Bangladesh and Corporate Social Responsibility

In the three weeks since an eight-story garment factory building in Bangladesh collapsed and entombed more than 1,100 workers, there have been lots of media reports about the responsibility of American and European retailers and brand name companies to be more proactive in monitoring and demanding greater safety in the factories that inexpensively produce goods to be sold throughout the world at prices that would be far beyond the reach of the women and men who make them for an average monthly wage of just $37.  

The scramble is on. The scramble to avoid the appearance of insensitivity. Retailers and their brand name suppliers are scrambling to distance themselves from multiple tragedies in Bangladesh and Pakistan, even as worker-advocates press them to force their foreign manufacturers to be more conscious of safety and living wage measures (http://www.nytimes.com/2013/05/11/business/global/clothing-retailers-pressed-on-bangladesh-factory-safety.html?ref=business&_r=0). 

They don’t want their good names sullied by horrific misfortunes half a world away. Yet, like our politicians who often kick the can down the road rather than tackle controversial issues such as social security or tax reform, the retail community rarely takes decisive action. My 30-plus years covering the industry, reinforced by my reporter’s sensibilities, make me a cynic. Sadly, my feelings can be summed up by the last paragraph in The NY Times story linked above: 

“Kellie A. McElhaney, an expert on corporate social responsibility at the Haas School of Business at the University of California, Berkeley, predicted that these pressures would hardly sway the companies. ‘They are feeling a lot of pressure, but it’s not coming from consumers. It’s coming from N.G.O.’s,’ she said, referring to nongovernment organizations. ‘They’re not feeling it in the marketplace. I believe they’re going to do the bare minimum. The N.G.O.’s need to make more consumers aware of this.’”  

Here’s why I’m a cynic: Perhaps 10 to 15 years ago my magazine co-produced a conference called Making It Right. We worked with several corporate social responsibility NGOs to raise awareness about the sordid conditions many foreign workers were forced to toil under as they prepared apparel, sporting goods and other products Americans eagerly consumed because they were less expensive than they would be if U.S. workers produced them, or if higher wages were provided to the populations in Sri Lanka, Pakistan, Bangladesh, Vietnam, China or any of the other Third World countries exploited for their cheap labor. Meeting at the Tenement Museum on Manhattan’s Lower East Side to plan the event, our conference advisory board had representatives from Gap, J.C. Penney and other retailers. Held at the Grand Hyatt Hotel in New York City, the conference attracted several hundred industry attendees. It was a thematic success, but little of any progress was made.

My takeaway from that conference was that price was the overwhelming driving force behind corporate decisions where sourcing would originate. For a few scant pennies per item, manufacturing contracts would shift from one country to another. Bangladesh became the second largest apparel producer in the world, behind China. If tragedies persist, and they surely will, the result most likely will not be safer standards or higher wages in that impoverished country. Rather, the people of Bangladesh, who rely on the garment industry for much of their economy, will be hurt by the desertion of apparel contracts as retailers and brand name companies migrate production to countries with low wages and labor conditions not (yet) under the media spotlight.

Though there have been some reports consumers are becoming more conscious of where and how their purchases are produced, I’m not optimistic there will be a tidal wave of change. I don’t profess to be any better than the next person. I’d rather spend less on everything I buy, assuming the quality is comparable. But I do believe retailers, especially large companies like H&M, Wal-Mart, Target, Nike, Gap, and their important suppliers, such as Ralph Lauren and Calvin Klein, can demand more accountability from their overseas factories, even to the point where they underwrite safety improvements. The few pennies more each of us in America and Europe would pay to prevent catastrophes would hardly impact our way of life. But it would go a long way into assuring a better life, maybe even continued life, for those faceless workers who make our lives easier and more fashionable.

   

Everybody's Doing It

“Everybody does it, so why pick on me?,” is not a viable defense for the alleged actions by Wal-Mart executives in Mexico. As you may have heard since The NY Times ran an expose last Sunday, Wal-Mart allegedly bribed officials in Mexico to pass or expedite approval of building plans for its network of stores south of the border. Moreover, when these alleged violations of law were reportedly brought to the attention of corporate executives, they were swept under the rug, according to The Times. Now, the world’s largest retail company, and the largest retailer in Mexico, has been engaged in major face-saving activity. 

I have no direct knowledge of the allegations beyond what has been reported, but I can tell you with fairly good authority it has not been uncommon for retail and shopping center companies with aggressive growth strategies to engage in activities that are questionable at best, illegal at worst, including favors (okay, bribes) to secure necessary permits or negative action to block competitors from entering a market. 

In other words, Wal-Mart is no more guilty than other companies. It’s just bigger. It’s the same reality whether it’s building permits or low wages or no health care for workers or an anti-union bias—Wal-Mart is no worse than other large (and small) chain store retailers. Which doesn’t excuse or explain away what happened in Mexico. 

