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Report

15 Nov 2022

Author:
Human Rights Watch

Global: Social audits insufficient in preventing & remedying labour rights abuses in global supply chains, Human Rights Watch reports

"“Obsessed with Audit Tools, Missing the Goal”", 15 November 2022

[...]

This report highlights the challenges associated with social audits and certifications as they apply to manufacturing facilities or factories around the world, focusing on labor abuses in factories. It draws on the experiences and insights of 20 current or former experienced auditors, many of whom had spent over a decade conducting social audits of suppliers across numerous countries and different sectors including apparel; 23 industry experts from the apparel industry; interviews with workers and worker advocates; an analysis of social audit reports; and other academic analyses of social audit reports. The report builds on other publications of civil society organizations and academics.

Pricing and Other Business Pressures

According to auditors Human Rights Watch interviewed, the time allocated to conduct an audit directly impacts its quality. The pressure to drive down costs by limiting the time available for audits undercuts auditors’ ability to interview workers offsite in safe settings, follow information leads, and corroborate information...

Efforts to Hide Adverse Findings During Audits

Many suppliers, eager to get good social audit reports or be certified, attempt to hide actual working conditions during audits. Research by Human Rights Watch as well as other organizations and academics shows that efforts to deceive auditing firms include coaching workers, keeping double-books and fake records, and “hiding” children who are employed illegally. Pre-announced social audits increase the risk of such tactics...

Unfair buying practices of some brands...coupled with an inadequate commitment to help remediate problems in factories can create perverse incentives for suppliers to utilize audit consultancies to “prepare” for the audit and for suppliers to provide deceptive information.

Social Audits Not a Substitute for Remediation, Support for Remediation

Even the most robust investigation of labor conditions at a supplier cannot force improvements...Remediation depends on how the supplier and brands sourcing from the factory act on the findings...

Moreover, social audits and certifications do not detect other structural root causes for labor abuses, such as unfair purchasing practices of buyers.

No Transparency, Low Trust

Finally, the social audits and certification industry is largely opaque. Social audit reports of suppliers are not published. This lack of transparency allows poor-quality audits to thrive unchecked, under the radar. It leaves everyone guessing why and how a particular facility was certified as the underlying basis for certification is not made public. It fails to build trust with relevant stakeholders, especially workers, or to assist local unions and worker rights organizations in monitoring progress of corrective actions...

Given these significant limitations and challenges around the use of social audits and certifications to detect labor abuses in supplier factories, policymakers and regulators should not treat social audits and certifications of suppliers as sufficient proof of human rights and environmental due diligence by brands and retailers. Policymakers and regulators should not create “safe harbors” or allow companies to immunize themselves from administrative penalties or civil liability by citing such social audits and certifications.

Key Recommendations

  • Policymakers and regulators should require companies to undertake human rights and environmental risks-based due diligence using a smart mix of tools developed in consultation with stakeholders, especially affected populations. These should include requirements to disclose their supply chains; implement effective and accessible independent grievance mechanisms in-country; examine and rectify their own purchasing and buying practices; publish social audits and corrective actions if companies opt to use them; have clear policies and processes to remediate and support remediation; and institute warnings and escalations, including ultimately conducting a responsible exit from a supplier with an emphasis on minimizing harms to workers and communities.
  • Policymakers and regulators should ensure that laws requiring companies to conduct human rights and environmental due diligence do not equate compliance with such laws with conducting social audits or certifications, and do not treat social audits and certifications as sufficient proof of such due diligence.
  • Policymakers should not create “safe harbors” or allow companies to immunize themselves from administrative penalties or civil liability on the basis of social audits and certifications.
  • Where companies incorporate social audits and certifications into their human rights and environmental due diligence efforts, regulatory and judicial scrutiny should extend to such social audits and certifications to determine whether the particular social audit or scheme generated credible information pertaining to the specific human rights risks.
  • Policymakers should also develop complaints-based and penalties-based regimes to hold auditing and certification programs, and firms offering social auditing and certification services, accountable and address some of the conflicts of interest and other challenges described in this report.