Shyamain WickramasingheSchool of Geography & Geo Sciences University of St. Andrews, UK

Ethical sourcing…

Further evidence of the unreliability of assurance and surveillance in the garment industry

Prof. Rob GraySchool of ManagementUniversity of St. Andrews, UK

Structure

Background

Findings

Summary and Conclusion

Background

Can we rely on the multinationals’ assurance?

“PricewaterhouseCoopers (PwC) auditors missed violations of labour practices, failed to notice serious health and safety problems, disregarded barriers to freedom of association, and ignored violations of working hours and wage laws” (O’Rourke, 2000)

“Some multinationals maintain business relationships with factories that have never passed their audits to the point where, in extremis, surveillance is a ‘farce’” (Locke et al., 2009)

“ Monitoring does not ensure compliance” (Esbenshade, 1999)

“There is surprisingly little empirical research on the implementation of the codes and the operation of monitoring schemes”

(Rodriguez-Garavito, 2005)

Background

Where : Sri Lanka

Who : One medium scale factory in one of the of the Free Trade Zone(Supplying to M&S; Adidas; Next)

Factory managementThird party auditorsBuyer auditors

How : Literature Review, Media, ILO conventions, corporate and government websites, empirical research

Findings

Auditor Independence seemed to be compromised (and cases of influence, bribery, etc.)

Findings

Worker participation in the audits is minimal and in some cases none

Findings

“Third party auditors treat it as a business. They do not delve deeply into the issues and they do not bother about transparency. Some third Third party audits have passed the factories who do not even pay Employee Provident Fund and operate under bad health and safety conditions and who produce fake records. There have also been child labour of 14 – 15, but those have not been captured by third party auditors”

Competence of the auditors is questionable

Quote from the Buyer Auditor

Findings

Ignorance of issues and reluctance to report on findings

Quote from a Third Party Auditor

“Although clients demand many standards, they know that some of them are not adhered to and they understand it. For example even though they ask to restrict over time, their orders are very big. And they demand big shipments so, obviously, the factories have to do overtime. How else are they going to send the shipments? So, buyers know about it and they do not pay much attention”

Findings

Time spent on audits…

adequate?

Findings

Lack of accountability

Quote from a Third Party Auditor

“We pick only a sample during the audit. And that audit will only last for 9 hours. So the findings and audit report we produce is valid only for that 9 hours. We don’t know what happens during any other time and we are not answerable for any other time. The audits happen once a year as a convenience for the factory. If the buyer wants they can do an audit themselves or increase the frequency”

Findings

Audits were pre-planned with the factories

So what are the implications? ….nothing has changed

Summary & conclusion

And bringing in the hard facts…

Collapse of the Rana Plaza Factory in Bangladesh - 24 April 2013

Death toll: 1,129 (registered)A factory passed by auditors?

…………hard facts…

Bangladesh Factory Fire: Tazleen Fashion 24 November 2012Death toll: 120-130

A factory passed by auditors?

• We increasingly rely upon assurances concerning the standards applied in the supply chains of goods.

• But, there is a growing anxiety about those standards as well as about the reliability of the assurances expressed about them.

• This paper explored these matters, in particular to what extent the outcomes of such audits might be considered reliable.

• Backed by the literature, the results confirm that only in the most extreme sense might current surveillance practices offer any basis for reassurance about standards of behaviour in garment manufacturing.

Summary & conclusion

Thank you