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7. No Requirement for Auditors to Have Human Rights Competencies and Knowledge of the Local Context 

  • What this means 
  • Why investors should care
  • What to look for 
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The effectiveness of an audit depends on auditors' human rights competencies and their knowledge of the industry and local context. Without adequate training in human rights or the local context, an auditor may fail to distinguish “between an actual absence of violations and interviewees’ perception that violations were either inevitable or so common as to be normalized.”[1] Auditors who lack human rights training may conduct interviews with rights holders ineffectively or unethically.[2]
 
The International Organization for Standardization’s (ISO) “Requirements for Bodies Certifying Products, Processes, and Services” (ISO 17065) highlights competence as a key requirement of a certification body. This means that schemes should have “the necessary competence in terms of resources, personnel, and procedures to conduct certifications.”[3]
 
An auditor’s inability to speak the local language may make interviewees reluctant to report issues, especially if the interpreter is supplied by the company being audited rather than someone trusted from the rights holders’ community.[4] In the case of migrant workers, certification schemes should not assume that migrants have a “good enough” proficiency in the local language or English. In such cases, the scheme should ensure that at least one of the auditors speaks the primary languages of workers.
 
Furthermore, auditors who are unaware of the occupational hazards in a particular sector and geography may overlook known safety hazards.[5] Thus, schemes that do not require auditors to have human rights competencies or knowledge of the local context are more likely to fail to detect abuses.
 
Finally, investors should be aware of the prevalence of unauthorized subcontracting, a circumstance where many abuses take place.[6] Auditors with weak human rights competencies may overlook this aspect in their audits or not know how to identify it.
[1] MSI Integrity, Not Fit-for-Purpose: The Grand Experiment of Multi-Stakeholder Initiatives in Corporate Accountability, Human Rights and Global Governance, (July 2020), 129,
https://www.msi-integrity.org/wp-content/uploads/2020/07/MSI_Not_Fit_For_Purpose_FORWEBSITE.FINAL_.pdf.
[2] Genevieve LeBaron et al., Forced Labour Evidence Brief: Social Auditing and Ethical Certification, (Re:Structure, July 2022), 9,  https://static1.squarespace.com/static/6055c0601c885456ba8c962a/t/62d746146f5dc5205a17621c/1658275349325/ReStructureLab_SocialAuditingandEthicalCertification_July2022.pdf.
[3] International Organization for Standardization, ISO/IEC 17065:2012 Conformity assessment — Requirements for bodies certifying products, processes and services, (last reviewed in 2018), https://www.iso.org/standard/46568.html.
[4] MSI Integrity, Not Fit-for-Purpose: 129-131.
[5] Ilona M. Kelly et al., Fig Leaf for Fashion. How social auditing protects brands and fails workers, (Clean Clothes Campaign, 2019), 73, https://cleanclothes.org/file-repository/figleaf-for-fashion.pdf/view.
[6] Aruna Kashyap, ‘Paying for a Bus Ticket and Expecting to Fly:’ How Apparel Brand Purchasing Practices Drive Labor Abuses, (Human Rights Watch, April 23, 2019), https://www.hrw.org/report/2019/04/24/paying-bus-ticket-and-expecting-fly/how-apparel-brand-purchasing-practices-drive.
The following studies highlight the significant risks inherent in some social auditing schemes due to auditors' lack of human rights competencies and knowledge of the local context:

  • A 2021 report by The European Center for Constitutional and Human Rights (ECCHR) and its partners concluded that auditors’ “lack of understanding of the human rights perspective in their own operations, and a lack of normative specifications in this regard led to mistakes in their work and probably directly contributed to human rights violations of others, in some cases with disastrous consequences.”[1]
  •  A 2016 report by Amnesty International partly attributed failures of the Roundtable on Responsible Palm Oil (RSPO) to detect widespread human rights abuses in the palm oil industry to the audit teams’ lack of “specific expertise and experience of detecting labour rights abuses.”[2] In 2020, RSPO revised its RSPO Certification Systems to include annual training for auditors and freelancers involved in the certification process.
  • Researchers at Cornell University’s School of Industrial and Labor Relations studied thousands of audits conducted by “a major social auditor,” and found that visits by highly trained auditors led to significant improvements in wages and occupational health and safety scores and a decrease in incidences of child labor.[3]
 
