Guide to SMETA Principles: The ETI Base Code

Guide to SMETA Principles: The ETI Base Code

The ETI Base Code outlines ethical labor standards for responsible business practices, while SMETA audits evaluate how well companies adhere to these guidelines. If you’re unclear on how these two frameworks relate, or how they apply to your business, this article will provide clarity. We’ll explain the connection between the ETI Base Code and SMETA audits, outline the key principles of the ETI Base Code, and explore the advantages of implementing these standards.

How Are SMETA Audits and the ETI Base Code Related?

The ETI Base Code is a set of ethical guidelines aimed at ensuring fair labor practices, safe working conditions, and respect for workers’ rights. It was developed by the Ethical Trading Initiative (ETI), an alliance of companies, trade unions, and NGOs working together to promote workers’ rights globally. It is based on internationally recognized standards, including the International Labour Organization (ILO) conventions, and provides companies with clear principles to help align their operations with ethical labor practices and global human rights standards. The ETI Base Code is not an official audit, but is widely recognized across industries as a benchmark for responsible business practices.

SMETA (Sedex Members Ethical Trade Audits) principles are based on the ETI Base Code. Developed by Sedex, a leading platform for ethical supply chain management, SMETA audits assess how well companies adhere to the ETI Base Code’s principles. These audits cover key areas such as labor rights, health and safety, and, in the case of 4-pillar SMETA audits, environmental impact and business ethics.

Learn more about the difference between 2-pillar and 4-pillar SMETA audits: SMETA 2-Pillar vs. 4-Pillar Audits: An In-Depth Comparison

What Are the Key Principles of the ETI Base Code?

Below is an overview of the main principles of the ETI Base Code. Each principle aligns with a variety of SMETA audit requirements.

1. Employment is Freely Chosen

• ETI Principle: No forced, bonded, or involuntary labor. Workers must have the freedom to leave their employment after reasonable notice.
• SMETA Alignment: SMETA audits assess whether a company uses forced labor, reviews labor contracts, and ensures freedom of movement for all workers.

2. Freedom of Association and the Right to Collective Bargaining

• ETI Principle: Workers must have the right to join or form trade unions and engage in collective bargaining. If freedom of association and collective bargaining are limited by law, the employer must facilitate the development of other, parallel means of independent association and bargaining.
• SMETA Alignment: SMETA audits check whether companies allow union membership and evaluate the presence of workers’ committees and fair grievance procedures.

3. Working Conditions Are Safe and Hygienic

• ETI Principle: Employers must provide a safe and healthy working environment, minimizing risks and ensuring proper safety measures.
• SMETA Alignment: SMETA audits evaluate health and safety protocols, workplace conditions, emergency procedures, and employee training programs.

4. Child Labor Shall Not Be Used

• ETI Principle: No person under the legal minimum working age should be employed. Young workers must not engage in hazardous work. Child labor policies and procedures should conform to relevant ILO standards.
• SMETA Alignment: SMETA audits thoroughly examine company hiring practices, verify worker ages, and ensure that child labor laws are being respected.

5. Living Wages Are Paid

• ETI Principle: Wages must meet legal minimums and be enough to cover workers’ basic needs, with some discretionary income. Deductions from wages should not be permitted without worker consent.
• SMETA Alignment: SMETA reviews payroll records, payment practices, and wage structures to verify that workers receive fair compensation as required by law.

6. Working Hours Are Not Excessive

• ETI Principle: Working hours should comply with national laws and collective agreements, and overtime must be voluntary and compensated at a premium rate. Working hours in a 7 day period may only exceed 60 hours in specific circumstances laid out in the Code. Workers must be given at least one day off in every 7 day period.
• SMETA Alignment: SMETA audits assess timekeeping systems, overtime policies, and whether working hours align with legal requirements and ethical standards.

7. No Discrimination Is Practiced

• ETI Principle: There should be no discrimination based on race, gender, religion, age, disability, or other characteristics in hiring, compensation, or treatment.
• SMETA Alignment: SMETA audits evaluate company policies and procedures to ensure fairness and equality in employment practices, from hiring to promotions.

8. Regular Employment Is Provided

• ETI Principle: Employers must ensure that workers are employed under recognized contracts, not under casual or temporary arrangements that exploit labor.
• SMETA Alignment: SMETA assesses employment contracts, ensuring that companies offer stable, regular employment and avoid unethical labor practices like casual hiring.

9. No Harsh or Inhumane Treatment Is Allowed

• ETI Principle: Physical abuse, threats, or other forms of intimidation and mistreatment are strictly prohibited.
• SMETA Alignment: SMETA reviews workplace practices, grievance mechanisms, and disciplinary procedures to ensure no harsh or inhumane treatment of workers is occurring.

Download a copy of the ETI Base Code for more information on each principle.

Benefits of Adopting the ETI Base Code versus Undergoing a SMETA Audit

The ETI Base Code is an important step toward ensuring ethical labor practices, but a SMETA audit provides the verification needed to demonstrate compliance and build trust with stakeholders.

Adopting the ETI Base Code offers companies a structured framework for improving labor practices, ensuring workers’ rights are respected, and promoting safe and ethical working conditions. By aligning with the Code, you can enhance transparency across your supply chain and improve your commitment to responsible labor practices and upholding international standards.

While adopting the ETI Base Code provides a strong foundation, a SMETA audit takes it a step further by offering a formal assessment of your company’s compliance with these ethical principles. Undergoing a SMETA audit brings several tangible benefits:

• Gaining stakeholder trust: A SMETA audit provides an independent evaluation, assuring customers, investors, and partners that your company meets globally recognized ethical standards.
• Improving operational efficiency: Through the audit process, companies can identify gaps or inefficiencies in their supply chain practices, leading to improvements in both compliance and overall operations. The more stringent nature of an official audit pushes companies to address weaknesses more thoroughly, driving greater operational efficiency compared to informal alignment with the Base Code.
• Demonstrating compliance through a recognized audit: SMETA audits are widely accepted as a credible standard for ethical business practices. Successfully completing a SMETA audit strengthens your company’s reputation, showcasing your dedication to ethical operations and helping to meet regulatory and market demands.

Preparing for a SMETA Audit

Successfully completing a SMETA audit starts with understanding the process and ensuring you work with an audit company experienced in Sedex protocols. SMETA audits can be conducted as either 2-pillar or 4-pillar assessments, depending on the depth of evaluation required.

Auditors may use a range of tools during the process, including:

• Third-party audits conducted in person to assess working conditions.
• Self-Assessment Questionnaires (SAQs), which allow suppliers to evaluate their own practices before an audit.
• Virtual assessments, especially useful when physical access to a site is limited.
• Corrective Action Plans (CAPs), which outline steps for improvement if non-compliances are found.

There are a number of organizations approved to perform SMETA audits, including QIMA, which is one of only 51 SMETA-certified Affiliate Audit Companies. In addition to SMETA, many providers also offer other ethical audits tailored to international standards or client-specific needs.