The limits of voluntary CSR

The largest German quality paper, the Süddeutsche Zeitung, recently published a good article about the CCC discounter tour in Germany. It sums up the main problems that we keep on reading about Bangladesh, the policies of discounters and the BSCI. Khorshed Alam (who did the research for the CCC lawsuit against Lidl) and Arifa Akter (an ex-worker and now unionist) report about issues we keep on hearing: (a) Being active in trade unions can be dangerous for the workers, even if the companies are member in the BSCI, (b) Minimum wages are too low – e.g. one room already costs 20 Euros of the 30 Euros the workers earn, (c) Workers are beaten, (d) Membership in an initiative like BSCI does not improve the workers’ situation. They all argue that whatever Lidl has promised in its CSR policy has not been effective, so far.

What do other BSCI members say? Yesterday I was invited to a quite large BSCI member to discuss my critique on the BSCI and their minimum wage policy. The CEO argued eloquently that as a family business they fully embrace a responsible policy for their workers. This is why they have 15 people on their CSR team, who check every factory, before they give an order. But he didn’t tell whether trade unions were a must-criteria (I guess not). They also know where the texiles are produced – and if the suppliers betray them they sooner or later find out. Together with 15 other companies they ensure that hazardous substances are not in the garments – one simple reason is that they do not want, e.g., their kids to be buying hazardous clothes – but he didn’t say, whether the dyeing factories have proper water treatment plants. He talked about one school in Indonesia and another they plan in Bangladesh, which is often criticized as Greenwashing. But here is a difference: They do not make it public. They do it becuase their long-term suppliers can later employ well educated mid-level management staff, who exactly know the needs of their customers. As a positive side effect, poor people are educated and get a job. A typical win-win CSR.

Here are some other intersting aspects from our conversation and some quick ideas that could be examined by researchers:

  • Toghether with other companies, this company  successfully lobbies production country governments regarding the improvement of environmental protection. This is surely a method companies could use to improve social and environmental standards – and there is little research on democracy and lobbyism by European companies in production countries regarding social / environmental issues.
  • Regarding living wages he argued that this is too much an intervention into the competitive host environment – and that it would not work. In addition, it is too much an external intervention into the business of the factory manager (although prescribing quality standards or ILO norms is not). He explained that the factory manager will argue that he will do what the law tells him to do, and not more. And that it would not work, if you had less than 90% of the factory capacity. I would really like to do research on cases, where living wages were successfully implemented. Are there any examples?!
  • Being criticized as “ignorant” by the CCC did not really bother him, because this only had regionally limited impact. However, he plans to become member in an MSI around next year. So: How much are such policy decisions driven by external influence?
  • They use a very small amount of Cotton Made in Africa – but he didn’t know GOTS, which surprised me. Why does a CEOs of large companies not know the GOTS standard? In a study they conducted 5 years ago they realized that customers do not value, the organic products they offered. This corresponds to the myth of the ethical consumer – or has the time changed in the last 5 years?
  • Transparency about the supply chain, he argued, was an absolute no-go area, due to reasons of competitiveness. So why do some make their supply chains and audit reports competitive, while others would absolutely not do it?

Some issues pointed out that voluntary responsibility is very limited.

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