"Open letter to EU policymakers on social audit failures", 13 September, 2021

OPEN LETTER TO EUROPEAN UNION POLICYMAKERS, Brussels, 13 September 2021

Subject: Urgent request to ensure social auditors’ liability and effective legislation on human rights and environmental due diligence (HREDD) and corporate accountability

Dear European Commissioners,
Dear Members of the European Parliament,
Dear Council of the European Union representatives,

As we mark the ninth anniversary of the deadly fire in the Ali Enterprises factory in Pakistan we are sending you this letter with regard to the Sustainable Corporate Governance initiative. The letter is based on our collective insights into social auditing and certification practices. The undersigned and other organisations have amply documented social auditors’ and certifiers’ failures that have resulted in countless human rights violations and loss of life. The Ali Enterprises case as well as a few other key examples are presented at the end of this letter. Crucially, these are not isolated incidents but examples of systemic failures of corporate-controlled social auditing that are ever more broadly recognised, including in academic literature. iii Yet, efforts to hold social auditing firms to account have exposed glaring accountability gaps and the lack of effective remedy for the affected workers and communities.

As we will explain in more detail, you now have the opportunity to address these issues with the upcoming HREDD and corporate accountability legislation. We urge you to ensure there is a robust liability regime – including for social auditors and certifiers in their capacity as companies – complemented with an explicit exclusion of audits and certifications as evidence of appropriate diligence.

Social auditor liability is vital to achieve the broader corporate legal accountability goal, and to end impunity where companies cause or contribute to human rights violations and environmental destruction. Furthermore, corporate legal accountability would be undermined if a company was able to defend claims of human rights harm solely through its use of social audits and certifications. There is abundant evidence of how ineffective these mechanisms are in identifying and preventing human rights abuses, and how fundamentally flawed the private audit system is as a whole. The upcoming legislation must confront this reality by ensuring that companies cannot outsource their due diligence duty to social auditors, and that they face legal accountability for human rights violations and environmental destruction.

... In that context, we once again call for robust liability regimes to give victims of corporate abuse access to justice and remedy including compensation and guarantees of non-repetition. This must be accessible in relation to any company’s conduct including when victims have sustained harm as a result of negligent and faulty audits. Any provision on the liability of auditing companies should not come at the expense of the liability of the audited companies and its directors.

Furthermore, it is essential to ensure that the upcoming legislation's provisions explicitly exclude social audits and certification as adequate proof of human rights due diligence in a court of law or in any other relevant enforcement actions. Beside other flaws outlined above, the time-limited nature of audits does not correspond with the exercising of effective, appropriate and continuous human rights and environmental diligence ...