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Supply Chain Ethical Issues

BLOOD ON YOUR LABELS! Are fashion retailers morally responsible for poor working conditions and inadequate living wages of workers in their supply chain?
by

Silvia de Carlo

on 20 June 2013

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Transcript of Supply Chain Ethical Issues

BLOOD ON YOUR LABELS!
Are fashion retailers morally responsible for poor working conditions and inadequate living wages of workers in their supply chain?

Agenda:
Background:
International Labour Organization (ILO) Ethical Trading Initiative (ETI),
GAP and ASOS profiles
Issue: working conditions
Ethical Imperialism vs Cultural Relativism
Stakeholder Theory
Issue: living wages
Ethic of Justice vs Ethic of Care
Ethical Foundation
Q&A
What is the ILO and what is its purpose?
Who are the members?
The core labour standards
How is it put into practice?

thank you!
Bangladesh 24th April 2013
BBC NEWS
Working conditions
Living wages
Overview of the ETI
The ETI Base Code – expect not guarantee
Two key codes:

ETI : Practical implementation of ILO
Reactive not proactive?









Let’s explore two signatories!

San Francisco, 1969
Mkt Cap (Mil.) $19,400 (Reuters)
CSR 'Our commitment to doing what's right unites us'
c43 country supply chain
Code of Vendor Conduct - all producing factories, any of their subsidiaries, divisions, affiliates or agents

London, 2000
Mkt Cap (Mil.) $3275
(Reuters)
CSR 'Fashion with integrity'
Supply chain - China, India, Turkey and Eastern Europe
Code of Business Ethics - all suppliers/manufacturing sites

Ethic of Justice vs.
Ethic of care


Evolution from
Shareholder to
Stakeholder Theory

‘When in Rome, do as the Romans do.’

Justice (Kohlberg)
Independence, autonomy & hierarchy

vs.

Care (Gilligan)
Interdependence, interconnectedness & relationships


It's all about the money...
ASOS

GAP

Definition of a ‘living wage’:
An hourly rate set independently and updated
annually
and calculated according to the
basic cost of living
in the country (Living Wage Foundation, UK)
Wages and benefits paid for a standard working should meet at least legal or industry minimum wage standards and always be sufficient to
meet basic needs
of workers and their families and to provide discretionary income. (ETI)
Codes of conducts










Questions:
How are the minimum wages set?
Who decides the minimum wages?

Global competition – race to the bottom




What is the reasonable and effective minimum wage?
Ethical foundations
Deontological
Principles: Doing right
Immanuel Kant

Teleological
Policies: Doing good
Jeremy Bentham

“Universal law
Ends in themselves
Kingdom of ends”

“The greatest happiness of the greatest number is the foundation of morals and laws”.

International Business Ethics
Case study by Group 5
Patrick Binding
Nicholas Milne
Jo Hsu
Silvia De Carlo
PROBLEMS
- ignored building codes and health and safety standards: collapses and fires








- long hours of work, sometimes at night

- virtually no government inspections

- no way for workers to alert authorities of threats to their own safety

HOW DO ASOS AND GAP DEAL WITH THESE ISSUES?
Bangladesh: the world’s second largest exporter of apparel after China.
(International labour rights)
CODES OF CONDUCT
Bangladesh's largest buyer is H&M, followed by Walmart and Gap Inc.
1,000 garment workers have been killed
in more than 275 unsafe factory incidents
since 1990
Her name is Lovely. She was 17 years old at the time of the fire (2006), she barely survived.
She never received compensation for her injuries.

"Working in a clothing factory is, relatively speaking, an attractive option. Many of them are women,
empowered as never before in the country’s history.
"
(Alex Massie, The Spectator)

"The truth is, there is no other industry that can absorb so many female workers with little schooling or skills"
(Ahsan Mansur, The Guardian)

RMG the key driving force behind Bangladesh development
(McKinsey&Company, 2011)

