Responsibility is a minefield

Jan 01, 2007

The workers, mainly women, are, according to the findings, working 80 hours a week for 5p per hour, in potential death trap factories. The living wage in Bangladesh is commonly calculated to be a minimum £22 a month. However, starting wages in the factories researched for the report were as little as £8 a month.

The three retailers have all signed up to ethical trading regimes which are supposed to guarantee a living wage and cap working hours. However, War on Want’s research claims that their third-party suppliers are failing to follow these rules and bullying workers into keeping quiet about the sweatshop conditions.

Companies are making serious efforts to define and integrate CSR into all aspects of their business, bolstered by a growing body of evidence that it has a positive impact on business economic performance.

But how do they address the negative impact on their image and, potentially, their bottom line that claims such as these can have?

Leading organisations have recognised that their social, environmental and economic impacts are associated not only with their products and services but also – and in some cases, very significantly – with the performance of their suppliers and contractors.

Companies are being asked to be accountable not only for their performance but also for that of their entire supply chain and for an ever-changing set of corporate social responsibility issues.

ASDA, Tesco and Primark all promote very worthwhile CSR policies and programmes and operate ethical trading policies. Everyone agrees that the supply chain can be a large CSR risk but very few agree as to how to reduce that risk and, perhaps equally importantly, to what extent it is appropriate to do so.

How should a company define where its responsibility ends and where its suppliers take on that responsibility? How do stores such as these three brands reconcile the need to cut costs and offer cheaper products with their objective of reflecting good CSR practices through the supply chain?

Asda says: “Over the past 20 years UK retailers have undergone significant changes in trading and sourcing relationships. Today’s supply chains are global in nature, wide, deep, and complex. Despite the complexities inherent in these relationships, however, our view is that retailers have an obligation to understand and address inequities in supply chains.

“Asda attempts to address and preclude any such inequities through its Ethical Trading Programme”.

Corporate social responsibility expert John Luff says: “Companies like Tesco and ASDA (as part of the WalMART group) make increasingly visible and measurable commitments with respect to CSR.

“The bad news for them is that if they are perceived to underachieve on these commitments the media swoops. The good news, for them, is that short-term consumer behaviour is still driven by factors such as cost and convenience.

“The even better news is that companies like this are building long-term brand loyalty because some under-achievement is forgiven if their total CSR programme is heading in the right direction.

“Tesco will retain its pre-eminent responsibility rating because of its schools programme. Tesco will fix this supply problem but Primark will only survive until someone cheaper appears. And they will.”

CSR and the supply chain is a minefield of debate that will rumble on. News of cheap labour won’t impact on the retailers’ clothes sales, however it will hopefully make them investigate the claims further and question how their demands on their suppliers to cut costs and therefore reduce margins contribute to these appalling claims.

John adds: ” In case we think this is all about big corporates and the developing world, let’s hope that 100 per cent of this article’s readers would be 100% happy for 100% of their employees and their suppliers’ employees terms and conditions to be open to total public scrutiny. Hopefully they will”.

For more information, visit www.jardine-michelson.com

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