The 2013 Rana Plaza factory collapse in Bangladesh also demonstrates the risk created when auditors fail to account for the local occupational health and safety context. According to an analysis by the Clean Clothes Campaign, at the time of the collapse it was widely known that government supervision of building safety was severely lacking. There had been earlier incidents of factory collapses after the illegal construction of extra floors. Additionally, during the audit of the Phantom Apparels factory on the plaza's fourth floor, illegal construction of additional floors was simultaneously taking place.[4] The Rana Plaza factory was far from an anomaly; it was foreshadowed by earlier incidents such as the Spectrum factory collapse in 2005. Both were located in Savar, an area of Dhaka that was once swampland. The building structures of Bangladeshi garment factories were notorious for being unsafe, as extra floors were routinely added in violation of building codes. Regular supervision of building safety by the Bangladeshi government was lacking, and the country had an insufficient number of building inspectors.
 
Following the tragedy, media reports revealed that the auditor had passed the factory using amfori’s Business Social Compliance Initiative (BSCI) and was able to do so because the BSCI code of conduct did not include building safety.[5] Nonetheless, the report authors assert that “an auditor familiar with the Bangladeshi context should have been more attentive to these aspects” and known that further scrutiny of the building was warranted.[6]
 
Investors should also be aware of attestations of standards compliance by nonaccredited auditors to the initiative or certification scheme. Researchers at the Helena Kennedy Centre for International Justice at Sheffield Hallam University documented the case of Volkswagen’s joint venture with SAIC, a Chinese state-owned automobile enterprise, involving Volkswagen’s Ürümchi plant located within the Xinjiang Uyghur Autonomous Region, where evidence of state-sponsored forced labor of Uyghur people had been mounting.[7] Volkswagen contracted Löning, a German consulting firm, to assess whether the plant was adhering to ILO conventions on forced labor and health and safety. Löning reported that it used the SA8000 framework for collecting data and determined that the audit found no indications of forced labor, an outcome that most observers, including Löning’s own senior staff, did not find credible.[8] In fact, following a US government advisory on the risks of doing business in Xinjiang, social audit firms Bureau Veritas, TÜV SÜD, Sumerra, RINA, and Worldwide Responsible Accredited Production (WRAP) all withdrew from the region.[9]
 
→ Demonstrates: Reputational risk, operational risk, legal risk
[1] Claudia Müller-Hoff, Human rights fitness of the auditing and certification industry? A cross-sectoral analysis of current challenges and possible responses, (ECCHR, Brot für die Welt, and MISEREOR, 2021), 19,  https://www.ecchr.eu/en/publication/human-rights-fitness-audits/.
[2] Amnesty International, The Great Palm Oil Scandal: Labour Abuses Behind Brand Names, (November 30, 2016), 318,  https://www.amnesty.org/en/documents/asa21/5184/2016/en/.
[3] Jodi L. Short, Michael W. Toffel, and Andrea R. Hugill, “Improving Working Conditions in Global Supply Chains: The Role of Institutional Environments and Monitoring Program Design,” ILR Review 73, no. 4 (2020): 873-912,  http://journals.sagepub.com/doi/10.1177/0019793920916181.
[4] Ilona M. Kelly et al., Fig Leaf for Fashion. How social auditing protects brands and fails workers, (Clean Clothes Campaign, 2019), 72-73, https://cleanclothes.org/file-repository/figleaf-for-fashion.pdf/view.
[5] “Decade After the Rana Plaza, Safety Flaws Persist,” Human Rights Watch, April 17, 2023,  https://www.hrw.org/news/2023/04/17/decade-after-rana-plaza-safety-flaws-persist.; “BSCI 10th Anniversary Shame over Rana Plaza,” Clean Clothes Campaign, June 25, 2013,
https://cleanclothes.org/news/2013/06/25/bsci-10th-anniversary-shame-over-rana-plaza. This incident shone a spotlight on the inadequate coverage of salient risks in initiatives, an issue addressed in Flag No. 1.  
[6] Kelly et al., Fig Leaf for Fashion, 72-73.
[7] Laura Murphy and Nyrola Elimä, In Broad Daylight: Uyghur Forced Labour and Global Solar Supply Chains, (Sheffield Hallam University, May 2021), https://www.shu.ac.uk/helena-kennedy-centre-international-justice/research-and-projects/all-projects/in-broad-daylight.; Laura Murphy et al., Driving Force: Automotive Supply Chains and Forced Labor in the Uyghur Region, (Sheffield Hallam University, December 2022), https://www.shu.ac.uk/helena-kennedy-centre-international-justice/research-and-projects/all-projects/driving-force.
[8] Victoria Waldersee, “Senior staff at auditing firm distance themselves from audit of VW's China plant,” Reuters, December 13, 2023, https://www.reuters.com/business/autos-transportation/auditing-firm-distances-itself-duos-work-vws-china-plant-2023-12-13/.; Patricia Nilsson, “Staff rebel at consultancy behind VW review of Xinjiang rights abuse,” Financial Times, December 13, 2023,  https://www.ft.com/content/46b37a15-054e-4d40-b42b-f31a0e3a07c3. 
[9] “No Bar too Low: Social Auditing State-Sponsored Forced Labor,” Worker-Driven Social Responsibility Network, February 28, 2024, https://wsr-network.org/no-bar-too-low-social-auditing-state-sponsored-forced-labor/.
Investors can check the website of the certification scheme for whether it publishes the following information:
  • Specific auditor competency or training requirements, as well as continuing education requirements. The scheme should require that at least one auditor on the audit team:
    • Has training on salient human rights issues in the industry and knowledge of the local context. One well regarded analyst recommended the Certified Social Compliance Auditors (CSCA) scheme of the Association of Professional Social Compliance Auditors.[1]
    • Speaks the local language and the languages of migrant workers (who often do not speak the local language), or at a minimum, uses a qualified, independent interpreter.[2]
  • The name of the auditing firm.
  • The means the scheme has for ferreting out unauthorized auditors and the consequences when this is found.
Note that the failure to publish such information can be another Red Flag: See Red Flag 14 in Governance & Accountability).
 
