Social audit involves a systematic assessment and reporting of social implications of a company’s operations towards the society and environment with a view for improvement. The essence of social audit stretches from the implication of business footprints in the society/environment to the company’s values towards fundamental responsibilities in the areas of human rights, labour, environment and anti-corruption. This have started to gain great momentum in recent times, especially, considering the impacts of organisational quest for profit maximization, to the ill human treatments of workers, host communities and the environment. Social responsibility starts with a company’s value system towards the people – employees, host community, customers/consumers, and other stakeholders. No business can operate in a vacuum, the long term existence of every businesses depends on its responsible actions towards the society and the environment in which it operates. Commitment towards such responsible actions requires social audit.
The last few decades have greatly experienced the spread of supply chain and production plants from developed countries to low-wage developing countries where there are lower social standards in the workplace. Over the years, the spread has created a couple of negative implications to the reputations of many brands. For instance, the collapse of the Rana Plaza building in Bangladesh, led to the death of about 3,639 workers due to a lack of social audit. The incident became a brand issue to factories producing clothing for some U.S., Canadian and European clothing labels and retailers.
Social audits should therefore not be undertaken only out of management concern for risk assess but to seek out opportunities for setting the stage for long-term success to earn:
• Competitive advantage
• Brand reputation
• Ability to attract and retain workers, customers, investors and the financial community
• Employees’ commitment and productivity
• Good relationship with regulators, government, and host communities.