Exploring Supplier Sustainability Audit Standards: Potential for and Barriers to Standardization

Abstract

Global focal companies are increasingly required and expected to monitor the sustainability risks and activities in their supply chains, which has resulted in increasing supplier sustainability audit activity and growth in the number of sustainability initiatives/associations. While common, shared audit standards were originally conceived to reduce audit fatigue; with overlapping and converging supply chains there could be a need for cross-recognition or standardisation of supplier audit standards. This research aims to provide empirically grounded insight into sustainability audit activity, audit processes and standards for suppliers and the extent to which they overlap. Audit standards employed by eight multi-brand, voluntary sustainability initiatives/associations, focusing on supply chain sustainability (SMETA, PSCI, ICTI, FWF, ASI, JAC, amforiBSCI and RBA) were inductively analysed. This research compares the audit processes and standards, detecting common audit categories, analysing points of overlap and difference. We find empirical evidence of significant growth in supplier sustainability audit activity. We also find overlap among the standards in terms of audit process and steps, as well as at the level of audit focus categories. Deeper analysis reveals large differences at the granular level in terms of questions asked to assess specific topics. We conclude that there is potential for standardisation and cross-recognition but that significant barriers to agreement at the level of audit questions and how topics are evaluated remain. This research provides a first empirical overview of this important tool and its application in various industries for sustainable supply chain management.

Accountability by design? Exploring design characteristics of corporate social responsibility standards

“…Fifthly, the verification of compliancefrequently considered under the terms auditing, in relation to management standards (Fraser et al, 2020;Pruett et al, 2005) or assurance, in relation to reporting standards (O'Dwyer et al, 2011;Perego and Kolk, 2012)is arguably one of the best-documented accountability mechanisms in the scholarship on CSR standards. The increasing uptake of verification practices for greater accountability stems from classical accounting, where financial auditing has traditionally provided greater confidence in the accuracy and robustness of compliance claims (Milne and Gray, 2013).…”

“…Hitherto, firms that adopted CSR standards were blamed for failing to achieve compliance (Banerjee, 2011;Ählström, 2010;Dietz et al, 2019). However, there is mounting evidence that the design characteristics of the CSR standards themselves, specifically the accountability mechanisms they contain, should be considered as an antecedent of later compliance or non-compliance (Simpson et al, 2012;Wijen, 2014;Milne and Gray, 2013;Fraser et al, 2020). Nevertheless, the design characteristics of CSR standards remain underresearched (Reinecke et al, 2012;Behnam and MacLean, 2011).…”

Data requirements to tackle global deforestation through mandatory due diligence

“…The fragmentation in approaches to collecting supply chain information may lead to confusion, inefficiencies, and duplication of effort; particularly as many upstream suppliers supply multiple downstream companies. Furthermore, existing disclosed supplier data do not have standardized formats, reporting frequencies, or reporting information, which includes, for example, different metrics and the lack of common company identifiers (Egels-Zandén et al, 2015;Fraser et al, 2020 Identifying production locations and risks such as deforestation can be done via satellite imagery and resulting land use monitoring and classification maps. Recent improved availability and processing of satellite imagery data on land use and land use change have been an important step forward to help identify production locations and monitor production activities.…”

Conceptualizing Audit Fatigue in the Context of Sustainable Supply Chains

“…Some scholars have made a fleeting reference to audit fatigue as an outcome of multiple audits [19,20,101,102] but have stopped short of exploring audit fatigue beyond the basic definition or studying its antecedents and effects. Almost all of these scholars were mainly focused on other aspects of audit activity, such as sustainability initiatives/associations and supplier audit standards, e.g., BSCI, SEDEX, FFC [9,10], sustainability assessment schemes [10,19], ethical audit regimes [16], information asymmetries in multi-tier supply chains [103], etc. Their main focus was on reducing audit fatigue through various approaches rather than on explaining what audit fatigue is in itself or the dynamics (environment/context, causes, and consequences) surrounding this concept.…”

“…These numerous factors cannot be covered in one audit; hence, the need for multiple audits has grown. This has also given rise to several initiatives/associations, such as Supplier Ethical Data Exchange (SEDEX), Fair Factory Clearinghouse (FFC), and Business Social Compliance Initiative (BSCI) [9][10][11], among others, aimed at the harmonization of standards and data sharing amongst members to avoid duplication of effort [12]. While such initiatives aim towards reducing the audit burden and have improved sustainability reporting, they have yet to gain traction [13].…”