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Improving Standards With Global Automotive Social Compliance Factory Assessments

Quality InsightsJanuary 20, 2023

The automotive supply chain is becoming more complex. It is vital that you thoroughly address key social compliance factors.

Why the automotive supply chain?

The automotive supply chain is complex, to say the least, especially with the onset of new players and technologies, such as electric vehicles. It is vital that organizations thoroughly address key social compliance factors like human rights, working conditions, the environment and business ethics.

An overview of the assessment

The Global Automotive Social Compliance Factory Assessment is based on Automotive Industry Guiding Principles to Enhance Sustainability Performance in the Supply Chain, defined by the Automotive Industry Action Group (AIAG) and Drive Sustainability.

The objective is to verify the degree of compliance by examining and evaluating objective evidence.

The results are documented in a report that indicates any room for improvement in the entire system (corrective action plan).

Audit principles

Human rights and working conditions

  • Child labor and young workers
  • Wages and benefits
  • Working hours
  • Forced labor
  • Freedom of association
  • Health and safety
  • Harassment
  • Non-discrimination

Environment

  • Energy consumption and greenhouse gas (GHG) emissions
  • Water quality and consumption
  • Air quality
  • Natural resources management and waste reduction
  • Responsible chemical management

Business ethics

  • Responsible sourcing of materials
  • Anti-corruption
  • Privacy
  • Disclosure of information
  • Fair competition/anti-trust
  • Conflicts of interest
  • Counterfeit parts
  • Intellectual property
  • Export controls and economic sanctions
  • Protection of identity and non-retaliation

Auditor qualification

Our auditors are qualified for Sedex Members Ethical Trade Audit (SMETA) four-pillar audits. The four pillars are:

  • Environment
  • Business ethics
  • Health and safety
  • Labor

They are also registered with the Association of Professional Social Compliance Auditors (APSCA).

Auditor coverage

SGS auditors cover more than 80 countries, including:

  • Albania
  • Australia
  • Austria
  • Bangladesh
  • Belgium
  • Brazil
  • Bulgaria
  • Cambodia
  • Chile
  • China
  • Colombia
  • Denmark
  • Egypt
  • France
  • Germany
  • Ghana
  • Hong Kong
  • Hungary
  • India
  • Indonesia
  • Israel
  • Italy
  • Korea
  • Malaysia
  • Mexico
  • Morocco
  • New Zealand
  • Pakistan
  • Peru
  • Philippines
  • Poland
  • Portugal
  • Romania
  • Russia
  • South Africa
  • Spain
  • Sri Lanka
  • Taiwan
  • Thailand
  • Tunisia
  • Turkey
  • UAE
  • UK
  • Ukraine
  • US
  • Vietnam

We also have over 800 APSCA-enrolled auditors.

Overall assessment workflow

Allocation

The client identifies the suppliers for assessment and gives us the audit request for processing.

Audit preparation and planning

We contact the supplier to schedule the audit and process the payment request.

On-site evaluation

The assessment is conducted and the findings are communicated to the supplier. A copy of CAP is left on-site with the supplier.

Reporting

A draft assessment report is created and reviewed internally. A final report is sent to the client within seven business days.

Follow-up activities

Depending on client requirements, CAP remediation is conducted by our client. Further desktop reviews or on-site assessments may be needed, depending on the findings.

Auditor days

Auditor DaysNo. of workers excl. managersIndividual InterviewsGroup interviewsTotal employees interviewedWorker files/time and wage recordsEffective time spent on interviews
21–50063 groups of 521216 hours
3501–1000126 groups of 542428.5 hours
41001–2000208 groups of 4525212.5 hours
42000+228 groups of 5626214 hours

The grading

There are two key grades:

Critical (immediate action). There is a requirement where there is high and immediate compliance required by the factory.

Nonconformity (action within 30 days). All other gaps, apart from critical gaps, can be identified as nonconformities.

Audit outcome

Outstanding (Grade A). Overall rating of 95% or more.

Good (Grade B). Overall rating is between 75% and 94%.

Acceptable (Grade C). Overall rating is between 60% and 74%.

Unacceptable (Grade D). Overall rating is less than 60% or if any critical failure is identified.

Why SGS?

We are the world’s largest testing, inspection and certification company. We are currently the only audit provider using Automotive Industry Guiding Principles to Enhance Sustainability Performance in the Supply Chain.

We have the widest global reach with a local touch and the most widespread network, working across industries and countries.

We have the most comprehensive solution to monitor supply chains (CATS) and a worldwide network of experts to deliver services faster, consistently and cost-effectively, as well as a proven track record of executing large-scale projects.

For more information, contact your local SGS office.

For further information, please contact:

Jason Hulbert
Associate Marketing Manager
Knowledge
t: +44 (0)7912 426878

About SGS

We are SGS – the world’s leading testing, inspection and certification company. We are recognized as the global benchmark for quality and integrity. Our 96,000 employees operate a network of 2,700 offices and laboratories, working together to enable a better, safer and more interconnected world.

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