Shenzhen in the Pearl River Delta, China, is a special economic zone. © 123RF
Shenzhen in the Pearl River Delta, China, is a special economic zone. © 123RF

Supply chain audits ‘fail to detect serious abuses’

22 January 2016

Labour abuses, poor working conditions and environmental degradation across global supply chains remain widespread, despite increased audits and inspections, a study has suggested.

Corporations with audited supply chains have designed a system of self-regulation that allows their suppliers to cover up abuses and “easily cheat weak inspection systems”, researchers from the Sheffield Political Economy Research Institute found.

They conducted 25 in-depth interviews with supply chain auditors, business executives, non-governmental organisations and manufacturers in North America, the UK and China, and visited factories in the Pearl River Delta in China (pictured).

The researchers found that supply chain audits are ineffective tools for detecting, reporting or correcting environmental and labour problems because they reinforce existing business models and preserve the global production status quo.

In addition, auditing systems supported by NGOs are increasingly reducing the role of governments in regulating business behaviour and global corporate governance is being reshaped towards the interests of private business and away from the public interest and social goods.

“The auditing system put in place by corporations gives the impression of detecting and correcting abuses but reinforces the labour and environmental problems that civil society NGOs strive to improve,” the report stated.

Genevieve LeBaron, co-author of the report and senior lecturer in politics at the University of Sheffield, said: “Recent disasters such as the Rana Plaza factory collapse in Bangladesh 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.”

She added: “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.”

LeBaron said the report should act as a “wake-up call” for governments, international organisations and NGOs.

“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," she said.

“Unless a 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."

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