Social audits can be used by companies to get an assessment of respect for labour and human rights in their supply chains.

Despite their widespread use, there is long existing evidence that audits are ineffective at capturing human rights abuses in global supply chains, and ultimately failing workers (I.)

Recent French case law indicates the judiciary system is giving social audits undue weight in corporate accountability cases - which means respect for human rights is being sidelined (II.)

To counter this trend, we explore what steps could be taken to reduce the illegitimate reliance on audits as evidence in court (III.)

I. Audits’ flaws are well established

Human rights practitioners as well as sociology scholars have documented both operational and structural flaws which are now well known:

On the operational side, pre-announced visits enable suppliers to hide information, non-anonymous worker interviews prevent them from speaking openly, the opacity of audits and their results mean it is difficult to hold auditors accountable in case of human rights violations, and practices deteriorate due to productivity objectives and the lack of regulation in the sector.

On the structural side, irremediable flaws include the voluntary nature which does not guarantee the implementation of recommended remediation measures, the absence of attention paid to root and complex causes of human rights violations, the inability to detect certain types of violations such as moral and sexual harassment, the inability to guarantee the absence of violations over time since they are only a snapshot of a situation, conflicts of interest given the financial link between the auditor and either the supplier or the ordering company, as well as non-intelligibility and incompatibility of their notation systems with the very notion of human rights.

II. Recent misleading commercial practices cases reveal the illegitimate credit granted to audits

After the Rana Plaza collapse, labels from French multinational Auchan’s brand Inextenso were found in the rubble. Sherpa and partners filed a complaint against Auchan for misleading commercial practices, arguing the working conditions of the company’s subcontractors were nothing like its ethical commitments, in which Auchan claimed to uphold workers’ rights throughout its value chain.

In its defence, Auchan highlighted it had carried out audits. Pursuant to current French case law, the judges had to assess whether these voluntary measures could be considered sufficient to ensure the veracity of Auchan’s CSR advertising messages, and justify a dismissal of the case. The judges dismissed the case.

In the first instance ruling, the judge relied on the recourse to audits, without even mentioning their conclusions. In the appeal ruling, they did analyse the conclusions of the audits but took for granted much of the auditors’ assertions, as well as their professionalism. The appeal filed by the organisations before the French supreme court was unsuccessful.

In another case, filed using the same legal argumentation, this time against Samsung, the judge, when dismissing the case, also relied on the conclusions of the audits, without apparent further analysis.

The reasonings of the judges in these instances show how they rely on auditors’ conclusions without appropriate caution given to their lack of independency. This seems to be partly explained by the complexity of the verifications involved.

III. Practical measures to avoid audits being detrimental to the respect of human rights before courts

First, judges could reclaim their powers and responsibilities, by making clear that the results of audit measures must be evaluated by them only. This would restore justice’s independence and prevent auditors from impinging on judges’ attributions. Indeed, in practice, audit reports contain lengthy and technical statements, then summarized in summary assessments by auditors. These auditors’ assessment should not be taken for granted; the results of audits should be assessed by judges themselves.

Second, independent court-appointed experts could be solicited to provide judges with adequate support. Audit analysis requires technical and operational skills that go beyond the legal sphere. They could bring verified expertise and restore objectivity while supporting judges on operational points.

This support could include:

- analysis of the audit procedure (announced or unannounced visits, duration and number of auditors, qualifications, interview procedures, involvement of trade unions),

- how it is financed (by the client company, by the audited supplier),

- the notation system chosen by the auditor (hierarchy of seriousness attributed to types of violation, weighting method),

- express mention of elements not audited or not included in the report,

- highlighting the controls that are specifically relevant to the case,

- necessary commercial and/or operational analyses (e.g. feasibility of an order in view of the equipment and teams on site, and the production lead time),

- the context of the checks carried out: geographical and political context, sector concerned, type of violations involved.

To finish, the weight given to audits before courts, if any, should be adapted. For instance, in corporate accountability court cases brought on the grounds of the French law on the duty of vigilance, it should be made clear an audit report can at best only be just one measure of vigilance among others, not necessarily appropriate, and unable on its own to rule out a breach of a duty of vigilance.

This could be in line with the orientation taken at the European level with the Corporate Sustainability Due Diligence directive. Indeed, it encourages companies to build their due diligence on a wide set of potential measures, to ensure it is fit for purpose in a given context, and makes clear that companies which have had recourse to third party verifications would still be able to be held liable.

Conclusion

Recent French case law has confirmed the necessity to ensure audits have a limited probative value, corresponding to their limited reliability, so they do not become a tool that unduly allows companies to escape liability.

By Laura Bourgeois, Litigation and advocacy officer at Sherpa & Clara Grimaud, Legal intern at Sherpa