Journal of Cleaner Production 258 (2020) 120773

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Journal of Cleaner Production

journal homepage: www.elsevier.com/locate/jclepro

Technology-enhanced auditing: Improving veracity and timeliness in

social and environmental audits of supply chains
Pavel Castka a, *, Cory Searcy b, Jakki Mohr c
a
University of Canterbury, New Zealand
b
Ryerson University, Canada
c
University of Montana, USA

a r t i c l e i n f o a b s t r a c t

Article history: Social and environmental audits (SEA) in supply chains prove to be difficult: costly, administratively
Received 16 June 2019 challenging, retrospective and often lacking veracity and timeliness. The purpose of this paper is to
Received in revised form explore the role of technology (such as blockchain, satellite imaging and others) in improving the ve-
3 November 2019
racity and timeliness of SEA in supply chains. We develop conceptualizations of veracity and timeliness
Accepted 25 February 2020
Available online 28 February 2020
appropriate to the SEA context. We also link veracity and timeliness to key steps in the auditing process
(data collection, recording and sharing, and analysis and interpretation) and explore technology’s role in
Handling Editor: Mingzhou Jin these steps. We then contrast the traditional audit process to a technology-enhanced audit process and
develop an organizing framework to generate a research agenda linking technology-enhanced auditing
Keywords: to veracity and timeliness of the audit process, and, in turn, enhancing social and environmental supply
Technology chain performance. The novelty and value of our work lie in its exploration of how technology-enhanced
Audits auditing relates to (1) issues related to scope/focus, firm motivations for SEA, and governance of the audit
Supply chain function, (2) three conditions under which the benefits of technology-enhanced audits are most likely,
Big data
(3) the 4 V’s of data (volume, variety, velocity/timeliness and veracity); and (4) possible mechanisms by
Social
which veracity and timeliness affect social and environmental performance in the supply chain.
Environmental
Veracity © 2020 Elsevier Ltd. All rights reserved.
Real-time economy

1. Introduction managing these risks (Castka and Prajogo, 2013; Darnall et al.,
2009), which may help reduce future non-compliances (Porteous
There is a growing recognition that supply chains often contain et al., 2015), enhance transparency (Dando and Swift, 2003b), and
a firm’s most significant social and environmental risks (Petersen improve firm legitimacy (Mueller et al., 2009). Social and envi-
and Lemke, 2015; Thorlakson et al., 2018). Social risks can arise ronmental auditing (SEA) is used to measure, account for, and ul-
from, for instance, poor labor practices, health and safety problems, timately improve social and environmental performance of firms
modern slavery or unfair wages (Awaysheh and Klassen, 2010). and their supply chains (Gray, 2000). More broadly, implementing
Environmental risks might arise from, for example, handling of strategies to improve social and environmental performance can
toxic waste, greenhouse gas (GHG) emissions, violation of envi- also improve competitiveness and financial performance (Gimenez
ronmental laws and other similar issues (Darnall et al., 2006). Poor and Tachizawa, 2012; Rao and Holt, 2005). Ineffective SEA, how-
social and environmental performance also poses reputational risks ever, can consume scarce resources or fail to detect critical social
for firms, who increasingly are being held responsible for the ac- and environmental non-compliances (Stevenson and Cole, 2018).
tions of their suppliers (Seuring and Müller, 2008). For example, Rana Plaza, site of the deadly Bangladesh factory
To mitigate the social and environmental risks in their supply collapse in April 2013, had been audited on multiple occasions,
chains, firms are employing social and environmental auditing including shortly before the disaster (Siddiqui and Uddin, 2016).
(SEA) of their suppliers (Andersen and Skjoett-Larsen, 2009). An The efficiency and effectiveness of any SEA is highly dependent
effective program of SEA can signal that companies are proactively on the quality and timeliness of the data used to inform the actions
arising from the audit. Veracity is an important aspect of any data-
based auditing function, and is concerned with accuracy, precision,
* Corresponding author. and truthfulness (Lukoianova and Rubin, 2014). Velocity concerns
E-mail address: [email protected] (P. Castka).

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2 P. Castka et al. / Journal of Cleaner Production 258 (2020) 120773

the speed with which the data is created, analyzed, and used in environmental quality in specific sites on the basis of generic
decision-making (Pendyala, 2018). A key aspect of velocity is standards and criteria and even more difficult to demonstrate that
timeliness, which concerns whether the data creation, analysis, and these improvements are the result of specific measures” (Cook
associated inferences are available at the right time. Any SEA must et al., 2016, p. 33). Moreover, SEA are often based on generic
therefore be concerned with the veracity and velocity of the data meta-standards that require special auditing skills in their in-
used in analysis and decision-making. Along with volume (amount terpretations and applications (Castka and Corbett, 2015). In this
of data) and variety (the different types of data), veracity and ve- paper, we consider and present a broad set of technologies in dis-
locity are commonly referred to as the “4 V’s” of big data infra- cussing the role of technology in improving the veracity and
structure (Goes, 2014).1 timeliness of social and environmental auditing in supply chains.
Despite decades of research and practice, SEA is often perceived We also present an organizing framework to guide future research
as lacking veracity (Blewett and O’Keeffe, 2011; O’Dwyer et al., on this important topic.
2011; Russell et al., 2017), which has contributed to a credibility At the outset, we state a critical underpinning of our approach:
crisis for SEA (Adams and Evans, 2004). Techniques and technolo- our research is premised on the assumption that firms are genu-
gies, such as big data analytics, blockchain, sensors, satellite im- inely motivated to conduct SEA in order to improve their supply
aging, and social media, offer the potential to radically improve the chain performance and to adopt auditing practices to address risk.
veracity of SEA (Appelbaum and Nehmer, 2017; Herding and This premise is in line with old institutionalism (see Selznick, 1949).
Fischer, 2015). For example, as a result of their significant in- As we subsequently argue, technology-enhanced auditing makes it
creases in reliability and quality, along with dramatic decreases or more difficult to falsify information (e.g., it offers greater veracity).
elimination in direct costs, technologies such as satellite imaging For instance, an audit record in blockchain is unalterable (Iansiti
are now widely used in a variety of applications, such as in moni- and Lakhani, 2017), which makes it hard to alter and falsify evi-
toring forest cover change (e.g. Hansen et al., 2013). As another dence. Hence, we assume throughout the rest of the paper that
example, sensors can provide objective site-specific data previously firms engaged in deception are less likely to pursue technology-
difficult to gather, such as air emissions, water quality, soil enhanced auditing than those with a genuine motivation.
contamination, and other environmental discharges in suppliers’ The structure of the paper is as follows. We first explore the
facilities, while drones can be used for observation and evaluation nature of auditing in monitoring social and environmental perfor-
purposes (Appelbaum and Nehmer, 2017). mance in supply chains, focusing on several key challenges. For
Combining these new data collection capabilities with cloud example, currently there is no common understanding of veracity
computing can expand both the quality and the quantity of data in an SEA context. The lack of a common understanding of veracity
available in real-time, in turn addressing the critical issue of lack of makes it difficult to identify what specifically needs to be improved
timeliness in SEA. Using real-time data in SEA can help facilitate a in SEA and how technology might play a role in doing so. To address
shift from the traditional focus on retrospective audits to real-time, this issue, we develop both a conceptualization of veracity, as well
or continuous, auditing (Bumgarner and Vasarhelyi, 2015) that is as a conceptualization of timeliness, appropriate to the SEA context.
better aligned with other real-time approaches in supply chains We also link veracity and timeliness to key steps in the auditing
(Oliveira and Handfield, 2018). Technology-enhanced SEA can process (Byrnes et al., 2018). Consequently, we develop a frame-
support this transition through its ability to gather both objective work to guide future research on the role of technology in SEA, as
and perceptual data, record and share data, and support real-time well as technology’s potential to improve veracity, timeliness, and,
data analysis and decision-making. Cloud-based applications, for ultimately, social and environmental performance in firms’ supply
example, can facilitate real-time data transmission from suppliers, chains.
while sensors can be installed to continuously monitor emissions in Our basic Proposition is that, due to enhanced veracity and
critical locations throughout the supply chain. Adoption of these timeliness (as well as volume and variety), technology-enhanced
technologies can thus facilitate a transition from retrospective to auditing generates improved social and environmental perfor-
continuous auditing. mance compared to traditional auditing practices. Part of our
The potential of technology-enhanced auditing has been framework explores three possible conditions under which firms
recognized in recent scholarly work (Zhang et al., 2015) focused are more likely to benefit from using technology-enhanced audit-
primarily on financial audits. For instance, the literature discusses ing: task complexity, firm absorptive capacity, and industry
the challenges of big data (Griffin and Wright, 2015), the use of big collaboration. In addition, we offer suggestions for possible
data as complementary audit evidence (Brown-Liburd and research questions generated by our framework. Given the scale of
Vasarhelyi, 2015), and the challenges of adoption of particular social and environmental risks firms face in their supply chains, the
technologies (such as drones) for internal and external auditing credibility crisis faced by SEA due to the lack of veracity and
(Appelbaum and Nehmer, 2017). However, social and environ- timeliness, the obsolete auditing practices in the sustainability
mental auditing (SEA) has received much less scrutiny. The realm (Herding and Fischer, 2015), and the potential for context-
exception is the work by Herding and Fisher (2015) that explores appropriate technological applications in addressing those issues,
the potential of technologies for sustainability systems standards. this article is timely and relevant.
Despite some suggestions in the early literature that many forms of
financial and environmental audits are comparable (Power, 1997),
2. Social and environmental audits in supply chains
more recent literature established that “environmental auditing is a
special case because it is often difficult to assess improvements in
2.1. Overview of social and environmental auditing

