Monitoring Misconceptions – The Role of Auditing in Supplier Code of Conduct Programs Part II

In my last blog submission, I shared my concerns about the misunderstanding, and misapplication, of Code of Conduct auditing. Part of this misunderstanding stems from the perception of a Code of Conduct assessment as a fix-everything panacea, versus a means of: a. Assessing the needs of the workforce; b. Assessing an employers’ impact on that workforce and the surrounding community, and c. Measuring continuous improvement and business impact. If it’s done correctly, there can also be room to lend guidance and begin to build capacity.

I promised to return with some suggestions for improving the system, so here are a few:

First, the design and communication related to responsible sourcing programs should reflect an intent that is less centered on passing audits, and more on the positive financial impact of continuously improving systems, and the business case for reducing workplace risk and improved relations with staff and business partners. The tone and message should reflect both the absolute necessity of supplier buy-in, and also the long-term collaborative nature of the brand/supplier relationship (And yes, if the brand is going to speak about building long-term relationships, their actions should obviously reflect that).

Secondly, brands should incorporate deeper assessments that identify gaps in systems, not simply the end results of those systems gaps. This becomes all the more possible (financially and administratively) as brands continue to collaborate and consolidate efforts related to their Code of Conduct programs. Redundant audits that simply identify findings will eventually be replaced by less frequent, deeper assessments that involve a greater percentage of the workforce, that communicate the impact of workplace risk and improved workplace systems, and that integrate the assessment deeply within the remediation process. These assessments will act as a jumping off point into a longer term, collaborative dialogue that recognizes the importance of the participation of the workforce in both the assessment process, as well as the ongoing remediation.

And yes, in many cases, that requires a tremendous shift in mindset. It also requires an improved understanding of Code of Conduct systems. That applies to:

• Factory management – They need to know how to develop and manage these systems, and what separates a corrective action (“Hang the extinguisher”) from a preventative action (“Why wasn’t it hung, and how do we keep it hung, and how do we ensure that everyone knows how to use it, etc?”)
• Agents/Vendors – They should be able to proactively identify effective or ineffective workplace systems during their subcontractor vetting process. They should also be in a position to drive improvement in those systems once issues have been identified during the audit process. If the value that an agent brings to a factory is the ability to take that business’ goods to market, that agent should recognize that effective workplace systems are part of meeting that market demand.
• Brands – Brands need to improve their understanding so that they are able to focus their efforts on managing an ongoing dialogue based around continuous improvement systems, and not passing audits. Brands can also provide support in the form of skills building and access to scalable systems that enable their partners to manage ongoing remediation and improvement of their own networks. And, of course, brands can make a massive impact through a critical self-assessment of their own purchasing practices.
• Service providers – In the spirit of humility, I will include myself and my colleagues in with this lot. We don’t know everything, and there are improvements that we can continue to make regarding building our own capacity in regards to systems assessment and remediation.

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Ryan Lynch is the US East Coast Regional Manager for CSCC. Ryan has worked with various Fortune 1000 retailers, licensors, and manufacturers to develop responsible sourcing programs in order to assess and improve labor conditions throughout the supply chain.