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8 Eyl 2021

Social audit liability: Hard law strategies to redress weak social assurances

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Executive summary also available in Spanish, French, German, Chinese, Japanese and Italian.

The social audit industry has rightly come under increasing scrutiny for its role in sustaining tolerance of human rights abuse in company supply chains. It is time the social audit industry is held to account for false or negligent claims which hide the truth of abuse against workers.

This year’s Corporate Legal Accountability Briefing explores opportunities and challenges for holding social audit firms legally accountable for human rights harm. This briefing provides legal analysis on civil and criminal claims brought to date against social audit firms, and associated certification schemes, to explore potential strategies for liability. It also outlines the legal and contractual reform required to enable victims of abuse to seek access to remedy against social audit firms where social audit failings result in harm.

Key findings of the report include:

(1) Bringing legal claims against social audit firms is, so far, a barely-tested strategy to create legal accountability for the industry

The two legal claims brought against social audit firms to date did not result in a finding of liability. However, the outcome of these cases does not mean that social auditing firms could not be held liable under existing laws. Our briefing outlines potential strategies for social auditor liability in tort law, contract law and under the United States (US) Trafficking Victims Protection Reauthorization Act (TVPRA). Nonetheless, there are challenges. Efforts to secure the legal accountability of social audit firms require contractual and legal reform.

(2) Claims by consumers against certification schemes could drive publicity for a certification scheme’s “fair washing” 

Only one lawsuit, filed in Washington State in the US, has been brought to date against a certification scheme. Consumer protection laws in certain US state jurisdictions seem favourable to claims against certification schemes. However, consumer claims would, crucially, not provide access to legal remedy for affected workers or communities.

(3) Social auditing firms must be subject to mandatory Human Rights and Environmental Due Diligence (mHREDD) legislation

Social audit firms, in their capacity as companies, must be subject to mHREDD laws and corresponding liability regimes.

(4) Social audits and certifications do not equate to human rights due diligence

Human rights due diligence is fundamentally different from social auditing in its approach, scope, and ambition. New laws and regulations must not equate social audits with human rights due diligence, or see them as a plausible substitute.

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