Dive Brief:

• Less than one-third of the factories inspected by third-party auditor AsiaInspection were compliant with company codes of conduct, with 27% of those having critical issues, according Triple Pundit report on aggregate inspection data released by the company.
• Regarding sustainability, 36% of factories failed to comply with company environmental standards last year, representing a 5% increase over 2015's results.  
• The report argues common standards like the ISO 14001 can provide a solution by benchmarking progress not just for brands and suppliers, but also for consumers seeking to make ethical purchases.

Dive Insight:

Anyone familiar with the industry knows that, for all the leaps and bound made by companies to create new standards, ethical sourcing remains extremely difficult to enforce for various reasons.

First, is the problem of compliance. A company may create a standard for a company to follow and conduct audits to ensure it happens, but suppliers may easily underwrite these efforts by hiding violations before the auditors' arrival.

Yet, even if a company does not — what can a buyer do when its supplier is found in violation? Many of the supplier codes of conduct do not include strict enforcement mechanisms, opting instead for review processes and second, third or indefinite chances. The reason is simple: there's a belief among the procurement community that more, positive change can be done by pushing suppliers to improve conditions than by cutting them altogether.

The second, equally important reason is that companies are often left to their own devices to ensure compliance. As many of the factories exist in countries with weak labor regulations, or weak enforcement thereof, there are limits as to how much a company can do. For example, commenting on human rights violations in artisan mines in Congo, Apple justified the decision not to cut the supplier by stating doing so would mean the laborers would be forced to work in other, even less compliant mines for the same income.

Lastly, many of these companies have had relationships with suppliers for years if not decades, and have grown dependent on them. In addition, the list of fully-compliant suppliers are relatively few for the international demand of products in, say, the apparel industry.

That's not to say ethical sourcing efforts are not effective — they can be. The problem, as shown by the Triple Pundit report, is with a global business environment that has yet to truly be changed by conscious consumers.