Corporate Social Responsibility Brings Limited Progress on Workplace Safety in Global Supply Chains

The most visible aspects of corporate social responsibility (CSR) over the last decade have been the proclamation of hundreds of corporate codes of conduct; the development of numerous in-house and third-party code monitoring organizations; thousands of pre-announced factory audits; dozens of annual CSR conferences, magazines and books; and the issuance of glossy annual CSR reports, especially by consumer goods retailers.

Yet the actual impact of all this CSR activity on working conditions on the factory floors of suppliers in some of the poorest countries in the world has been marginal. There has been a flood of reports, both about particular factories and CSR programs in general, indicating that not much has changed, despite the millions of dollars spent in the CSR industry. [See the sidebar with a list of key reports.]

Weak Impact of CSR on Working Conditions

Certainly there has been no progress in meeting the first two of the four “core categories” of the 1998 International Labor Organization’s “Declaration on Fundamental Principles and Rights At Work:”

1. Freedom of association and the effective recognition of the right to collective bargaining;
2. The elimination of forced or compulsory labor;
3. The abolition of child labor; and
4. The elimination of discrimination with respect to employment and occupation.

Progress in the last two categories of the ILO Declaration has been restricted to a relative handful of the 70,000 transnational brands operating or contracting plants outside their home countries.

Unfortunately, occupational health and safety (OHS) is not one of the ILO’s fundamental rights at work. Ironically, however, OHS is the one area where the brands and contract factories have made efforts to improve conditions because OHS is “less political” than wages, hours or the right to form unions. But even these gains are undermined by the inherent contradictions in the transnationals’ schizophrenic approach to supply chain management.

On one hand, the transnationals demand that their contract factories obey all local wage, work hours and workplace safety laws – or the particular corporate code of conduct if it is stricter. On the other hand, the transnationals provide no financial assistance for added costs, and demand ever-faster delivery for ever-lower prices for their product orders in a brutally predatory contract bidding process.

For this reason, perhaps the only thing the local contract factory owners and factory workers would agree on is that the transnationals’ CSR programs often are little more than an elaborate public relations effort at reputation management.

OHS Improvements

There have been improvements in OHS in the global supply chain over the last decade. These include credible life safety programs for fire and evacuation; elimination of visible safety hazards such as machine guarding and electrical hazards; improved housekeeping and lighting; and genuine attempts at improving ventilation, providing personal protective equipment and worker education.

These efforts have been most pronounced in directly owned and operated plants – as opposed to plants run by Korean, Taiwanese or Hong Kong contractors – in numerous producing countries. But not all directly-owned facilities are up to U.S. or even local standards, as sub-standard conditions in many maquiladora plants on the U.S.-Mexico border testify.

More numerous, however, are areas where OHS improvement efforts in the global supply chain have been inadequate or absent altogether – despite CSR programs and the attendant publicity. Health issues, such as exposures to hazardous levels of airborne chemicals, noise and ergonomic stressors, have not received serious attention in either hazard assessment or engineering controls. Very few transnational brands or contract factories have comprehensive, integrated safety programs with trained and qualified OHS professionals on staff, so haphazard, uneven efforts predominate.

Perhaps the most glaring problem is the near-total lack of involvement of workers in the development, implementation and evaluation of factory health and safety programs. Small, management-only factory safety committees – with managers who have many other, more pressing production responsibilities – cannot possibly conduct adequate site safety inspections, accident investigations and corrective actions or and worker training. This particularly is true in the giant factories in Asia, where workforces of 15,000 or 20,000 workers in a single facility are common.

Challenges for Effective OHS Programs

Establishing and maintaining effective factory safety programs in the global supply chain is not an easy undertaking. Contract factory operators have their own profit goals, naturally, which must be met despite ever-lower prices from transnational buyers. Cultural differences between the brands’ staff, foreign contract factory operators and the local workforce can be substantial.

Although some facilities in the global supply chain use state-of-the-art equipment and technologies, many factories are stuck with used or cast-off equipment and low-tech processes. Almost no factories operate only a 5-day, 40-hour work week – often 6-day, 72-hour (or more) work weeks are common – so that workers’ exposures to hazardous substances are well beyond any 5-day, 40-hour occupational exposure limit. The extremely long work week also increases the likelihood of accidents and repetitive motion injuries.

One of the greatest challenges is the high employee turn-over rates in supply chain factories. Workers frequently leave factories because wages are low, conditions may be poor and immediate supervisors can be a source of harassment. “Good” factories will have a turn-over rate of 35 percent to 40 percent a year, while “bad” factories can turn over as much as 90 percent of its workforce in a year. Non-stop employee training – which is expensive and rarely done – would be required to meet the training requirements of both national and international safety regulations.

