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14. Does Not Make Information on Audits, Complaints, or Compliance Public

  • What this means 
  • Why investors should care
  • What to look for 
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Public disclosure of audit methodology, compliance, and complaints lodged enables public monitoring and generates accountability and trustworthiness of the certification scheme. The International Organization for Standardization (ISO) addresses transparency in standard ISO 17021, which outlines requirements for bodies providing audit and certification of management systems. The standard requires certification bodies to be transparent in their operations, including the disclosure of their audit processes, the criteria used for certification, and the qualifications of their auditors.
 
The OECD Guidelines do not explicitly require companies to make their audit reports public. However, the Guidelines emphasize transparency, accountability, and disclosure as key principles for responsible business conduct. For example, the Guidelines encourage enterprises to disclose timely and accurate information on all material matters regarding their activities, structure, financial situation, performance, ownership, and governance. This includes both financial and non-financial information. Specifically, Chapter III on Disclosure recommends that companies ensure that their disclosure policies are transparent and provide information that is relevant for different stakeholders.
 
Unfortunately, transparency has yet to become a standard across the certification industry. In 2019, the Clean Clothes Campaign (CCC) reported on multiple standards that did not have the necessary transparency mechanisms.[1] One of those was Social Accountability Accreditation Services (SAAS), a division of Social Accountability International (SAI), the owner of the SA8000 standard. The CCC asserts that SAAS “does not reveal the number of workers per facility. Furthermore, audit reports, including identified and documented risks and any corrective actions taken, are not accessible to the public, workers, unions or labour rights organisations.”[2] Without full transparency, the validity of external audits cannot be corroborated, nor can progress and improvements be measured.[3]
 
While care needs to be taken to ensure that making audits public does not harm rights holders, some level of transparency is necessary for stakeholders to know how well the certification is working to improve human rights protections in workplaces. Workers know their own workplaces best, and likewise communities understand their community dynamics and ownership rights best. Rights holders have unique insight into the intricacies of their work environments and are well positioned to validate or contest the findings of auditing reports. Re:Structure Lab’s Social Auditing and Ethical Certification brief notes that “[r]esearchers have highlighted the need for workers to have access to audit reports, as well as feedback mechanisms to report disputes and ideally seek remedy.”[4]
[1] Clean Clothes Campaign, “Fig Leaf for Fashion: How social auditing protects brands and fails workers,” Social Accountability International (SAI), Worldwide Responsible Accredited Production (WRAP), and Amfori BSCI are named in this report. (Ilona M. Kelly et al., Fig Leaf for Fashion. How social auditing protects brands and fails workers, (Clean Clothes Campaign, 2019), 31,  https://cleanclothes.org/file-repository/figleaf-for-fashion.pdf/view.)
[2] Kelly et al., Fig Leaf for Fashion, 19.
[3] Gabriela Quijano and Joseph Wilde-Ramsing, A Piece, Not a Proxy (SOMO, November 25, 2022), 17, 
https://www.somo.nl/a-piece-not-a-proxy/.
[4] Genevieve LeBaron, et al., Forced Labour Evidence Brief: Social Auditing and Ethical Certification, (Re:Structure Lab, July 2022), 25, https://static1.squarespace.com/static/6055c0601c885456ba8c962a/t/62d746146f5dc5205a17621c/1658275349325/ReStructureLab_SocialAuditingandEthicalCertification_July2022.pdf.
The fire at Ali Enterprises in Pakistan in 2012, which killed over 250 workers, exposed severe failures in the auditing and certification processes. The factory had been certified as safe under the SA8000 standard by the Italian auditing company RINA just weeks before the fire, despite significant safety issues such as blocked emergency exits and barred windows. This certification failure contributed to the high death toll as workers were unable to escape the blaze.[1]​
 
One of the critical issues was the lack of transparency and accountability in the auditing process. RINA's certification implied that the factory met international safety standards, which was not the case. The fact that these audit reports were not made public, preventing independent verification and undermining the credibility of the certifications, exacerbated the situation​.[2] 
 
