topic and explanation Typical questions from auditors What you should doFurther information

websites etc

l It enables a site toidentify monitor andcontrol its impact onthe environment

l It should includeresponsibilitiesprocedures andpractices forimplementing theenvironmental policy

l An EMS may becompliant with aninternationalrecognised standardsuch as ISO14001 orBS8555

l Is the Sedex SAQ completed and available for pre ndash review l Are you aware of any local and national regulations and anyclient requirements covering environmental performance

l Do you have procedures in place to ensure you meet theseregulationsstandards

l Do you have an environmental policy Is any policycommunicated to relevant parties eg employees suppliersagents

l Is certificate available eg ISO14001BS8555l Are you aware of your major environmental impacts (eg Inan area of water shortage your water usage would be a majorimpact)

l Do you have relevant legal permits for each of yourenvironmental impacts

l Is there a periodic review of environmental performance andtargets set for improvement

l Has responsibility for environmental performance beenassigned to an individual(s)

l Do you review the environmental performance of yoursuppliers

l Are you aware of any customer requirement with reference tochemicals used in the manufacture of their products and areyou meeting these

l Do you have inspections for environmental issues from localgovernmentothers Have you had any complaintsprosecutions or recommendations and have you acted onthem

l Complete the SAQ for your site and make itavailable to the auditor for pre review

l Have copies of all local and national regulationsand client requirements covering environment

l Ensure all procedures are documented andsufficient to ensure you meet the legalrequirements including permits (FAILURE TOACHIEVE LEGAL OBLIGATIONS IS LIKELY TORESULT IN THE AUDITOR RECORDING A NONCOMPLIANCE)

l Where there are client requirements ensure thatyou have a system to measure your performanceagainst those requirements

l If you do not have an environmental policyconsider creating one

l Communicate your policy to all relevant parties l Make any certificates available for assessmenteg ISO 14001

l Prior to the assessment list all environmentalimpacts for your site and prioritise them for action

l Consider ways of reducing your impacts andtogether with the individual(s) responsible forperformance produce action plans with targets

l Keep any local inspection documents and ensureyou react to any prosecutions complaints orrecommendations

Information sources onEMS

China StateEnvironmental ProtectionAdministrationhttpwwwsepagovcn

Environment Canadahttpwwwmbecgccaindexenhtml

10B4 Guidance for Suppliers for Environmental Assessments (see BPG pg 75)

SMETA 4-Pillar Audit Guidance for Suppliers for Extended Environment and Business Ethics Assessments (Version 1 September 2012)

7

0 ENVIRONMENTAL MANAGEMENT SYSTEM (EMS)

Topic and explanation Typical questions from auditors What you should doFurther information

websites etc

l It enables a site toidentify monitor andcontrol its impact onthe environment

l It should includeresponsibilitiesprocedures andpractices forimplementing theenvironmental policy

l An EMS may becompliant with aninternationalrecognised standardsuch as ISO14001 orBS8555

l Is the Sedex SAQ completed and available for pre ndash review l Are you aware of any local and national regulations and anyclient requirements covering environmental performance

l Do you have procedures in place to ensure you meet theseregulationsstandards

l Do you have an environmental policy Is any policycommunicated to relevant parties eg employees suppliersagents

l Is certificate available eg ISO14001BS8555l Are you aware of your major environmental impacts (eg Inan area of water shortage your water usage would be a majorimpact)

l Do you have relevant legal permits for each of yourenvironmental impacts

l Is there a periodic review of environmental performance andtargets set for improvement

l Has responsibility for environmental performance beenassigned to an individual(s)

l Do you review the environmental performance of yoursuppliers

l Are you aware of any customer requirement with reference tochemicals used in the manufacture of their products and areyou meeting these

l Do you have inspections for environmental issues from localgovernmentothers Have you had any complaintsprosecutions or recommendations and have you acted onthem

l Complete the SAQ for your site and make itavailable to the auditor for pre review

l Have copies of all local and national regulationsand client requirements covering environment

l Ensure all procedures are documented andsufficient to ensure you meet the legalrequirements including permits (FAILURE TOACHIEVE LEGAL OBLIGATIONS IS LIKELY TORESULT IN THE AUDITOR RECORDING A NONCOMPLIANCE)

l Where there are client requirements ensure thatyou have a system to measure your performanceagainst those requirements

l If you do not have an environmental policyconsider creating one

l Communicate your policy to all relevant parties l Make any certificates available for assessmenteg ISO 14001

l Prior to the assessment list all environmentalimpacts for your site and prioritise them for action

l Consider ways of reducing your impacts andtogether with the individual(s) responsible forperformance produce action plans with targets

l Keep any local inspection documents and ensureyou react to any prosecutions complaints orrecommendations