SEA is based on various reference points2 finclusive of standards,

1
The traditional big data and information systems literature referred to 3 V’s:
volume, velocity and variety. Later, this trio was extended to accommodate the
2
fourth V, veracity (Goes, 2014). The need for veracity was sparked by an increased The term “reference point” refers to a standard, code of conduct or other
recognition that the accuracy of big data can be questionable (Pendyala, 2018). document that stipulates the focus (e.g., social, environmental) and scope (e.g.,
Hence, Goes (2014) argues that sorting out the noise and the malicious information facility level, chain of custody) of an audit. SEA compares actual organisational
from valid, actual information is critical. practices with such reference points.
 P. Castka et al. / Journal of Cleaner Production 258 (2020) 120773 3

code of conducts, frameworks or legislation. Example reference auditors in all steps in the auditing process. Auditors are trained
points include generic international standards (e.g., ISO manage- (internally or externally), and in some instances certified (Andersen
ment system standards), industry-focused standards (e.g., Forest and Skjoett-Larsen, 2009) and their role is to determine if firms
Stewardship Council’s (FSC) standards for forestry management comply with a given audit reference point (Mironeasa and Codina ,
and chain of custody), international conventions (e.g., International 2013). An auditor’s job requires a range of skills, from technical
Labor Organization’s Declaration of Fundamental Principles and knowledge to people and time management skills (Power and
Rights at Work), due diligence frameworks (e.g., Organization for Terziovski, 2007). The traditional audit is the mainstream
Economic Cooperation and Development’s Due Diligence Guidance approach in many realms of auditing, including financial auditing
for Responsible Business Conduct), legislation (e.g., UK’s Modern (Gepp et al., 2018).
Slavery Act), and consortia or industry-led standards and codes of The literature highlights many challenges in using traditional
conduct (e.g., Responsible Business Alliance). Many firms are also audits in SEA. The meta-standard design of audit reference points
developing their own internal reference points for SEA. IKEA, for requires auditors to use their own judgement to assess firms’
example, has developed the IKEA Way, or IWAY, standard, which compliance relative to the standards. Relying on the judgment of
establishes environmental and social requirements for its suppliers. different auditors creates the potential for several potential prob-
These standards are enforced through a program of rigorous audits lems, including the possibility of inconsistent interpretations and
(Andersen and Skjoett-Larsen, 2009). Example social issues assessments (Castka, 2013), reliance on possibly corrupt auditors,
addressed by reference points include modern slavery and human the failure to recognize misleading documents, or “mock compli-
trafficking, ethical sourcing, child labor, minimal wage and other ance where suppliers appear to be doing the right things but for the
issues (Awaysheh and Klassen, 2010). Example environmental is- audit day only” (Stevenson and Cole, 2018). Access to representa-
sues include waste management, energy efficiency, biodiversity, tive data is also challenging: data collection is not necessarily in-
water stewardship, and GHG emissions (Ahi and Searcy, 2015). dependent and relies on information provided by management or
Most standards and code of conducts for SEA are designed as management representatives (Byrnes et al., 2018). For instance,
meta-standards (Uzumeri, 1997). The term “meta-standard” refers critics of social audits in developing countries often challenge the
to the rules and requirements for designing, maintaining, and extent to which the data accurately represent working conditions
reviewing of management systems (e.g., such as the ISO certifica- (Short et al., 2016) and argue that auditors do not have access to
tions; Corbett and Yeung, 2008). The design of a meta-standard is contracted labor during social audits (Gold et al., 2015).
based on a determination of a system and its key components and Another key challenge is that, in SEA conducted by external
ensures a generic applicability across various types of organizations parties, the firms being audited typically cover the auditing costs and
(Castka and Corbett, 2015). Meta-standard design gives firms the therefore become de facto clients for auditing firms (Heras-
discretion to ‘translate’ a set of generic requirements into their Saizarbitoria et al., 2013). As in financial/accounting audits, the
unique settings. For instance, ISO 14001:2015 requires firms to client-service provider relationship creates the potential for a con-
determine their environmental impacts without prescribing any set flict of interest because auditing firms need to focus on maintaining
of particular environmental issues nor any expectations of specific the relationship (Nayebpour and Koehn, 2003). The demand for
levels of environmental performance (Heras-Saizarbitoria et al., auditing services also has grown exponentially over last two decades
2011). Likewise, numerous eco-labelling schemes e such as the and has led to a growing number of certifiers in the market; this, in
Forestry Stewardship Council’s certification in forestry (Teitelbaum turn, has led to increased competition between certifiers for audit-
and Wyatt, 2013) e adopt meta-standards for environmental ing services (Dogui et al., 2014). Such a competitive environment
reference points3 brings auditors under even more pressure to focus on maintaining
SEA can have two primary types of scope: facility management good relationships with their clients. The conflict of interest and high
audits and chain of custody audits. Facility management audits focus level of competitive intensity are associated with cost-pressure on
on the facility level, auditing one or more facilities in the supply bids, and subsequent under-resourcing of audits (Castka et al., 2015).
chain (Gilani et al., 2016). For example, the FSC Forestry Manage- As a consequence, an auditor is under pressure to collect and analyze
ment standard specifies environmental requirements that must be the evidence with limited time and with limited resources allocated
met on-site at a specific forest (Brotto and Pettenella, 2018). Chain to an audit (Prajogo et al., 2016; Simon et al., 2011, 2014).
of custody audits focus on the traceability of products in supply SEA is also criticized for a lack of transparency (Cook et al., 2016;
chains (Espinoza et al., 2012). For example, the FSC Chain of Custody Dando and Swift, 2003a). Often, the results of audits are not
standard provides requirements related to the traceability of logs available even though the audits are meant to serve a broader set of
from a specific forest to the saw mill, the manufacturing site and stakeholders. Firms often opt to present only the outcome of the
through to the retailers. audit (e.g., announcement of achieving a third-party certification or
of passing a social/environmental audit) rather than the thorough
and unalterable audit report. Even the most celebrated and credible
2.2. Challenges in social and environmental auditing
third-party providers of social and environmental standards and
audits (e.g., part of ISEAL Alliance) rarely provide audit reports or
Social and environmental auditing has traditionally relied on
employ technology-enhanced auditing. There is a need for
auditing by inspection, observation, and site visits by human au-
increased pressure on firms to publicly disclose the results of their
ditors; these auditing practices are collectively referred to as a
audits (Kauppi and Hannibal, 2017), which could be facilitated
“traditional audit” (Byrnes et al., 2018). The traditional audit follows
through the increased use of technology (e.g., social media) in SEA.
a fairly established sequence of activities: selection of a reference
Greater public disclosure of audit reports also could incentivize
point, collection of data, data recording and sharing, and data
suppliers to improve their efforts with respect to social and envi-
analysis to determine a firm’s compliance with the selected refer-
ronmental performance (Stevenson and Cole, 2018).
ence point. Central to the traditional audit is the use of human

