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, October 8, 2014

Strategic CSR - Supply chain

What happens when pressures for higher operational standards in the West are resisted further down the supply chain?
"Eight times now, the European-dominated Accord on Fire and Building Safety in Bangladesh — a group of more than 150 retailers and brands — has forced the temporary closing of garment factories after its inspectors found dangerous conditions. But from the time the inspections began, tensions have been growing between the Accord and the Bangladeshi apparel industry, … And this time, as on several previous occasions, the Bangladeshi government has aligned with a garment manufacturer opposed to having its factory closed, even temporarily."
In the West, the collapse of the Rana Plaza building, which caused the deaths of 1,129 workers in April 2013, brought pressure to bear on large brands to improve conditions or close factories. In Bangladesh, however, worker safety cannot be separated from the economic development benefits these factories bring and, in some cases, may supersede it—both for the factory owners and for the workers that the Western brands are trying to protect:
"… factory closings can have immediate economic impact. Some factory owners worry about losing large and profitable orders to other companies and countries, and garment workers themselves fear losing their jobs. In one of the first closings after an Accord inspection, workers took to the streets in a raucous demonstration, protesting that their wages might not be paid."
What is the responsibility of firms once the possibility of an impending disaster has been identified?
"… in numerous cases where hazardous conditions were uncovered, the groups have confronted considerable resistance to closing a factory building altogether, and to the notion that a building should be closed as soon as possible."
Should they move to protect themselves by dropping suppliers that resist and moving to countries with better safety standards (causing unemployment and greater poverty in Bangladesh), or should they risk damage to their brands by staying in Bangladesh and working to improve conditions while the factories remain open? And whose responsibility is it to pay for the higher standards the Western firms are suddenly demanding?
"The remediation process, garment industry experts say, could lead to clashes between the Bangladeshi factory owners and the Western brands about who should pay for needed safety improvements — especially because many factory owners are expected to say they cannot afford to make the repairs."
Take care
David Chandler & Bill Werther
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Stalemate Over Safety in Bangladesh
By Steven Greenhouse and Julfikar Ali Manik
June 26, 2014
The New York Times
Late Edition – Final