Information sources onEMS

China StateEnvironmental ProtectionAdministrationhttpwwwsepagovcn

Environment Canadahttpwwwmbecgccaindexenhtml

10B4 Guidance for Suppliers for Environmental Assessments (see BPG pg 75)

SMETA 4-Pillar Audit Guidance for Suppliers for Extended Environment and Business Ethics Assessments (Version 1 September 2012)

8

1 ENERGY USAGE

Topic and explanation Typical questions from auditors What you should doFurther information

websites etc

Reducing energy usagecan have a number ofbenefitsl Reduction in costsl Improvement inenvironmentalperformance

l Improved local airquality

l Reduction in greenhouse gas emissionsand a reduction in thecontribution to climatechange

l Are you aware of any local and national regulations and anyclient requirements covering energy usage performance

l Do you have procedures in place to ensure you meet theseregulationsstandards

l Do you require permits for specific energies used and do youhave them

l Do you measure your energy usage including the use ofelectricity andor gas meters and the quantity of fuel used foreg on site transport and machinery

l Is your energy usage recorded against the quantity of goodsand services you produce eg KwH per measure of finishedgoods produced

l Are you taking steps to reduce your energy usage as aproportion of the goods produced by eg Turning off machineswhen not in use Training workers in the need to switch offmachines when not in use heat recovery systems

l Are you using any renewable energy eg Solar wind turbinesetc

l Are you keeping any local inspection documents and ensuringyou react to any prosecutions complaints orrecommendations

l Have copies of all local and national regulationsand client requirements covering energy usage

l Ensure all procedures are documented andsufficient to ensure you meet the legalrequirements (FAILURE TO ACHIEVE LEGALOBLIGATIONS IS LIKELY TO RESULT IN THEAUDITOR RECORDING A NON COMPLIANCE

l Where there are client requirements ensure thatyou have a system in place to measure yourperformance against those requirements

l Where permits for energy use are required ensurethese are available and up to date

l Keep records of your energy usageweekmonthand document against your output

l Map your energy use over time as a proportion ofoutput and have targets for reduction

l Investigate opportunities for renewable energysuch as solar wind turbines geothermals andenergy from biomass eg Wood animal manurecrop residues and waste

l Keep any local inspection documents and ensureyou react to any prosecutions complaints orrecommendations

Information on how toimprove energy efficiencycan be found

UK Carbon Trusthttpwwwcarbontrustcouk

United Nations EnergySite httpesaunorgun-energy

International EnergyAgency httpwwwieaorg

SPECIFIC TOPICS FOR ENVIRONMENTAL ASSESSMENT INCLUDE (BUT MAY NOT BE LIMITED TO)Energy usage bull Water usage bull Water discharge bull Waste bull Emissions to air

GUIDANCE ON EACH OF THESE IS LISTED BELOWPlease note not all may be important for your site It is up to the auditor and the supplier to decide the significant topics for this assessment

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2 WATER USAGE

Topic and explanation Typical questions from auditors What you should doFurther information

websites etc

Water used bycompanies can comefrom several sourcesl Purified drinkingwater

l Municipal mainsl Abstracted groundwater (wells)

l Surface water(rivers)

l Collected rainwater l Recycled grey water

There are a number ofcosts associated withwater usel Costs to abstractl Treatment costs egStoring purifying anddisposal costs

l Costs from disruptionto supply

l Reducing waterusage cansignificantly reducecosts

l Is the site in an area of water shortage l Are you aware of any local or national regulations and clientrequirements governing water usage

l Do you have procedures in place for meeting theseregulationsstandards

l Do you know your water sources l Do you have any necessary permits covering waterusageextraction

l Do you measure your water usage by eg Meterl Is your water usage recorded against the quantity of goodsyou produce

l Do you have the appropriate facilities for treating incomingwater where necessary

l Are you reducing water usage by (eg) l Mending leaks l Turning off water using machines and equipment when

