Precis

Transparentem’s investigations suggest that audit deception is a pervasive problem in apparel supply chains. At most worksites included in our recent investigations, workers have described strategies used by their employers or recruiters to cover up possible labor rights violations. This problem reveals the need for changes to conventional audit processes, such as increasing workers’ involvement in audits and enhancing transparency around audit findings. Additional measures to uphold workers’ rights must complement social audits, including support for worker organizing, proactive rights training for workers, effective third-party grievance mechanisms, and sustained buyer-supplier relationships based on trust and a shared commitment to human rights.

Executive Summary

Social audits, whether conducted by buyer representatives, third-party certifiers, or other independent groups, are a crucial tool for apparel companies seeking to monitor on-the-ground conditions at distant supplier factories. These audits are high-risk undertakings for suppliers: findings of violations can spur buyers to intensify oversight or terminate a business relationship altogether. Suppliers therefore have a strong incentive to ensure they pass audits, which leads some to deceive auditors, resulting in misleading and inaccurate audit findings. Recruiters who connect workers to jobs may also hide abusive practices from suppliers in ways that later prevent auditors from detecting these problems.

Audit deception is a serious impediment to identifying and remedying human rights abuses in global supply chains.1 This report compiles evidence from Transparentem’s past investigations of efforts to conceal labor rights violations from social auditors in the apparel industry in India, Malaysia, and Myanmar, as well as research from peer organizations and academics, which indicate that audit deception is a pervasive problem in apparel supply chains.

Transparentem has uncovered evidence of audit deception at most worksites included in its disclosed investigations since 2019. Interviewees across nearly 20 garment factories and spinning mills in India, Malaysia, and Myanmar described various strategies by employers and recruiters to conceal labor rights violations. Common tactics included falsifying documents, coaching workers to lie, and hiding workers who appeared to be employed unlawfully. Some workers said they feared that buyers would cancel orders, and thus jeopardize their jobs, if they did not help their employers cover up violations. Collectively, workers’ testimony suggests that what auditors observe during a worksite visit is often not representative of typical conditions, and evidence shows that documents auditors review may sometimes be inaccurate.

Interviewed workers’ accounts reveal that many types of labor abuses can be hidden from auditors, including passport retention, wage and hour violations, and hazardous working conditions. Transparentem’s investigations found evidence of audit deception around illegal adolescent labor and prohibited recruitment fees to be particularly common. Adolescent workers were either hidden on the premises or ordered to stay away from the workplace during audits, according to workers at almost all investigated worksites in India and Myanmar. At some factories in Malaysia, Transparentem found evidence that recruiters or employers attempted to conceal excessive recruitment fees foreign workers had paid to secure their jobs.

In order to combat audit deception, buyers must structure audit processes to minimize the chances of deception and maximize worker agency. Buyers should increase worker involvement in audits, improve auditing techniques, and enhance transparency around audits and remediation processes. Improvements to auditing processes alone, however, are insufficient—buyers and suppliers should also do more to uphold workers’ rights, by providing greater support for worker organizing, proactive rights training for workers, and effective third-party grievance mechanisms, among other measures. Buyers must also work to develop sustained relationships with their suppliers based upon trust and shared human rights commitments.

Efforts by buyers and suppliers to improve auditing practices and working conditions can also be supported by others. Notably, investors and nongovernmental organizations (NGOs) can support buyers and suppliers attempting to improve auditing practices and working conditions. They can also hold buyers and suppliers accountable when they fail to protect workers.

About Transparentem- Transparentem is an independent, philanthropically funded nonprofit organization that uses frontline investigative methods to identify environmental and human rights abuses in global supply chains. Our mission is to advance the well-being of workers and their communities by exposing hard truths to those with the power to transform industries. We strive to be a catalyst for systemic change and work with diverse stakeholders, including brands and manufacturers, to eradicate those human and environmental abuses, and encourage supply chain traceability and transparency. Transparentem is tax exempt in the United States under Section 501(c)(3) of the Internal Revenue Code.

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