I've been asked to get an audit of the ETI Base Code - what is it?

The ETI Base Code is a generic code of labour practice and is internationally recognised as a model code. All ETI member companies and many other retailers and brands have adopted the Base Code and have committed to making sure their suppliers work towards it over time. Companies either adopt it word-for-word, or incorporate it into their own company codes.

As part of their commitment to ethical trade, buying companies need to find out what working conditions are like in their supply chains, so they can identify any potential issues that need resolving. Campaigning organisations and increasingly, concerned consumers, also ask that companies assess their suppliers. ETI member companies - and many others - inspect significant numbers of their suppliers against the ETI Base Code every year. View the ETI Base Code

How do I arrange the audit?
We don't carry out audits against the ETI Base Code ourselves, as that's not our role as an organisation. However, many private certification and auditing companies have experience of carrying out audits against the Base Code, and some of them have staff around the world. Below are some of the ones we know about:

Africa Now (not-for-profit)

Bureau Veritas

Impactt

Intertek

Pricewaterhouse Coopers

SGS

Verité (not-for-profit)

Please note that ETI does not endorse any of these organisations.

As the quality of audit firms and individual auditors varies tremendously, some tips on making sure you get accurate results are:

• Ask that the audit is carried out by local staff with appropriate language skills and cultural knowledge.
• Make sure the audit team has a gender balance that matches that of your workforce.
• Make sure the auditors carry out confidential interviews with workers.
• Ask for experienced auditors.
• Ask that auditors give a narrative account, rather than just ticking boxes.

You may also find a local non-governmental organisation in your area that has relevant skills and could either carry out, or participate in an audit.

What can I do to make sure I pass the audit?
We expect our corporate members to use audits as a way of diagnosing problems, not as a ‘pass or fail' test. In fact, it's very rare to find any company that's fully compliant with the Base Code.

If you supply an ETI member company, you should expect them to help you make any necessary improvements within a timeframe that works for both of you. ETI member companies should not stop trading with you if the audit uncovers only minor issues. However, if they uncover very serious issues, you will be expected to take immediate corrective action. If you do not do so, you may lose the business.

Will I get a certificate to say I've passed?
After being audited, it is possible that you will receive a certificate of compliance with the ETI Base Code from the auditing company. You should be aware that ETI does not formally endorse any certificate that claims that a company is ‘compliant with ETI' or ‘compliant with the ETI Base Code'. We do not endorse any companies who carry out workplace audits, as we are not an accreditation body.

So how will I benefit from an audit?
As well as keeping customers happy, many suppliers who have invested the time and resources in improving conditions for their workers have found that their efforts have brought them business benefits, including:

• Boosting morale
• Reducing absenteeism
• Improving employee retention
• Increasing productivity
• Increasing profitability

It's also likely that as retailers and brands respond to increasing concern among Western consumers about workers' rights in supply chains, more and more of your customers will start asking you to comply with the ETI Base Code. So making the effort now should stand you in good stead for the future. 

Why do I have to go through so many audits?
Life would be much easier if one audit was acceptable for all! There are many reasons why buying companies like to do their own audits. These include:

• There is no single internationally agreed code of labour practice. Although many companies - particularly those in the UK - follow the ETI Base Code, some follow other codes that have been developed by different ‘labour standards initiatives'.
• Even where companies are auditing against the Base Code they often tag these audits on to quality and environmental audits.
• Audit methodologies are by no means 100% reliable - we often hear of cases where a supplier may be found compliant in one area by one buying company, while another will find them non-compliant. Buying companies often don't trust other peoples' audit reports for that reason.

Can I join ETI?
ETI focuses on the responsibilities of companies that outsource their production to other companies, and so do not directly employ the workers involved in making their products. The challenges we tackle include questions such as ‘How can a buying company make sure its buying practices (such as lead times, price negotiations) don't impinge on its suppliers' ability to provide decent conditions for their workers?' and ‘How can a company persuade a supplier to improve conditions if it only takes a small proportion of its production?' For this reason, membership is most relevant for companies that outsource a significant proportion of their production.

I'm an auditor - how do I get ETI accreditation?
Unlike other organisations, we do not have a formal system for registering or accrediting auditing companies for doing inspections against the ETI Base Code, nor do we carry out audits ourselves. That means in principle there is nothing to stop any third company carrying out an audit of a supplier against the ETI Base Code, but we strongly recommend that they can offer an audit team that has the necessary skills to obtain accurate information about workers' conditions. It's worth noting that in our experience, carrying out audits of working conditions requires very different skills to those required for other types of audits - for example, financial, environmental or quality audits. The ETI Workbook provides guidance about what skills, experience and team composition are most effective in getting the best information out of audits.