not needed l Training workers in the need to conserve water l Use of non-return valves

l Have copies of all local and national regulationsand client requirements covering water usage

l Ensure all procedures are documented andsufficient to ensure you meet the legalrequirements (FAILURE TO ACHIEVE LEGALOBLIGATIONS IS LIKELY TO RESULT IN THEAUDITOR RECORDING A NON COMPLIANCE

l Where there are client requirements ensure thatyou have a system in place to measure yourperformance against those requirements

l Where permits for water usage are requiredensure these are available and up to date

l Keep records of your water usageweekmonthand document against your output

l Map your water use over time as a proportion ofoutput and have targets for reduction

l Investigate opportunities for re- cycling water suchas grey water being used for other operations

l Keep any local inspection documents and ensureyou react to any prosecutionscomplaints orrecommendations

Information onmechanisms andprocesses to improvewater efficiency

Australian Department ofthe Environment WaterHeritage and the Artshttpwwwenvironmentgovau

Sign up to a Save WaterMandatehttpwwwunglobalcompactorg

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3 WATER DISCHARGE

Topic and explanation Typical questions from auditors What you should doFurther information

websites etc

Waste water can be asignificant cause of pollutionand in most countries thereare laws governing thedischarge of waste waterincluding permits

At any site waste water canbe in several formsl Process effluent as aresult of commercialprocesses

l Cooling waste water ornon contact waste watereg Chillers

l Blow down (from boilers)l Storm water runoff (roofetc)

l Fire water l Domesticsanitary wastewater (toiletssinks)

Laws usually stateVolume and flow ratesuspended solids biologicaloxygen demand (BOD)chemical oxygendemand(COD) toxicity (egChemicals) heavy metalcontent pH colourtemperature foam oil

l Are you aware of all local and national regulations andclient requirements covering water discharge

l Do you have procedures in place to ensure you meetthese standards eg Testing procedures to check thequality of the waste water

l Do you have any necessary permits for water discharge l Do you keep records of your water discharged both inquantity and quality

l Are the operators testing for quality of water dischargeaware of what action to take if the results are over anyrequired limits

l Have you identified all sources of waste output and areyou managing associated risks eg waste waterdischarge to drains soak aways and possible spillages

l Where your water discharge (effluent) is handled byothers have you checked their license and credentials forcorrect handling of waste water

l Are there any local inspections by government or similarand have you kept records of these and are taking actionon their findings

l Have copies of all local and national regulationsand client requirements covering water discharge

l Ensure all procedures are documented andsufficient to ensure you meet the legalrequirements (FAILURE TO ACHIEVE LEGALOBLIGATIONS IS LIKELY TO RESULT IN THEAUDITOR RECORDING A NON COMPLIANCE

l Where there are client requirements ensure thatyou have a system in place to measure yourperformance against those requirements

l Where permits for water discharge are requiredensure these are available and up to date

l Keep records of your water discharged both inquantity and quality

l Ensure that water discharged meets the legalrequirements with reference to its contents andquality by sufficient testing

l Track your water disposal routes and ensure thatwhere necessary different types of waterdischarges are separated

l Ensure that the operators carrying out the watertesting know what action to take if the tests gooutside of the legal and regulatory limits

l Keep any local inspection documents and ensureyou react to any prosecutions complaints orrecommendations

Information for improvingthe quality of waste water

Uk EnvirowiseProgrammehttpwwwwraporguk

Water EnvironmentFederationhttpwwwweforghome

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4 WASTE

Topic and explanation Typical questions from auditors What you should doFurther information

websites etc

Everyone produceswaste Industry andcommerce producesbillions of tonnes ofwaste each year and thevalue is growing byapprox 3 per year

