The report shows a lack of accountability within the factory social auditing industry

The report shows a lack of accountability within the factory social auditing industry

A new study claims to reveal "corporate negligence" and a lack of accountability within the multi-billion social auditing industry – alleging that it instead operates as a corporate social responsibility (CSR) tool to protect brand reputation and profits while aggravating risks to garment workers.

The report, 'Fig Leaf for Fashion: How social auditing protects brands and fails workers,' has been produced by labour rights group the Clean Clothes Campaign (CCC), and asserts the social audit industry has "failed spectacularly" in its proffered mission of protecting workers' safety and improving working conditions.

Instead, CCC says it has protected the image and reputation of brands and their business models, while standing in the way of more effective models that include mandatory transparency and binding commitments to remediation.

The report takes an in-depth look at some of the leading social compliance initiatives, including Social Accountability International (SAI), WRAP, FLA, and Amfori BSCI, and the largest auditing firms such as Bureau Veritas, TÜV Rheinland, UL, RINA, and Elevate.

"Twenty years of CSR has failed to improve labour conditions, and will continue to fail until there is an overhaul of the prevailing social auditing regime," says Ben Vanpeperstraete, lobby and advocacy coordinator at Clean Clothes Campaign, and an author of the report. "Brands cannot be trusted to regulate themselves. Binding regulations with the threat of sanctions and worker empowerment via unions are the only mechanisms that can ensure brand responsibilities are taken seriously, due diligence is performed, and workers lives are protected."

The report offers a number of examples of corporate negligence, including the Ali Enterprises factory fire in Pakistan in September 2012, in which over 250 workers died. The factory burnt down three weeks after being awarded SA8000 certification upon inspection overseen by RINA.

The Rana Plaza building collapse in Bangladesh in April 2013 killed 1,134 workers and left thousands more injured and traumatised. Factory audits by TÜV Rheinland, under the oversight of Amfori BSCI, failed to notice the safety defects (or child labour) in the factory and even stated that the building was of "good construction quality," the report says. Similarly, when Bureau Veritas audited another factory in the building it overlooked multiple obvious building violations, the report found.

In another example cited by the research, a boiler explosion in the Multifabs factory in 2017 illustrated that TÜV Rheinland and Amfori BSCI had not learned their lessons from Rana Plaza. "Their audit failed to highlight a broad range of safety defects, even though these had been previously publicly reported on by the Accord on Fire and Building Safety in Bangladesh", the report noted.

In the cases of both Ali Enterprises and Rana Plaza, accredited auditors had deemed these facilities safe just weeks or months before they were reduced to ruins, the report notes. In terms of Ali Enterprises, this assessment was made by auditors who reportedly never even visited the building, according to CCC.

Out of control

"The social auditing industry is out of control and presents a danger to workers making our clothes," says Anna Bryher, advocacy director at Labour Behind the Label. "Far from protecting human rights, this corporate-controlled billion pound industry prioritises brand reputation and profits, encouraging neglect where there should be urgent action."

Kalpona Akter of the Bangladesh Centre for Worker Solidarity, who has been intensely involved in the struggle for justice for the families affected by the Rana Plaza collapse adds: "It is essential for people to understand that the social auditing system is deadly by design. Auditors do not have the skills, time, or incentives to properly detect unsafe buildings, but they do issue reports that reassuringly tell brands that there is nothing to worry about.

"The Rana Plaza building collapse was a man-made disaster and completely preventable. Brands were wilfully blind to the factory conditions, which were just not detected, or worse ignored, by the social audits they commissioned. It is startling that no one – not a brand or an auditing firm – was held to account for the massive loss life. We need laws that hold these corporations to account for their negligence."

The report offers a number of recommendations for industry stakeholders:

Brands must...

  • Develop a robust due diligence process, including a policy statement, to assess their supply chain, identify, stop, prevent or mitigate any human rights risks or violations, and monitor and report on progress. Robust site-assessments should be a part of this due diligence process. Prioritise the most significant risks or impact, wherever they occur in the supply chain.
  • Conduct root cause analysis of violations, and how pricing, purchasing and sourcing practices contribute to violations.
  • Ensure that the audits are conducted by independent third parties, with no conflicts of interest, and that off-site worker interviews are conducted.
  • Regularly review auditing methodologies used by auditing firms, especially when violations are not identified. Ensure that methodologies and composition of the auditing teams are gender-sensitive and adapted to the local context in order to identify violations that are often overlooked, such as union busting, discrimination and sexual harassment.

Investors must...

  • Ask brands for robust due diligence processes, including a policy statement and site-assessments (including public disclosure of assessment reports), in order to stop, prevent and mitigate any risks, and track and communicate about them.
  • Ask brands to sign and implement the Transparency pledge, publish all audit reports, time-bound corrective action plans, complaints and progress reports shortly after completion, and link them with the individual factories and regularly update this information.

Governments of brand home countries/regions must...

  • Adopt and strengthen mandatory human rights due diligence legislation that makes brands, social compliance initiatives and auditing firms responsible for workers'rights violations in their international supply chains, in-line with the United Nations Guiding Principles on Business and Human Rights.
  • Legislation should include governance mechanisms to ensure brand, auditor and certifier liability, including: Minimum standards for social auditing and certification, similar in scope to government standards that regulate financial auditing, against which social auditors can be held accountable.

Governments of production countries must...

  • Require audit firms and social compliance initiatives that are active on their territory to publish audit reports and incidents of labour violations. Audit reports need to be comprehensive and complete – for example, they must include all legal requirements, both national and international – so that companies do not report selectively.
  • Ratify ILO Labour Inspection Convention No. 81 and bring their own legislation inline with this Convention.

Public procurers must...

  • Require that government procurement policies include strong due diligence, criteria for the monitoring of labour conditions in suppliers, resources for independent monitoring of suppliers, and transparent reporting.

just-style reached out to some of the companies mentioned in the report. This is what they had to say: 

Amfori: "We value engagement with stakeholders to achieve our mission and enable companies to improve the working conditions in their supply chain. With respect to the report, we have previously been in dialogue with CCC during its preparation, and we would like to further expand the report's overall view on social auditing. Social audits are one of the tools to detect labour issues in the supply chains. They contribute to the improvement of working conditions when complemented with our other due-diligence tools such as the Amfori Country Due Diligence tool, Audit Integrity Program, Amfori training programmes and our continuous dialogue with stakeholders.

"In view of the report's recommendations, we look forward to continually working with all stakeholders interested in improving labour conditions in the global supply chain."

Elevate CEO Ian Spaulding: "As the report indicates, Elevate has championed the 'beyond audit' model which addresses the shortfalls of programmes that focus only on conventional audits via the implementation of robust and proven improvement programmes.

"We are aligned with, and fully support, the report's recommendation that audits and monitoring initiatives need to engage workers in a meaningful way. This is at the heart of Elevate's worker engagement tools which identify social and labor risks directly from workers. Our worker sentiment data enables better insight into the issues workers face and helps promote more effective remediation."

Click here to access the full report.