2.3. The lack ofdand need for e veracity and timeliness in social
3
See Castka and Corbett (2016) for a discussion of social and environmental
and environmental auditing
labelling schemes. Furthermore, web platforms such as ecolabelindex.com provide
a comprehensive overview of social and environmental schemes. The challenges noted above, such as assessment inconsistency
4 P. Castka et al. / Journal of Cleaner Production 258 (2020) 120773

Table 1
Auditing process and its challenges.

Key steps in Description Representative challenges Example veracity

the auditing and timeliness
process issuesa

1. Data Collection of the data that will be used to determine compliance Use of past data (retrospective), use of limited samples, and use of Accuracy
collection with the reference point. Firms select in-house or external auditors ‘preselected data’ by management. Precision
to collect the data. Completeness
Consistency
Timeliness
2. Data Data collected during the audit is recorded and made available to Auditors are responsible for data management (external auditors Transparency
recording those who will use it. keep the data e used for generating audit reports) and the data is Traceability
and not available to firms. Timeliness
sharing
3. Data The data collected in the audit is analyzed. Multiple forms of analysis Audits unable to fully process large amounts of data due to limited Bias
analysis are possible depending on the types of data collected and how the resources or time; analysis could also be compromised due to Process errors
results will be used. conflicts of interest. Timeliness
a
Veracity and timeliness issues have been adapted from Pendyala (2018) and the conceptualizations presented in the main text. All issues in Step 1 are also relevant in Steps
2 and 3.

(Castka, 2013), mock compliance (Stevenson and Cole, 2018), lack of for analysis and interpretation at the time required by decision-
independence in data collection (Byrnes et al., 2018), conflicts of makers and other stakeholders.
interest (Heras-Saizarbitoria et al., 2013), and lack of transparency Table 1 provides an overview of the key veracity and timeliness
(Cook et al., 2016) all point to concerns with respect to the veracity issues for each of the steps in the auditing process, consistent with
and timeliness of the data to support SEA. The lack of veracity and auditing standards, such as ISO 19011:20184 and other auditing
timeliness is also implicit in literature reviews of social and envi- literature (Appelbaum and Nehmer, 2017). Prior to initiating these
ronmental standards (Castka and Corbett, 2015; Heras- steps, an explicit reference point must be selected. The reference
Saizarbitoria and Boiral, 2012). point identifies the focus of the audit (e.g., environmental, social),
Veracity is generally defined as “the quality of being true, scope in terms of issues (e.g., selective issues such as audit of GHG
honest, or accurate” (Cambridge_Dictionary, 2018a). In a Big Data emissions or broader set of social and environmental issues), and
context, Pendyala (2018) defines veracity as “the underlying accu- the firms involved (e.g., facility versus chain of custody). Firms’
racy, or lack thereof, of the data under consideration, specifically selection of a reference point for SEA is critical: a poor choice of a
impacting the ability to derive actionable insights and value of it”. reference point may hamper firms’ ability to manage risks in their
Lukoianova and Rubin (2014) identify key components of big data social and environmental arenas. For example, an audit based on a
veracity: accuracy, completeness, consistency, truthfulness, objec- weak environmental standard may show that a firm has “passed”
tivity, and credibility. Pendyala (2018) posits that the following (i.e., met or exceeded the standard); however, media reports later
factors influence veracity: missing values, uncertainty, falsity, bias may surface problematic social and/or environmental behaviors.5
(e.g., process errors), and hacking. Building on the aforementioned Step 1 shows that all audits require the collection of data that
definitions, we conceptualize veracity in the SEA context specif- will be used to determine compliance with the reference point.
ically in terms of the underlying accuracy, precision, and truthfulness Depending on the scope of the audit dictated by the reference
in collecting audit data, and transparently deriving factual, complete, point, the collection of data can involve a wide range of quantitative
process-error free, unbiased and consistent analysis and traceable and qualitative data gathered through various means (e.g., physical
conclusions about meeting the requirements of a reference point. or chemical measurements, document review, images, or employee
Timeliness generally is defined as “the fact or quality of interviews, among other options, Cook et al., 2016). Key veracity
happening at the best possible time or at the right time” issues in Step 1 include the accuracy, precision, completeness, and
(Cambridge_Dictionary, 2018b). Timeliness is a key enabler for the consistency of the data. The timeliness of the data collection will
quality of data collection, analysis, and interpretation. The retro- largely dictate whether the audit is conducted retrospectively or in
spective nature of traditional audits contradicts the very nature of real-time.
today’s business environment e characterized by a shift toward Step 2 focuses on recording and sharing the data. This step
real-time management in firms and supply chains. Hence, the audit underlines the importance of making the records of the collected
function needs a similar shift to real-time data exchange and data available to decision-makers and stakeholders, potentially at
decision-making. Byrnes et al. (2018) provide a comprehensive many different points throughout the supply chain. All of the ve-
overview of the journey from the “traditional audit”, to “auto- racity issues listed previously are also relevant in this step, with the
mating the audit”, and ultimately toward a “continuous audit” or added need for transparency and traceability. Traceability (sourc-
“future audit”. Even though financial auditing has made progress in ing) is becoming a particularly important issue in auditing as in-
audit automation, more needs to be done to enable the shift to the terest in product provenance increases. Timeliness is also critical in
continuous audit (CPA, 2017) and technological advances are Step 2, given that the many different stakeholders in the supply
pivotal in enabling this shift. We therefore conceptualize timeliness chain may be geographically dispersed and may need access to the
in the SEA context as the availability of social and environmental data data at different times.
In Step 3, the data are analyzed. Many forms of analysis are
possible, depending on the nature of the data and the needs of the
4
ISO 19011:2018 provides guidelines for auditing management systems. The
guidance provided in ISO 19011 is intended to be generic and flexible, and it applies
to all types and sizes of organizations. It defines key auditing terms, summarizes
5
the core principles of auditing, and provides guidelines on managing and con- Saying that a firm has met an audit standard when its behavior is actually
ducting audits. ISO 19011 also provides guidance on determining and evaluating problematic is analogous to making a Type II statistical error: a false negative,
auditor competence. meaning that people infer the absence of poor behavior when in fact it is present.
 P. Castka et al. / Journal of Cleaner Production 258 (2020) 120773 5

