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www.psi-network.de PSI Journal 11/2016 on the grounds of religious affiliation or gender, and whether or not wages are paid correctly. Further questions include: Is protective equipment available for the workers and is there access to fresh water? Would medical care be sufficient in the case of an accident? Does the company discharge toxic waste water or fumes without filters? Does the company respect the local laws or does it ignore regulations? These and many more questions are examined in audits and answered in final audit reports. On request, a “corrective action plan” which lists the negative points and makes suggestions for improvement is drawn up following a social audit. The extent to which the audited supplier is willing to implement concrete suggestions for improvement can now be seen. Of course, the implementation of the recommendations must be verified, for example, by means of further short-term audits aimed only at the implementation of the corrective action plan. Risk analysis as a first step How should should a a company company that that wishes wishes to to demonstrate demonstrate gen genuine responsibility and to audit “many” of its suppliers proceed? Often, the volume to be processed is a real challenge. For example, by their own account H&M has 1,650 suppliers, BASF has 6,000 suppliers worldwide for raw material procurement alone, Daimler AG has 20,000 suppliers and Wal-Mart has more than 100,000 suppliers for “parts, packaging and technical components”. Even comppanies p beyond y corporate p ggroups g p of this size easily y have several hundred suppliers. Of course, you do not simply start with supplier A and work through to Z. In the initial step, the suppliers are first analysed in terms of risks, identifying those with the highest risk. This is done, among other things, by answering the following questions: ? Does my supplier come from the EU and is he thus obliged to comply with all EU laws? Or does he come from a region in which laws exist but implementation is often inadequate? ? Is the region which the supplier comes from known for violations of social responsibility issues? ? Is the supplier one of my main suppliers? Would it hurt me if he failed the audit? ? Are the supplier’s products easy to manufacture, e.g. by unskilled workers, or is specialisation necessary? ? Are the products or production dangerous? These and other questions are helpful to classify suppliers from “high risk” to “low risk”. It is sensible to deal first with the suppliers which represent a high risk. Danger of manipulation Every professional audit can be manipulated, and this is attempted again and again: For instance, factory managers try to bribe auditors, they hide child labourers or alter documents. Nobody is immune to criminal energy and lies, as is demonstrated by practical examples from the recent past. Ultimately, defective products produced by unqualified workers will at some point be detected. Or when local auditors repeatedly hear ‘rumours’ in the region that a worker was fatally injured again. When factories have the reputation of being “unsafe” or when it is known that wages are always paid too late. This is why Intertek auditors in India have become accustomed to getting up on the roof during their factory audits. It is often the case that child labourers are hidden on the factory roof. Even factory managers sometimes play cat and mouse with auditors. However, it is clearly visible that the majority of manufacturers consider auditing to be a necessary measure to sell their products. Significant progress In discussions about the impact and benefit of audits, the question often arises as to whether audits really achieve anything. The answer to this is a resounding yes: despite black sheep and undetected manipulations, overall audits create greater transparency and security in one’s own val- ue-added chain and help p pto improve p the working g genviron- ment and ultimately the living standard in the production countries. A look at the economic history shows us that former low-wage countries such as South Korea, Singapore and Hong Kong have continued to develop. South Korea’s per capita annual income was 500 dollars in 1960, and today it is 20,000 dollars – whereby such figures are relative depending on the price level. Since the beginning of the 90s, 800 million jobs have been created worldwide, many of them in sweatshops. It is precisely for this reason that some argue that it is counterproductive to boycott clothing made in sweatshops. In Europe, it took 40 years for the average income to double. The countries of South- East Asia needed 10 to 15 years to achieve this. Overall, however, not only has the wage structure improved, but working conditions and product quality have also made significant progress. At least according to the experts. < 27

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