Auditing in the Textile Supply Chain

The textile and apparel industries rely heavily on the efficiency of their supply chains to ensure the timely delivery of their products to customers. However, with the complexity and length of modern supply chains, it can be challenging to ensure that they meet the highest standards for ethical, social, and environmental responsibility. This is where auditing the supply chain comes in. 


Auditing is a vital process that involves a systematic and independent examination of a company’s supply chain to ensure that it complies with various ESG standards. The process helps to identify any potential risks in the supply chain that could affect a brand’s reputation, customer trust, or regulatory compliance. Auditing can also be used to increase efficiency. By carefully reviewing all processes that make up the supply chain, brand executives can determine where pitfalls lie, what processes can be optimized or automated, and what suppliers may be repeatedly troublesome. 


In the apparel industry, auditing has become increasingly critical in recent years. The industry has faced numerous challenges related to human rights abuses, environmental degradation, and poor working conditions. For example, reports have surfaced on forced labor in the Chinese region of Xinjiang, where more than one million Uyghur people were forced to work in labor camps. Another example is the infamous 2013 Rana Plaza collapse which killed more than 1000 people in Bangladesh. Structural flaws were apparent, but the laborers in these textile factories were forced to keep working. 


To address these challenges, many fashion companies have developed ethical and social responsibility policies that outline their expectations for suppliers. These policies often include requirements for fair wages, safe working conditions, and environmental sustainability. Many governments have also started to place regulations on the textile industry: the United States published a new law called the “Uyghur Forced Labor Prevention Act” which bans products that use Xinjiang cotton. Similarly, the European Union has started to place regulations on ESG standards and reporting, with many countries within the Union like France and Germany also implementing their own laws. 


However, simply publishing these policies is not enough to ensure that the supply chain meets the required standards. Auditing has become an essential tool for fashion companies to ensure that their suppliers adhere to their ethical and social responsibility policies. H&M, one of the world’s largest apparel brands, relies heavily on auditing to keep suppliers in check. The company has a comprehensive auditing program that involves both announced and unannounced visits to their suppliers’ factories. The program focuses on assessing working conditions, labor standards, and environmental performance. The company also collaborates with third-party auditors to conduct independent assessments. 


Another example is Adidas, which has developed a comprehensive program called “Better Work” to audit its supply chain. Like H&M, the program involves monitoring working conditions in factories, identifying potential risks, and evaluating environmental standards. Lastly, Nike has developed a new initiative called the “Labor Compliance Program” to audit its supply chain. The program involves auditing factories to ensure that they comply with Nike’s code of conduct which deals with labor standards, human rights, and the environment. The program also includes a grievance mechanism that allows workers to report any violations anonymously. 


Auditing the supply chain has become an essential process for fashion companies to ensure that their global suppliers meet standards. It is a complex process that requires careful planning, effective communication, and collaboration with suppliers and stakeholders. However, the benefits are significant. Fashion companies should continue to invest in auditing mechanisms for their supply chains to address the challenges facing the apparel/textile industry. 




Auditing in the Textile Supply Chain
Triple Tree Solutions
Published 26 February 2023

Further Reading