How to re-build confidence in the audit system of certification schemes

This report summarises why social audits fail to uphold certification standards and offers possible solutions to re-build confidence in the audit system. It provides examples to demonstrate the systemic malpractice and lack of redress present in a wide range of certification schemes and highlight the current flaws in the social audit process.

Read the full report in English or Bahasa

The credibility of certification schemes depends not only on their standards but on the degree to which these standards are upheld. Central to this is the effectiveness and impartiality of the auditing mechanisms used to evaluate company compliance with their standards. Some stakeholders and rights-holders have voiced concerns that third-party social audits of producer companies, conducted to verify adherence to human rights requirements, may lack rigor and depth.

On occasion, these audits may inadvertently downplay human rights violations and unsustainable practices, in part due to collusion between auditors and the companies they assess. If these schemes cannot transparently ensure that the products carrying their labels are reliable and independently verified, then markets, consumers and regulators will learn to distrust ‘sustainability certificates’ and the schemes which deploy them. Trust once lost is hard to regain.

 

"Communities do not want to hear speeches and read long reports, they want concrete action." - Huvat Biseh surveys FSC-certified logs, trees that were taken from Dayak Bahau ancestral lands without their consent. Harita Group retained FSC-certification despite human rights violations being brought to the attention of CBs on repeated occasions.

 

Read a two-page report summary in English or Bahasa

Principal Critiques of Existing Social Audit Practices: 

• Lack of auditor independence – Financial dependence between Certification Bodies (CBs) and audited entities creates conflicts of interest that may lead auditors to compromise standards in order to retain business. Competition amongst CBs creates “a race to the bottom” where CBs are under pressure to appoint less experienced, cheaper auditors to remain profitable. Companies are free to refrain from reappointing auditors who voice considerable concerns with their operations.
• Weak interpretation of social criteria – Certification standards’ often vague indicators can lead to misinterpretation and non-compliance with human rights.
• Scheduled visits and chaperoned audits – Pre-announced audits let companies prepare and may lead to biased sampling. Auditors are not always logistically independent from their ‘clients’, eroding trust in their autonomy.
• Lack of ground-truthing/Over-reliance on paper policies – company documents collected by the auditors tend to be referred to more than information directly from impacted stakeholders.
• Lack of transparency – Social audit findings and corrective actions are typically not publicly available, nor made available to impacted rightsholders, even though audits may be conducted regularly.
• Insufficient auditor capacity – Auditors often do not have the relevant social or human rights expertise and result in the omission of major non-compliances during audits.
• Lack of accountability – Accreditation Bodies provide limited oversight of CB performance and there is an absence of consequences for negligent CBs.