relevant decision-makers and stakeholders. For example, they guide future research. No academic work has developed a frame-
could include statistical analysis on issues related to product work for the role of new technologies in SEA. For our purposes,
quality or inductive analysis to identify key themes arising from technology-enhanced auditing in the context of social and envi-
employee interviews. Again, all of the veracity issues previously ronmental audits refers to employing technologies for the purposes
listed are related to this step, with bias (e.g., on the part of the of the audit data collection, recording & sharing, and analysis.
analyst) or process errors (e.g., auditors’ inability to process large
amounts of data) also affecting the veracity of the conclusions 3. Research agenda for technology-enhanced social and
(Kyunghee et al., 2015). Moreover, the timeliness of the analysis can environmental auditing
be essential to recognize and respond to key social and environ-
mental risks. The purpose of SEA is to identify risks arising from social and
In many cases, the veracity and timeliness challenges environmental concerns in supply chains and, ultimately, to
throughout the auditing process can be addressed by leveraging improve the firm’s performance on its social and environmental
technology. The next section identifies representative technologies targets. Social and environmental performance is defined as a
and explains how they can be used in technology-enhanced measurable outcome of an organization’s ability to meet environ-
auditing. mental and social objectives and targets set forth in the organiza-
tion’s social and environmental plan or policy (as defined in, for
2.4. The use of technologies in social and environmental auditing instance, United States Department of Agriculture’s National Agri-
cultural Library Glossary and ISO standards). The traditional SEA
Technologies (such as computer-assisted audit techniques, i.e., process is depicted in Fig. 1 e as a selection of focus/scope; the audit
CAATs) are receiving increased attention in the financial auditing itself (comprising of data collection, data recording and sharing and
literature. Cangemi (2015) argues that new technologies will pro- data analysis) and its impact on improvement of social and envi-
vide assistance to auditors throughout the auditing process and ronmental performance. Although the traditional SEA process can
enable a shift to real-time and risk-based auditing. The role of an be useful and is linked to improvements in supply chain perfor-
auditor in such technology-driven auditing is increasingly seen as mance (Atilgan and McCullen, 2011), there are also limitations to its
being a “supervisor of cognitive technology” (KPMG, 2017). The contribution to improved performance (as discussed in Section 2).
implementation of technologies also presents opportunities for We argue that because it can yield more accurate, comprehen-
auditors in new areas (as described below) and new technologies, sive, and timely data collection, recording, sharing, and analysis
such as blockchain, are increasingly being applied by major inter- than traditional audits, technology-enhanced auditing can help
national auditing companies, such as Ernst & Young and PwC. proactively identify non-compliances, which in turn, allows the
Despite the capability of existing and emerging technologies to firm to take more timely, targeted actions to improve the social and
address the veracity and timeliness shortcomings in SEA, the environmental performance in its supply chain. This logic is
adoption of these technologies for SEA is in its infancy (ISEAL, captured in the following Proposition:
2018). The slow uptake may be due, in part, to the limited under-
Proposition. The relationship between technology-enhanced
standing firms have of which technologies are available. An illus-
auditing and social and environmental performance is stronger
trative overview of the possible technological solutions available to
than the relationship between traditional auditing and social and
support each step is provided in the Appendix.
environmental performance.
Because technology-enhanced auditing offers the potential to
improve both the veracity and the timeliness of the data in the Fig. 1 serves as an organizing framework for this section,
auditing process, we next present an organizing framework to directing questions along each link in the technology-enhanced

Fig. 1. Traditional vs. Technology-Enhanced Audits.

6 P. Castka et al. / Journal of Cleaner Production 258 (2020) 120773

auditing process. In particular, we first explore questions related to 3.2. Research questions on the Firm’s motivations for SEA
the scope/focus of the audit, the firm’s motivations, and the
governance of the audit function (important aspects of SEA as The firm’s motivations for undertaking SEA may also affect audit
discussed in Section 2) and the use of technology-enhanced practices, data, and decisions. The strategy literature views the
auditing. We then explore three possible conditions under which uptake of positive social and environmental practices as a
technology-enhanced auditing is used, and how those conditions competitive move (Porter and Kramer, 2006), with an emphasis on
may affect the benefits firms gain from leveraging technology in being proactive and mitigating risks. The literature on legitimacy,
their audit process. This section is then followed by explicitly on the other hand, views the use of SEA as a potentially superficial,
assessing the relationships between technology-enhanced auditing ceremonial and symbolic act to create a positive image about (i.e.,
and the 4 V’s of data: volume, variety, velocity (timeliness) and to legitimize) firms’ social and environmental performance rather
veracity. We then explore the possible mechanisms by which ve- than to address the substantive nature of a firm’s operations and
racity and timeliness contribute to enhanced social and environ- practices (Hooghiemstra, 2000; Owusu and Frimpong, 2012).
mental performance: decision-maker confidence in the data, as Hence, research that explores a firm’s motivations, e.g., genuine
well as the ability to be more proactive in decisions. We conclude motivations to address social and environmental footprints; repu-
this section with an exploration of issues related to the relative role tational motivations (such as responding to stakeholder pressures
of human auditors and technology-enhanced auditing, including from social and environmental violations that damage firms’
potential skills needed and alleviation of auditor fatigue. Illustrative reputation); or deceptive motives (such as actively hiding illegal
research questions are provided in the following sections. activities) would be valuable. Traditional audits, for example, are
poorly equipped to uncover criminal activity (Stevenson and Cole,
2018). Related to the issue of motivations, it may be informative
3.1. Research questions on how the scope and focus may be affected to relax our underlying assumption of authenticity in the audit
by technology-enhanced auditing process. For example:

