Holding Global Corporations Accountable

We all know that we
are in a global world. Companies have operations
all over the planet. And a big question
we have to face is how do we keep these
global corporations accountable for providing good
jobs and decent work in far flung places? Let’s do it through a company
we all know and love– Nike. Nike was a pioneer in this area. In the 1960s, Nike was one of
the first companies that said we will design our work here. We will market and sell our
products around the world, particularly in
the United States, but we can find cheaper
places to manufacture them. First, they started
in Japan, and Korea, and then Indonesia, and Vietnam,
and China, and Bangladesh. As they did so, a number
of problems became known. The Nike products more marketed
well with Michael Jordan and so on, but Labor
Standards became a problem. They were famously found
having child labor, to having unsafe
working conditions, to having long hours of unpaid
overtime in their factories abroad. And what was Nike’s response? Well, wait a minute. These aren’t our problems,
these are our contractors. These are not our employees. We don’t treat our
employees that way. Somebody else’s problem. And that lasted for awhile,
but by the middle of the 1990s, Nike watched its stock
price begin to fall. It saw the publicity
begin to grow and grow. And finally, Phil
Knight, the CEO of Nike, made this famous statement. He said, Nike’s
products have become synonymous with slave
wages, forced overtime, and arbitrary abuse, and we
need to do something about it to change that image, or we’re
going to suffer as a company. So what did Nike do? Well, to its credit, it
took a whole set of actions. First, it created a
social responsibility unit within its organization
and assigned people the responsibility to
say, fix this problem. That was a good
start, but not enough. Second, they created what
are called codes of conduct. They established
minimum wages, and rules against sexual
harassment, and rules for maximum hours and overtime,
and freedom of association. And they started to apply
that code of conduct to all factories
that they contracted with throughout their
global supply chain. They sent auditors out
there to measure compliance with its code of conduct. They took some of their
expert operations managers and manufacturing experts, sent
them to some of these plants to help consult, to
help people both build safe working conditions,
but also efficient ways of manufacturing products
to improve safety, improve quality,
improve productivity. They went on and
worked with a variety of non-governmental
organizations, or NGOs in these countries
who are advocating for improved employment
conditions, safety standards, and in some cases, environmental
standards in these factories. They shared this audit data
with academic researchers, including a team of
researchers here at MIT, where they started to analyze
the data and learn what works and what didn’t. They also created a website,
and to their credit, you can go on this
website and you can find all their factories listed. You can find the
audit scores, and you can find an analysis
of what is working and a very frank analysis
of what isn’t working. They met here at MIT,
and later, at Stanford with multiple stakeholders,
NGOs, academics, competitors, suppliers, in forming what
they call a just supply chain project and set of practices. The research findings
from our MIT project, led by my colleague
Richard Locke, reached a number of conclusions. First, they found
that NGO pressure was really important to
get this thing going. Nike and other companies
like Hewlett Packard, and other electronics firms,
and other consumer companies that followed in
Nike’s footsteps did it because there was
transparency and pressure that was being brought to bear
to get them to do so. The codes of conduct were
successful and the audits we’re successful,
but only partially. They seem to bring the
practices up to about 50% to 60% of the overall goals
that were established in the standards that were set. So there’s lots of
room for improvement. The standard that was
most frequently violated was around working hours
and overtime hours. Why is that? It’s important for us
to know, because we are part of the problem. As we are fickle consumers,
and all of a sudden we want the latest logo,
or the latest scarf, or the latest shirt,
and so the company puts pressure on
the supply chain to get those
products in a hurry. And the contractor there out
in Asia or somewhere else says to employees, I need those,
I need them today and get them done no matter what, or we’re
going to lose this contract. And so they work long hours, and
they’re forced to work overtime and all kinds of bad
things happen after that. But the scores of
suppliers that got better had three key ingredients. First, they got management help
from Nike and other companies. Secondly, they were
in countries that had stronger rules of law,
less corrupt governments, and they had stronger rules
governing human rights and commercial practices. And so the environment
of the country matters. So this is all great progress. Companies have learned
how to do this. But what about us? If we’re part of the
problem, we ought to be part of the solution. There are a number of things
that have been very positive. There’s an organization
on college campuses around the country called United
Students Against Sweatshops, and they have put pressure
on their universities– universities like
Cornell and Brown and Wisconsin and
others to make sure that they’re only buying
their university logo apparel and athletic wear
from companies that have these kinds of just supply
chain practices in place. So we can do this, but
it takes a lot of energy, and a lot of collective effort. And it has to be done by all
the parties working together. Companies can’t do it alone. NGOs can’t do it alone. Local governments
can’t do it alone. But if they all work together,
and build a sustained effort to improve the
conditions, and then produce the data that
makes it all transparent for us as consumers, we
can make a difference in improving the conditions
of very low wage workers in many developing countries. So I’d like to ask
you two questions. Apple, our computer
friends, and iPhone friends, and iPod friends are about
two decades behind Nike. They have experienced terrible
problems with their contractors in China and elsewhere. You may have heard about
Foxconn with suicides of workers frustrated with
terrible working conditions. If you were to write
to the CEO of Apple, what should Apple learn
from Nike’s experiences? And then, more
broadly, what can you do to hold companies accountable
for their global operations? How can we take
responsibility for making sure that every shirt, every tie,
every sweatshirt that we buy is made in a just supply
chain, and keep asking, and be willing to pay for
products that are made under fair working conditions? We can do that
individually as consumers, and we can collectively set
the norms that essentially say, to any company, if
you want our business, then you’ve got to demonstrate
that you are providing safe and healthy working
conditions, and fair wages for people wherever they
make these products.

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