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.


Zach Skyles Owens January 24, 2007 - 7:07 pm

I believe there is a certain set of consumers who are conscientious enough and have the buying power to only purchase from retailers who use suppliers with “ethical principles.”
For many consumers in the world this is financially not an option nor is it a priority. When walking through the aisles of a super market most customers don’t think about the child labor that went into making the goods. I think it’s a similar phenomenon to the citizens of sheltered western societies not really understanding the reality of war on the ground and the affect foreign policy has on the lives of those whose worlds are destroyed in the process.
Therefore, I think we must count on responsible policies of the most powerful retailers in the world such as Wal-Mart. The issue is that they are in markets of extremely high competition where cost savings seem to be their primary concern.
I’ve noticed a recent trend by Wal-Mart to heavily promote their social responsibility in terms of providing good jobs in communities through the US, which probably comes from the difficulty they have had trying to enter some small town markets.
Hopefully in the next couple of years we will see commercials promoting their fair-trade policies as well. Hopefully some high profile public relations disasters similar to what Tesco has gone through will help push retails in the right direction.

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