The scope and focus of the audit may be affected by the appli-
If a company lacks genuine motivations in the audit proc-
cation of technology-enhanced auditing. For example, new forms of essdsay, a company is engaging in dangerous or unethical
social and environmental data allow firms to assess performance in practices and does not want these practices to be revealeddis it
areas that were previously difficult or impossible to audit. less likely to rely on technology-enhanced auditing?
Measuring changes in ecosystem or species diversity, for example,
To what extent does technology-enhanced auditing reduce
was previously a very resource-intensive process requiring the use possibilities for deception in SEA?
of trained experts deployed in the field for long periods of time.
Given the costs associated with measuring biodiversity, many Naturally, addressing the questions regarding deception would
forestry firms previously chose to forgo such assessments entirely require research methods that allow such issues to be surfacedda
or to rely heavily on data imputation techniques. The application of challenge in and of itself.
satellite imaging in such contexts, for example, opens new possi-
bilities and can dramatically improve the veracity and timeliness of 3.3. Research questions on governance of the audit function
a SEA. Illustrative research questions related to the scope and focus
of the SEA might address, for example: The governance/ownership of the audit function is another area
that affects how the audit is conducted (Castka and Corbett, 2016),

To what extent are the scope and focus of SEA affected by and hence, may have some bearing on the use of technology. For
technological advances? To what extent does technology- example, some firms opt for internal auditing (i.e., first-party au-
enhanced auditing facilitate capturing different types of data dits) and develop an internal system to audit their own social and
compared to traditional auditing? environmental conduct. In other supply chain settings, an inter-

To what extent does technology-enhanced auditing change the ested party, such as a buyer, may conduct an audit (i.e., second-
audit process? For example, can technology (e.g., chemical party audits). Firms may also outsource their auditing function to
fingerprinting) replace chain of custody auditing? independent third-party providers (i.e., third-party audits), which

Do technology-enhanced audits make it more likely to identify/ are usually relied upon for the purpose of certification. First-, sec-
detect certain types of issues/problems, compared to traditional ond-, and third-party audits are described further in Ciliberti et al.
audits? (2009). The relationship between these various models of gover-

To what extent does new data captured via technology help nance/ownership and technology-enhanced auditing warrants
identify new problems or problems of which firms were not consideration. For instance, if a manufacturer is concerned about
previously aware? labor practices in its supply chain, perhaps it is more likely to

Does technology influence the design of reference points, such partner with a specialized firm to use that firm’s technology to
as management system standards (e.g., ISO 14001:2015, ISO collect data about workers’ rights violations than to develop its own
45001:2018), generic auditing standards such as ISO 19011:2018 technology. Similarly, a forestry firm may outsource satellite
and generic guidelines for auditing firms? monitoring of its operations to a third-party certification program.
Cloud-based reporting, real-time auditing, artificial intelligence
Developing a research design that tackles these issues will be (particularly deep learning), satellite imaging, and blockchain may
challenging. For example, the research design may require all be leveraged particularly for auditing beyond the first tier of the
comparing the results of a traditional audit process with a supply chain, tiers which are rarely audited directly under tradi-
technology-enhanced audit process out of the same supply chain/ tional auditing practices (Stevenson and Cole, 2018). Example
facility. Moreover, as we mentioned at the outset, our premise is questions include:
that companies genuinely desire to uncover real risks and vulner-
abilities in their social and environmental audits. However, it is
What is the relationship between SEA governance decisions
possible that some types of issues (violations) might be missed or (e.g., whether to seek third-party certification or keep the audit
overlooked, in both traditional and technology-enhanced auditing. in-house) and the use of technology-enhanced auditing?
 P. Castka et al. / Journal of Cleaner Production 258 (2020) 120773 7

What is the relationship between governance structure and International Accreditation Forum’s (IAF) guidelines? If
veracity in SEA? technology-enhanced auditing becomes more widely adopted,

To what extent does third-party ownership of audit platforms would the guidelines require revising?
(such as Inspectorio) provide greater transparency, and hence,
greater likelihood of detection, than other types of audit Another factor that affects a firm’s likelihood of using
governance? technology-enhanced auditing is its capacity to effectively leverage
the benefits from such technologies. We propose that a firm’s
previous investments in cutting-edge technologies across the
3.4. Research questions on contextual factors in technology- business likely will facilitate its ability to effectively harness the
enhanced auditing power of technology-enhanced auditing. For instance, there are
technical challenges in implementing new technologies and the
Given the myriad possibilities for technology-enhanced SEA in process of fully adopting technologies like blockchain can take
supply chains, there are questions regarding when and how a firm years (Iansiti and Lakhani, 2017). Based on the idea that “a firm’s
should adopt such technologies. The adoption and use of ability to recognize the value of new information, assimilate it, and
technology-enhanced auditing is likely to be influenced by a firm’s effectively apply it”da concept known as absorptive capacity
unique context. Building on the idea that “organizations adapt their (Apriliyanti, 2017; Cohen and Levinthal, 1990; Todorova and
structures in order to maintain fit with changing contextual factors, Durisin, 2007; Zahra and George, 2002), we argue that previous
so as to attain high performance” (Sousa and Voss, 2008, p. 698; experience with new technology investment could help firms
Donaldson, 2001, p. 7), we explore the question: Under what con- successfully navigate that process. Studies of absorptive capacity
ditions does technology-enhanced auditing enable stronger social show that a firm’s prior knowledge base has a strong impact on its
and environmental performance in supply chains than traditional ability to absorb new knowledge (Cohen and Levinthal, 1990;
auditing practices? Ketokivi and Schroeder (2004) identified the Malhotra et al., 2005; Nieto, 2005). Based on that logic, a firm that
internal task/firm and external business environment as key has less reliance on technology across its business processes is less
contextual factors. Hence, we select three important contextual likely to have the necessary absorptive capacity to effectively
factors capturing these different levels of analysis: the task, the leverage technology-enhanced auditing. Representative research
firm, and the broader industry environment. More specifically, we questions related to absorptive capacity include:
develop illustrative research questions around these three vari-
ables: (1) task complexity, (2) a firm’s absorptive capacity, and (3)
To what extent do previous technological investments affect the
industry collaboration for SEA. In particular, we suggest that firms adoption of technology-enhanced auditing? E.g., are previous
may gain the benefits of technology-enhanced auditing when investments in technology in the supply chain positively asso-
leveraged for complex audits; when the firm has sufficient ciated with the adoption of technology-enhanced auditing?
absorptive capacity to harness technology, and when the industry
What are the relationships between absorptive capacity,
shares a desire for collaborating in SEA. Future research could technology-enhanced auditing, and social and environmental
identify other contextual conditions in technology-enhanced performance? Do firms achieve increased benefits from
auditing. technology-enhanced SEA under higher absorptive capacity?
Complexity in SEA is assessed on the basis of both geographical
complexity and process complexity (International Accreditation Firms can implement technologies to enhance SEA in their
Forum, IAF, 2009), as well as complexity of the issues being supply chains through a reliance on their market and contractual
addressed. Geographical complexity refers to organisational dis- power (Hingley, 2005) or by developing close collaborative re-
tribution (i.e., small versus large firms; geographically localized lationships with their suppliers (Brockhaus et al., 2013; Formentini
versus geographically dispersed). Process complexity refers to the and Taticchi, 2016). Technology-enhanced SEA may also introduce
nature of firms’ operations and their supply chains (i.e., repetitive new opportunities to collaborate with competitors, such as in
processes versus unique processes; few processes versus many instituting minimally acceptable working conditions (Winston,
different processes). Issue complexity refers to the “nature and 2014, p. 200). Companies in the electronics industry, for example,
gravity of the environmental [and social] aspects” (IAF, 2009); high are collaborating on the implementation of a supplier code of
risk, for instance, is associated with hazardous and non-hazardous conduct that heavily emphasizes improved working conditions,
waste processing (e.g., incineration; effluent and sewerage pro- among other issues, through the Responsible Business Alliance. As
cessing, mining); low risk is associated with aspects related to another example, in the realm of big data, German car manufac-
telecommunications and business services, for example. As turers cooperate to collect and share data on traffic congestion and
complexity increases, a firm’s risk/exposure to undiagnosed issues accidents to improve their product design. Collaboration allows
also increases. For instance, the ISO 19011 standard on internal firms to collectively agree on acceptable SEA standards and then
auditing provides clear guidance on risk evaluation (Johnson, focus on individual strategies for differentiation above and beyond
2014). Addressing the increasing complexity of supply chain those standards. Furthermore, relying on an industry-wide plat-
auditing requires the adoption of new auditing tools and tech- form for SEA also suggests that, rather than making decisions in a
niques (Coronado Mondragon et al., 2011). Representative research firm’s own self-interest, firms could collaborate in terms of what is
questions on complexity include: best for the industry, society, and the environment. This potentially
offers enhanced performance beyond which any one firm could

