Too much of anything—even a good thing—can be bad.
Social compliance audits, when properly conducted, are certainly good things (there are those who argue otherwise and I have written a prior op-ed in this publication explaining why I think they are wrong), but having a factory undergo multiple, repetitive ones in a short period of time does not do anyone any good. Sadly, this scenario has become all too common over the past two decades, earning itself the moniker “audit fatigue.” The good news is that a silver lining is emerging that I anticipate will make it much harder to justify this practice, and I envision a future where it fades into oblivion.
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But to get there, we have to start with a quick journey through the past.
Social compliance audits got going in the 1990s and truly came into their own in the 2000s. But they got started on the wrong foot. Because the core impetus had been press coverage in the nineties of some prominent buyers (brands and retailers) exposing sweatshops in their supply chains, they felt a need to protect themselves and ended up creating codes of conduct that pitted them and their vendors on opposing sides. It was a unidirectional imposition of “rules” and every buyer thought it important to develop their own program, conducting audits with their own internal teams (or using third-parties performing audits against their own code) and having the data entered into their own proprietary databases. There was no sharing of audit results or recognition of other, independent programs that emerged shortly thereafter.
As such, facilities that worked with multiple buyers ended up undergoing multiple audits, each pretty much the same as the other. And thus was born the scourge of the social compliance space—audit fatigue.
The problem did not go unrecognized. Early on, ideas to address it emerged, and attempts at “harmonizing” the industry reached their peak in the 2010s. They took various forms, but primarily went through two phases (which I have discussed at greater length).
The first involved trying to create a universal code—a single code of conduct all buyers would ascribe to, thereby requiring only one audit to validate practices in a given facility. When those types of efforts failed (quite predictably, given that universal agreement on so esoteric an issue as social values is simply not attainable), the next phase that emerged was focused on equivalency benchmarking. The idea being that even if the standards weren’t universal, they could all be benchmarked against a single code to determine whether they were equivalent. Those efforts also failed, and the main lesson from all of these attempts has been that they were all doomed to fail from the start because they all made the mistake of seeking a single “‘silver-bullet” solution, something that, in an industry as complex and disparate as this one, is not possible. There are too many different players (both on the buyer and the manufacturer side) who are at very different places on their supply chain journey and vary significantly with regards to their size, degree of sophistication, and access to resources (financial and human). As such, expecting everyone to be able to do things in exactly the same way simply does not work.
Which brings us to where we are today, and the increasing attention legislators around the world (especially in Europe) are paying to that important activity: supply chain due diligence. Across a very wide range of jurisdictions, laws are being considered that impose specific requirements (beyond simply reporting) on buyers that outsource the manufacture of their products. These mandatory human rights due diligence laws have ushered in an era of enhanced supply chain scrutiny, one that will make social audits (if done right) more important and more numerous, since they are now going to be necessary not only at the first-tier level, but further upstream as well. This makes audit fatigue an ever more pressing issue, and the need for cost effective approaches even clearer.
Over a five-week period at the tail end of this summer, Worldwide Responsible Accredited Production (I am the president & CEO of WRAP, the world’s largest independent social compliance certification program focused on the sewn products sector) did a survey of 525 facilities in 32 countries covering all the major sourcing regions of the world and running the full gamut of size. The findings revealed the extent of the burden of audit fatigue being imposed on manufacturers. A detailed report can be found on WRAP’s website, but here are the highlights:
- 69.7 percent of the factories had three or more social audits conducted during 2022. (23.5 percent had six or more, and 7.5 percent had 11 or more audits.)
- More than half the factories (51.8 percent) ended up spending over $5,000 in fees for these audits. (21.9 percent paid more than $10,000.)
- Those fees were absorbed almost entirely by the factories themselves, with less than 1 percent reporting that the buyer would pay for the audit. More than 70 percent of the time, the factory covered all the costs, with the remaining (less than 30 percent) involving situations where the costs were shared.
- In addition to money, each of these audits takes up valuable time as well. Some 44 percent of respondents said they averaged three audit-days or more, with 7.5 percent reporting seven or more audit-days.
- Seventy-six percent of the factories reported having at least one buyer insist on their own proprietary audit despite the factory showing them an independent audit report or certification.
That last statistic is the most damning because it clearly demonstrates what the core driver of audit fatigue is. There is absolutely no need for a buyer to subject a factory to its own propriety audit when that factory has a legitimate report or certification from a credible independent program. During the early days of social audits, buyers had two main reasons for doing so—uncertainty about the quality of the auditors used by independent programs, and the need to have the data formatted to meet that buyer’s own specifications. Both those reasons were products of their time (the former a function of the lack of existence of a professional standards body for social auditors and the latter the result of technological constraints in existence then) and neither one remains relevant today.
Over the past few years, the Association of Professional Social Compliance Auditors (APSCA; I have the privilege of being the chair of APSCA’s executive board) has come into its own and has not only validated the credentials of more than 2,300 practitioners as Certified Social Compliance Auditors (CSCA), but also established a Code and Standards of Professional Conduct for social auditors and set up a mechanism to strip individuals who violate that code of their accreditation. Meanwhile, on the tech side, it is now possible to easily “translate” audit information into whatever format a buyer wants to receive it in. For example, WRAP, through an Application Programming Interface (API), can transfer the data of a WRAP audit from WRAP’s database directly into a buyer’s database.
The traditional excuses for a buyer to continue to insist on their own audits, even in light of the added costs involved, are no longer valid. In fact, not only does this impose an unnecessary burden on the factory, it is also going to prove increasingly unhelpful to the buyer, because those emerging mandatory human rights due diligence laws mentioned earlier all call for independent assessments, and proprietary/internal programs will not meet that requirement.
That, then, is the silver lining I referenced earlier. Between the focus on independence in these new laws and the absence of any ongoing validity to the traditional reasons for insisting on their own proprietary audits, it is going to become increasingly harder (to the point of being impossible) for buyers to justify continuing that practice when presented with an audit report or certification from one of the handful of existing independent, credible social compliance programs. The recognition of this reality is already evident in the changes in practices some major brands and retailers have instituted recently (although, sadly, at present there are others that are yet to reach this inevitable conclusion). Once we come to realize the folly (actually, not just the impossibility, but, in fact, the undesirability) of a “there’s-only-one-way-to-do-this” approach to social compliance, we will finally arrive at the solution, which is to recognize that the answer lies in utilizing independent audits/certifications instead of insisting on duplicative proprietary audits.
The future I envision is one characterized by what I call “symphonization”’” (an approach I have written about previously), where those few credible programs coexist and serve as a menu of options for buyers and manufacturers, supplanting buyer-proprietary programs and creating a more efficient supply chain due diligence environment.
For an industry that understands better than most that one size does not fit all, that future should feel just right.
Avedis Seferian is the president & CEO at WRAP (Worldwide Responsible Accredited Production).
