Audits ineffective against irresponsible purchasing

21 July 2004
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22 July 2004

Poor purchasing practices continue to undermine corporate social responsibility (CSR) programmes and audits are ineffective, claims a new report.

Published by the Institute of Business Ethics, the report says some companies are still failing to tackle poor labour standards in supply chains. But significant progress has been made since the last report five years ago.

Louise Jamison, co-author and director of specialist trading consultancy Impactt, said the main challenge for companies was the way they did their buying.

"Commercial pressures and processes undermine labour laws in countries abroad," she said. "If lead times shrink, workers are still expected to deliver on time. Often purchasing procedures are not in line with the rest of the company's CSR programme."

She added that purchasers should examine practices from the beginning of the supply chain as well as strengthening communication between departments.

The report also claimed audits were ineffective against poor labour conditions. Jamison said: "You do not achieve better results by standing over people with a big stick. You get results and improvements by working more closely with employees, explaining your standards clearly to a factory manager. Often the factory you are dealing with is so far away that guidelines and goals can seem meaningless."

But a spokesman for ethical coffee producer Union Coffee Roasters said audits had an important role for purchasers seeking better supply chains. "For companies looking for best practice, audits are an effective way of understanding the people you work with," he said.

"Ethical trading is not just about paying the right money to producers. It is also about understanding their part in the process, and audits provide a link between the producer and the product."

Peter Smith, consultant and former president of CIPS, said a balance between commercial responsibilities and doing the right thing was essential in a highly competitive world.

"If any organisation decided to work entirely to a CSR strategy and only work with ethically sound companies, they would cease to exist in two years' time."

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