The CSR Newsletters are a freely-available resource generated as a dynamic complement to the textbook, Strategic Corporate Social Responsibility: Sustainable Value Creation.

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Wednesday, November 13, 2013

Strategic CSR - Alta Gracia

The article in the url below reports on an inspiring new apparel brand, Alta Gracia, which is not only making clothes in an ethical way, but is also persuading college bookstores to display their clothes more prominently than those from other apparel companies:
 
“The first-to-the-eye displays at the front of the Georgetown University bookstore don’t belong to Nike or Adidas or other recognized giants of the global garment trade, but to Alta Gracia, the label of a South Carolina company trying to carve a niche by paying above-average wages at its Dominican Republic factory and building confidence about the working conditions.”
 
The company is part of a larger apparel company, Knights Apparel, which is “No. 2 in the [college apparel] field behind Nike, according to the Collegiate Licensing Co.”:
 
“Most of the company’s production is spread around the world like its competitors’, including in Bangladesh. But [Knights Apparel CEO] Bozich said it was the emotional appeal of students that led him to think there was a viable business in clothes ‘branded’ with their concerns in mind. Alta Gracia pays more than triple the minimum wage, is run with strong employee input and relies on outside monitors to certify factory conditions.”
 
It is a difficult industry/product to monitor and introduce meaningful change:
 
“A single garment might combine parts, labor, fabric and other elements from several countries, complicating efforts to create any sort of ‘fair trade’ labeling standard. Old-fashioned consumer boycott tactics are shunned because workers might get fired as a result.”
 
It will be interesting to see how the company fares. In particular, I was struck by two comments towards the end of the article. On the one hand, there is the student who worked for United Students Against Sweatshops for four years:
 
“‘[Large multinational apparel companies] target young people with their advertising, but they have not respected us enough to realize we won’t mindlessly consume their product,’ she said.”
 
On the other hand, however, as noted by Knights Apparel CEO:
 
“Three years into the experiment, Bozich said the factory loses money, with lower profit margins on each item because of the higher wage and other costs, and the low overall demand.”
 
My fears are twofold: first, that, unfortunately, most students (as with most people) do “mindlessly consume” and that, second (as a direct result of the first point), while the intentions among students is good, those intentions do not necessarily translate into a willingness to pay the associated price. Alta Gracia represents an effective test of these fears/assumptions.
 
Take care
David
 
David Chandler & Bill Werther
 
Instructor Teaching and Student Study Site: http://www.sagepub.com/chandler3e/
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/
 
 
University logos become weapons in debate over textile factor working conditions
By Howard Schneider
May 27, 2013
The Washington Post