Waste costs moneydiscarded materials wereoriginally bought at acost

The cost and reducingavailability of landfill willrequire companies tosignificantly reduce theirwaste

l Are you aware of all local and national regulations and clientrequirements covering waste

l Do you have procedures in place to ensure you meet thesestandards

l Are you aware of any hazardous waste you producel Do your disposal methods for hazardous waste meet legaland client requirements

l Do you have any necessary permits for disposal of all thetypes of waste you produce

l Do you keep records of the volumes and types of waste youproduce and is there an action plan to reduce it

l Do you re-use and recycle waste and only dispose of it as alast resort

l Where contractors handle waste have you checked theirlicences and credentials for appropriate legal disposal

l Are there any local inspections by government or similar andhave you kept records of these and are taking action on theirfindings

l Have copies of all local and national regulationsand client requirements covering waste disposal

l Ensure all procedures are documented andsufficient to ensure you meet the legalrequirements (FAILURE TO ACHIEVE LEGALOBLIGATIONS IS LIKELY TO RESULT IN THEAUDITOR RECORDING A NON COMPLIANCE

l Where there are client requirements ensure thatyou have a system in place to measure yourperformance against those requirements

l Where permits for waste disposal are requiredensure these are available and up to date

l Keep records of your waste disposed of both inquantity and type and have an action plan toreduce waste by re-use re- cycle and onlydispose of as a last resort

l Track your waste disposal routes and ensure thateach one meets legal requirements

l Ensure that you have checked any contractorsprocessing your waste for legality and licenses

l Keep any local inspection documents and ensureyou react to any prosecutions complaints orrecommendations

China EnvironmentalProtection Foundation httpwwwcepforgcnenindexhtm

UK Envirowiseprogrammehttpwwwenvirowisegovuk

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5 EMISSIONS TO AIR

Topic and explanation Typical questions from auditors What you should doFurther information

websites etc

The issue of globalwarming has become animportant issue forbusinesses

There is a worldwidepressure to reduce theemissions of greenhousegases to limit as far as ispossible the issue ofglobal warming

Some emissionsresulting from a sitesprocesses have limitsimposed by law in orderto protect the air qualityand the health of thelocal environment

l Are you aware of all local and national regulations and clientrequirements covering air emissions

l Do you have procedures in place to ensure you meet thesestandards

l Do you have any necessary permits for emissions to air l Do you keep records of the volumes and types air emissionsyou produce and is there an action plan to reduce it

l Do you carry out regular testing of emissions where it is alegal or client requirement

l Do you have a cleaningmaintenance programme for criticalcontrol equipment

l Are there any local inspections by government or similar andhave you kept records of these and are taking action on theirfindings

l Have copies of all local and national regulationsand client requirements covering air emissions

l Ensure all procedures are documented andsufficient to ensure you meet the legalrequirements (FAILURE TO ACHIEVE LEGALOBLIGATIONS IS LIKELY TO RESULT IN THEAUDITOR RECORDING A NON COMPLIANCE

l Where there are client requirements ensure thatyou have a system in place to measure yourperformance against those requirements

l Where permits for air emissions are requiredensure these are available and up to date

l Keep records of your air emissions both inquantity and type and have an action plan toreduce

l Keep any local inspection documents and ensureyou react to any prosecutions complaints orrecommendations

US EnvironmentalProtection Agencyhttpwwwepagov

The above is a guide only and it can be used for all environmental topics judged to be significant by the site and the auditor

The above are the most common environmental impacts they may not all be significant for your site

The likely environmental impacts include but are not limited to energy usage water usage water discharge waste and emissions to air

The auditor will record each of the above measureables for this year and last year in the environmental analysis section of the SMETA report

Notes To encourage convergence the above information uses available best practice from a number of sources these include

l Global Social Compliance Programme (GSCP) Environmental Reference Tools Please see httpwwwgscpnetcomworking-planenvironmental-modulehtml and UK Envirowise Programe httpwwwenvirowisegovuk

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0 MANAGEMENT SYSTEM

Topic and explanation Typical questions from auditors What you should doFurther information

websites etc

A management systemenables a site tol Monitor and controlits business ethicsissues

l It should includeresponsibilitiesprocedures andpractices forimplementing anybusiness ethicspolicy

A management systemneedsl A policy (statement ofintent)

l Documentedprocedures

l Practicesl A review process totest the system

l Is the Sedex SAQ completed and available for pre ndash review l Are you aware of any local and national regulations and anyclient requirements covering Business Ethics performance

l Do you have procedures in place to ensure you meet theseregulationsstandards

l Do you have all necessary licenses and permits in place to forcorrect legal practice of your business

l Do you (or your clients) have a Business Ethics policy if sowhat topics are covered

l Has any policy been communicated to the relevant partiessuch as employees suppliers agents

l Have you signed up to any global standards for businessethics

l Has responsibility for Business Ethics performance beenassigned to an individual(s)

