A common conclusion reached by students discussing the Nike (sweatshop) case that I teach in my strategy classes is that firms should be held responsible for the whole supply chain. When I point out that there is a cost to this that many Western consumers are unwilling to bear, the students find the dissonance challenging. But, a significant reason why strategic CSR is more valuable than the mainstream CSR discussion is precisely because it deals with empirical reality – incorporating models of human behavior in line with the decisions people actually make, rather than decisions we might wish they made.
In terms of whether companies are willing to audit their own operations (let alone whether external stakeholders are willing to pay), the article in the url below offers an extensive look at where we are, currently. There is an industry of private auditors that companies use to deflect the suspicion/accusation of transgressions in their supply chain. Companies hire these auditors to audit suppliers, largely because federal government agencies are too understaffed to enforce the legislation intended to protect exploited worker populations:
"In the past two decades, private audits have become the solution to a host of public relations headaches for corporations. When scandal erupts over labor practices, or shareholders worry about legal risks, or advocacy groups demand a boycott, companies point to these inspections as evidence that they have eliminated abuses in their supply chains. Known as social compliance audits, they have grown into an $80 billion global industry, with firms performing hundreds of thousands of inspections each year."
Unfortunately, child workers, who often staff the overnight and cleaning shifts (especially in labor- and machinery-intensive industries), often evade inspections given the limited (day) time inspectors actually stay on site. The article makes it clear that this convenient reality seems to be in the best interests of all involved (apart from, perhaps, the child workers who slip under the radar of every regulation intended to protect them):
"Children were overlooked by auditors who were moving quickly, leaving early or simply not sent to the part of the supply chain where minors were working, The Times found in audits performed at 20 production facilities used by some of the nation's most recognizable brands. Auditors did not catch instances in which children were working on Skittles and Starburst candies, Hefty brand party cups, the pork in McDonald's sandwiches, Gerber baby snacks, Oreos, Cheez-Its or the milk that comes with Happy Meals."
Why does this still happen?
"Children often use forged documents that slip by auditors who check paperwork but do not speak with most workers face-to-face. Corporations suggest that supply chains are reviewed from start to finish, but sub-suppliers such as industrial farms remain almost entirely unscrutinized."
So, what is the solution? How do we fund federal agencies to enforce the legislation that already exists? More specifically, how do we incentivize companies to realize that ensuring a clean supply chain is in their best business interests? The key, I think, is that when abuses like those revealed in articles like this appear, we need to act rather than look the other way. As long as there are no substantive consequences, then this greenwashing will continue until we decide, at some point, that it is no longer acceptable. Ultimately, though, it comes down to a willingness to bear the cost burden. Auditing an entire supply chain is expensive – who is going to pick up the tab?
Take care
David
David Chandler
© Sage Publications, 2023
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An Industry Paid to Find Child Laborers, Doesn't
By Hannah Dreier
December 31, 2023
The New York Times
Late Edition – Final
p1, 14-15
