Auret Van Heerden of the Fair Labor Association holds up a cellphone and tells us that the phone started its life with artisinal mines, run by gangs and staffed by slaves in the Congo. It was built in a factory in China where people have committed suicide and died after impossibly long work shifts. Chocolate comes from cocoa harvested by children in Ivory Coast. Diamonds come from impossibly dangerous mines in Zimbabwe. Uzbekistan shuts down the schools to bring children into the cotton fields to harvest – they allow the country to be the world’s second largest cotton producer. And all these products end up in dumps in slums in places like Manila.
These are evidence of governance gaps – gaps in our supply chains. Some happen in failed states. Some happen in states that feel like deregulation or lack of regulation is good for trade. But they provide a human rights dilemma for all of us. And most of the companies involved in these supply chains can’t assure us that no one had to suffer to make our products.
We need a reality check, to realize what a serious deficit of rights we have. The independent republic of the supply chain is not being governed in a way that promises ethical trade. We would expect that a drug like Heparin is produced in a way that’s “squeaky clean”. But the active ingredient comes from pigs…which means that it’s produced in sweatshops, which buy their materials from backyard abattoirs. We had a global scandal based on contaminants – some intentionally introduced – into the supply chain.
Why didn’t the Food and Drug Administration prevent this from happening? Because there are 500 suppliers in China providing these materials, and the regulatory system doesn’t allow us to oversee this. And 85% of the active ingredients in the pharma industry are now produced outside the US. Governments can’t regulate their own supply chains, and they have even less ability to monitor these changes on an international level.
When we look at global challenges like climate change, we wonder where the leadership is from government. But governments are national – they’ve got voters and interests that are local. So we need a different mechanism.
In 1996, President Clinton convened a meeting of labor, manufacturers, consumer groups and activists and challenged those assembled to ensure that globalization didn’t mean a race to the bottom. Companies didn’t feel it was their responsibility for labor standards in the supply chain – everyone else felt that they couldn’t shirk that responsibility. Eventually, they agreed on a common set of standards, a code of conduct, and made it part of the supply contracts. “They harnessed the power of the contract – private power – to make public goods.”
Van Heerden points out that the contract from a major manufacturer is much more powerful than local authority. Most of these manufacturers never see an inspector. If they did, they’d bribe him. If they got fined, the fine would be tiny in comparison to profits.
This method doesn’t come naturally to multinational companies – their goal is profit. But they’re very efficient, and if they can get this right, it’s an incredibly powerful model. The best chance that a 15 year old girl in Bangladesh isn’t abused by her employer – we hope she’s working for a major multinational corporation that’s signed a code of conduct. And we don’t just trust – we trust, but verify, and we inspect the facility of organizations that sign onto these codes of conduct. “You don’t need to believe me, you shouldn’t believe me, you should go to the website, read the audit” and see for yourself.
“I hate the idea that governments aren’t protecting human rights.” This started out as a stopgap measure. But it’s starting to look like a new way of addressing governance challenges. This seems overwhelming for the corporations who participate – too daunting or dangerous to take on. But four thousands companies have taken this on, especially the sporting goods industry. The role models are there.
“Human rights comes down to a simple question: Can I give this person their dignity back?” His simple plea to every decision maker in the room – make a decision to run with the ball that government has dropped, because no one else will do it.
This post originally appeared on Ethan's excellent blog My Heart's in Accra.
The most positive thing I take from all this is this. However little we do - and at this stage it looks like what's being done IS very little, at the very least people are thinking and calling meetings. Sooner rather than later, more substantive steps will -we trust - be being taken. We've begun to set the ball rolling;which is a positive
A powerful post, simultaneously inspiring and depressing.
As someone involved in the business of change management and change leadership, I know how very difficult it is to get directors to even take into account the human impacts of their business decisions on their own employees - let alone the employees in their supply chains.
There has to be a powerful reason - a point of leverage - something that will motivate them.
Here in the UK in a prevailing corporate culture of short-termism the best leverage is some form of "exposure" i.e. a business issue that can give rise to serious personal accountbility for the director.
So maybe this is something that may happen as a result of increasing consumer awareness and the ensuing consumer pressure?
There are some disturbing ideas in this article that need to be thought through. First, is the idea that governments especially in developing countries, have no ability to regulate or enforce policy. This suggests that the world is moving to an oligopoly and the power of governments is diminishing. This makes an even stronger case that business will be the source of the solution. The current market does favor short term profits over long term profits because companies feel compelled to maximize short term shareholder value. If market expectations change or management teams began to take a more long term view, then consumers and activists could really shift business policies. The negative equity that a protest engenders against a product would be much more powerful in this case.