We have been writing quite substantially lately about responsible procurement, corporate social responsibility, and human rights in the supply chain. Our posts on the Greenwich Symposium on Human Rights and Public Procurement covered issues such as the high-profile risks that occur in mass manufacturing of IT technology, and concerns over “the weight of responsibility coming down on procurement,” to name a few. And we have highlighted the works of the likes of London Universities Purchasing Consortium and Electronics Watch in this domain (among others).
Corporate social responsibility is often quoted as a type of self-regulation mechanism that is integrated into the business model, in which procurement plays a large part. It has become a hot topic in public procurement, and, as we said in Human Rights and Public Procurement – International Learning Lab Hits Its Stride, it is only going to get hotter! “Stories about conditions in electronics and garment factories for instance have hit the national press. Citizens and taxpayers are rightly horrified to think that ‘their’ money, being spent by contracting authorities via public procurement, maybe helping support human rights abuses in those and other areas.”
One instrument in the battle for investigating human rights abuses is the use of social audits in the supply chain – the main development in corporate social responsibility for the past few years for organizations to take a degree of responsibility for the behavior and impact of their suppliers.
We were interested to read on Medium, an online publishing site, an article from Albert Vilariño Alonso, Consultant in Corporate Social Responsibility, Sustainability, Reputation, and Corporate Communication, and integration of people with disabilities. He brings up three main topics in “Responsible procurement: general status, trends, and implementation:” social audits in supply chains, trends in the supply chains for SMEs in the medium and long term, and how to implement a responsible procurement system.
We are interested in all three (and will probably come back to them in greater detail in another article) but particularly in the first. He gives a succinct overview of the limitations of this type of social audit, and it made us think about just how effective these really are.
In the article, he talks about social audits as a tool to carry out responsible management of the supply chain. “This would be evaluation carried out at the supplier’s factory (premises) in relation to the policies and code of conduct of the purchaser.”
He refers us to The “Ethical Audits and the Supply Chains of Global Corporations” report, conducted by Sheffield Political Economy Research Institute (SPERI) of Sheffield University, which summarises the pros and cons of social audits. Also taken into account are a number of interviews (carried out between 2012–14) with ethical auditors, business executives, NGOs, and suppliers in North America, the UK, and China, and visits to factories in the Pearl River Delta in the region China. The report, he advises, tells us about the effectiveness of the audits carried out, and the “interviews highlight how audits deception is widespread …”
Several conclusions are drawn from the report, which you can read in his article. We aren’t experts in this field, and maybe our readers have more insight, but the most alarming ones for us, reproduced here, possibly do not come as a surprise:
- Respondents explained how decisions about scheduling audits, such as time of year, frequency, and if it is an announced audit or a surprise, significantly affect the results. Pre-announced audits enable producers to falsify records and rid facilities of unauthorized agency contractors or exploited workers during audits.
- Corporations control how deep within the supply chain audits are conducted. One auditor told them: “We will audit as far down as the brand wants to go”.
- Many corporations design audit programs for only inspect Tier 1 suppliers where the final assembly of products takes place. By focusing on Tier 1 suppliers, most audits tend to exclude labor agencies and subcontractors further down the supply chain in low-value activities such as harvesting, processing, dyeing, and mining. Evidence from food, clothing and other industries indicates that the most exploited workers (e.g. forced and child labor) tend to be found in sites with complex subcontracting arrangements.
- Auditors can usually only inspect areas that suppliers choose to show them and are often only able to speak to workers they happen to see. Because most audits are announced, or at least semi-announced, the factory usually has the opportunity to tell their people what they have to say.
- Most audit firms have no investigative powers and so have limited capacity to verify that information presented to them, whether about safety conditions, contracts, or environmental standards, is accurate.
- A growing number of sites have passed audits only to have major violations discovered or catastrophes take place soon after.
And worryingly: within the social compliance world, it is now standard operating understanding that audits don’t work to achieve change within organizations, that they are a diagnostic tool that doesn’t fix things, and that the fact that visiting a factory many times doesn’t mean that the situation is going to improve.
So when it comes down to it – are purchasers just ticking boxes, even though the heart might be in the right place?