The obligation to carry out human rights due diligence cannot be outsourced.
Human rights due diligence – also referred to as corporate sustainability due diligence (CSDD), human rights and environmental due diligence (HREDD), or simply HRDD – is a continuous exercise that companies must internalize and embed into corporate policies, processes and culture.
However, companies increasingly rely on third-party auditors to assess human rights risks within their supply chains. Many are also implementing software programs that require suppliers to complete lengthy supplier assessment questionnaires (SAQs) or upload certifications as proof of compliance with international human rights standards.
While social audits and certifications can serve as useful tools that support companies’ due diligence activities, they are not sufficient on their own to meet corporate sustainability due diligence requirements.
1. Due diligence responsibility cannot be transferred to suppliers via audits or certification schemes.
Human rights due diligence is the responsibility of a company (and increasingly a legal obligation) to identify and assess the human rights impacts of its own operations and supply chains.
By engaging third-party auditors and certifiers, some companies attempt to outsource their own due diligence responsibility to suppliers. Many mistakenly believe that favorable supplier audit results and certifications are sufficient to fulfill their due diligence obligations. However, this assumption is incorrect: companies cannot transfer their due diligence obligations to suppliers by auditing them or obtaining certifications. Companies remain accountable for human rights violations within their supply chains, regardless of whether they engage external auditors or certifiers.
In fact, shifting this due diligence responsibility to suppliers contradicts a key principle of human rights due diligence: collaborating with suppliers. Collaboration in the supply chain means building trust-based relationships with suppliers and enabling them to adhere to international human rights standards, for example, through responsible purchasing practices and capacity building or financial support. This collaborative approach is explicitly highlighted in corporate sustainability regulations, including, for example, in the official guidance issued for the German Supply Chain Act (LkSG).
Audit and certification schemes do not necessarily align with this collaborative approach but often promote a policing mechanism that disincentivizes transparency regarding potential human rights issues. Furthermore, in some cases, suppliers are asked to bear the costs of audits. Cost-sharing is one way for companies to demonstrate the collaborative approach they take towards their suppliers.
This dynamic is then also mirrored in supplier contracts with clauses stipulating direct termination of supplier relationships upon detection of forced labor or child labor, for example, during audits. Disengagement clauses in supplier contracts can inadvertently incentivize suppliers to hide human rights or environmental violations. This “hide and seek” dynamic fosters a lack of transparency and perpetuates the very risks the audits are supposed to address.
Such risk-shifting practices reinforce a top-down dynamic – one that is mandated by the buyer on the supplier and disregards the buyer’s own responsibility to uphold human rights standards throughout its supply chain.
The ineffectiveness of audits and certifications in reliably identifying human rights abuses has been documented in several well-known cases:
- The two most well-known incidents are the Rana Plaza collapse in Bangladesh and the Ali Enterprises fire in Pakistan, which collectively claimed 1,300 lives, despite both production facilities being audited shortly before these tragedies.
- The Brumadinho Dam collapse in Brazil that killed 272 workers and community members. The dam had been certified by the Brazilian subsidiary of German certifier TÜVSÜD, which had confirmed its safety despite known risks.
- More recently, private auditors failed to detect migrant child labor in U.S. factories supplying several major supermarket and food brands as well as forced labor among migrant workers in Mauritius’ garment industry, which serves leading international clothing brands and retailers.
2. Social audits and certifications can support but cannot alone fulfill the due diligence obligation.
What Social Audits Can Do for HRDD:
Social audits enable companies to generate knowledge about their supply chains, particularly by gaining a better understanding of certain issues that are more easily identified during site visits, such as health and safety concerns. Audits can also indicate the level of adherence to human rights standards and point to areas that require further assessment.
Standards underpinning social audits can help suppliers to set targets for implementing human rights and labor standards within their operations and prioritize measures.
When conducted by committed and culturally aware auditors with human rights knowledge, audits can also serve as a first opportunity to engage with suppliers, workers and local community members and establish connections that can be further developed and enhanced through other meaningful stakeholder engagement methods.
What Social Audits Can’t Do for HRDD:
Audits provide only snapshot assessments of operations. While audit questionnaires may address many topics, they often examine only certain human rights issues in depth such as health and safety or overtime.
A fixed list of indicators and a focus on processes, as opposed to (potential) impacts on people, render social audits too rigid and ineffective for identifying many human rights issues. Hence, auditors are only able to capture certain human rights risks that are covered by the auditing standard they are adhering to.
Audits are typically announced in advance, providing the audited business with time to conceal human rights abuses. There are documented cases of audits where workers were coached on what to say, were skipped entirely, or replaced with representatives selected by company management.
Social auditors themselves often lack expertise in the different human rights risks and appropriate methods for engagement with rightsholder groups, including critical stakeholder groups or members of vulnerable and marginalized communities. This means they fail to adopt a human rights lens – a fundamental notion in human rights due diligence.
Audit methods may be problematic from a human rights point of view, for example, when auditors interview workers in front of their supervisors, in groups or only inside the facility or workplace. As such, it is questionable (and it has been questioned in reports by SOMO and BHRRC) whether social audits achieve better human rights outcomes.
3. Audit and certification providers must conduct due diligence too.
Another criticism of the social audits and certification sector is that it has evolved into a commercialized industry that prioritizes cost and efficiency over quality and integrity. From a human rights perspective, allocating adequate time to on-site audits is crucial.
However, unlike human rights impact assessments (HRIAs), which can take weeks or even months to complete, audits are typically conducted within strict timelines and limited budgets, leaving insufficient resources for thorough on-the-ground assessments and meaningful engagement and participation from rightsholders such as workers and community members.
In many cases, social audits end up focusing only on reviewing documents, records, and pay slips submitted and inspected by the company itself or on written responses to surveys distributed to a limited group of workers.
Paradoxically, the industry tasked with identifying human rights violations often mirrors the very systemic issues it is supposed to detect. Whether subject to a corporate sustainability regulation or not, auditing firms and certification providers themselves must exercise human rights due diligence in line with the UN Guiding Principles on Business and Human Rights (UNGPs) by establishing robust human rights policies and effective risk management system. Audit and certification bodies need to first demonstrate that they themselves are human rights fit before they can assure other businesses that they are.
Corporate sustainability laws do not require the use of social audits or certifications.
While social audits and certifications can play a supporting role in human rights due diligence, they are not a substitute for companies’ due diligence responsibility. Current corporate sustainability regulations such as the EU Corporate Sustainability Due Diligence Directive and the German Supply Chain Act clearly state this.
In Part 2 of this article, you will find the position these regulations take on the role of social audits and certification schemes and the guidance the regulators provide on how to make the most effective use of third-party schemes as part of your own human rights due diligence process.
Serra for the CORE team
