What is SMETA?

A Practical Guide for Brands Managing Supply Chain Risk

Do you really know what’s happening in your supply chain?

Where what you see ends – risks often begin

For many brands, especially in retail, apparel, consumer goods, and logistics, that question is no longer a theoretical one. It is a current business challenge with direct implications for brand reputation, investor confidence, and regulatory compliance.

As ethical sourcing and labor practices move to the top of the corporate agenda, SMETA (Sedex Members Ethical Trade Audit) has emerged as a leading framework for companies looking to ensure visibility, accountability, and improvement across their supplier networks.

This article explores what SMETA is, how it works, and why more North American companies are incorporating it into their compliance strategies.

SMETA Explained: Structure and Purpose

SMETA is one of the world’s most widely adopted audit methodologies for assessing social and ethical performance in supply chains. It focuses on four core pillars:

• Labor standards
• Health and safety
• Environmental management
• Business ethics

SMETA audits are conducted by approved third-party firms and follow a standardized protocol. The results are shared through Sedex, a secure data platform that allows companies to collaborate with multiple clients and reduce the need for repetitive audits.

The purpose of SMETA is simple. It helps buyers assess and monitor risks, enforce ethical standards, and continuously improve supplier performance.

Real-World Supply Chain Risks SMETA Can Address

Here are common risk areas SMETA audits are designed to uncover, along with real-world

Forced Labor

Risk: Workers are coerced through deception, debt bondage, threats, or restriction of movement.

SMETA's Role: Auditors review contracts, interview workers, and check for signs like withheld passports or restricted freedom.

Risk can hide deep in tier 2 or tier 3 suppliers— SMETA helps you look where it counts.

Example: In Southeast Asia, SMETA auditors found workers whose passports were taken upon arrival, preventing them from leaving the facility. The audit resulted in an urgent Corrective Action Plan to return identification documents and review recruitment policies.

Child Labor

Risk: Underage workers are employed in violation of legal standards.

SMETA's Role: Birth records and interviews are used to verify age and prevent exploitation.

Example: A subcontracted packaging plant in Central America was found to employ minors. Though the buyer was unaware, SMETA auditing prompted an immediate response, including disengagement from the supplier and stronger age verification protocols.

Unsafe Working Conditions

Risk: Workers are exposed to hazards such as blocked exits, lack of emergency training, or improper PPE.

SMETA's Role: Auditors check facility safety, emergency preparedness, and protective equipment use.

Example: A textile facility audit revealed expired fire extinguishers and blocked fire exits. The audit led to facility upgrades, new emergency training programs, and follow-up inspections to confirm compliance.

Discrimination

Risk: Workers face unfair treatment in hiring, pay, or promotion based on gender, ethnicity, or other protected traits.

SMETA's Role: Policy reviews and worker interviews highlight disparities and discriminatory practices.

Example: A European facility was found to have no female supervisors, despite a majority- female workforce. The audit led to new internal guidelines for promotion based on experience and merit.

Overwork and Wage Violations

Risk: Employees work excessive hours or receive less than minimum wage or overtime pay.

SMETA's Role: Auditors analyze payroll and timekeeping records and confirm conditions through worker interviews.

Example: At a facility in Mexico, workers were denied overtime pay and worked six or seven days a week. The audit called for the implementation of rest days, payroll corrections, and a quarterly review process to ensure fair compensation.

Strategic Benefits for Buyers

Beyond risk identification, SMETA offers strategic advantages for companies that depend on third-party suppliers:

• Enhanced visibility: Through the Sedex platform, buyers access reliable data on supplier
• Regulatory alignment: SMETA

supports adherence to laws like the UFLPA, Canada’s Modern Slavery Act, and the upcoming EU CSDDD.

• Reputation protection: Brands that

demonstrate ethical sourcing practices are more resilient to consumer and media scrutiny.

• Continuous improvement: Each audit

produces a Corrective Action Plan that creates accountability and fosters supplier growth.

• Reduced audit fatigue: Suppliers can

share one audit report with multiple clients, streamlining compliance.

• Stronger supplier relationships: Transparency and structured communication improve long-term collaboration.

The Takeaway

SMETA is not a checkbox. It is a practical, structured approach to identifying risk, improving compliance, and building trust throughout the supply chain. For companies in customer-facing industries, where reputational exposure is high and compliance requirements are evolving, SMETA provides a foundation for long-term resilience and responsible growth.

Up Next

In our next article, we will explore why undergoing a SMETA audit is not just about compliance but about unlocking value, managing investor expectations, and strengthening operational performance.

For more information, contact Patrick Mullen @ 732 570-8631 or email [email protected]