Cultural relativism
Ethical imperialism
“the ethical principle that we accept apply to everyone, there is a common ethical view”
"different cultures have different beliefs about the morality of particular types of acts"
Is it morally permissible?
source: www.gapinc.co.uk and www.asos.co.uk
•Al-Mahmood, S. Z., 2013. Bangladesh's garment industry still offers women best work opportunity. Guardian. [online] 23 May. Available at: <http://www.guardian.co.uk/global-development/2013/may/23/bangladesh-garment-industry-women-opportunity>[Accessed 16 June 2013]
• Anker, R., 2011. Estimating a living wage: A methodological review. [pdf] Geneva: International Labour Organization. Available at: <http://www.ilo.org/wcmsp5/groups/public/---ed_protect/---protrav/---travail/documents/publication/wcms_162117.pdf> [Accessed 15 June 2013]
• BBC News, 2013. Bangladesh collapse: Thousands hold prayers for victims. BBC News [online] 26 April. Available at: <http://www.bbc.co.uk/news/world-asia-22526786> [Accessed 15 June 2013]
• Claeson, B., 2012. DEADLY SECRETS: WHAT COMPANIES KNOW ABOUT DANGEROUS WORKPLACES AND WHY EXPOSING THE TRUTH CAN SAVE WORKERS’ LIVES IN BANGLADESH AND BEYOND: ILRF.
Ethical Trading Initiative 2013, 2013. ETI. [Online]
Available at: http://www.ethicaltrade.org/
[Accessed 01 06 2013].
Friedman, M., 1970. The Social Responsibility of Business is to Increase its Profits. The New York Times Magazine.
• Eyraud, F. and Saget, C., 2005. The fundamentals of minimum wage fixing. International Labour Organization. [pdf] Available at: <http://www.ilo.org/wcmsp5/groups/public/---ed_dialogue/---actrav/documents/meetingdocument/wcms_208814.pdf> [Accessed 16 June 2013]
•GOV.UK, 2013. National Minimum Wage rates. [online] Available at: <https://www.gov.uk/national-minimum-wage-rates> [Accessed 15 June 2013]
•Massie, A., 2013. In Praise of Sweatshops. The Spectator.
• Mayer, A., 2013. How can you tell if your shirt was made in a sweatshop? CBC News. [online] 26 April. Available at: < http://www.cbc.ca/news/canada/story/2013/04/25/f-bangladesh-clothing-consumer-awareness.html> [Accessed 16 June 2013]
• McKinsey&Company, 2011. Bangladesh's ready-made garments landscape: The challenge of growth, s.l.: McKinsey&Company.


2011 list of sourcing countries:

Bahrain Bangladesh Brazil Bulgaria Cambodia Canada China Colombia Dominican Republic Egypt El Salvador France Germany Greece Guatemala Haiti Honduras Hong Kong India Indonesia Ireland Israel Italy Japan Jordan Lesotho Malaysia Mexico Nicaragua Pakistan Peru Philippines Portugal Singapore South Africa South Korea Spain Sri Lanka Taiwan, Province of China Thailand Turkey United Kingdom United States of America Vietnam
www.gapinc.co.uk
Safe and hygienic?
Source: Claeson, B., 2012. DEADLY SECRETS: WHAT COMPANIES KNOW ABOUT DANGEROUS WORKPLACES AND WHY EXPOSING THE TRUTH CAN SAVE WORKERS’ LIVES IN BANGLADESH AND BEYOND, s.l.: ILRF.
Working Conditions -
Occupational health and safety

Factories shall comply with all applicable laws and regulations regarding working conditions and shall provide workers with a safe and healthy environment.

Health and safety

Adequate measures must be in place to protect the health and safety of all people at factory site and any other supplier workplaces, including temporary workers and workers on agency contracts. This must include a formal and regular assessment of risks and a corresponding programme of improvement. The specific risks to vulnerable workers e.g. young workers, pregnant workers or workers with disabilities must be assessed separately.

Management’s responsibility does not end with providing safe systems of work. Management must also ensure that safe working systems are understood through formal and informal training and that they are being followed. It is appropriate to use the disciplinary process for anyone who wilfully puts themselves or their colleagues at risk
20.06.2013
References:
CONTROVERSIES
- Gap Inc. Admits Problems, Vows to Improve Working Conditions at Garment Factories (2004, EHS Today)
- Child sweatshop shame threatens Gap's ethical image (2007, guardian.co.uk)
- Workers jump to their deaths as fire engulfs factory making clothes for Gap (2010, guardian.co.uk)
- Bangladesh factory collapse: Gap refuses to back safety deal (2013, independent.co.uk)
CONTROVERSIES
Radioactive metal-studded belts recalled by Asos (May 2013, ft.com)
2 MAY 2013
The Ethical Trading Initiative (ETI) has announced how it is working with its members to tackle the chronic health and safety issues affecting Bangladesh’s garment sector.
The UK-based alliance has worked with its member companies, trade unions and NGOs to develop the plan, which includes immediate actions and commitment to wider international efforts. This work began in force following the tragic Tazreen Fashions factory fire in November, with the framework reviewed and updated, following last week’s collapse of the Rana Plaza in Savar; the country’s worst industrial disaster.

ETI members sourcing from Bangladesh, alongside member trade unions and NGOs, will: .............
ETI announces its Bangladesh fire
and building safety plan
'"There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.' Friedman (1970)
It's all about the stakeholders...
'The firm is constructed to serve them.'
Freeman & Gilbert (1989)
Don't do anything you wouldn't do at home.
(Frederick, 1999)
What happens in Bangladesh?

“We're poor. I have to work to survive. Unless I go to work at the factory, who will feed me?“ "It's difficult to get through the month. It's long hours."
The $60 per month she earns puts a roof over her head and food on the table - but only just.
- Begum, worker in Bangladesh garment industry. (The Guardian)

Annual Per Capita USD 850 ( = USD 70.8/month)
Work force in garment industry: 3.6 million people


Are fashion retailers morally responsible for poor working conditions and inadequate living wages of workers in their supply chain?
Full transcript