What is the relationship between complexity and the use of generate on its own. Representative research questions on collab-
technologies in SEA? E.g., are high geographical, process, and oration include:
issue complexity positively associated with the adoption of
technology-enhanced auditing?
To what extent does industry-wide collaboration facilitate the

Do firms achieve increased benefits from technology-enhanced use of technology-enhanced auditing? E.g., what factors moti-
SEA under higher complexity? vate the industry to invest collectively in new technology to

To what extent does technology-enhanced auditing affect the support SEA (i.e., versus the individual firm?); What is the
governance of audits and guidelines on complexity; e.g. relationship between task complexity and industry-wide
8 P. Castka et al. / Journal of Cleaner Production 258 (2020) 120773

collaboration for SEA? (e.g., does collaboration in SEA increase and environmental performance in its supply chain. Understanding
as complexity increases?) the mechanism by which this relationship is manifested would be

What challenges do collaborating parties face in integrating valuable. Here we explore two related mechanisms.
their SEA processes and results? How can these challenges be First, the increased veracity and timeliness of the SEA could
mitigated? increase the level of confidence decision-makers have in the

How do firms evaluate the relative benefits compared to collection and analysis of social and environmental data. As noted
drawbacks of collaborating with competitors in SEA? How do earlier, SEA results under traditional audits often are perceived to
firms evaluate the benefits from (versus costs of) collaborating lack credibility. Decision-makers may be reluctant to take action on
compared to undertaking SEA individually? What is the rela- findings they believe to be flawed.
tionship between industry-wide collaboration and individual Second, enhanced veracity could help firms adopt a proactive
firm’s competitive advantage? approach to managing their supply chain risks, which research has

How are the costs of implementing the technologies in collab- shown can reduce future non-compliances (Porteous et al., 2015).
orative SEA addressed? Smart sensing technology, for example, can provide a mechanism
for monitoring the structural integrity of buildings or other critical
infrastructure. This data could help prevent catastrophic building
3.5. Research questions on the “4 V’s” in technology-enhanced collapse, as occurred in Rana Plaza, or provide an early warning
auditing system for required building evacuations. Among other possibil-
ities, technology-enhanced auditing could therefore reduce safety
The next link in our framework explores the relationships be- hazards, decrease response times, and decrease reliance on reacting
tween technology-enhanced auditing and veracity, velocity, vol- to problems that have already occurred. In contrast, the lack of
ume, and variety of data. We posit that technology-enhanced veracity and timeliness could discourage the implementation of
auditing is positively associated with veracity, due to its ability to required governance, technical, or procedural changes that could
improve the accuracy, objectivity, credibility, completeness, etc. of improve social and environmental performance through, for
the data collection, recording & sharing, and analysis. For example, example, improved employee safety or decreased resource usage.
new technologies can cheaply, quickly, and reliably provide man- Example research questions on the relationship between
agers deep in the supply chain with meaningful input on the quality technology-enhanced auditing and social and environmental per-
of the working environment, an activity that was previously time- formance include:
and resource-intensive. Veracity also can be enhanced by
increasing the timeliness (i.e., velocity) of SEA. Increased frequency
What are the relationships between veracity and timeliness of
of data collection and analysis, for example, allows firms to reduce SEA and the level of confidence decision-makers have in the
or eliminate gaps in monitoring key social and environmental risks. data?
For instance, access to continuous (real-time) data e through, say, a
How would firm decision-making change if the veracity and
combination of sensors and cloud-based technologies e provides a timeliness of SEAs were enhanced? E.g., what is the relationship
more complete, objective picture of the firm’s supply chain activ- between the veracity and timeliness of SEA data and the de-
ities than periodic retrospective audits. Retrospective auditing cisions made/actions taken?
“only offers a snap-shot of the [social and] environmental impact of
Is there a lag between when technology-enhanced auditing is
a supply chain at a given point in time” (Edwards et al., 2011). adopted and when the social and environmental performance
We also argue that technology-enhanced auditing impacts the benefits are observed?
volume and variety of the data (i.e., the other two “V’s”, along with
veracity and velocity). For example, in addition to applying block-
chain technology to obtain previously unavailable data on product 3.7. Research questions on the relationship between the traditional
traceability, a forestry firm might employ satellite imaging to audit process and technology-enhanced auditing
monitor changes in forest productivity, reforestation, biodiversity,
or conservation of other resources (such as soil and fresh water In addition to empirical testing of the various relationships
resources) in the lands managed by its suppliers. Research that depicted in Fig. 1 along the technology-enhanced auditing process,
assesses the strength of the relationships between each of the at- other issues arise related to the roles of traditional (primarily
tributes of the data (volume, variety, velocity, and veracity) would human-based) auditing in light of the advantages technology-
help firms to understand how to better leverage technology in the enhanced auditing might offer. For example, technology-
audit process. For example: enhanced auditing does not eliminate the need for auditors. To be
sure, the quality of audit conclusions is heavily dependent on the

