Translation missing: en.parallax1_caption If you’ve ever been to a corporate social responsibility conference, you’ve undoubtedly heard the story of the three fire extinguishers. The way it goes is, an inspector was walking through a clothing factory in Bangladesh and noticed that it had three fire extinguishers on the wall, one right on top of the other. He asked why, and the manager of the factory told him, “We get audited under three different standards, and they each require us to have a fire extinguisher a different distance from the floor. We got tired of moving the fire extinguisher every time an inspector came, so now we just have one at each height.” This is the world that No Logo built. By the end of the ’90s, a society-wide consensus had formed on how companies should operate their developing-country factories. First, we wanted them to ban all the terrible things we read about in magazines.

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No more child labor, choked ventilation, abusive bosses, confiscated passports. Companies should apply U.S. Working conditions or, at the minimum, follow local laws where they operated. Second, we wanted them to send inspectors to see if those commitments were being met. And most companies did these things. That was the easy part.

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The hard part, it turned out, is that these structures aren’t designed to make factories take better care of their workers. They’re designed to make factories look like they are. When you hear the word “inspector,” you think of a sort of detective, walking up and down whirring assembly lines, interviewing workers, interrogating managers. In reality, factory audits are primarily a paperwork exercise. Inspectors typically spend one day—two, tops—at each factory, mostly in the back office, checking time sheets for shift lengths, birth certificates for child labor, pay stubs for wages and overtime. In a 2009 survey, Chinese auditors referred to their work as a “cat-and-mouse game.” They updated their inspections to get around the fraud: asking workers their zodiac signs instead of their birthdays, checking for wrinkles on birth certificates.

Then the factories updated their fraud to get around the inspections. Auditors tell me of arriving at factories where the owners play a song over the loudspeakers as a signal to shuffle the child laborers out the back. “Sometimes [employees] answer before you ask the question,” says Rachelle Jackson, director of sustainability and innovation at Arche Advisors, who estimates she’s done around 1,500 audits. “You ask, ‘What time do you start work?’ and they say, ‘Eight hours.’”. For his book The Promise and Limits of Private Power, Brown University’s Richard Locke examined 10 years of Nike inspections. Nike was doing two kinds of audits, one mostly based on paperwork and the other incorporating the impressions of its staff after visiting factories. From 2001 to 2005, the paperwork audit showed that working conditions in almost all of Nike’s suppliers were steadily improving.

When Locke checked the qualitative audit, though, he found that nearly 80 percent of them either hadn’t improved—or had gotten worse. Partly in response to this dynamic, a lot of the big brands switched tactics, moving from wrist-slapping to worker-training. In 2009, Nike set up a model factory in Sri Lanka and sent managers there from all over the world. Since any change in operations can make suppliers less productive at first, the company signed long-term agreements with factories, pledging to stick with them as they learned how to meet deadlines using better methods and safer equipment rather than longer shifts. But these second-gen practices couldn’t insulate factories from the countries where they operated. The Nike training worked wonders in Mexico, but had no effect in China or Sri Lanka. Between 8 and 10 percent of Mexican workers quit every year.