Auditing INADEQUATE THIRD-PARTY AUDITING PROCEDURES Scheduled audit visits present only a snapshot of conditions at a particular location, at a specific time,1 and allow companies to ‘prepare’ for the audit.2 Pre-announced audit visits give producers time to falsify records and (perhaps temporarily) remove unauthorized agency contractors or exploited workers from facilities.3 Some certification schemes go some way towards addressing these concerns by having unannounced audits in addition to scheduled visits.
ONLY PART OF THE SUPPLY CHAIN IS CHECKED Certification schemes often only specify performance standards for the primary producer or processor.4 Although schemes might have a ‘chain of custody’ standard that is intended to provide some assurance about what happens to certified goods before they reach the brand or retailer, these standards may be significantly less detailed and robust than the standards and oversight processes in place for the initial supplier. This opens the risk of, for example, human rights abuses occurring at other points in the supply chain, such as during processing of products like coffee, wood or palm oil.5 In the case where there are multiple certificates used in the supply chain, they are often audited
1
MSI Integrity (2020) p.134
by different CBs. The problem here is that the audits are done separately, and critical information – particularly concerning certified volumes of the commodity concerned – is not passed down the supply chain and shared with the CBs that are auditing the buyers of these products. This creates the opportunity for fraudulent labelling of uncertified material as certified. As discussed in the previous section, at present, no scheme has implemented a system that comprehensively tracks the movement or transformation of commodities all the way through the supply chain (the exception is the ‘identity preserved’ supply chain model, but as noted, because of the high costs associated with this system its use is not yet widely adopted).6 The FSC has developed a transaction verification system, but it is applied only in limited circumstances in relation to risk.7 This lack of full traceability and volume tracking renders claims made about so-called ‘sustainable’ certified sources questionable.
LIMITED INDEPENDENCE OF CERTIFICATION BODIES It is common practice for certification bodies to be paid directly by the clients they are auditing, who can always choose another CB if they are dissatisfied with the results of an audit. The CBs’ financial dependence on the clients they are certifying creates an intrinsic conflict of interest, potentially encouraging them to give unduly favourable audit results in order to keep their clients. As well, auditors may become overly
2 MSI Integrity (2020) pp.131-132 3 LeBaron, G., & Lister, J. (2016) p.3 4 See eg GreenPalm, What is GreenPalm? [Website].
6 Mol, A., & Oosterveer, P. (2015). See also eg RSPO (n.d.-a) p.5.
5 MSI Integrity (2020) p.102
7 FSC, Transaction verification [Website]
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Chapter 2: Key aspects that determine certification schemes’ effectiveness and credibility
