September 3, 2024

Who audits the auditors?

Doing business in the leather industry requires third party audits. Your tannery will have signed up for some and others are required by customers. Invariably, the tanner pays for these and they are expensive.

Yet, it is vital that a system of external audits succeeds and is workable for tanneries if leather is to establish and maintain a position as a top material for sustainability and circularity. We can shout loudly about this but without providing, and continuing to provide, top quality scientific evidence the cause will be lost. Those who think they are good at the shouting need to remember that these up to date and accurate facts are essential.

But who audits the auditors? The quality of any audit is linked to the capability and integrity of the auditor. How good are the auditors entering your tanneries? Do they really comprehend what they are looking at? Is the audit primarily a paper exercise and if so what checks on accuracy and authenticity are undertaken? How can we be sure that these audits are truly creating a fair playing field for all?

In the leather industry, the Leather Working Group (LWG) has been a pioneer. It has shown the way for many other materials in the wider fashion and luxury sectors. After over 15 years, it has built up great respect; quite an achievement in what has become a Wild West. At the start, as far as I understood, the LWG limited the number of inspectors to trusted employees to better ensure accuracy and honesty. This was costly for members with smaller tanners feeling deliberately priced out and some in emerging markets arguing that a non-tariff barrier to market access was being created.

Some years ago, in Gujarat, India, research showed the need for honesty when it was proven that only when auditors were specifically incentivised to be accurate did their outcomes start to reach an accuracy of 80% or more. Since the auditors were paid by the company they were auditing, this conflict of interest was found to make them likely to “distort or falsify their reporting….to maintain good relationships with the companies they audit”. This led to companies not meeting legal requirements for pollution since the regulators were not being told the truth.

Over and above being honest, an external auditor must be free from other biases, such as class, religion or culture, which have all become heightened concerns as national politics have become more polarised and ideologies expanded to cover previously non-controversial areas.

A good auditor should be able to work anywhere in the world, see things with a fresh pair of eyes and carry out the audit without excessive disruption. An audit should offer something more than evidence of regulatory compliance or adherence to a required protocol. And within the leather industry there is a need to find an affordable cost.

At certain moments our national bodies were uncomfortable when new organisations moved into spheres such as environmental and material standards. But it is clear now that their involvement is required to make the playing field fairer for all and try and reduce the sheer number of unexpected new audits tanners have to deal with every time they acquire a new customer. Some form of regulation is required.

Brand engagement

At the same time, there is an extra associated task for them and that is to engage the brands on the topic of leather buyers. Once upon a time. a leather buyer was a skilled and knowledgeable employee highly respected in the trade. I have had the pleasure, if you can call it that, of dealing with many from glove buyers in London through to leather goods in the U.S., luxury goods in Europe and footwear everywhere.

These brands were noted for their power, their stubbornness and quite often for being unfair. Yet, they held respect because they knew the material; they understood leather and how it was made and their judgements were made with an unwavering focus in achieving the right product.

Third party audits have been used too often to steadily replace these legends and put juniors in the role, using the auditing process for inspections and essentially to decide and approve the leather purchase. Often these “buyers” are supported by someone in the important role of sustainability officer, but too regularly the training even they have does not include either leather technology or chemistry. It rarely prepares them to properly assess what is going on in a tannery and its waste streams.

Hence, we see mistakes when tanneries are charged with serious pollution by their local authorities only days after coming through an audit with high marks. Whereas a tannery walk-round by a buyer with an experienced eye would recognise the risk and follow it up.

These are complex and vital areas that must be managed well for the industry to succeed and the consumer to get a fair deal. While we need to plead for everyone to think this through it does seem like there should be a role for our trade associations to play in helping to make the process properly skilled and managed with integrity.

Leather is, after all, the most honest of materials. Its presentation to the market, sourcing and processing, must match that honesty.

Michael Redwood

Leather chemist, writer, and advisor on responsible leather manufacturing and material strategy. This article was originally written for ILM.