How to do an ethical procurement audit?

What is an ethical audit?

An ethical audit is an examination of suppliers practices to ensure its compliant with legal and contractual requirements. It’s likely that an ethical audit is part of a supplier’s contractual agreement and often, an ethical audit is done before the contract is signed. The audit can vary, from assessing employee awareness to understanding the overall ethical culture of an organisation.

How do you conduct an ethics audit?

An audit is important to determine which parts of the ethical standards are met. Some buyers provide their suppliers with self-assessment workbooks of explanatory guides. This is helpful when national laws are not well known. Before an audit takes place, buyers should check the suppliers understanding of ethical procedures.

Here are some hints and tips on how to conduct an ethics audit:

• Off-site interviews with workers and ex-workers in places where they are free to speak honestly
• Audits can be undertaken by a third party such as - non-government organisations (NGOs), commercial audit companies, or by the organisation’s employees.
• Suppliers with experience of selling internationally may already have been audited, and buyers could ask to see recent results. Initiatives such as SEDEX have been set up to share audit data amongst organisations to avoid duplication and reduce supply chain costs.
• Having trade union representation or an independent workers’ committee at a supplier site can be an advantage for the buyer and the workers. Unions and workers committees can provide information, inform workers about their rights, and provide a structured process for supplier management to discuss workers’ priorities and grievances.

Key challenges of the auditing process

Despite auditing being a fundamental part of procurement ethics, there are some challenges you may face. The way audits are undertaken can undermine the social or environmental objectives. Suppliers goodwill can be lost if the buyer requires them to pay for audits and improvements but fails to enable and support improvements. Buyers may need to think twice about requiring a supplier to make the costly investment of an audit when there is no guaranteed order. In the worst case, this can result in suppliers falsifying records for an audit, asking workers to lie in audit interviews or bribing the auditor.

The key to whether audits lead to positive or negative outcomes lies in how the results are used and whether processes are put in place which lead to sustainable improvement in conditions. Building up worker awareness of their rights and establishing an effective worker-management dialogue is a cost-effective way of ensuring sustainable improvement in conditions.