The Right to Execute Social Audits

Contract management is a critical function for most businesses, regardless of their industry or size. It involves ensuring that contracts with suppliers, partners, and customers are properly executed, and that both parties meet the obligations and expectations set forth in the contract. However, when it comes to the issue of social responsibility, contract management alone should be enriched with the right to execute social audits.

A social audit is a process of evaluating a supplier’s operations to assess their compliance with social responsibility standards. It involves a thorough examination of a supplier’s practices, policies, and procedures to determine whether they are operating ethically and responsibly. The goal of a social audit is to identify areas where a supplier may be falling short of social responsibility expectations, and to help them improve their practices.

There are several reasons why social audits are important in contract management. Firstly, social audits provide an additional layer of oversight and due diligence. While contracts may contain provisions related to social responsibility, this is not always enough to ensure that suppliers are adhering to these standards.

Secondly, social audits help to mitigate reputational risks for companies. In today’s interconnected world, social responsibility is an issue of increasing importance to consumers and stakeholders. Companies that are found to be engaging with suppliers that have poor social responsibility practices can face significant reputational harm.

Thirdly, social audits can drive positive change in a company’s supply chain. By highlighting areas where suppliers are falling short of social responsibility standards, companies can work with their suppliers to improve their practices. This could involve implementing new policies and procedures, providing training or education, or even terminating contracts with suppliers who are unwilling or unable to meet social responsibility expectations.

Social audits are an essential tool for companies that are committed to managing their contracts responsibly. They provide an additional layer of oversight and due diligence, help to mitigate reputational risks, and can drive positive change in a company’s supply chain. By conducting regular social audits, companies can demonstrate their commitment to social responsibility and position themselves as leaders in their industry. I firmly believe that pro active use of audits like this will speed up the needed change in commercial relations.

Arjen van Berkum

Arjen van Berkum is a columnist, keynote speaker and motivator, with an eye for business ecosystems, innovation and disruption. In addition to his work as technology and contract management evangelist, he is a visiting lecturer at Delft University of Technology (TU Delft).