What are the relationships between technology-enhanced competence of the auditors. The auditors are expected to act ethi-
auditing and the 4 V’s (i.e., volume, variety, velocity, and ve- cally, fairly present their findings, and exercise due professional
racity) along each step of the SEA process (i.e., data collection, care (ISO 19011:2018). Moreover, auditors are expected to
recording and sharing, and analysis and interpretation)? E.g., demonstrate independence and to ground any audit conclusions in
What are the relationships between new forms of technology- evidence collected over the course of the audit (ISO 19011:2018).
enhanced audit data and an audit’s veracity and timeliness? While some data analysis and interpretation can be addressed
through machine learning technologies, for example, well-trained,
experienced auditors are still required to develop the final audit
3.6. Research questions on improved social and environmental conclusions. Technology is thus intended to complement, not
performance in technology-enhanced auditing entirely replace, auditors in SEA. In today’s era of relying on data to
drive decision making, experts increasingly caution on relying
The final link in our framework focuses on the relationships be- solely on technology and data to make decisions (e.g., Brady et al.,
tween the 4 V’s and social and environmental performance. We posit 2017; Horst and Duboff, 2015; Muller, 2019). Indeed, one study
that increased veracity and timeliness arising from technology- showed that the balance of human judgement relative to data-
enhanced auditing in SEA are positively related to a firm’s social driven decision making is optimized at a 50/50 ratio (Blattberg
 P. Castka et al. / Journal of Cleaner Production 258 (2020) 120773 9

and Hoch, 1990). Additionally, auditors may need to develop new learning technologies can be used to partially or fully automate
skills to leverage new technologies. Moreover, audit fatigue is a real data verification and analysis, such as ongoing risk assessments.
concern in traditional audits (Garcia-Torres et al., 2019). Hence, Our basic premise is that technology-enhanced auditing offers
another area of inquiry could examine the relationships between significant improvements in veracity and timeliness for SEA, filling
technology-enhanced auditing and reliance on people in the audit important knowledge gaps and better informing decisions made on
process. Representative research questions include: the basis of the audit conclusions. We developed an organizing
framework to guide possible research on the role of technological

What factors affect the degree to which technology-enhanced enhancements in SEA. The novelty and value of our work lie in its
auditing is used in the audit process? Can some types of exploration of how technology-enhanced auditing relates to (1) the
technology-enhanced auditing replace humans altogether? audit’s scope/focus, firm’s motivations for SEA, governance of the

Is there an optimal balance, or ideal combination, between the audit function, (2) possible contextual factors, e.g., the conditions
use of human auditors and technology in SEA? under which the benefits of technology-enhanced audits are most

What is the impact of technology-enhanced auditing on audi- likely, (3) the 4 V’s of data (volume, variety, velocity/timeliness and
tors’ skills? To what extent are new skills required in veracity); and (4) possible mechanisms by which veracity and
technology-enhanced SEA? timeliness affect social and environmental performance in the

To what extent can technology-enhanced auditing alleviate supply chain beyond what is possible with traditional SEA practices.
audit fatigue in SEA? One key limitation of our paper is the speculative nature of the
research questions. Although these questions were derived from
A final useful area of inquiry may be exploring the factors that the literature, consultation with industry practitioners could offer
influence the adoption (versus non-adoption) of technology in SEA both refinements and insights for future validation. In addition,
(Cooper, 1998; Rogers, 1962; Venkatesh and Davis, 2000). For case studies would illuminate more specifically some of the moti-
example, there are technical challenges in implementing new vations and challenges firms experience in leveraging technology-
technologies and the process of fully adopting technologies like enhanced auditing. Moreover, future studies could use a range of
blockchain can take years (Iansiti and Lakhani, 2017). Possible methodologies, such as questionnaires, interviews, and action
research questions could include: research, among others to pursue some of the questions. For
example, data related to all 4 V’s could be collected and analyzed

Do the sensitive nature of and risks involved in SEA differentially from multiple suppliers throughout a supply chain to address the
affect the uptake of technology-enhanced auditing compared to research question proposed in Section 3.5, “What are the re-
the uptake of technology in other domains? lationships between technology-enhanced auditing and the 4 V’s

What are the barriers/challenges firms face in the transition to along each step of the SEA process?”
technology-enhanced auditing? Notwithstanding that limitation, the paper has a number of

What factors can mitigate those challenges or help firms navi- implications for managers and policy makers.
gate the transition more easily? The paper highlights the growing range of options for
technology-enhanced auditing and provides a starting point for
4. Conclusions managers and administrators of third-party certification schemes,
certification, and accreditation bodies looking to identify, assess,
While traditional SEA practices can lead to improved social and select, and implement new technologies to enhance the veracity
environmental performance in a firm’s supply chain, traditional and timeliness of SEAs. As the paper highlights, these choices will
SEA practices are limited in the variety and volume of the data they be influenced by the scope and focus of the audits, managerial
can collect. They are also limited to primarily retrospective forms of motivations for SEA, the complexity of the SEA, the firm’s capacity
auditing, and, thus, are oriented to a reactive, rather than a pro- to leverage technological benefits in SEA, and the collaborative
active, approach to performance improvement. The veracity of relationships within the industry, to name but a few considerations.
findings generated through traditional SEA practices has also been The paper also underlines the opportunities for managers and their
questioned, in large part due to these limitations (Herding and firms to improve their social and environmental performance
Fischer, 2015). through the adoption of technology-enhanced auditing. For policy
The application of technologies (i.e., technology-enhanced makers, the paper highlights the growing complexity of SEA and
auditing) provides an opportunity to address limitations associ- the need to reconsider requirements in management systems
ated with the data collection, analysis, and interpretation in tradi- standards, regulation, and other governance mechanisms. The pa-
tional SEA practices. Our paper is the first to address the potential to per also highlights the opportunities for potential societal benefits
improve the veracity and timeliness of SEA through technology- arising from technology-enhanced SEA, such as improved moni-
enhanced auditing practices. More specifically, we explore tech- toring of environmental impacts, reduction of safety hazards, and
nology’s role in the various steps of the audit process in order to the possibility of early warning of near- or long-term problems.
improve the veracity and timeliness of SEA and, in turn, social and Over time, greater adoption of technology could provide a basis for
environmental performance in supply chains. For example, satellite improved policies and practices related to SEA.
imaging can provide information on land usage patterns deep in
the agricultural supply chain, blockchain technology can provide a Declaration of competing interest
comprehensive accounting of a product’s history, and environ-
mental sensors can provide continuous monitoring of discharges to The authors declare that they have no known competing
the air, water, or land. In addition to enhancing veracity, financial interests or personal relationships that could have
technology-enhanced auditing also offers the opportunity to in- appeared to influence the work reported in this paper.
crease the timeliness of data collection, recording, sharing, analysis,
and interpretation. Similarly, sensors can be installed to continu- Appendix A. Supplementary data
ously monitor emissions in critical locations; cloud-based appli-
cations can facilitate the transmission of the data collected from Supplementary data to this article can be found online at
suppliers in real-time. Once the data are collected, machine https://doi.org/10.1016/j.jclepro.2020.120773.
10 P. Castka et al. / Journal of Cleaner Production 258 (2020) 120773