The following initiatives require auditors to possess these competencies:
➔    The Forest Stewardship Council publishes the requirements for accredited certification bodies within its online document center. The Council requires that when a certification raises "questions related to indigenous or community rights and tenure issues, or has social high conservation values (HCV), then the team shall include expert(s) who have knowledge of these issues, appropriate language/dialect, and experience of interacting with indigenous peoples and communities in the region concerned.”[3]
 
➔    Some initiatives work with only one dedicated auditing body, which has a depth of expertise on the standard, the salient risks within the sector, and what to look for during inspections. Milk with Dignity (MD), a program dedicated to improving working conditions in dairy supply chains, has a Code of Conduct which specifies the Milk with Dignity Standards Council, an independent non-profit, as the auditor. Further, the Code of Conduct specifies that the MD Standards Council’s “sole function is oversight of the MD Program—working with farmers and farmworkers to understand, participate in and achieve compliance with the standards in the Code.”[4] As noted in Red Flag 8 (in Audits), however, having just one auditor may also entail risks.
 
➔    Electronics Watch’s  Monitoring Policy provides that local organizations and independent researchers serve as monitoring partners and requires that they: 1) have expertise in labor rights, health and safety, and monitoring methodologies; 2) be located near workers' communities; and 3) have established relationships with workers through educational or other service programs such that they can meet with workers in conditions that minimize fear of reprisals.[5]
[1] The Association of Professional Social Compliance Auditors (APSCA), which certifies that auditors have human rights competencies through its Certified Social Compliance Auditors (CSCA) scheme. “Competency Framework,” APSCA, accessed June 28, 2024,  https://www.theapsca.org/resources/competency-framework-d-011/.
[2] MSI Integrity, Not Fit-for-Purpose: The Grand Experiment of Multi-Stakeholder Initiatives in Corporate Accountability, Human Rights and Global Governance, (July 2020), 129, https://www.msi-integrity.org/wp-content/uploads/2020/07/MSI_Not_Fit_For_Purpose_FORWEBSITE.FINAL_.pdf.
[3] “FSC-STD-20-001 - General requirements for FSC accredited certification bodies v4.0,” Forest Stewardship Council, 2016, https://connect.fsc.org/document-centre/documents/resource/280.
[4] “The Milk with Dignity Code of Conduct,” Migrant Justice, 2017, 
https://migrantjustice.net/sites/default/files/2018%20MD%20Code%20English%20%281%29.pdf.
[5] Electronics Watch, Electronics Watch Monitoring Methodology Guidance 1.0, (2020),  https://electronicswatch.org/electronics-watch-monitoring-methodology-guidance-1-0_2577562.pdf.
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