Global accountability on worldwide suppliers

Written on January 23, 2007 by Max Oliva in Corporate Responsibility

J.Pozuelo-Monfort, MSc candidate in economic development at LSE.
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The Financial Times of last January 16th, 2007 features an article with the following headline: “An onus on retailers to keep hands clean“. The article raises the issue of large retailer’s sense of responsibility when picking suppliers. Large retailers such as Walmart, Carrefour or Tesco have a huge purchasing power and are able to impose working conditions on their suppliers in exchange of a selling spot in their large retail centers. Players such as Walmart and Carrefour can therefore negotiate with their global suppliers a set of conditions under which the merchandise has to be manufactured and delivered. If the set of conditions is not met, the large retailers could turn a supplier down. Therefore a retailer has the option, and must exercise it, to motivate suppliers to adopt a set of ethical principles vis a vis the working conditions of their employees. Usually it has more often been the case, that a large retailer will exercise pressure on the prices, so that it can purchase bargains, ignoring the conditions under which certain products are manufactured. Inexpensive clothing coming from Asia is not necessarily manufactured in fair conditions. How do we make sure Bangladeshi women do not work 12 hours a day, 7 days a week, manufacturing clothing that the rich world can purchase at bargain prices? Either the consumer must decide not to purchase at a certain retailer that does not guarantee its suppliers fulfill a set of ethical principles, or the retailer itself must guarantee that all of its suppliers fulfill a set of ethical principles.
The effort seems to be coming from the retailers’ front. In an initiative called “Ethical Trading Initiative” a set of retailers, coupled with trade unions and NGO’s is pushing towards global standards in a supplier’s assessment. Ethical Trading Iniative exists “to promote and improve the implementation of corporate codes of practice which cover supply chain working conditions”. Their ultimate goal is “to ensure that the working conditions of workers producing for the UK market meet or exceed international labour standards”.
Autoregulation in a particular industry is not necessarily a bad thing, but does not always lead to the elimination of the problems that caused its creation. Imagine public corporations auto-auditing their financial statements on behalf of their good faith. If Auditing Companies are necessary in the financial arena, why aren’t there Auding Companies confirming whether or not a retailer, in this case, fulfills an ethical set of principles when incorporating suppliers to their global supply chain?
Two other organisations that are working in the direction of measuring the working conditions of a retailer’s supplier are the French NGO Verite and the American Fair Labor Association.
Let’s demand retailers to be accountable for their supplier’s miserable working conditions. The third world, in the end, does not deserve to be imposed 19th century working conditions in a globalized world that presumes to be reducing the gap between the rich and the poor. The third world cannot continue working day and night so that consumers in the first world have access to bargain products.


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