Social Audit Pitfalls & Recommended Next Steps Part I

By Wendy Blanpied

The fashion industry has long been a contributor to human rights abuses and environmental degradation. While the collapse of Rana Plaza in Bangladesh a decade ago spurred governments, donors, and civil society to action, social auditing - a way of measuring, understanding, reporting, and ultimately improving an organization’s social and ethical performance- had already been playing a significant role in advancing sustainable fashion by setting benchmarks and providing guidance for brands to operate in a more socially and environmentally responsible manner. Pioneer social audit programs include the Global Organic Textile Standards (GOTS), a comprehensive standard that covers the entire textile supply chain from harvesting of raw materials to labeling the finished product, launched in 2006; and Better Work, a global program launched in 2007 by the International Labor Organization (ILO) and the International Finance Corporation (IFC) to improve working conditions and respect all workers’ labor rights based on ILO’s  international labor standards.

Overview of Problems

Over the last two decades, social audits that address social and environmental issues within the fashion sector have proliferated globally, becoming widely accepted by brands as due diligence panaceas. While these schemes have been effective to an extent, they are not intended to be a comprehensive solution to all social and environmental risks in a supply chain. They should be used in conjunction with other tools and approaches to achieving due diligence.

The following are a handful of the many common critiques of social audits around the lack of transparency, among the most common critiques of social audits. 

Social audit schemes can lack transparency on their methodology, criteria, and findings, making it difficult for stakeholders to determine the level of credibility and effectiveness as well as next steps. Recent data from ELEVATE, an LRQA company, found that supplier transparency is on the decline, making it harder for us to identify the highest risk parts of a supply chain.

There are many reasons for the lack of transparency. Some of these include:

1. Little to no requirements to disclose the audit findings

Apparel brands are often not required to disclose audit findings (some disclosure is required for certain legislation and some brands voluntarily disclose), which means that they are not necessarily compelled to address negative findings in their business operations and supply chain. There is little incentive for brands to voluntarily disclose negative findings, as they risk negative publicity from consumers and stakeholders. Brands also may consider social audit findings to be proprietary information that gives them a competitive edge in the market. In the end, the lack of disclosure makes it more difficult for stakeholders and consumers to hold brands accountable to addressing negative findings, or to collectively learn from social audits and develop best practices around adequately addressing negative business practices. Rather, when audit results are kept hidden, the onus is on the brand to take any necessary action on the labor and human rights findings and/or violations. 

  2. Risk of fraud and deceit in disclosure

Closely tied to the lack of transparency in the disclosure of audit findings, the audit sector has its fair share of fraud and deceit. In the interest of brands and suppliers avoiding risk, suppliers may engage in risk and fraud in order to deceive the brands, stakeholders, and even the governments that are increasingly requiring clean supply chains. Lara Walters, a member of the EU Parliament, recently discussed the phenomenon of shadow auditing businesses at the OECD Garment and Footwear Conference in Paris. In addition to manipulated site visits (in the case of shadow audits), other types of fraud include concealment of subcontracting practices, document forgery, false reporting, selective disclosure, and greenwashing. 

  3. Lack of civil society, advocacy groups and other stakeholder engagement in assessing and addressing findings

With little to no disclosure of information, stakeholders, including labor and human rights experts and advocates, have a hard time understanding how the audit was conducted and what issues are assessed. The lack of or false disclosure of information means that key stakeholders are less able to assess valid data to show us trends that can help us better understand the landscape of human rights abuses in the apparel sector and come up with long-term, systemic solutions together to address them. This can create distrust and skepticism among stakeholders towards brands. 

  4. Inadequate worker voice and stakeholder engagement in the audit

Apparel brands may or may not involve workers, labor unions and other worker rights groups, local communities, and civil society groups in the audit process. These stakeholders, in particular workers and those speaking on their behalf, bring in critical human rights information, including firsthand accounts on working conditions (wages, OSH, access to breaks), issues of overtime or recruitment fees, special provisions for mothers or pregnant workers, etc. Excluding these stakeholders from the assessment and decision-making processes limits transparency and can lead to biased or incomplete audit findings. 

  5. Lack of standardization- yes and no

While the auditing field is becoming more professionalized, there are still no standardized reporting frameworks for social audits in the apparel due to the lack of industry-wide consensus on what to assess. Assessing the social impact of a company is complex and encompasses a wide range of factors, even within the narrow scope of human rights (forced labor[1], child labor, gender-based violence, occupational safety and health). In addition, developing a common framework that accounts for the diversity in the size, culture, structure, differing supply chain tiers, etc. of companies is complicated, too. 

  6. Failure to audit beyond tier 1 or 2

Many apparel audits still only occur at the first or second tiers, but do not go deeper into the supply chain into processing or touch on contractors and subcontractors. All these factors result in the difficulty in developing consistent auditing standards just in terms of human rights in the apparel industry. It also leads to varying degrees of findings, depending on how accurate and actually “fit for purpose” the audit is.

  7. Lack of follow-up on findings, including remediation

As a sector, we have gotten much better at conducting audits and finding human rights violations in the apparel sector, particularly at tier 1; however, there is still a long way to go in those harmed accessing remedy as was envisioned by John Ruggie in the UN Guiding Principles on Business and Human Rights. The lack of subsequent action and accountability can undermine the effectiveness of the audit, particularly when workers disclose violations.

  8. Difficulty for victims of abuse to access remedies

The lack of transparency makes it more difficult for victims of human rights abuses in the apparel sector to make formal complaints or access real remedies. While there have been some examples of victims accessing remedies through the increased presence of grievance mechanisms and systems where unions have worked with brands, such as the Accord in Bangladesh, there is still a long way to go. 

[1] Within the labor rights framework, many audit standards are based on ILO’s core labor standards, which include the right to collective bargaining, elimination of forced labor, abolition of child labor, and non-discrimination in employment. Apparel audits often assess compliance with these core labor standards, drawing inspiration from ILO conventions and recommendations.

Wendy Blanpied

Wendy Blanpied has worked for over 20 years addressing human rights abuses, including child and forced labor, gender-based violence and other labor and child rights, globally for the US government, companies, civil society organizations and the UN. She works to develop strategies to address the risk of human rights abuses in global supply chains. She currently works on an innovative project developing global traceability schemes in the cotton and cobalt supply chains with ELEVATE Limited. Ms. Blanpied holds a Master's Degree on Social Policy and Planning in Developing Countries from the London School of Economics.