l Are you aware of your major Business Ethics risks l Is there a mechanism for reporting Business Ethics concernsand does it include no reprisals for reporters

l Complete the SAQ for your site and make itavailable to the auditor for pre review

l Have copies of all local and national regulationsand client requirements covering Business Ethicsissues

l Ensure all procedures are documented andsufficient to ensure you meet the legalrequirements

l Where there are client requirements ensure thatyou have a system in place to measure yourperformance against those requirements

l If you do not have a Business Ethics policyconsider creating one

l Ensure that policies are communicated to relevantparties

l Have available any documentary evidence of signup to any initiatives on business ethics standards

l Prior to the assessment list all Business Ethicsrisks for your site and prioritise them for action

For a complete discussionof why it is important toconduct businessethically see CleanBusiness is GoodBusiness

10c Guidance for Suppliers for Business Ethics Assessments (see BPG)Note It is expected that the company employing the auditor(s) will have its own code of conduct and integrity policy which will include the prohibition ofaccepting or soliciting bribes The policy will be discussed with each site prior to and at assessment to inform the site of the ethical business standards of theaudit company

At this time the AAG recommends that any issues found in Business Ethics are recorded as ldquoObservationsrdquo Standards are difficult to define at this momentand may only become clear over time

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Business Ethics policies can cover forexample (but not limitedto)l Briberyl Facilitation paymentsl Conflict of interestsl Charitable andpolitical donations

l Intellectual propertyrights

l Is there a clearly communicated procedure in place for dealingwith Business Ethics issues including disciplinary actionagainst perpetrators

l Are there any local inspections by government or similar andare the findings actioned

l Ensure that any of your (andor your clients)Business Ethics policies are clearlycommunicated to the appropriate parties such asemployees customers agents suppliers

l Ensure that appropriate employees know how toreport concerns through eg poster or websiteinformation

l Keep any local inspection documents and ensureyou react to any prosecutions complaints orrecommendations

THE AUDIITOR WILL ASSESS SPECIFIC TOPICS FOR BUSINESS ETHICS THESE CAN INCLUDE(BUT MAY NOT BE LIMITED TO)Bribery is defined as The giving of money gifts or other advantage as a deliberate inducement to do something that is dishonest illegal or a breach of trustin the course of business Conflict of interests is defined as when a personal interest or relationship is put before the interests of the business Charitable contributions is defined as giving which might influence a business deal Facilitation payments defined as eg payment made to speed up a service which is a legal entitlement such as customs clearance Political contributions (must be made with the agreement of the business) Reporting procedures (for Business Ethics issues) Disciplinary procedures (for dealing with Business Ethics issues) Non-retaliation for raising compliance issues in good faith

Please note not all may be important for your site It is up to the auditor and the supplier to decide which are the significant topics for this Business EthicsassessmentTo assist suppliers to prepare for this assessment we have detailed 3 topics461 BRIBERY AND CORRUPT BUSINESS PRACTICE462 CONFLICT OF INTERESTS463 REPORTING AND INTERNAL CONTROLSMONITORING

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1 BRIBERYCORRUPT BUSINESS PRACTICEDefinition (from httpwwwtranspencyorg International Business Principles for Countering Bribery SME edition)Bribery is the giving or receiving money a gift or other advantage or inducement to do something that is dishonest illegal of a breach of trust in the course of business

Topic and explanation Typical questions from auditors What you should doFurther information

websites etc

There are a number ofglobal initiatives workingto eliminate briberyl The United NationsConvention againstCorruption UNAC

l The Organisation forEconomicCooperation andDevelopment (OECD)has a anti-briberyconvention which isnow in the laws of 37countries

For businesses in thedeveloped world anti-bribery policies andpractices are importantwithin their suppliers asthey have disclosurerequirements whichextend to their supplychains

l Are you aware of any local and national regulations and anyclient requirements covering bribery

l Do you have procedures in place to measure yourperformance against any regulationsstandards

l Do you (or your clients) have a bribery policy if so what topicsare covered

l Has any bribery policy of you or your clients been clearlycommunicated to the appropriate parties eg Supplierscustomers employees agents etc

l Is there a mechanism for reporting bribery concerns withoutfear of reprisal to the reporter

l Is there a clearly communicated procedure in place for dealingwith bribery issues including disciplinary action againstperpetrators

