How can audits and certifications effectively and efficiently support compliance with human rights and environmental protection standards in global supply and value chains? The Ludwig Boltzmann Institute of Fundamental and Human Rights (LBI-GMR) addressed this question in its independent scientific study on ‘Audits and certifications in supply/value chains’, which has been conducted in cooperation with the Chamber of Labour (AK Vienna) and the Institute for Sustainability, Business Law and Reporting (INUR) of the University of Cologne. Its results were presented in Vienna on Friday, 28^th February 2025.

The starting point for the study is the European Union’s so called ‘Supply Chain Directive’, which has entered into force as from July 2024. The directive obliges large companies to minimise, bring to an end and prevent negative impacts of their business activities on human rights and the environment in their global supply and value chains. Companies may also make use of support measures such as audits and certifications as a form of ‘independent third-party verification’. Between November 2023 and January 2025, the study examined how certificates and verification procedures would need to be designed in order to effectively and efficiently support compliance with human rights and environmental protection standards in global supply and value chains.

Clear regulatory framework instead of ‘fairwashing’

How effective are these measures? Are audits and certifications in supply/value chains a means of ‘greenwashing’/‘fairwashing’ or are they an effective tool to support companies’ compliance with human rights and environmental protection after all? ‘Under certain conditions, audits and certifications can make a positive contribution to compliance with these obligations and also help to achieve the currently emphasised goal of simplifying the fulfilment of legal expectations for companies,’ says Michael Lysander Fremuth, Scientific Director of the LBI-GMR and Professor of Fundamental and Human Rights at the University of Vienna. ‘Among other things, it should be ensured that various stakeholders, including local NGOs, trade unions, local employee and employer representatives and environmental protection organisations, are involved in audit processes in order to provide as comprehensive a picture as possible,’ he explains.

‘It is also important to have a functioning liability regime for auditors and certifiers to ensure the quality of audit and certification procedures,’ says Camilla Sophia Haake, Post-Doc at the LBI-GMR. This is necessary to prevent incorrect or incomplete audits and certifications which are poor in quality and to ensure the protection of human rights and the environment.

The researchers therefore recommend a clear and ideally sovereign – i.e. EU or national – monitoring and regulatory framework for audit and certification processes.

Valentin Wedl, Head of the Department ‘EU and International’ at AK Vienna criticises the undermining of the ‘Supply Chain Directive’, which, according to the EU Commission, is to be postponed and limited to only apply to direct suppliers instead of the entire supply chain. The originally planned option for victims to claim compensation has been removed: ‘Under the guise of reducing bureaucracy, companies will not be held responsible in the future, even if they are aware of forced and child labour in their supply chain and do nothing about it. The Supply Chain Directive must be amended instead of suspended. The study makes an important contribution to the necessary objectification of the debate surrounding the Supply Chain Directive.’

On Friday, the study results were presented in Vienna by Camilla Sophia Haake and Stephen Rabenlehner. Michael Lysander Fremuth (Director of LBI-GMR), Felix Mayr (‘EU and International’, AK Vienna) and Anna Mago (Fairtrade) also took part in the ensuing panel discussion. The panel was moderated by Judith Fritz (Program FAKtory, Department ‘Youth and Participation’ at AK Vienna).

Further information on the research project and the full text of the study can be found here.