What’s Needed

If the OHS promises made in the codes of conduct and CSR programs are to be met in a significant number of factories in the global supply chains, then several principles need to be implemented:

Unified standards: Currently some factories are audited for a dozen of different codes of conduct and monitoring systems. A uniform slate of international standards and actual practices needs to be developed, starting with the national laws and the ILO’s 20-plus OHS conventions, protocols and recommendations. Over time, at a minimum, the standards would include the most health-protective mix available of national laws, international guidelines, corporate codes, technical consensus standards and actual best practices.

Integration of CSR principles into sourcing decisions: Until the transnationals’ sourcing departments are not working at cross-purposes with their own CSR departments, little progress will be registered. The latest cutting edge management theories center on integrating CSR goals and requirements into the companies’ sourcing criteria and purchasing policies.

Sufficient allocation of resources: Both the transnational brands and contract factory owners must “put their money where their mouths are” in terms of long-term allocation of the financial, human and technical resources needed to implement and maintain effective OHS programs.
Meaningful worker participation: Workers must be integrated into plant-level OHS activities, including inspections, accident investigations and peer-training of co-workers. These worker OHS committee members must receive sufficient training and time off from production duties so that they have the knowledge, skills, confidence and opportunity to meaningfully participate in factory safety programs.

Occupational safety and health has been one of the few areas that has benefited from the CSR craze over the last decade. However, the OHS benefits – let alone the ILO’s other fundamental labor rights – have not been widely distributed nor deeply implanted in the global supply chain. If the partisans of CSR want it to be anything other than a relatively small cottage industry, then much more work remains to be done.

Sidebar: Key Corporate Responsibility Reports

There is a wide variety of organizations and individual researchers looking at how “corporate social responsibility” programs affect workplace health and safety and other working conditions in global supply chains. Here is a list of key reports:

Asia Monitor Resource Centre, “Report on Industrial Relations and Working Conditions in IMF-related TNCs in China,” http://www.amrc.org.hk.
Business for Social Responsibility, “Women’s General and Reproductive Health in Supply Chains,” http://www.bsr.org.
Business Week, “Secrets, Lies, and Sweatshops; How Chinese Suppliers Hide the Truth from U.S. Companies,” http://www.businessweek.com.
Roseann Casey, “Meaningful Change: Raising the Bar in Supply Chain Workplace Standards,” Harvard University School of Government, http://www.harvard.edu/m-rebg/CSRI/publications/workingpaper_29_casey.pdf.
China Labor Watch, “The Long March; Survey and Case Studies of Work Injuries in the Pearl Delta River Region,”http://www.chinalaborwatch.org.
China Labour Bulletin, “Falling Through The Floor: Migrant Women Workers’ Quest for Decent Work in Dongguan, China,”http://www.clb.org.hk.
Clean Clothes Campaign, “Looking for a Quick Fix; How Weak Social Auditing Is Keeping Workers in Sweatshops,”http://www.cleanclothes.org.
Ethical Trading Initiative, “Report on the ETI Impact Assessment 2006; The ETI Code of Labour Practice: Do Workers Really Benefit?”http://www.ethicaltrade.org.
Fair Labor Association, numerous reports on conditions in factories producing for member companies, http://www.fairlabor.org.
International Labor Organization, “ILO Declaration on Fundamental Principles and Rights at Work,” http://www.ilo.org/dyn/declaris/DECLARATIONWEB.ABOUTDECLARATIONHOME?var_language=EN.
Richard Locke, “Does Monitoring Improve Labor Standards? Lessons from Nike,” MIT Sloan Working Paper No. 4612-06, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=916771
Maquila Solidarity Network, “Codes memo No. 21 – Year 2006 in Review: Heightened Global Competition Tests the Limits of CSR Initiatives,” http://www.maquilasolidarity.org.
Maquiladora Health & Safety Support Network, Special issue of the International Journal of Occupational and Environmental Health on workplace safety in China, http://mhssn.igc.org.
Garrett Brown and Dara O’Rourke, “Lean Manufacturing Comes to China: A Case Study of its Impact on Workplace Health and Safety,” IJOEH, http://mhssn.igc.org.
National Labor Committee, Numerous reports on factory conditions around the globe, including Mexico, Central America, Jordan, South Asia and China, http://www.nlcnet.org.
PlayFair 2008, “No Medal for the Olympics on Labour Rights,” http://www.playfair2008.org.
Workers Rights Consortium, Numerous reports on conditions in factories producing licensed goods for U.S. universities, http://www.workersrights.org.

Garrett Brown, MPH, CIH, is a compliance officer with the California Division of Occupational Safety and Health (Cal/OSHA) and since 1993 has been the volunteer coordinator of the Maquiladora Health & Safety Support Network doing work in Mexico, Central America, Indonesia and China.