Introduction as best they can, then it

Introduction

Is a large garment retailer such as Walmart responsible for ensuring that labour rights are upheld in supply chain factories? Or is such a responsibility not only in the hands of corporations but should actors such as governments, ordinary citizens and public institutions shoulder the ethical consequences as a shared responsibility? (Dahan et al. 2016). In 2013, a factory in Bangladesh making clothes for retailers to sell under the label of brands such as the American firm Walmart collapsed. Such incidents raise questions around the duty of firms to ensure labour rights in supply chains: Are firms such as Walmart responsible for ensuring labour conditions in sub-contracted production factories when the latter are usually unknown from firms, unaware of the existence of these in their supply chain? Conceptions of responsibility diverge between authors: although the terms of responsibility and accountability are used interchangeably in the literature (Lindkvist and Llewellyn 2003, cited by Demirag, 2005), the arguments put forward in this essay regarding the two terms therefore requires a clear distinction in definitions. Alexander 1996 (cited by Demirag, 2005:12) differentiates accountability from responsibility as “the execution of responsibilities and being answerable for them”. Whist many argue the responsibility of global organisations in ensuring employment rights, others argue that local governments and private actors should also bear the responsibility for enforcing labour standards. Others advocate a need for “shared responsibility” between public institutions and private actors connected to the violation of labour rights in chains of production.

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CORPOrate responsibility

As Campbell (2007:946) highlights, “if the raison d’être for corporations is to maximise profit and shareholder value as best they can, then it stands to reason that corporations will do whatever it takes to achieve this goal”. Profitability and financial performance have traditionally been regarded as a firm’s only responsibility and purpose in a market, usually denigrating a corporation’s responsibility in social issues such as labour rights (Montera Vena, 2013) and such responsibilities regarding social issues such as labour rights lie within governments who are elected for this specific reason (The Economist, 2005). The Economist (2005:12) argues that “it is desirable to establish a clear division of duties between business and government” underlining the fundamental job of governments is ensuring safe working conditions. On the other hand, managers, employed by the firms’ owners, must comply with stakeholders’ interest and corporations’ purpose in markets which is maximisation of profits (the Economist, 2005). Friedman (2002) emphasises this incompatibility between business and ethics: “there is one and only one social responsibility of business- to use its resources and engage in activities designed to increase its profits” (Friedman, 2002:63).

The rise in globalisation has resulted in the growing power and influence of transnational corporations which can influence employment rights and structures: pressures from stakeholders including civil society organisations, private actors such as consumers and employees and governments have changed firms’ role in the market and society “attributing them a broader responsibility” and increasing influence (Montera Vena, 2013: 4). It is through the “pressure exerted on multinational companies, from both internal and external stakeholders such as customers, employees, unions, shareholders, business partners, governments, NGOs and the media” that corporations are increasingly needing to fulfil their responsibility to respond to stakeholders and their growing interest for social conditions in supply chains (Andersen and Skjoett Larsen, 2009:77).  Therefore, the attribution of greater market power and control over resources to multinational corporations is directly correlated to a greater responsibility these firms hold in deciding the conditions of production (Gereffi, 1994, cited in Andersen and Skjoett Larsen, 2009).

This argument is supported by Dahan et al. (2016) who underline the link between corporations’ power and their responsibility towards labour rights. Indeed, “Walmart’s responsibility stems from the benefit it receives from purchasing products that are produced under illegal labour conditions” (Dahan et al. 2016:231) but most of all through the corporations’ influence and its resources “that makes its participation indispensable to remedy those conditions” (Dahan et al. 2016:231). The authors therefore extend this perspective through corporations’ accountability to society, and the power they hold in their ability to compensate for such conditions. As companies engage in outsourcing and offshoring parts of their supply chains, their responsibility transcends those of their “juridical walls” (Andersen and Skjoett, 2009:77) as well as those of their national borders. Andersen and Skjoett (2009) argue that corporations who participate in such practices are therefore held responsible for labour practices of actors in their supply chains such as suppliers, intermediaries although they may hold no ownership over them. For advocates of corporate social responsibility, “ignoring the legitimate interests of all the other stakeholders” (The Economist 2005:13) can be seen as going against a firms’ goals in such cases. Consumers, suppliers, employees are part of a corporations’ stakeholders and their interests need to be satisfied: considering the owners’ as the only stakeholders, managers must satisfy constitutes a limited view.