Isn't ethical trade just for large companies?
Ethical trade tends to be associated with activities undertaken by multinational companies to address and improve working conditions in what are often vast and complex supply chains. Although small and medium-sized sourcing companies may not have the resources and leverage of large multinationals, we believe they still bear a responsibility towards the workers involved in making their products, and can and should seek to source ethically. And the fact that smaller companies often have far fewer suppliers and closer relationships with them than large companies may actually make it easier for them to get their suppliers to improve.

Why should I source ethically?
There are lots of reasons why it makes good business sense to source ethically. For example, some companies have found that the increased communication with suppliers entailed in implementing an ethical sourcing strategy can help build trust among suppliers and so increase efficiency in their supply chain. Larger public companies can also attract investment, as ethically motivated investors grow in number.

For many small businesses, the primary business motivation for sourcing ethically is as a source of market differentiation with their customers. There are many signs that ‘conscientious consumers' are growing in number, prompting many small companies to market themselves and/or their products as ‘ethical' or ‘fairly traded'.

If you are thinking of doing this, it is important that you are very clear about what statements you make to consumers. Be careful not to make claims that cannot be backed up by evidence, as you could be criticised for misleading your customers.

How you prioritise your efforts will depend on the size of your business, how much experience you already have, what industry you are in and how complex your supply chain is. As a rule of thumb, any company starting out in ethical trade, whatever its size, should at least:

• develop a code of labour practice based on all the relevant conventions of the International Labour Organisation (we encourage companies to adopt the ETI Base Code);
• get management and staff buy-in;
• make sure you have adequate skills and resources for the job;
• find out as much as possible about your suppliers and assess conditions in their workplaces;
• communicate regularly with your suppliers and work with them to make sure they improve over time; and
• make sure your buying practices (eg, lead times, pricing) don't constrain suppliers' ability to comply with your code.

Where can I find a list of ‘approved' manufacturers?
We are often asked if we can provide a list of ‘ethical' or ‘ETI-approved' manufacturers/producers. Unfortunately, ethical trade is more complex than that! For a start, it is difficult enough to find any lists of manufacturers, as buying companies tend not to reveal the identity of their suppliers. This is something we encourage though and recently several large companies - notably Nike, Levi Strauss & Co., Puma and others have revealed the names and contact details of their top level suppliers on their websites.

Here are some suggestions on different approaches to finding suppliers:

No initial ‘ethical' screening
It is perfectly valid to choose your supplier solely on the basis of commercial criteria, then work with them to help them resolve any issues over time. You may well have more positive impact with suppliers who may not be perfect but are willing to improve, than with those who are already doing well.

Look for trade union membership
If you do want to check suppliers before you start sourcing from them, as a simple rule of thumb you could find out if any potential suppliers have a unionised workforce, as this should at least mean that workers have the space to bargain for their rights with management.

Check for SA8000 certification
There is also a certification scheme called SA8000 run by US-based Social Accountability International (SAI), whereby manufacturers who want to provide a public report of their good labour practices can obtain SA8000 certification. Note that even if a supplier has gained a certificate, this is not a foolproof guarantee that they will continue to be compliant in the future. Supplier companies are getting very adept at hiding problems.

So what can I do to get information on my suppliers' labour practices?
If you have the resources, it makes sense to visit the supplier in person and inspect the workplace/s yourself. The ETI Workbook provides detailed information about how to get accurate information during inspections, including suggestions on what questions to ask workers and managers, what records to check and so on. If you are able to make a personal visit, you also need to work out how you are going to follow up on any issues you uncover.

If your business is very small and you do not have the resources to carry out in-depth inspections of the workplace/s concerned, here are a few suggestions on how you can get information:

• Send the supplier a copy of the ETI Base Code.
• Ask them whether they have seen a code of labour practice before, and if so, what are their views about it and what are they doing to comply with it. Sometimes asking just a few well-chosen questions will give you a good indication about the suppliers' attitude.
• Ask your supplier whether they have been audited for their labour practices and if they have, ask them who carried it out and if you can see a copy. If they appear happy to share information, this is one indication that they will be willing to improve.
• Stay in regular communication with your supplier. Ethical trade is not a one-off activity.
• Find out what you can about local conditions to try and build up a picture of what the national laws are and whether they are enforced, and what the main risks of labour abuses are.
• If you can, find out who your suppliers' other customers are. If they include any of ETI's members, it's worth contacting the company/ies concerned to see if you can share information and/or pool resources.

Can I join ETI?
We welcome enquiries about membership from any company, whatever their size or type of business. However, small companies may find it difficult to devote sufficient time and resources to fulfilling the commitments that ETI membership entails. For example, corporate members must provide detailed annual reports to ETI and participate actively in our projects. Find out more about joining ETI here.