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Are businesses ethically responsible to assure fair labor practices throughout their supply chains?

Nicholas Napolitan, Nicole Nitowski, Luke Sullivan, Lamar Thomas

Financial Obligations

Shareholders primary stakeholders

Many others are important, not paramount

Natural law of competition

Global business

If there’s a bottom, there’s a race to it

Supply chain jobs are outsourced to save money

Which leads to poor working conditions

Motivated by money

Is it morally permissible?

Ethical imperialism - is the theory that holds that morality is relative to the norms of one's culture. That is, whether an action is right or wrong depends on the moral norms of the society in which it is practiced. The same action may be morally right in one society but be morally wrong in another.

‘‘When in Rome, do as the Romans do”

Lamar:

As corporations, we seek to generate the highest profit possible.

When entering into developing markets, we establish manufacturing plants to increase productivity and to create an economic opportunity for the existing citizen.

(http://www.ethicaltrade.org/issues/living-wage-workers/living-wage-standards) (http://www.independent.org/publications/working_papers/article.asp?id=1369)

(https://www.numbeo.com/cost-of-living/country_result.jsp?country=Indonesia&displayCurrency=USD)

Globalization Factors In

Governments play significant role:

Shortfalls in fair labor practices give huge trade advantage

Trade doctrine of industrial countries

Matters of global economic policy:

Emerging economies/improved GDPs

Debt-cycle between U.S. and China

India: fast growing economy, growing influence, tense regional relations

Nicole

Def: the process by which businesses or other organizations develop international influence or start operating on an international scale.-outsource their labor to other countries

Bad reputation/misconceptions- opponents of globalization believe that this trend only makes the rich richer and further impoverishes the poor

However, there are benefits such as:

Improved economies- India and China- globalization has lifted 200 million people out of abject poverty in the 1990s as globalization took off, the International Monetary Fund says. Tens of millions more have catapulted themselves far ahead into the middle class. In the next eight years almost 1 billion people across Asia will take a Great Leap Forward into a new middle class.

GDP- Foreigners build hundreds of new factories, Chinese government built the coal mines, power grid, airports and highways to supply them

Complications with Globalization

Being ethical as a business has global implications

Problem is much larger than the corporate decision making process

Political roots/state driven

International trade law

AOIC, Iran, and the issues surrounding their government

Challenges of Ensuring an Ethical Supply Chain

Few academics, industry experts and company executives agree on what an “ethical” supply chain is

Values of corporation vs. values of manufacturer

Evolving definition of supply chain

Nicole

I know what you’re thinking- human nature/common sense can tell you what is and isn’t ethical in a supply chain such as unfair labor practices, low wage, etc.

However, because so few agree on the definition of an ethical supply chain, clear, codified international regulations for global supply chains are lacking which makes it easier for unfair labor practices to slip through the cracks.

Nicole

Companies have their own ethics codes, usually based on broad, vague frameworks from the United Nations and international standards organizations, but they may not match their suppliers' codes or those of the country in which they manufacture. Although a company should try to monitor their supply chain, they give up some control when they turn over responsibility to those in charge of leading the supply chains.

Complicating the task is that the definition of supply chain has broadened beyond its traditional meaning as the source and movement of materials, parts and labor that make up a finished product. The term now encompasses everything from metals in the earth and seeds in the ground to middlemen who use those elements to make an intermediate component—such as foot pedals for a bicycle or a corn crop that goes to a food processor to make corn syrup—to a final product: the bicycle or the breakfast cereal that is sweetened with that corn syrup. It also includes the many people involved in the supply chain, such as the miners, farmers and factory workers. This makes it near impossible for corporations to ensure that their supply chain was ethical from start to finish. That is why…..

Labor Regulation

Labor Regulation Groups

Worker Rights Consortium

Fair Labor Association

International Labor Organization

Ethical Trading Initiative

Nicole

Labor rights organizations, including Central General Trabajadores, Worker Rights Consortium and the Fair Labor Association (FLA), and Ethical Trading Initiative (ETI) are tasked with monitoring the right’s and wrong’s of a supply chain NOT the companies themselves.

Even when companies are trying to be as ethical as possible Sometimes, companies must balance one ethical consideration against another. If working conditions are poor because the government in a developing country either doesn't have health and safety regulations or doesn't enforce them, what's the most ethical stance for a company? Should it pull out and leave thousands jobless, or stay put and work with subcontractors, the government and workers to improve the situation? So although a company strives for an ethical supply chain, they still may face challenges .

Who should bear the Responsibility?

International regulatory agencies

International Labor Organization, World Trade Organization

WTO still not authorized to enforce labor standards

No ulterior motives (money)

Why isn’t it working?

Their policies only apply to countries that are members of the organization

Little power

Complex regulation system

Luke

WTO and ILO rules and members overlap

Solution