l Are there any local inspections by government or similar andare the findings actioned

l Have copies of all local and national regulationsand client requirements covering bribery issues

l Ensure any procedures are documented andsufficient to measure your performance

l Where there are client requirements ensure thatyou have a system in place to measure yourperformance against those requirements

l If bribery is not covered in any a Business Ethicspolicy you should include it

l Have available any documentary evidence of signup to any anti bribery initiatives

l Ensure that any of your (andor your clients)bribery policies are clearly communicated to theappropriate parties such as employeescustomers agents suppliers

l Ensure that appropriate employees are informedon how to deal with any bribery issues theyencounter in their work

l Keep any local inspection documents and ensureyou react to any prosecutions complaints orrecommendations

For a list of countries thathave signed or ratified theUnited NationsConvention AgainstCorruption seehttpunodcorgunodcentreatiesCACsignatorieshtml

For information onfacilitation payments httpwwwethicalcorpcomcontentNote In Oct 2011 UK governmentpublished The UKBribery act (link) anyCompany related to theUK has a legalobligation to minimisebribery and corruptionnot only in their owncompnay but also in theirsupply chains

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Business Ethics policies can cover forexample (but not limitedto)l Briberyl Facilitation paymentsl Conflict of interestsl Charitable andpolitical donations

l Intellectual propertyrights

l Is there a clearly communicated procedure in place for dealingwith Business Ethics issues including disciplinary actionagainst perpetrators

l Are there any local inspections by government or similar andare the findings actioned

l Ensure that any of your (andor your clients)Business Ethics policies are clearlycommunicated to the appropriate parties such asemployees customers agents suppliers

l Ensure that appropriate employees know how toreport concerns through eg poster or websiteinformation

l Keep any local inspection documents and ensureyou react to any prosecutions complaints orrecommendations

THE AUDIITOR WILL ASSESS SPECIFIC TOPICS FOR BUSINESS ETHICS THESE CAN INCLUDE(BUT MAY NOT BE LIMITED TO)Bribery is defined as The giving of money gifts or other advantage as a deliberate inducement to do something that is dishonest illegal or a breach of trustin the course of business Conflict of interests is defined as when a personal interest or relationship is put before the interests of the business Charitable contributions is defined as giving which might influence a business deal Facilitation payments defined as eg payment made to speed up a service which is a legal entitlement such as customs clearance Political contributions (must be made with the agreement of the business) Reporting procedures (for Business Ethics issues) Disciplinary procedures (for dealing with Business Ethics issues) Non-retaliation for raising compliance issues in good faith

Please note not all may be important for your site It is up to the auditor and the supplier to decide which are the significant topics for this Business EthicsassessmentTo assist suppliers to prepare for this assessment we have detailed 3 topics461 BRIBERY AND CORRUPT BUSINESS PRACTICE462 CONFLICT OF INTERESTS463 REPORTING AND INTERNAL CONTROLSMONITORING

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1 BRIBERYCORRUPT BUSINESS PRACTICEDefinition (from httpwwwtranspencyorg International Business Principles for Countering Bribery SME edition)Bribery is the giving or receiving money a gift or other advantage or inducement to do something that is dishonest illegal of a breach of trust in the course of business

Topic and explanation Typical questions from auditors What you should doFurther information

websites etc

There are a number ofglobal initiatives workingto eliminate briberyl The United NationsConvention againstCorruption UNAC

l The Organisation forEconomicCooperation andDevelopment (OECD)has a anti-briberyconvention which isnow in the laws of 37countries

For businesses in thedeveloped world anti-bribery policies andpractices are importantwithin their suppliers asthey have disclosurerequirements whichextend to their supplychains

l Are you aware of any local and national regulations and anyclient requirements covering bribery

l Do you have procedures in place to measure yourperformance against any regulationsstandards

l Do you (or your clients) have a bribery policy if so what topicsare covered

l Has any bribery policy of you or your clients been clearlycommunicated to the appropriate parties eg Supplierscustomers employees agents etc

l Is there a mechanism for reporting bribery concerns withoutfear of reprisal to the reporter

l Is there a clearly communicated procedure in place for dealingwith bribery issues including disciplinary action againstperpetrators

l Are there any local inspections by government or similar andare the findings actioned

l Have copies of all local and national regulationsand client requirements covering bribery issues

l Ensure any procedures are documented andsufficient to measure your performance

l Where there are client requirements ensure thatyou have a system in place to measure yourperformance against those requirements

l If bribery is not covered in any a Business Ethicspolicy you should include it

l Have available any documentary evidence of signup to any anti bribery initiatives

l Ensure that any of your (andor your clients)bribery policies are clearly communicated to theappropriate parties such as employeescustomers agents suppliers

l Ensure that appropriate employees are informedon how to deal with any bribery issues theyencounter in their work

l Keep any local inspection documents and ensureyou react to any prosecutions complaints orrecommendations

