Everyone agrees that auditing processes are unsatisfactory. A combination of on-the-ground empowerment and a rethink of how auditors are paid could help
“Deeply shocked and appalled” was the reaction of the Spice Girls, forced to issue a statement following a Guardian investigation alleging that the band’s Comic Relief charity “gender justice” t-shirts had been made by women earning the equivalent of 35p an hour in a Bangladeshi garment factory. The women machinists claimed that they are forced to work 16 hours a day and verbally abused and harassed if they fail to hit targets.
The garments can be traced back to online retailer Represent’s supplier, Belgian company Stanley/Stella, and a factory owned by Interstoff Apparels. Under pressure, Stanley/Stella responded that the most recent audit of the factory – the standard industry fallback – carried out by the International Fair Wear Foundation had found “no issues” with the factory.
Whatever the actual detail – the factory denies the claims – the celebrity angle has helped to raise awareness of ongoing social injustice and poor conditions in global supply chains.
But the response and reaction from those at the centre of the story adds to the on-going debate about the credibility and effectiveness of auditing mechanisms employed by many brands to protect themselves and those working in their supply chains from malpractice.
So, what is actually happening on the ground? And why, if auditing (and verification – to ensure specific compliance to a standard) are being used more frequently, are brands still at the mercy of poor social and environmental standards within supplier companies? Auditing is now a multi-million dollar global industry. But how much improvement is it really creating?
According to Sedex, audits offer a “catalyst for positive change”. The organisation’s research
suggests that companies that are regularly audited are more likely to decrease their incidents of non-compliance, and therefore make positive improvements in their working conditions. It points to the fact that, 20 years ago, for regularly-audited companies, child labour in China was found in 2-5% of audits. Today, child labour is found in less than 0.5% of those company audits.
But whether or not audits actually identify issues is only part of the problem. Hilary Thompson, director at TFT, argues: “How can they when the vast majority of audits are pre-announced, whereby the site knows someone is coming to do an audit?” She says that auditing and verification on the ground are fraught with problems around corruption, perception and poor quality. And they just don’t do enough to encourage and support sites to improve.
The only part of the process that will bring change is if the data generated is used effectively. Darian McBain, sea food business Thai Union’s global director of sustainable development, describes the process as being similar to taking a patient’s temperature when they are ill, but that more information is often required. “It’s an important diagnostic, yes, but if the patient has no pulse possibly not the only diagnostic,” she says.
For Shylaja Devi Vasudevan Nair, head of the sustainability unit at palm oil plantation company Sime Darby, there are very few opportunities for adding value from the auditing process because of the “incompetency of the auditors, [and] the rigid indicators of the Roundtable on Sustainable Palm Oil’s principles and criteria, with little or almost no independence given to auditors to judge the severity of the non-conformance”.
Phil Bloomer, executive director at the Business & Human Rights Resource Centre, offers a further damning assessment. Audits alone provide little to no independent and reliable assessment of human rights risk and abuse in supply chains, he argues. “Instead, they serve a separate and distinct function: to reduce reputation risk of brands when abuse is revealed.”
When it become widespread knowledge that there had been abuse of Syrian refugees in Turkish apparel factories supplying almost all European brands, only two brands admitted
they had Syrian refugees in their supply chain. “The rest could say that they had found no Syrian refugees in their supply chains because their announced audit system – where it existed – had ensured that the Syrian refugees had been given the day off, without pay, on the day of the audit,” Bloomer says.
Which poses the question: if a company or supplier pays for their own audit, what are the safeguards that work to assure everyone else in the value chain that the audit results reflect reality?
Worker interviews, done sensitively, can be useful – but unhappy workers can be “hidden” by the supplier at the time of audit. That’s why unannounced audit visits and open access to documentation and workers can go a long way to ensuring audits are credible and fair.
Thai Union has been developing worker dialogue initiatives as safeguards, working with some of its biggest customers to progress from an audit-only approach, to building better relationships between auditors, suppliers and customers with a greater focus on shared responsibility and outcomes, rather than merely on audit results alone.
Across different sectors, a range of IT and remote tools, such as Global Forest Watch
, are increasingly being used to help facilitate the sharing of information across supply chains. TFT says that its pilot initiative, known as Kumacaya
, could potentially scale up to offer credible monitoring by civil society organisations. “The difficult issue to overcome is always funding,” says Thompson, adding that some sort of escrow/blind trust/three degrees of separation system is required, which can of course be cumbersome to set up.
Building capacity on the ground is perhaps the best solution to deal with the ineffectiveness of auditing. But McBain worries that flying people in to “solve” problems on the ground, with little understanding of the culture or what it would take to truly build local capacity that would be sustainable in all senses of the word, is a tough ask. “It takes courage to allow local people to determine their future, change culture and develop the capacity to deal with the challenges so often found in supply chains,” she adds.
Thompson says that local resources are often open to corruption and ignorant of international standards, which then fuels inconsistency and poor quality auditing.
What price credibility?
So, what do brands and retailers need so that they can credibly reassure their customers and stakeholders that they are to be trusted in delivering against their sustainability commitments – and that auditing is enabling them to stay on track?
Vasudevan Nair would like to see an audit process that measures corporate commitments against international standards and the progress made, rather than merely focusing on the number of non-compliances thrown up by an audit.
The empowerment of workers is also crucial, giving people a robust complaint and remedy mechanism (most of which are “anaemic and ineffective, where they exist”, according to Bloomer) and greater voice to express their concerns.
Independence and objectivity are crucially missing given the current process and structure for supply chain auditing and verification. Right now, the box-ticking nature of auditing fails to accommodate the recommendation of solutions that would make real positive change on the ground – for those in the field, or in the factory.
Bloomer highlights a small group of brands that are deploying unannounced audits as a complement to a broader, deeper, and more rigorous approach to their human rights due diligence. This includes elements such as supporting workers’ organisation, engaging with workers and civil society on risks, and clear multi-brand cooperation to eliminate risk in their first, second and lower tiers of the supply chain.
And, his advice for what brands should really (really!) want? “Speak to the people you don’t want to speak to… And create pre-competitive collaboration with competitors to speak in unison to the suppliers.”