Appendix LaborVoices, offering real-time employee feedback on their safety,

working hours, fire hazards, and building integrity.
Technologies Used in SEA
Data recording and sharing
Technologies for SEA can address each of the key steps of an
Data recording and sharing also can be improved through
audit process, i.e., data collection, data recording and sharing, and
technology-enhanced auditing. The need for information sharing
data analysis (Herding and Fischer, 2015). Accordingly, firms may
throughout supply chains has long been recognized (Lee and
use technologies to address some or multiple aspects of an auditing
Whang, 2000). The timely sharing of data can be enhanced
process. For example, firms might use technology not only to collect
through the use of cloud-based platforms, including general plat-
and record the data, but also to analyze it automatically with
forms, such as Amazon Web Services, and more tailored platforms,
technology (e.g., by adopting machine learning). For instance, a firm
such as Inspectorio, which is intended to help improve the effi-
could collect data on environmental conditions through sensors,
ciency and transparency of quality inspections. In addition, tech-
collect data through LaborVoices, and use advanced analytics, such
nologies can collect, create, and provide access to verifiable,
as text recognition and machine learning, to analyze the available
unalterable records intermittently or in real-time across the supply
streams of data. In this example, the technology directly assists in
chain. Blockchain, for example, has myriad uses in a supply chain
decision-making. Table A1 provides an illustrative summary of
context (Saberi et al., 2018), particularly with respect to improving
these technologies.
contract management, product traceability, and chain-of-custody
concerns. As noted in the text, the Forest Stewardship Council
Chain of Custody standard requires log traceability throughout the
Data Collection
supply chain. Blockchain can be used to create unalterable records
Technology-enhanced auditing can improve data collection,
of material and product provenance at little-to-no cost, dramati-
through enabling intermittent or real-time collection of high-
cally improving both the veracity and timeliness of this informa-
quality site-specific temporal and spatial data. Satellite imaging
tion. This could help alleviate traceability concerns that arise from
might be used to improve veracity, through tracking data changes
traditional auditing practices, such as “audit fatigue or double re-
in forest coverage (Lynch et al., 2013), fish stocks (Stuart et al.,
cord keeping practices” (Garcia-Torres, 2019).
2011), or large-scale spills. The use of satellites in identifying
modern slavery practices has also been explored. As Gold et al.
(2015, p. 489) explain, satellite images can be used to identify an Data Analysis
“absence of economic activity in a region that would otherwise be Technology-enhanced auditing also can support data analysis. In
generated by the workforce spending their wages or an unsus- the SEA context, machine-learning technology can identify relevant
tainable way of living in rural settlements [which] are warning information, identify patterns, make predictions, provide advice,
signs for slave labour conditions”. Data regarding product origins and even make decisions. Among other uses, this could include the
could be addressed through chemical fingerprinting. Oritain Labs, identification of anomalies and outliers in data collected as a part of
for example, uses concentrations of trace elements and isotopes to the audit, thus enhancing the truthfulness of the data. Automated
identify the origin of food products. Radio-frequency identification data analysis techniques also can reduce the need for time-
(RFID) also is widely used to track product information in supply consuming manual review of the data, thus contributing to
chains. Interactive social media-based platforms can be used for improved timeliness. In machine learning, the technology can go
real-time monitoring of employee perceptions of their work envi- beyond analyzing data to support decision-making by making
ronment (Arora and Thompson, 2018). For example, LaborLink predictions, providing targeted advice, or making autonomous
provides a platform for workers to answer anonymous surveys decisions through automatic learning from an analysis of the
focused on their working conditions using their mobile phones. available datasets. This use of technology also can increase auditors’
Apparel and electronics supply chains often use another platform, access to accurate, precise, and truthful data in a timely manner.

Table A1
Representative technologies to address veracity and timeliness in SEA

Key steps in the Example technological Description of technological solution Examples from industry Example applications
auditing process solutions

1. Data collection Satellite imaging Technologies that enable both SAFARI Programme Global Forest Watch monitors forests around
intermittent and real-time monitoring Global Forest Watch the world to highlight deforestation and
of spatial and temporal changes. Global Fishing Watch identify sustainably sourced goods, among
NASA Worldview other uses. The FSC is also piloting the use of
NOAA View satellite imaging in its certification schemes.
CubeSats Monitoring of fish stocks or large-scale spills are
just two of the many other possibilities.

Chemical fingerprinting Use of mass spectrometry to measure The Chemical Footprint Oritain Labs uses concentrations of trace
the concentrations of Project Oritain elements and isotopes to identify the origin of
chemical elements. food products, with applications for businesses
and consumers.
There are potentially wide-spread applications
for chemical fingerprinting in agribusiness,
particularly with respect to chain of custody
certifications.
Social media platforms Collection of perceptual data by LaborLink Over 400 suppliers use LaborVoices to identify
providing unrestricted communication LaborVoices fire hazards, child labor, etc., which can help
platform for all. Ushahidi identify key areas of focus for SEA.
Sensors/RFID
 P. Castka et al. / Journal of Cleaner Production 258 (2020) 120773 11

Table A1 (continued )

Key steps in the Example technological Description of technological solution Examples from industry Example applications
auditing process solutions

Intermittent or real-time monitoring of Indoor air quality Sensors are widely used to collect objective data
site-specific temporal and spatial data. Air emissions on environmental performance (such as on air
RFID emissions or discharges to bodies of water).
Drone-based monitoring Newer applications include embedding sensors
in products (for example, to detect missing or
non-functional components) and wearable
technologies that enable direct monitoring of
employees (such as collecting data on
movements, productivity, and stress levels).
2. Data recording Audit cloud applications A new generation of audit systems that Inspectorio Inspectorio is a cloud-based platform devoted
and sharing improve efficiency of audits by Ecovadis to enhancing transparency throughout the
providing an on-line platform for data Amazon Web Services quality and compliance process. The platform
recording and analytics. also is used in ethical auditing, such as by the
Sustainable Apparel Coalition.
The recently merged UTZa and Rainforest
Alliance have been piloting similar applications
as a part of their program of product
certification, such as for cocoa, coffee, and tea.
Blockchain Blockchain provides access to Financial services The application of blockchain technology is
unalterable evidence. Shipping rapidly expanding in SEA. For example, it is
Insurance widely used in the diamond industry to track
Smart contracts product provenance (e.g., to avoid “blood
Product traceability diamonds”) and limit counterfeiting. Many
Cryptocurrency other pilots are being reported throughout the
certification industry (e.g., Fair Trade).
3. Data analysis Advanced machine learning Technologies that identify relevant “Big 4” auditing companies KPMG leverages data analytics to assist in
information, identify patterns, make (Deloitte, Ernst & Young, problem identification, strategy development,
predictions, provide advice, and make PwC, KPMG) and making predictions.
decisions intermittently and in real-
time.
a
UTZ certification was named for the Mayan-language “Utz Kapeh” meaning ‘Good Coffee.

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