Balancing Fairness and Credibility of Eco-Audits During COVID-19
COVID-19 has significantly disrupted the operation of global markets. In response to the pandemic, governments have restricted travel and business activities. What has this meant for the operation of private eco-labeling programs?
Professors Graeme Auld and Stefan Renckens have sought to understand these implications by examining the adjustments private eco-labeling programs have made to their audit policies. In normal times, in-person inspections would be a key part of the audit process. Programs have had to adopt new procedures – particularly virtual audits – to continuing operating during the pandemic. But an emphasis on retaining credibility raises issues of fairness because of the barriers to participation created for businesses in lower income countries.
The COVID-19 pandemic has disrupted global economic relations. Transnational private regulatory programs, such as sustainability certification and eco-labeling schemes that set standards for responsible production practices in global markets, have had to react. Private regulation’s market credibility is partially built on audits, which include field visits used to assess whether participating operators conform with a program’s standard. But COVID-19-related health and business restrictions have forced adjustments to field-audit policies. Literature on private governance has identified several barriers to participation of Global South operators, including the costs of certification, the availability of qualified auditors, and uncertain socio-economic benefits. Are audit policy changes made because of the COVID-19 pandemic exacerbating these barriers? We examine this question through a dataset constructed between April and November 2020 that contains information on COVID-19-related audit policy responses of 98 transnational private sustainability regulators. We describe the mixed transparency of these adjustments to date and five ways in which the adjustments create explicit and implicit barriers to operators from Global South countries. The changes create barriers through (1) the conditions set on when and how adjustments to audits are permitted, (2) the limited flexibility of substantive standards, (3) the potential costs of shifting to remote audits, (4) the focus on accommodating existing participants over new applicants, and (5) the potential challenges of accessing auditors to conduct assessments. We conclude with implications for research on private regulation post-COVID-19.
Auld, G., & Renckens, S. 2021. “Private sustainability governance, the Global South and COVID-19: Are changes to audit policies in light of the pandemic exacerbating existing inequalities?” World Development, 139, 105314. https://doi.org/https://doi.org/10.1016/j.worlddev.2020.105314