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What Do They Mean By "Monitoring?"

What Do They Mean By "Monitoring?"

May 1, 2008 —

Anyone who follows sweatshops or international labor standards is by now familiar with the importance of transparency and monitoring of supply chains. Large multinational corporations like Wal-Mart or Nike rarely own their own factories these days, and instead produce their goods via a tangled web of contractors and subcontractors. This way of doing business allows companies to get the lowest price possible for each component of their product, and shift production swiftly without having to shut down an old factory or build a new one. Unfortunately, it also makes it extremely difficult for labor watchers to monitor which companies are using child labor or cheating their workers out of overtime, and pretty much impossible for consumers to really know where their products are manufactured.

Former labor inspector T.A. Frank is all too familiar with these problems, and writes about them in an excellent article in this month's Washington Monthly. For years, Frank worked for a corporate social responsibility monitoring firm that was responsible for keeping its clients informed about the labor and environmental practices of their suppliers. Frank found that some companies genuinely cared about keeping their supply chain sweatshop free, while others used consulting firms like his to add yet another layer of plausible deniability to their alibi should a scandal emerge.

Saying that you monitor your supply chain to ensure that labor and environmental standards are followed looks great on a CSR report, but it's how a company goes about this monitoring that really tells the story. According to Frank, Nike is one company that goes above and beyond in backing up its "sweatshop-free" claims, whereas Wal-Mart consistently uses some of the worst contractors in China—while trumpeting its inspection regimen year in and year out in its CSR report.

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