 

A SHARED RESPONSIBILITY

However, the Economist (2005) makes a clear distinction between responsibility and accountability. Indeed, managers are held accountable to the firms’ owners and argue on a strict basis that “where the law does not create accountability to non-owners (such as consumers and society at large), there is none”. The Economist (2005) argues that responsibility lies within the government of Bangladesh in remedying to social issues regarding justice. Yet, corruption in government officials in Bangladesh has contributed to the abuses of working conditions and therefore implies that although the government is held accountable for the violation of employees’ rights (Taplin, 2014), responsibility for ensuring labour rights cannot be attributed to a corrupt government which fails to its duty. Arnold (2010) argues that when local governments fail to enforce labour rights, often defined as core human rights such as ensuring safe conditions and minimum wages, corporations have a moral responsibility to respect human rights. In the case of Bangladesh, with weak legal enforcement of labour laws, firms bear the moral responsibility to ensure just working conditions.

Dahan et al. (2016) highlight that as the states’ role becomes outdated, global organisations such as the ILO have seen their role in labour rights redefined. As corruption in politicians in Bangladesh is high, many decide to ignore the reality of working conditions in favour of employment and FDI the country benefits from. Moreover, according to Taplin (2013:77), “roughly 10 percent of seats in Parliament are taken by factory owners confirms the deep political linkages in this industry between owners and politicians”. This raises questions regarding the effectiveness of attributing responsibilities such as ensuring labour rights to owners: although culpability for the tragedies in supply chains lies within the factory owners in Bangladesh, corruption by local politicians shows that such responsibility needs to seized by other actors capable of ensuring that employee rights are upheld (Taplin, 2013).

 Barraud de Lagerie (2016) introduces counter arguments through the example of the Bangladesh events: although the author argues that responsibility lies within the Western client firms, local trade unions see the allocation of responsibility to corporations as a generator of counter-productive effects, where local governments disregard their own responsibilities and duties in ensuring working conditions. Indeed, assigning the responsibility entirely on international brands would merely benefit those workers and overshadows the rights of those working in the domestic market who have protested for their rights against the local government (Barraud de Lagerie, 2016). However, Arnold (2010) argues that “moral arguments for TNC human rights duties in no way undermine the importance of state duties to protect human rights” (Arnold, 2010:33). On the contrary, there is a need for strong state human rights protections and strong global institutions and corporations to combat such abuses.

Approaches regarding responsibility mainly focus on firms’ duty in ensuring labour rights who are involved with unfair practices and on states in which unjust working conditions and wages are implemented. Barry and MacDonald (cited by Dahan et al. 2016) argue that this issue needs to also be faced by private actors such as individual consumers of the goods produced under such conditions as these detain the power through their buying decisions. Montera Vena (2013) furthers this perspective, arguing that consumers are the “final addressee” for the types of products they wish to purchase: such responsibility regarding ensuring labour rights in supply chains should not only be a concern for governments or corporations but consumers should bear moral responsibility through their buying decision-making process. Barry and MacDonald (cited Dahan et al. 2016: 15) broaden this view and “assign responsibility to all participants who contribute through their actions to structural processes that result in an injustice”.  Through the demand low price products of fast-fashion, consumers have become dependent on a culture which relies on fast consumption of inexpensive goods and therefore which contributes directly to the unethical working conditions in supply chains: corporations have configured their supply chains accordingly in order to respond to consumer demands (Taplin, 2014).

