This Friday, April 24, marks the two-year anniversary of the catastrophic garment factory collapse at Rana Plaza in Bangladesh.
Killing more than 1,000 workers and injuring hundreds more, Rana Plaza was the single most deadly disaster in garment-manufacturing history. It was entirely the result of malign neglect of stakeholders at every level – business, consumers and government. Unfortunately, I have the sinking feeling that real reform is slowing as the shock fades and attention drifts.
It is true that consumers and factory workers have demanded better health and safety conditions, and it is true that governments have pledged to enhance their auditing and enforcement of safety standards. Perhaps more important, a number of multinational clothing and retail corporations have made serious commitments to better safety by forming the Accord on Fire and Building Safety in Bangladesh (ACCORD).
ACCORD is a legally binding agreement signed by 166 apparel corporations from 20 countries in Europe, North America, Asia and Australia, as well as by Bangladeshi unions and international watch-dog organizations such as the Worker Rights Consortium and the International Labor Organization. The Accord contains binding commitments to protect the safety of more than 2 million workers at 1800 factories in Bangladesh. It requires independent safety inspections as well as public disclosure of the inspection results on the ACCORD website, the remedial actions that particular factories must take and their progress in implementing them. The agreement also provides funding of up to $6,000 per factory for safety improvements.
All this is good. Unfortunately, broader progress on cleaning up global supply chains remains discouraging.
Remember that Bangladesh is only one of many nations in which workers earn very low wages, often in dangerous conditions, to mass-produce low-cost goods for the world’s affluent consumers.
But even in Bangladesh, it’s noteworthy that only 18 US-based apparel companies and retailers have joined ACCORD. The US members do include a few big brands, among them Ambercombie & Fitch and Urban Outfitters. But many of very biggest America buyers, such as Walmart, have formed a separate “alliance” that is less binding, less specific, and less subject to independent verification.
Most of the Accord’s corporate members are based in Europe: Adidas, Aeropostale, Hugo Boss and giant retailers such as Karstadt AG and Metro AG. No fewer than 60 members of the Accord are based in Germany alone.
Why the disparity between the US and Europe? In part, it is because European corporations are more committed to social fairness and more accustomed to public oversight. In part, however, it is also because European consumers are more willing to pay slightly higher prices in order to promote safer workplaces and more sustainable environmental practices.
This brings me to my point: to change the world, we first need to change ourselves. Business bears a big responsibility, but so do consumers, political leaders, non-governmental organizations and – dare I say it? – universities.
Without a clear understanding of our individual roles in the global supply chain, it is at best naïve and at worst hypocritical to expect change in others. Unfortunately, I see surprisingly little self-reflection in any of the sectors.
Here are the questions I would like each group to ask itself:
Consumers. The world’s population has already exceeded 7 billion. If we continue to consume more products at stable (or declining) prices, how would this affect social, economic, and environment sustainability? Are you willing to pay more for a suit or a shirt or a smartphone if it was made in a humane workplace by workers who earn livable wages? Are you willing to encourage sustainable business, even if means consuming less, recycling more, or paying higher prices?
Companies. Many large corporations in the U.S. have corporate social responsibility initiatives, and many have proudly told me how they engage directly with factories and farmers to improve social and environmental sustainability. But in my own discussions with companies that are especially public about their efforts, I found them far more willing to detail the number of jobs they had created than to document their willingness to share profits with those workers.
Apple recently celebrated a world-record quarterly profit, but we did not hear much about the profit of Apple’s supply chain partners — except for the bankruptcy of its Sapphire glass supplier, GTAT. The iPhone 6 sells for $700 in the U.S. (without a contract) and as much as $1,000 in Europe, but Teardown.com estimates that the assembly cost is only about $227..
If companies are benefitting poor workers and improving the world, why do so few of them disclose how much of the economic and social value actually goes to those workers? In Denmark, exchange-listed corporations and state-owned companies are required to integrate a sustainability report in their annual financial reports to shareholders since 2010. But Denmark is a rare exception, and even Danish disclosures may not tell the whole story.
Governments. Governments care about social and environmental sustainability, and they want businesses to be more responsible. In the policy proceedings and discussions I have attended so far, however, lawmakers and officials were much stronger on prescribing solutions (incentives, regulations, and enforcement) than on conducting either descriptive analysis (why did a tragedy occur?) or predictive analysis (what will happen if we take the following action?).
As much as I want the governments to take the lead, I am surprised by how little officials understand about supply-chain operations. Without a clear understanding of “Why” and “What,” it will be difficult to sell these solutions. Worse yet, the solutions themselves might be wrong. Governments need to honestly answer a simple question: Do we understand the root causes of social and environmental problems we are trying to solve?
Universities. As an educator myself, I strongly believe that universities play a key role in shaping the talented minds of our future generations. Yet the uncomfortable truth is that most graduate schools devote only meager resources to serious academic research on responsible supply chain management. It is an extremely complex arena, and many professors see little pay-off in comparison with other fields of research. Indeed, they may even fear being penalized by corporate supporters that don’t want to be lectured on what to do.
Deans, department heads, and faculty members should ask themselves a simple question: “To what extent does our curriculum and the content of our courses facilitate a deeper understanding about the “Why” “What” and “How” of social and environmental responsibilities?” Simply answering that question would be a big step forward.