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The Guardian

Corporations are paying for worker abuse audits that are ‘designed to fail’, say insiders

American and European firms with overseas operations have turned to auditing firms [...] to investigate conditions at their factories and produce an assessment sometimes known as a social audit.

But insiders and observers say auditing companies are failing at their job, and are part of a broader system focused less on safeguarding workers than protecting companies – and their bottom lines – from costly public relations scandals.

Labor abuses persist in the global operations of many big companies, as an investigation published today by the Guardian US, the International Consortium of Investigative Journalists, NBC News and Arab Reporters for Investigative Journalism has revealed. In interviews with the reporting partnership, nearly 100 workers describe an array of unfair and repressive labor practices within the Persian Gulf footprints of Amazon, McDonald’s, Chuck E Cheese and the InterContinental Hotels Group...

In response to the labor practices documented by the reporting partnership, a representative from McDonald’s said the workers’ accounts are “extremely troubling” and Amazon said in a statement that it was “deeply concerned” workers weren’t treated better. The InterContinental Hotels Group and the Chuck E Cheese brand’s parent, CEC Entertainment, both say they take fair treatment of workers seriously...

Recent research by Human Rights Watch has criticized two of the most well-known audit companies, Amfori and Sedex, for their lack of transparency, including a failure to make public the results, company names, locations or dates of audits.

A Sedex spokesperson did not provide data on the overall number of problems discovered by its auditors at overseas factories, though they pointed to case studies on the company’s website. And they said that more than 1,500 worksites in the US resolved more than 8,500 issues identified in its audits.

The Sedex spokesperson said that while the company makes recommendations to the firms it audits, it does not “set requirements or have regulatory powers”.

“While we encourage buyer members to follow best practice and take effective action, we do not assess members on whether they do this or have visibility of their due diligence activities outside of our solutions,” the spokesperson said.

Amfori did not respond to requests for comment.

The weaknesses of the auditing industry are important because legal protections for many overseas workers are scant, experts say...

A new European Union proposal appears to have more teeth. The Corporate Sustainability Due Diligence Directive requires companies to identify risks of human rights abuses in their supply chains – including large American companies that do business in Europe. Unlike most of its predecessors, however, the directive subjects companies found in violation to sanctions such as fines. And crucially, victims of labor abuses can seek compensation.

Labor experts say the success of this directive will hinge on its being paired with robust enforcement mechanisms, as well as stronger protections for unions, as opposed to practices like auditing.

Note: Amfori provided some comments to Human Rights Watch; more information available here.