'Abuses are taking place within ‘certified’ supply chains' say authors

Global supply chains audits for corporations fail to detect serious abuses: Report

By Will Chu

- Last updated on GMT

Ethical audits do little to root out labour abuses and poor working conditions, a report has highlighted. (© iStock.com)
Ethical audits do little to root out labour abuses and poor working conditions, a report has highlighted. (© iStock.com)

Related tags Supply chains Human rights

NGO-certified ethical audits do little to root out labour abuses, poor working conditions and environmental degradation within global supply chains, as a report accuses corporations of 'fixing' the process to ensure working standards are approved and accredited. 

The study raises serious concerns about the auditing process, carried out as part of the Corporate Social Responsibility (CSR) initiative, accusing the audit regime of ‘working’ for corporations, reinforcing existing business models and preserving the global production status quo.

In addition, the report accuses audits of reinforcing the labour and environmental problems that civil society non-governmental organisations (NGOs) are striving to improve.

Slavery seafood was 'certified' sustainable

The report, produced by Sheffield Political Economy Research Institute (SPERI), highlights the human rights abuses in the Thai seafood supply chain​, exposed by The Guardian newspaper in June 2014. The newspaper reported that slaves were being used in the production of Thai seafood sold by major US, British and European retailers, such as Tesco, Aldi and Morrisons, supplied by Thai company CP Foods.

The Thai seafood supply chain was accused of using slave labour to supply seafood to major US, British and European retailers. (© iStock.com)

It was revealed that the Thai shrimp in British supermarkets had been ‘ethically’ certified by an NGO that sets voluntary standards for the certification of agricultural products and encourages producers to adopt ‘safe and sustainable practices.’

“Recent disasters have put the spotlight on supply chains, but what has been less reported is that labour, safety and environmental abuses often take place within ‘certified’ and audited supply chains,”​ said Dr Genevieve LeBaron, co-author of the report and senior lecturer in politics at the University of Sheffield and a current visiting professor at Yale University in the USA.

“Our interviews reveal how corporations have designed an inspection and auditing system for global supply chains that is ‘working’ for them, but badly failing workers and the planet.”

Corporate control

To investigate corporate supply chains, LeBaron and co-author, Jane Lister, interviewed supply chain auditors, business executives, non-governmental organisations and manufacturers in North America, the United Kingdom and China, as well as visiting factories in the Pearl river delta region of China.

LeBaron and Lister discovered the influence of corporations on the ethical auditing process was such that certification standards set up by NGOs to monitor and verify standards, were entirely voluntary and relied on private audits, designed and paid for by corporations, to assess standards.

The report described the governance of global supply chains as increasingly reliant on an ethical and voluntary ‘benchmarking regime’ supported by corporations and civil society groups, in which audit inspections played a key role.

This auditing regime comprised company codes of supplier conduct, voluntary certifications, standardised metrics and aggregated indexes for comparing corporate environmental and social performance.

The authors believe audits had evolved from a management tool that multinational corporations used to measure, track and enforce internal organisational standards into a central mechanism of global state and non-state efforts to monitor standards within corporate supply chains.

LeBaron said: “Arguably it is the unsustainable business models of large corporations, which are reliant on cheap labour and environmental degradation that drive abuses within supply chains. Yet corporations, by working with a growing audit industry, are presenting themselves as the solution to the abuses.”

Fruits & Vegetables
Emmetts UK were discovered to have 60 forced labourers working on site, months after the farm had passed two successful audits. (©iStock.com)

As well as the human rights abuses in the Thai seafood supply chain, the report also highlighted Emmetts UK – a large vegetable grower and supplier to Tesco and Waitrose, who were discovered to have 60 forced labourers working on site - months after the farm had passed two successful audits.

Similarly, the Lipton brand of tea had recently achieved the ‘green’ Rainforest Alliance Certification, despite illegal labour practices in its supply chain being widely reported.

Food fightback

The food industry has taken steps in addressing the problems within its own supply chains. Nestlé were amongst the first of the ‘big’ food manufacturers to protect workers from abuses, improve working conditions and tackle unacceptable practices including juvenile and teenage working.

Nestlé’s ‘action plan’,​ unveiled at the end of November 2015, included the establishment of a migrant workforce emergency response team, setting up a grievance mechanism, providing training for captains and boat owners operating in the industry, and raising awareness about minimum required labour standards.

The firm’s executive vice president of operations Magdi Batato said: “Nestlé is committed to eliminating forced labour in our seafood supply chain in Thailand, working alongside other stakeholders to tackle this serious and complex issue.

“We believe that out action plan will improve the lives of those affected by unacceptable practices. This will be neither a quick nor an easy endeavour, but we look forward to making significant progress in the months ahead.”

In December last year, food and drink makers Princes, were the only manufacturer so far to come forward after the Ethical Trading Initiative asked the industry to map their supply chains, following revelations of gross exploitation of workers in the Italian tomato processing industry​.

“The report should be a wake-up call for governments, international organisations and non-governmental organisations,” ​LeBaron concluded.

“It raises serious questions about the effectiveness, legitimacy and accountability of a system of supply chain monitoring that is increasingly being designed, implemented and reported on by corporations themselves. Unless concerted effort is taken to strengthen non-corporate led inspections it seems highly likely we will continue to have serious abuses within the supply chains of major global brands.”

The full report: “Ethical Audits and the Supply Chains of Global Corporations​,” is available HERE​.

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