In the aftermath, there was strong criticism of the auditing system for protecting companies' reputations rather than genuinely improving worker safety​​.[3] In September 2018, several unions and NGOs (Ali Enterprises Factory Fire Affectees Assoc.) filed a complaint against RINA to the Italian OECD National Contact Point for breach of the OECD Guidelines. In the complaint, they called upon RINA to provide for the “public disclosure of future audit reports, at least to the relevant trade union, workers at the audited factory and relevant government agencies.”[4]
 
→ Demonstrates: Reputational risk
[1] Zia Ur Rehman, “Eight years after the Ali Enterprises factory fire in Pakistan, victims and their families are still fighting for justice,” Equal Times, October 19, 2020, https://www.equaltimes.org/eight-years-after-the-ali?lang=en.; European Centre for Constitutional and Human Rights (ECCHR), Case Report: RINA certifies safety before factory fire in Pakistan, (December 2020),  https://www.ecchr.eu/fileadmin/Fallbeschreibungen/CaseReport_KiK_RINA_December2020.pdf.
[2] OECD Watch, Ali Enterprises Factory Fire Affectees Assoc. v. RINA S.p.A, (September 11, 2018), 21, 
https://www.oecdwatch.org/complaint/ali-enterprises-factory-fire-affectees-assoc-v-rina-s-p-a/.
[3] Simone Preuss, “Five years after Ali Enterprises fire, not much has changed in Pakistan's garment industry,” Fashion United, September 13, 2017, https://fashionunited.com/news/business/five-years-after-ali-enterprises-fire-not-much-has-changed-in-pakistan-s-garment-industry/2017091317306.
[4] OECD Watch, Ali Enterprises Factory Fire Affectees Assoc. v. RINA S.p.A, 23.
Investors can examine the certification scheme’s policy documents to understand whether audit reports are shared with affected workers or community members who can verify or dispute report findings.
➔    Fairtrade International’s Standard for Hired Labour requires audit results to be shared with workers. It mandates that “company shares audit results with workers following each audit in a format and language accessible to workers.”[174]
With regard to complaints, investors can check to see whether the certification has a complaints database.
➔    World Wildlife Fund’s Certification Assessment Tool (WWF CAT) includes the following stipulations: 
  • Certification bodies post information about upcoming scheduled certification and surveillance audits on a common national and/or international scheme-operated website or mailing list.
  • Summary reports of certification and surveillance audits (including dates, locations, scope of auditing, team composition, main findings, and corrective action requests) are publicly available in a UN language and a common local language on a website.
  • Summary reports of certification and surveillance audits are made publicly available within 90 days after completion of the audit (see Red Flag 11 in Grievance Mechanisms).[175]
➔    ​Fair Labor Association publishes the results of audits “to encourage an open and honest dialogue about the conditions that workers face, ensure brand accountability, and help consumers make more informed decisions about the products they buy.”[176]
Publicly sharing individual audits and complaints is only one way to ensure a certified company is complying with its commitments. For example, members of the Worker-Driven Social Responsibility (WSR) Network provide detailed annual reports that include data on complaint volume and resolution time frames, overall supplier compliance levels over time, and qualitative worker feedback on the WSR program’s effectiveness.[177]
[1] Fairtrade International, Fairtrade Standard for Hired Labour, (April 16, 2024), 9, https://www.fairtrade.net/standard/hl.
[2] WWF, WWF Certification Assessment Tool V3, (2015), 4,  https://wwfint.awsassets.panda.org/downloads/cat_fsc_14_5_15_final.pdf.
[3] “Assessments,” Fair Labor Association, accessed July 1, 2024, https://www.fairlabor.org/accountability/assessments.
[4] Antonella Angelini and Shauna Curphey, “The Overlooked Advantages of the Independent Monitoring and Complaint Investigation System in the Worker-driven Social Responsibility Model in US Agriculture,” Business and Human Rights Journal 7, no. 3 (October 12, 2022): 497, https://doi.org/10.1017/bhj.2022.25.
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