Ethical Performance
inside intelligence for responsible business


Agribusiness firms are over-reliant on auditing

April 2010

Companies involved in agribusiness have been told to stop relying on audit results for ‘off-site issues’ in managing their supply chains.

A paper on increasing the contribution of auditing to social development in global farming has said companies often depend on farm audits as ‘the main event’ in engaging with suppliers, and recommends that those in industries such as palm oil, biofuels and aquaculture apply wider measures.

The report, from the AccountAbility think tank, says that in some circumstances ‘audits may not always be the best tool’ for identifying or remedying off-site problems such as access to land or water and community rights.

It emphasises the importance of ensuring that audits actually lead to improvements and that businesses are ‘involved in identifying solutions’.  And it warns that an over-reliance on auditing against existing standards means that companies risk missing areas that are not covered by those standards, particularly off site. Companies should be looking to help improve the standards to plug these gaps, as well as funding new ones.

It also notes that suppliers in developing countries should be treated as stakeholders, and that businesses should help audited producers to deal with deficiencies, giving them examples of best practice by others in their supply chain.

Special praise goes to a ‘risk and reward’ scheme initiated by the US-based labour rights non-governmental organization Verité. The project encourages factories to admit early on where they are struggling in order to get support, after which, with improvements in place, they are rewarded in various ways. The report says such co-operation can ‘avoid cat and mouse games between the factory and auditors’.

AccountAbility concludes: ‘Audits can be seen as a relatively static process (a snapshot in time) that contributes to a more dynamic process of ongoing exchange. They are important, but their limitations must be recognised. There is a need to be more realistic about the role of audit and its limitations, particularly in relation to complex off-site social issues.’

AccountAbility | Global | Supply Chain Ethics

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