CSR is often presented by critics as an additional cost to firms, above and beyond core business costs, which explains why some firms (particularly low-cost retailers like Wal-Mart) fail to implement proactively a comprehensive social responsibility perspective. A distinction is rarely drawn, however, between a firm’s primary responsibility for CSR (i.e., concerning its own operations) and a secondary responsibility for CSR (i.e., concerning the operations of other firms with which the focal firm is connected, but over which it does not have direct control, such as off-shore suppliers):
“The changes afoot in the Thai shrimp ponds reflect the world-spanning, industry-rattling reach of Wal-Mart's push for environmental sustainability. The Bentonville, Ark., retailer has prodded its suppliers to cut their packaging and pare their reliance on nonrenewable fuels. It has relentlessly promoted long-lasting but slow-selling compact-fluorescent light bulbs. It is the world's largest buyer of organic cotton, purchasing more than 10 million pounds a year. And it has pledged to eventually buy its wild-caught fish only from fisheries certified as environmentally sustainable.”
The article in the url link below, however, demonstrates how a powerful firm like Wal-Mart (and its consumers) can conform to the social responsibility expectations of stakeholders by forcing its suppliers to adopt stringent standards, without incurring any additional costs itself:
“… some Thai farmers see little benefit in paying inspection fees -- amounting to a fraction of a penny per pound of shrimp produced -- or upgrading facilities where necessary because Wal-Mart won't reimburse them for their costs nor pay a premium for certified shrimp. Wal-Mart views those costs as the industry's responsibility.”
Wal-Mart has the power and influence to force suppliers to comply as they hang the threat of withdrawing their business if the standards are not met:
“Wal-Mart first threw its weight behind the aquaculture alliance's shrimp-farming standards in 2005, announcing that by the end of this year it would buy all its shrimp from farms certified as meeting the standards. The endorsement drew attention; Wal-Mart buys more shrimp than any other U.S. company, importing 20,000 tons annually -- about 3.4% of U.S. shrimp imports. With Wal-Mart's nod, "we went from trying to convince individual facilities to become certified to having long waiting lines," says George Chamberlain, president of the aquaculture alliance.”
The end result for small producers is a punitive threat to their business that encourages Western firms to favor large-scale producers that can absorb the cost implications of the higher production standards:
“Others see the standards fueling a continuing consolidation of the industry. Wal-Mart prefers to buy from fewer, stronger suppliers with control over all phases of production. Rubicon, for example, owns 14 seafood-processing plants, roughly 150 farms and importing and exporting operations. "Short term, [the costs of meeting the standards] are onerous," says Brian Wynn, Rubicon's president and chief executive. "Long term, they are beneficial because they set up barriers to entry to nonintegrated companies."”
Put it down to the unforeseen consequences of CSR advocacy in the West forcing small operators in developing countries out of business!
Take care
Dave
Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther
The New Wal-Mart Effect: Cleaner Thai Shrimp Farms
By Kris Hudson and Wilawan Watcharasakwet
1204 words
24 July 2007
The Wall Street Journal
B1
http://online.wsj.com/article_email/SB118523019620675464-lMyQjAxMDE3ODI1NTIyMzUwWj.html
