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Wednesday, September 11, 2013

Strategic CSR - Bangladesh

A follow-up thought on the Bangladeshi factory collapse. The article in the url below raises a good point when it notes that:
“One of the perplexing issues with the building collapse is that auditors from the Business Social Compliance Initiative (BSCI) based in Brussels had approved two of the factories in Rana Plaza. It has revealed the failures of auditing on several fronts and the need for businesses to take several unprecedented measures to ensure safety.”
This reminded me of the problem of Enron, which won several CSR/ethics awards and was on various Best Companies to Work for-type lists right up until the point that it wasn’t (see Issues: Values, pp. 557-558). Ultimately, we have very little idea how to measure CSR effectively and comprehensively. And, when you are dealing with the complex supply chains of global multi-national firms today (that have tens, if not hundreds, of thousands of supplier factories), it is impossible for any company, let alone a third-party auditor, to have an accurate snapshot of every detail at any single point in time.
So, what is the answer—give up? No, not very satisfactory. But, it is worth putting the discussion in context so that responses to these events can be measured and the immediate knee-jerk policy responses they tend to generate can be replaced with more thoughtful innovations around how best to tackle the underlying problem.
One other thought. The article also reinforces the idea that:
“While it is difficult to know how [the subsequent agreement signed by multiple companies in the US and EU] might be successfully implemented, the accord reveals a shift in corporate social responsibility: it shows how far down the supply chain companies can be held responsible.”
While true, two responses that suggest we should not be celebrating prematurely. First, I have seen little substantive debate as to exactly how far down the supply chain responsibility should go. While it seems to be generally accepted that firms should be held responsible for their immediate suppliers; what about the suppliers of those suppliers, and what about their suppliers and sub-contractors (see: Strategic CSR - GAP)? Is responsibility complete and absolute? I am not sure that is very practical when there are hundreds of thousands (millions?) of companies in the supply chain of a company like Walmart. And second, I still have not seen a corresponding argument that argues for responsibility to extend up the supply chain (i.e., to distributors, see: Strategic CSR - Distributors) in the same way that we seek to hold firms accountable for their suppliers.
Take care
David Chandler & Bill Werther
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Dhaka factory collapse: how far can businesses be held responsible?
By Rebecca Chao
May 16, 2013
The Guardian
Late Edition – Final