We invested in Elm AI because it will make social audits more impactful.

Social audits are a persistent feature of the responsible supply chain landscape. Despite their well-documented limitations, there are thousands of social audits conducted every day in the supply chains of every large company in the world. Each audit report can run to dozens, if not hundreds, of pages long, depending on the complexity of the audit process. Furthermore, supply chain due diligence requirements are growing (even in the face of scope reductions among EU laws), but responsible supply chain teams are not expanding. The task of managing these efforts is significant. The effort to turn them into meaningful change experienced by workers is yet a greater and more vital challenge.

Elm AI addresses this pain point head-on. The company deploys a tool built with large language model artificial intelligence to understand, refine, and strengthen social auditing, adding value and driving impact in several ways:

1. The company treats social audits as a dataset, applying machine learning to extract, digitize, and analyze unstructured data from audit reports. This enables users to use audits as a source of insight rather than merely a tool for compliance.
2. Elm AI removes friction from the most important part of the audit cycle: turning findings into corrective actions. The company’s product reduces the amount of time spent per audit by an order of magnitude. In an era of increasing supply chain complexity and stronger regulatory requirements, paired with continued tight budgets, efficiency gains enable internal teams to channel resources towards supplier improvement.
3. Corrective Action Plans (CAPs) can be generated automatically from audit reports using Elm AI’s approach, and supplier performance against those CAPs can be monitored automatically as well.

That’s where the company started, and offers current value. But while Elm AI primarily processes social audits, its powerful LLM-driven engine also ingests and analyzes environmental audits, supplier questionnaires, and a variety of related supplier documentation to enhance the picture of factories’ overall performance. By contextualizing these diverse data points, Elm AI offers a fuller and richer understanding of supply chain conditions, driving broader improvements and corrective actions. Though an early-stage company, Elm AI has already processed data from several thousand factories, significantly enhancing transparency, accountability, and impact across global supply chains.

A social audit-focused investment is a departure for Working Capital Fund, due to the inherent limitations of audits as a tool. Our investments are targeted at building a future where information about supply chains and workplaces is worker-generated, real-time, scaled, and accurate, rather than reliant on the (often blurry) snapshot that is the social audit.  However, audits remain the most widespread responsible supply chain intervention, and an AI-driven approach to the data generated by the audit has an obvious path to immediate value.

Elm AI offers a path to take social audits to a place where they offer insight and deliver remedy. The tool is varied and powerful enough to serve clients who can embrace the potential of AI as it generates insight into working conditions in supply chains.