According to the SRSG, the protection of workers’ rights lies in the responsibility of all agents and institutions (Arnold, 2010). Such argument moves the line of thought to a shared responsibility approach to ensuring fair labour rights. Yasmin (2014) argues for a “shared responsibility” from multiple actors in order to ensure safe working conditions in Bangladesh’s garment factories rather than solely blaming factory owners. Indeed, “all stakeholders (need to) work in a coordinated way and acknowledge their shared role and responsibility in protecting garment workers” (Yasmin, 2014:60). The examples of the events in Bangladesh has created a “new rule of responsibility” (Barraud de Lagerie, 2016:401) as they evolve from a local scandal to international affairs. Indeed, although the initial responsibility is argued to lie within the local government, Western brands’ responsibility to ensure just working conditions stems from firms’ power as it has previously been discussed (Ali Manik, Yardley, 2013).  The growing ineffectiveness of state intervention and power has led to the emergence of private non-governmental actors’ responsibility in ensuring labour rights and many argue that the concept of responsibility needs to be enlarged to NGOs when faced with a deficit in state regulation and efficacy. However, the scope of corporate responsibility is hardly definable and Santoro (2000, cited by Scherer et al. 2006 :523) suggests “a fair allocation of duties” between firms, consumers and global institutions. Therefore, it is argued that ensuring labour rights relies on a shared responsibility amongst different actors.

 

CONCLUSION

To conclude, it is argued that Walmart and garment corporations in general bear such responsibilities in ensuring labour rights are respected in their supply chains although these may be unknown to the firm and be located outside of national borders. Labour rights is perceived as a moral duty for firms who hold the resources and power necessary to remedy to these unjust conditions. However, local governments are also seen to share a part in the responsibility of labour rights as it is a duty of governments to address such social issues.  consumers are also morally responsible in their decision-making process to ensure international brands do not transgress employee rights. However, although a “shared responsibility” is put forward, issues such as corruption in states, NGO lack of enforcement of responsibilities and voluntary measures from consumers and firms raise questions of ineffectiveness in assigning appropriate responsibilities. The implications of attributing responsibilities to such actors need to be considered as such tragedies like the events of 2013 in Bangladesh are inevitable without willingness from all actors.

 

references

Ali Manik, J. and Yardley, J. (2013). Building Collapse in Bangladesh Leaves Scores Dead. The New York Times, pp.1-4.

 Andersen, M. and Skjoett?Larsen, T. (2009). Corporate social responsibility in global supply chains. Supply Chain Management: An International Journal, 14(2), pp.75-86.

Arnold, D. (2010). Transnational Corporations and the Duty to Respect Basic Human Rights. Business Ethics Quarterly, 20(03), pp.371-399.

Barraud de Lagerie, P. (2016). Conflicts of Responsibility in the Globalized Textile Supply Chain. Lessons of a Tragedy. Journal of Consumer Policy, 39(4), pp.397-416.

 Campbell, J. (2007). Why would corporations behave in socially responsible ways? An institutional theory of corporate social responsibility. Academy of Management Review, 32(3), pp.946-967.

Dahan, Y., Lerner, H. and Milman-Sivan, F. (2016). Global Justice and International Labour Rights. Cambridge University Press.

Demirag, I. (2005). Corporate Social Responsibility, Accountability and Governance: Global Perspectives. Greenleaf Publishing Limited.

Friedman, M. (1970). A Friedman doctrine- The Social Responsibility Of Business Is to Increase Its Profits. The New York Times, pp.1-4.

Montera Vena, C. (2013). CSR IN THE BANGLADESH TEXTILE INDUSTRY: Responsible Supply Chain Management. European Institute for Asian Studies, pp.1-24.

Scherer, A., Palazzo, G. and Baumann, D. (2006). Global Rules and Private Actors: Toward a New Role of the Transnational Corporation in Global Governance. Business Ethics Quarterly, 16(04), pp.505-532.

Taplin, I. (2014). Who is to blame?. Critical perspectives on international business, 10(1/2), pp.72-83.

The Economist (2005). The Good Company: A survey of corporate social responsibility. online pp.12-14. Available at: http://www.economist.com/sites/default/files/special-reports-pdfs/3555199.pdf Accessed 10 Jan. 2018.

Yasmin, T. (2014). Burning Death Traps Made in Bangladesh: Who is to Blame?. Labor Law Journal, pp.51-62.