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When will US companies put safety in their global supply chain before profit?

On Saturday, November 24th, 120 garment workers in Bangladesh were killed when fire broke out in an 8 story factory building.  Although a full report has not been provided by fire officials, workers at the factory indicated that fire escapes were blocked and guards had failed to open the main gate after smoke engulfed the building.  This is yet another sad event in the problems that exist in the global supply chains of many US-based companies.  Worker conditions in places like Bangladesh and China are well below global standards.  Workers earn minimal wages and live in dormitory locations that are patrolled by military-like platoons of guards.  This particular Bangladesh factory provided services to companies like Wal-Mart who just last year indicated that this factory had a high risk of fire.

In reviewing supply chain management issues over the past few months I find myself questioning the necessity to hold organizations to foundational principles,  defined by Waddock as the “generally agreed-on standards that provide a floor of acceptable practices below it is ethically and managerially problematic to go” (Waddock, 2009, p. 330).  Ultimately, foundational principles ensure basic human rights and dignity.  One has to wonder why these principles measure to a “floor”.  Is it to protect workers or to guide organizations as to how low they can go in their treatment of individuals and the environment before being in violation of the standards.  Wouldn’t the collective “we” as members of the global village be better off if these guiding principles started from the ceiling of what is expected as opposed to what is the minimal requirement that needs to be met?

Although there are many organizations that monitor and set standards on issues such as worker safety, very few have any real bite.  Most rely on voluntary reporting by its members.  One such organization is the UN Global Impact, an initiative started in 1999 by former United Nations Secretary-General Kofi Annan. The 10 guiding principles of the UN Global Compact focus on human rights, labor standards, environment and combating corruption.  There are some shining members of UN Global Impact, such as Unilever who was an early member that voluntarily agreed to the core setup of principles in 2000. Unilever has a differentiation level of “Global Compact Advanced” which set a “higher standard for corporate sustainability performance and disclosure”. With this designation, Unilever has demonstrated that they report on a range of sustainability strategy, governance and management practices, many of them based on core United Nations and Global Compact resources.

One does not need to look far to see the commitment Unilever has made to bringing positive Corporate Social Responsibility (CSR) impacts to those in the global village. In Brazil, they recycle 17 tons of waste from their manufacturing plants and also provide a free laundry in poverty-ridden areas of Sao Paulo. In India, they fund a floating hospital that offers free medical care (Waddock, 2009, p. 156). In 2011, they opened a new food processing plant in Durban, South Africa that was designed to reduce greenhouse emissions by 50%, contributes zero waste to landfills, and is working towards using collected rainwater and recycled water so that they do not consume any water needed by individuals in this rain stressed area.

My feeling is that standards or no standards, Unilever will continue to make what can only be considered incredible contributions to the global village because they have engrained it in their business to the point where management all the way up to the CEO have CSR goals tied to their compensation plans. I would recommend you all take a look at their Unilever Sustainable Living Plan Progress Report 2011 to see the commitment they have made to being a leading corporate citizen. Unfortunately, for every company like Unilever, there are probably 50 that are not part of the UN Global Impact – companies like Wal-Mart and Apple who’s supply chain workers seem to suffer incredibly.  How do we make those companies more like Unilever and hear our dissatisfaction with how they treat their factory workers?

For more information on Apple’s supply  management issues please see my early posting.

References

Waddock, S (2009). Leading Corporate Citizens: vision, values, value added, (3rd ed.). New York, NY: McGraw-Hill Irwin.

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One comment on “When will US companies put safety in their global supply chain before profit?

  1. I was thinking about who is to blame for such tragedies. I do not believe that the problem will be resolved by consumers who vote against exploitation with their feet, as consumers are often distracted by marketing experts and, thus, unaware of social abuses in foreign plants. Rather, we need institutional intervention that forces supply chain members to internalize environmental and social externalities.

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