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Common audits emerging among retailers

Reena Mital - Mumbai

Social responsibility, audits, are becoming increasingly important in the global market, with newer laws and audits being implemented over time.

One such is the Customs Trade Partnership Against Terrorism (C-TPAT), which a number of US retailers are looking at seriously bringing into force in India. According to industry sources, “Some exporters to the US have come up against this issue, and once buyers decide to implement this, it has to be done, no matter what.”

According to officials of the Textiles Committee, “There have been positive changes after the strict imposition of the various social, environmental, quality requirements of the buyers, even as some of these may be a bit irrelevant, or managing the number of audits, especially in garment units which have no clear management structures could be cumbersome.”

This is especially so when buyers from the same country refuse to recognise each other’s auditing systems. “However, this is changing. For instance, in Germany, the 30 or so retailers have evolved common auditing systems that recognise each other’s factory audits. But other European countries would still implement their audits on these same factories.

The UK has also started the British Retail Consortium, and this would also mean recognition of the audit results among the members of the consortium. It is learnt that France too is coming out with its own standards,” informed sources.

Industry sources further informed that units prefer to comply with the norms today, rather than lose business. One such garment unit ended up paying the provident fund contribution of its employees’ too, when the employees refused to do so, just so the law is followed, and the auditors are satisfied.

In another case, the workers were entitled to ESI benefits, but the ESI authorities refused to provide the medical benefits, and issue the ESI cards. “This was a violation of the law, for which the management was being held responsible. Finally, a solution was arrived at with the ESI authorities, the company sent its own person to make the cards, so that the workers could avail the medical benefits.

All this is done today, just so business is not lost. In fact, a number of smaller companies have begun going in for critical audits, to find out where they stand and what improvements are needed, so that they are prepared once their buyers begin demanding certifications, and audits,” according to a consultant.

Similarly, working conditions for the workers has also improved significantly. “While earlier, in some factories, there was no provision for food, now the companies have made these provisions. Also, there is clean drinking water, toilets, etc, which was not there earlier,” inform sources.

Another reason why it is easier to implement the norms is that there are laws in the country for all of these issues. This is not the case in China. According to officials of the Textiles Committee, “There may not be laws in China, but that does not mean there is no compliance. There has to be compliance as all the big buyers are sourcing from China. The issues in China are about the working hours and wages.”

It is learnt that SA 8000 certifications have been withdrawn in case of a large number of factories in China. “But this could be because the buyers refuse to accept these certifications, and conduct their own audits to find out the compliance levels. In that case, such certifications do not mean much. Of course, this could in the future become an eligibility criterion,” said the official.