This corporate black eye is the latest in a long string of image-blackening revelations about the way American companies exploit their interests in foreign lands. Apple, as well as other technology firms, has had its reliance on Chinese suppliers and their labor practices put under the magnifying glass. Nike did, as well. Half a dozen years ago my magazine co-sponsored a one day conference, “Making it Right,” on the business implications of fair labor standards throughout the worldwide supply chain. Though progress has been made, exploitation of workers persists. 

Sadly, it seems significant progress occurs only when the media spotlights egregious conditions. 

Food for Thought: I’m married to a foodie. Now, some of you might know Gilda is a good, even great, cook. I am fortunate to enjoy many a good meal she whips up, even after she works a long day in Manhattan. 

But being a foodie means her taste buds work differently than mine. Whereas I enjoy foods that are generally sweet, Gilda prefers foods that are bitter, sour and something called umami, a Japanese word for pleasant, savory. It hasn’t been easy meshing our different tastes, but now Gilda has reason to believe she is a trend setter. Read for yourself: http://www.usatoday.com/money/industries/food/story/2012-04-25/food-snobs-tastes-wired-differently/54540652/1

Wrong Number: Just had a most interesting phone call from the Republican National Committee. Seems I’m on one of their “conservative” lists, thus would I be willing to join the RNC with a pledge of $300, $200, or $100 so the ultimate goal of removing Barack Obama from the White House could be realized? 

After telling the woman on the other end of the line I was “fascinated” to find myself on such a list, she embarrassingly fumbled her way through the rest of our short conversation, apologizing for bothering me. I guess the RNC doesn’t read my blog. 

Season of Giving and Taking

In this season of giving, news reports remind us it also is the season of taking, as in “Shoplifting tab to hit $1.84B,” according to the Associated Press.

The AP story said in the “four weeks leading up to this Christmas, an estimated $1.84 billion in merchandise will be shoplifted from retailers in the U.S., according to The Global Retail Theft Barometer. That’s up about 6% from $1.7 billion during the same period last year.”

No doubt about it, “five-finger discounts” are trending up, what with an economy that hawks purchasing at too many people unemployed or too underemployed to afford all the goodies they and their families want.

The dirty little secret of retail losses from what the industry calls “shrink,” however, is that insiders—retail employees—steal more than customers. It’s been that way for years. Employee theft accounts for about 44% of all losses, compared to 36% from shoplifting. The rest, the AP reported, results from vendor theft and administrative error.

Some years ago I heard about Kmart’s efforts to control insider losses. Management would review each employee’s monthly store purchases. If they fell below a certain percentage of take home pay, red flags would be raised. After all, why would an employee not buy household and health and beauty aid supplies, stationery and other commodity purchases at Kmart, where they’d get an employee discount? One possible explanation would be the employee was simply taking home the goods without paying for them. An investigation would follow.

The story, perhaps, was apocryphal. But I always thought it had a ring of authenticity to it.


Choose Your Obscenity: Which to you is more obscene, the throngs of mostly young men who grappled last week to get their grubby hands on $180 a pair Nike Air Jordans, or the $88 million reportedly paid by the 22-year-old daughter of a Russian billionaire for a 6,774-square-foot penthouse apartment at 15 Central Park West in Manhattan?

Perhaps neither affronts you. By my very question you can surmise I find both disdainful. Push come to shove, as happened across the country with the Air Jordans, I’d have to say I am more repulsed by the real estate transaction (I also wasn’t too excited by another deal at the same address, a mere $24 million for a three-bedroom apartment.)

I’m not against the free market setting prices. But let’s be real, people. The apartment doesn’t come with Central Park thrown in, just a view. I’m not sure if the apartment comes furnished, but even if did and everything inside it was trimmed in gold, $88 million is a little much. I’ve seen castles and mansions, all with extensive grounds, that would sell for less.

As Gilda pointed out, one has to wonder from where the money to afford these purchases came. The Russian father is an oligarch of questionable morality and business dealings. While rank and file Russians struggle, oligarchs and their minions have brazenly usurped wealth, natural resources and power.

The Manhattan real estate market has been pumped up by financial industry bogeymen, er, I mean, moneymen. Naw, I mean bogeymen. Rarely do they contribute anything tangible to human endeavor. Their sole purpose is to make money through arcane, manipulative practices few understand, fewer regulate. Their mistakes plunged the nation and world economies into turmoil. Millions lost jobs, retirement savings, homes. With rare exception, only they and their gilded lifestyles have rebounded. They’ve made it almost impossible for ordinary people to invest without anxiety as their computer-generated trading systems produce huge stock market fluctuations, not just daily but also hour to hour.

It’s hardly a wonder, therefore, when the common folk fight for a pair of sneakers. It’s the most tantalizing asset many of them will ever own. Which is an obscene commentary on our society.