For a list of countries thathave signed or ratified theUnited NationsConvention AgainstCorruption seehttpunodcorgunodcentreatiesCACsignatorieshtml

For information onfacilitation payments httpwwwethicalcorpcomcontentNote In Oct 2011 UK governmentpublished The UKBribery act (link) anyCompany related to theUK has a legalobligation to minimisebribery and corruptionnot only in their owncompnay but also in theirsupply chains

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1 BRIBERYCORRUPT BUSINESS PRACTICEDefinition (from httpwwwtranspencyorg International Business Principles for Countering Bribery SME edition)Bribery is the giving or receiving money a gift or other advantage or inducement to do something that is dishonest illegal of a breach of trust in the course of business

Topic and explanation Typical questions from auditors What you should doFurther information

websites etc

There are a number ofglobal initiatives workingto eliminate briberyl The United NationsConvention againstCorruption UNAC

l The Organisation forEconomicCooperation andDevelopment (OECD)has a anti-briberyconvention which isnow in the laws of 37countries

For businesses in thedeveloped world anti-bribery policies andpractices are importantwithin their suppliers asthey have disclosurerequirements whichextend to their supplychains

l Are you aware of any local and national regulations and anyclient requirements covering bribery

l Do you have procedures in place to measure yourperformance against any regulationsstandards

l Do you (or your clients) have a bribery policy if so what topicsare covered

l Has any bribery policy of you or your clients been clearlycommunicated to the appropriate parties eg Supplierscustomers employees agents etc

l Is there a mechanism for reporting bribery concerns withoutfear of reprisal to the reporter

l Is there a clearly communicated procedure in place for dealingwith bribery issues including disciplinary action againstperpetrators

l Are there any local inspections by government or similar andare the findings actioned

l Have copies of all local and national regulationsand client requirements covering bribery issues

l Ensure any procedures are documented andsufficient to measure your performance

l Where there are client requirements ensure thatyou have a system in place to measure yourperformance against those requirements

l If bribery is not covered in any a Business Ethicspolicy you should include it

l Have available any documentary evidence of signup to any anti bribery initiatives

l Ensure that any of your (andor your clients)bribery policies are clearly communicated to theappropriate parties such as employeescustomers agents suppliers

l Ensure that appropriate employees are informedon how to deal with any bribery issues theyencounter in their work

l Keep any local inspection documents and ensureyou react to any prosecutions complaints orrecommendations

For a list of countries thathave signed or ratified theUnited NationsConvention AgainstCorruption seehttpunodcorgunodcentreatiesCACsignatorieshtml

For information onfacilitation payments httpwwwethicalcorpcomcontentNote In Oct 2011 UK governmentpublished The UKBribery act (link) anyCompany related to theUK has a legalobligation to minimisebribery and corruptionnot only in their owncompnay but also in theirsupply chains

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2 CONFLICT OF INTERESTSDefinition (from httpwwwtransparencyorg International Business Principles for Countering Bribery SME edition)A conflict of interests is when a personal interest or relationship is put before the business interest Conflict of interest can lead to actions which are not honest and open Theycan sometimes lead to a situation where individuals against their better judgement can give or accept a benefit which may damage the business

