Why are multinational enterprises wasting money on supply chain audits?

17 Jan 2016, by Owen Tudor in International

A new report from the University of Sheffield, published last Thursday and brilliantly summarised by Tansy Hoskins for the Guardian, provides yet more evidence for something trade unionists have known for years. Expensive audits of the impact of supply chains on workers’ rights and environmental standards do not improve either of them. Companies that spend large amounts of money on them are wasting it, if improving workers’ lives and reducing harm to the environment are actually their objectives.

Could there be some other reason for their continuing popularity? (Here’s a clue: they often give rich multinational enterprises cover for their activities, ‘showing’ that they have taken issues consumers and electorates in the west that the goods they sell have been ethically produced.)

Unions have pointed before to the ineffectiveness of audits, with the AFLCIO in the USA producing a substantial demolition of the practice some time ago. The stand out example of the shortcomings of such audits is, of course, the Rana Plaza textile factory complex in Bangladesh, where Primark admitted that two audits had failed to identify the building safety problems that led to its collapse and the death of more than 1100 people nearly three years ago.

Audits don’t work for several reasons.

They are snapshots of situations which can only be truly understood by much more intense involvement in a workplace.

They are often conducted by people with very little understanding of what shapes workers’ conditions, even if they are experts in their profession. in the worst cases, the auditors have an interest in finding nothing wrong, or give the businesses they are auditing so many clues about how to avoid being caught out (eg giving advance notice of inspections) that it’s no surprise they find nothing to be alarmed about.

And, fundamentally, they are conducted in the interests of their clients, not in the interest of the workers or the environment.

The only real way to ensure a workplace is operating in a way which benefits the workforce is to have the workforce audit the workplace day by day, week by week, year by year. And to ensure they are empowered to conduct such auditing and act on its results, they need the power and experience of an independent trade union. That’s why the bank workers on the ground floor of Rana Plaza, who had the backing of their union to refuse to go in when cracks started appearing all survived, and the textile workers who didn’t have a union, couldn’t refuse to go to work, and died or suffered horrific injuries.

The report’s authors also argue that a more effective government inspection regime would be useful. Genevieve LeBaron says:

“Inspectorates need more funding and a stronger mandate, and workers need to be empowered to exert their rights to prevent abuses in the first place.”