Effective ethical sourcing: part 2
- timnicolle7
- May 29
- 5 min read
Updated: Jun 4
In a recent post we explained why an ineffective ethical sourcing policy can increase risk: https://www.es3g.com/post/ethical-sourcing-policies-increase-risks.
This is the second of a three part series of posts on ethical sourcing and how to make your policy effective.
This sets out the overall approach.
The four factors to consider in the design of policy and implementation.
And it covers the first factor in the list - "understanding the risks to workers".
There is a third post (part 3 can be accessed here).
The four factors (repeated):
Factor 1: the risks that workers might experience harms
Factor 2: what is "reasonable" for you to do to monitor those risks
Factor 3: what do you do about harms that are detected
Factor 4: how you talk about what you are doing
This second post in the series focusses on the second of the four factors.
Factor 1 - covered in our earlier post
In summary, the risk to workers will vary between suppliers and locations.
Risk severity can be mapped and suppliers can be graded to reflect the level of risk to workers given the nature of each supplier's operation. Some suppliers will be higher risk than others. Higher risk suppliers require more attention.
Factor 2: what's reasonable for you to do to monitor those risks?
There is no single answer here.
A combination of solutions is likely to be best - and this article sets out the case for combining social audit with continuous worker voice, given that this can be both effective and reasonable.
What tools are available to make ethical sourcing effective?
There is a range of tools available that include:
Supplier self-certification
Social audit
Worker surveys
Continuous workplace monitoring via technology
"Grievance mechanisms"
So we have five tools available that can be used individually and in combination.
What would be reasonable?
It would not be reasonable, for example, to expect a business to audit its suppliers every single day, or to place one of its own employees permanently on site to check that workers are being treated in line with ethical sourcing policies that suppliers may have signed up to.
On the other hand, except in rare situations, it would also not be reasonable to rely, for example, on self-certification of compliance by the supplier.
Sometimes it is the supplier that is the bad actor, whether that is as a business or because of the unchecked behaviour of individuals.
Sometimes the buyer itself is the bad actor - for example, if its purchase practices are not responsible.
But the important point is that, if worker human rights are not being respected by a supplier, the supplier is unlikely to admit this to you in a questionnaire.
From a liability point of view, perhaps it might be better to have no policy at all, rather than to set a policy and rely on supplier self-certification - even if suppliers are felt to be very low risk.
Is social audit sufficient?
Social audits are good in some areas but weak in others.
Social audits, by themselves, are unlikely to be sufficient.
A typical social audit relies on:
A substantial level of supplier self-certification
A review of limited evidence (eg: payroll records provided by the supplier)
Interviews of a small cohort of workers usually on-site an during working hours, often in groups rather than individuals, and often selected by or with the selection approved by supplier management
Whilst many social auditors are experienced, less-scrupulous suppliers are easily able to manipulate audit findings to their advantage - particularly if the audit is announced ahead of time.
The limitations of social audit are well-known and widely-discussed. For example, this study found that social audits were not sufficient to generate credible information pertaining to specific human rights risks (Human Rights Watch (2022), “Obsessed with Audit Tools, Missing the Goal; Why Social Audits Can’t Fix Labor Rights Abuses in Global Supply Chains.” )
What can social audit deliver?
Social audit is good at identifying "observable risks", although less good at identifying "social and behavioural risks", despite its name.
Observable risks are hard facts that suppliers find difficult to hide, such as:
Policies that are non-compliant
Out of date certificates
Visible dangers (cables, pollution, cramped workspaces)
Inadequate sanitary facilities
Social and behavioural risks are harder to detect and easier for suppliers to hide and these are matters that a social audit cannot reasonably detect, such as:
Harassment, discrimination, wage theft
Forced labour, child labour
The gaps in social audit can be plugged
Detecting social risks is best done by asking the workers directly. The challenge, historically, has been that direct worker surveys have tended to be expensive and time consuming in terms of outright cost and disruption to the supplier; they also need to be repeated reasonably often to be effective.
The alternative is to partner social audit with continuous worker voice.
This can deliver a solution that can be both "effective" and deliverable at a reasonable cost.
Continuous worker voice asks workers directly, independently and all the time how they are treated. It is hard for suppliers to influence workers without detection and it provides transparency on exactly the issues which social audit finds difficult to detect:
Workers download an app, linking themselves anonymously to the location where they work
The app is available to all the workers, all the time and can be used at any time.
Each day, workers can use the app to provide feedback on their treatment by answering a small number of questions drawn from a much larger panel, mapped to the ETI base codes (see above).
Since all the workers can use the app and can keep returning to the app, data flows from the workforce covering all the questions every day .
Workers own the data that they provide and need a small financial incentive to reinforce usage of the app and to compensate them for their efforts.
Continuous worker voice costs as little as a fraction of a US$ cent per month per worker. That's because these platforms (like Ask the workers) are designed for scaled implementation across all the workers in all the suppliers to an enterprise.
Combining continuous worker voice and social audit
Many advantages come from a combined approach without breaking the budget:
Social audit is:
a snapshot, often paid for by the supplier and announced in advance,
but it can detect observable worker-human-rights risks (eg: building and machinery safety); these are risks which workers are often unaware of and therefore poorly placed to comment on.
Continuous worker voice is:
all the time and independent of the supplier
it detects the social risks that social audit misses - providing data to enable root cause detection if matters are arising, combined with the automatic monitoring of remedy delivery,
it enables you to understand the impact of your own leverage on the supplier (eg: low prices, rush-jobs, late changes to orders), and
the simple fact of its implementation deters suppliers from operating in less ethical ways.
It is this ability to provide effective coverage of the risks at a reasonable cost which makes the combination a compelling approach.
In the final post, we look at the final two factors and put all of this into context.
These are really interesting topics - and we are keen to talk to human rights specialists, ethical sourcing teams, worker organisations, social auditors and consultancies.
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