Topic and explanation Typical questions from auditors What you should doFurther information

websites etc

Even without malpracticeconflict of interests maybe seen as corruptpractice

The way to deal with thisis to have rules on howto manage situationswhere a conflict mayhappen

l Are you aware of any local and national regulations and anyclient requirements covering conflict of interests

l Do you have procedures in place to measure yourperformance against any regulationsstandards

l Do you (or your clients) policy cover conflict of interest l Have any rules of you or your clients concerning conflict ofinterests been clearly communicated to the appropriateparties eg Suppliers customers employees agents etc

l Is there a mechanism for reporting conflict of interestconcerns without fear of reprisal to the reporter

l Is there a clearly communicated procedure in place for dealingwith conflict of interest concerns including advice given anddisciplinary action against perpetrators

l Are there any local inspections by government or similar andare the findings actioned

l Have copies of any local and national regulationsand any client requirements covering conflict ofinterests

l Ensure any procedures are documented andsufficient to measure your performance

l Where there are client requirements ensure thatyou have a system in place to measure yourperformance against those requirements

l if your (or your clients) policy does not coverconflict of interest consider including it

l Ensure that any rules of you or your clientsconcerning conflict of interests have been clearlycommunicated to the appropriate parties egSuppliers customers employees agents etc

l Ensure there is a clearly communicated procedurein place for dealing with conflict of interestconcerns including advice given and disciplinaryaction against perpetrators

l Keep any local inspections by government orsimilar and ensure you react to any prosecutionscomplaints or recommendations

httpwwwuksportgovuk

httpwwwnihgov

httpwwwhwachrhtmpoliciesconflictofinterests

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3 REPORTING AND INTERNAL CONTROLSMONITORINGFor any programme to be successful it needs to have controls and records These are the checks and balances which will show the programme is working There needs to be a clearly communicated reporting procedure in which concerns about any BusinessEthics issues can be reported without fear of reprisals to the reporterAdvice should also be available on how to handle incidents before they become a problem

Topic and explanation Typical questions from auditors What you should doFurther information

websites etc

A Business Ethics programmebegins with a policy statementor a statement of principleswhich can be as simple as

Your business commits tol Conducting business fairlyhonestly and transparently

l Will not offer or acceptbribes

l Developing a programmeto support those Principles

Programmes to support thispolicyPrinciples requirel Detailed procedures andpractices

l A process for reportingconcerns

l An internal review processwhich checks that theprocedures are working

l Does the site have a Business Ethics policyl Does the site have a clearly documented procedure forreporting on Business Ethics concerns

l Are records available of any reports made and actionstaken clearly detailed

l Are there detailed and clearly communicated proceduresfor dealing with individuals who are found to be involvedin Business Ethics issues

l Is there a review process in place to check thatprocedures are working and that business ethics issuesare being dealt with

l Check your procedures for dealing with anyBusiness Ethics issues which may have occurredin your business and ensure they are clearlydocumented and available for inspection

l Check with those who have reported issues thatprocedures are being correctly followed and thatthere have been no reprisals following reporting

l Check with interested parties eg supplierscustomers agents employees that they areaware of your Business Ethics policy or principlesand that they are following these

l Check that any actions taken as a result ofsubstantiated Business Ethics issues have beendocumented and have followed correct procedureif you do not have a Business Ethics policyconsider creating one

l Ensure that any policies and procedures are fullycommunicated and trained to the workforceespecially those where there is a high risk ofcorrupt practice such as sales logisticspurchasing

l Ensure that any training is recorded

For country profiles onBusiness Ethics risk for alist of those who havesigned up seehttpwwwbusiness-anti-corruptioncom

The UN Global Compactand the World EconomicForum and TransparencyInternational haveproduced a tool forcountering corruption inbusinesses seehttpunglobalcompactorg

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The above is a selection of Business Ethics titles there may be others which you may wish to discuss and report to the auditor either ahead of or during theassessment

Notes To encourage convergence the above information uses available best practice from a number of sources these include but are not limited to

l BUSINESS PRINCIPLES FOR COUNTERING BRIBERY (SMALL AND MEDIUM ENTERPRISE EDITION) httpwwwtransparencyorg

l UN Global Compact 10th Principle Supply Chain Group Extract from working documents This is work in progress a copy can be obtained from your clientor auditing body

For more information see website details in above table

For more information on Sedex please go to wwwsedexglobalcomor email auditingsedexglobalcom

This SMETA Guidance for Environment and Business Ethics Assessments Guide for Suppliers has been produced by the current members of theAssociate Auditor Group (AAG) of Sedex It is work in progress and we are currently making it available to members only in order that we can learn from their

experience to review and improve the guidance

Please forward your comments to auditingsedexglobalcom

Following a further review process based on membersrsquo comments we hope to follow the mission of Sedex and to drive convergence by making it available on thepublic section of the Sedex website