Social audits: turning a blind eye

 

- Dr Liu Kaiman, Institute of Contemporary Observation, Shenzen

 

Smoke and mirrors

What should a company do to find out whether the workers who produce its clothes have their rights respected?  To campaigners, the answer is simple: ask the workers.  That's what we do, and that's how we know that conditions are unacceptable.

When companies began responding to consumer pressure by publishing their codes of conduct, we told them they needed independent evidence that these codes were observed in their factories.  And thus was born the social audit, an inspection of working conditions in factories.  Tens of thousands of these audits are performed every year, either as internal company monitoring, or as independent verification by a third party (usually an auditing firm): social auditing is now a major industry.

A typical audit will involve three things:

• Document review: looks at wage sheets, timekeeping, personnel records, etc
• Site inspection: walking through a factory to check for health and safety problems and to observe the workers at work.
• Interviews: usually this includes interviews with managers, supervisors and workers. In best practice, trade unions and local labour rights groups are also consulted.

Most audits attempt to do all this in a few hours, while some take several days.  Some are better than others.  There are important distinctions between internal monitoring visits and independent audits, between audits where warning is given and unannounced audits, and between regular auditing and one-off checkups.  At root, and however they are conducted, the evidence shows that audits are not the solution that many companies treat them as.

Bottom up: how workers see it

"I have been working [here] for more than a year. Auditors visit the factory but there is no visible change in our working conditions [...] I have been having a constant leg pain since I joined. I have complained to the supervisors but have not got time off to see the doctor."

 

 

These two testimonies from workers in north India typify the results of a wide-ranging investigation of worker perspectives on auditing conducted last year by the Clean Clothes Campaign . Some 670 workers from 40 factories in 8 countries were interviewed about their experiences with auditors.  The results were conclusive:

The social audit methods used by [some retailers] are based on a seriously flawed model largely discredited not only by labour rights advocates but also by those within the industry who have had a longer-term involvement in this field but on an extended scale. The impact of these programmes on working conditions is at best superficial.

Their approach seems for the most part to be minimalist - they tend to invest as little time and money as possible, and more worryingly, they seem to be promoting a "lowering of the bar", in order to make it easier to tell consumers that they are meeting goals for treating workers responsibly.

Interviews with workers and those who work closely with them showed many technical flaws with the audits.  The problem is the cat and mouse game played between supplier management and auditors: it suits both the brand and its supplier for an audit not to turn up any serious issues. 

 

Suppliers may keep two sets of records of wages and hours worked - one which shows the real information, and one to show the auditors.  The factory is tidied up and prepared in advance so that it meets health and safety criteria.  Workers who should not be there, for example because they are under age, are given the day off.  Homeworkers are often totally passed over in the audit: out of sight, out of mind.

Better audits will place a strong emphasis on worker interviews, which will be conducted by someone who has the workers' trust (a local person of the same gender, with experience of interviewing).  Ideally, they are conducted off-site.  All this will help, but in itself it is often not enough to get past the coaching and intimidation of workers to ensure that they say the right thing.  One factory manager in north India admitted,

"[Supervisor's name] is present at the time of the interview so we get to know who was interviewed and what was asked. We hold meetings with the workers, train them, before the audit. We tell them what may be asked and what should be answered."

 

Workers' testimonies reveal that, even when audits are conducted well, and though they may pick up on some problems like basic health and safety, as a Chinese researcher stated,

 

It appears to workers and campaigners that most companies are more interested in ticking the right boxes than they are in actually improving working conditions.  As we discussed in the previous chapters, there are commercial reasons why it is in their interests to maintain low wages and the absence of trade unions.

 

We have tried to see through companies' responses to our questions, and to assess what action they are actually taking.  In the final analysis, as the CCC research concluded,

 

 

 

Top down: how the brands see it

For the majority of companies, best practice appears to means an annual audit of each supplier.  Companies that do this include H&M , Gap , Levi Strauss & Co and Asda-WalMart . The latter's website tells us that this amounted to more than 13,600 audits in 2005.

Not all companies accept that this is necessary, however.  Some, such as New Look , Tesco and John Lewis   focus regular audits on "high risk" or "core" suppliers.  Others are even less rigorous.  In some cases the information supplied suggests that there is no process to check working conditions, or only a very cursory one.  Oasis told us that,

 

Turning back to companies with regular audits, at the better end, audit programmes will involve unannounced audits.  We asked specifically about this, but few companies told us whether or not audits were announced, or gave proportions.  One exception was H&M , where 33% of audits in Asia were unannounced.

Some of the more developed responses told us what audits entailed, and placed a strong emphasis on worker interviews.  For example at Levis Strauss & Co :

Several companies, such as New Look , were 'sceptical' of the ability of 'bulk auditing' to "diagnose problems and tackle the root causes of non-compliances."  Some of these explained, in vague terms, that local stakeholders were consulted at some stage of the process, although no company indicated that this was systematic and rigorous.  Tesco , for example, requires auditing companies to,

 

Pentland said that,

Real multi-stakeholder oversight of audits is confined at present to a few companies and a few pilot projects.  Next told us about the ETI pilot project in Sri Lanka, where,

Finally, Gap has begun to examine how a more systematic involvement of trade unions in its approach to workers' rights can be realised:

 

What should the brands do?

- Supplier's perspective, ETI

 

Social audits can be valuable, if they are conducted in a credible way. That means frequent, unannounced audits; it means using gender-sensitive, rigorous, off-site interviews; it means involving trade unions and NGOs in the auditing process.  But audits remain only one small part of ensuring workers' rights. To truly determine working conditions means giving workers a voice. Freedom of association within a mature system of industrial relations remains the most powerful tool we have to verify working conditions, as it creates an environment in which workers are able to express their concerns with confidence. 

 

Other useful tools include: long-term partnerships with local trade unions and NGOs; grievance and complaints mechanisms; education and training; addressing existing business or purchasing practices; effective remediation; increased transparency.

Companies also have to make it clear that they are prepared to support factory managements to raise conditions, and ultimately pay more if it means workers will receive a living wage: when factory managements threaten workers that they will lose their jobs if they tell auditors what they are really paid, there is some truth in their argument - buyers may well be more likely to relocate elsewhere than to stump up to ensure workers receive decent pay. 

It's also important to ask what companies do with their audit results: do they simply file them away, or do they have an effective system to correct the faults they find?

So buyers need to:

• Put in place a system of regular, unannounced audits, for all their suppliers.
• Involve comprehensive worker interviews in these audits, as well as local trade unions and NGOs.
• Ensure that supplier managements implement the necessary corrective measures when audits show up problems.
• Put in place complaints mechanisms so workers can raise concerns at other times.
• Take a pro-active approach to freedom of association, including setting up worker training by local trade unions and NGOs.
• Disclose their factory lists publicly or to global union federations, and negotiate access or neutrality agreements with trade unions.Work collaboratively with factory managements to raise standards, and create incentives for improved working conditions.