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The Supply Chain Alibi

The Supply Chain Alibi

For years, companies have been operating under the "what we don't know can't hurt us" strategy, allowing subcontractors to engage in pretty much whatever business practices they like.

February 8, 2008 —

Globalism has undoubtedly brought lower prices, more choices, and in some cases, new employment opportunities to parts of the world where before there were few. But it's also resulted in a race to the bottom in terms labor and environmental standards, product safety, and perhaps most importantly, corporate accountability. No company wants to be known for employing children in sweatshops or coating their products in lead paint, but intricate supply chains filled with contractors and subcontractors have helped to insulate global corporations from the responsibility of ensuring that their products are safe and ethical.

Take Gap or Mattel, two of last year's most egregious bad apples. Gap was found to be selling apparel that had been hand embroidered by 10 year-olds working in conditions that are illegal for adults in most parts of the world. The ensuing scandal was a minor PR catastrophe for a few weeks, but ultimately Gap was able to defend itself by claiming ignorance of the practices of its subcontractors.

Mattel, which was found to be engaging in a host of labor, environmental and product safety violations last year, pled ignorance as well. The company attempted to blame its Chinese contractors for sweatshop working conditions and the high lead content in its toys — though CEO Bob Eckert was later forced to admit that the company itself was responsible for design flaws that lead to the high toxicity in its toys. Mattel now faces an array of potential lawsuits from both its contractors and the Chinese government for misleading statements it made in the wake of the scandal.

Surprisingly, Wal-Mart has one of the leaders in the supply chain accountability movement. The retailer has been actively engaging its suppliers and their contractors in an effort to promote environmental responsibility. A similar effort to ensure that basic labor standards are followed has been heralded in the company's CSR report, but so far there's little indication that much progress has been made on that front. Still, Wal-Mart deserves credit for being among the first global corporations to do more than pass the buck on these issues.

Another early leader, according to the Centre for Reflection and Action on Labour Issues, is Hewlett-Packard. Since endorsing the Electronics Industry Code of Conduct several years ago, HP has been active not only in bringing its own supply chain up to the standards laid out in the EICC, but fostering the participation of others in the industry. As difficult as it is to find ethical electronics products — and labor groups suggest that the industry as a whole is only getting worse in this regard — HP may be a unique role model, pressuring others to do, at the least, minimal due diligence to ensure that their supply chains aren't in blatant violation of internationally recognized standards.

One way that we can keep putting the heat on these global corporations is to continue to search for smaller, locally made alternatives. The best part about small business is that the owner of the company and its lowest paid employee often work in the same building, and if a community has questions about the safety of the company's products or their impact on the environment, they know right where to take them. It may be years before it becomes common practice for Fortune 500 companies to strictly police their supply chains, but in the meantime, there are often plenty of reasonably priced, locally made products vying for our attention.

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