DYNAMICS OF

SOCIAL COMPLIANCE
Dr. Ruth Rosenbaum
Executive Director
CREA: Center for Reflection, Education and Action, Inc.

Prepared for the Auditing Roundtable Conference

Baltimore, MD September 7, 2007

Copyright 2006 CREA Inc.

 The World of Auditing Today

Financial Auditing
Environmental Auditing
Social Auditing
 Each Branch of Auditing

Has standards
Requires skills

Achieves credibility because of

these standards and skills
 Financial Auditing

Has Legal standards

Requires Training

Designed to ensure that no one is

taking what he/she shouldnt
Designed to ensure that everyone
gets what they should
 Environmental Auditing

Legal standards
These standards vary depending
on country and law
Training can and does vary from
country to country
 Environmental Auditing
Under the best circumstances, environmental
auditing recognizes:
a. Limits of resources worldwide
b. Substances can produce illness, even death
c. Substances and the processes used to retrieve
and/or produce these substances can
permanently damage the ecosystem and
environment
d. Substances and processes can cause illness,
even death
 Social Compliance
Laws of one country or jurisdiction do not apply
in another jurisdiction
Legal is a floor, not a ceiling for standards
Legal standards are not the same as ethical
standardsor moral standardsor just
standards

Question: Where would the standards for

social auditing come from?
 Social Compliance

Originated with the awareness that supply

chains and outsourcing each bring
complexities to the workplace
Legal responsibility changes when
outsourcing occurs
Legal responsibility changes when supply
chains are used in any industry
Standards for Social Compliance
Internationally recognized standards
including, but not limited to,
1. Universal Declaration of Human Rights
2. Core ILO Conventions
Two Basic Groups of Codes
Brand codes
Industry Codes
 Social Compliance Codes
Standards originated as Codes of Conduct
developed and adopted by brands or
corporations

Today, some industries have developed or are

developing codes for the entire industry
 Social Auditing is about People

Social auditing is about labor rights

Social auditing is about human rights
Social auditing is about the workers
The workers themselves
The workplace
The living situations provided or possible for
them
 Auditing for Social Compliance

Standards

Skills

These originate from sources very

different from those of financial
and social auditing
 Auditing for Social Compliance

There are three basic groups of Social auditors

- Internal Auditors work directly for the
brand
- External Auditors external company hired
by the brand to do auditing
- Independent Monitors external human
rights, labor rights and social rights experts
 The Skills for Social Auditing

Are not an add-on to prior training

Are specific to social auditing if it is going
to be done well
Are required skills if the object of social
auditing, the protection of the workers, is
to be achieved
 Changes in Social Complaince
Today
First, creation of certification programs of social
auditors
Second, results of social auditing are being used
in sustainability reporting by corporations
Recognition that compliance with recognized
social standards is a component of corporate
responsibility, and that social auditing makes
clear the degree of compliance achieved by the
entity being audited.
 Training for Auditing for
Social Compliance
Training is necessary for each type of
auditing.
No matter whether a person is a financial
auditor, an environmental auditor or a
social auditor, each type of auditing
requires specific training and expertise
 Social Auditing & Public Reporting

Gap reports on social compliance in their

supply chain
Project Kaleidoscope
Cambodia Project
Global Reporting Initiative reports
IFC and the PS2 content and process
 Evolving Components of
Social Compliance
Rights
Management Systems
Monitoring process

There needs to be both mechanisms and

procedures to ensure the inclusion of
these components