Essay working conditions are poor and environmental
Essay ProposalTransnational Governance and Corporate Social Responsibility???Dhr. Dr.
Philip SchleiferAcademic Year 2017 / 2018Governmental and intergovernmental failures to tackle global justice issues have motivated actors to turn towards private regulatory measures (Fransen, 2011). Economic Globalization, more precisely global production processes, have created opportunities for developing countries due to the fact that employment is generated and tax revenues are created, however, the conditions of the labour market in the respective countries are anything but rosy in many respects (Burgoon & Fransen, 2014; Locke et al. 2013). Due to various factors, low margins and fierce competition to name two, working conditions are poor and environmental standards are lax (ibid.).
As a matter of fact, demands for global labour norms and standards are around for over one century but the actors have changed over time (Toffel, 2015: 205). Historically, the state has played a key role by passing national labour laws, participating in international organizations as the International Labour Organization (ILO) or by including specific clauses in trade agreements (ibid.).
Now it is common strategy to develop private regulatory programs where companies engage with environmental degradation and / or human rights abuse under the banner of Corporate Social Responsibility (CSR) (Fransen, 2011; Toffel, 2015). Indeed, businesses as well as non-governmental organization (NGOs) have created a myriad of private regulatory regimes with the potential aim of creating a more sustainable global production chain. Corporate self governance is one way of private voluntary regulation but an increasing number now reunite, private sector companies, NGOs, trade unions, social movements and sometimes states in initiatives called multi stakeholder initiatives (MSIs) (Burgoon & Fransen; 2014).
Fransen (2011) describes MSIs as “a universe of initiatives in which expertise, skills and finance of non-profit and for-profit organizations are pooled”. Because they are widely perceived to be more legitimate then other initiatives MSIs have mushroomed in the past decades (Fransen, 2011). Even though political authority remains with the state, MSIs are able to define social standards at the international level (Hassan & Lund-Thomsen, 2017). Those social standards, which are recommendations, guidelines or rules of responsible behaviour for business, are also labelled codes of conduct (Fransen & Kolk, 2007).
Despite the theoretical benefits of MSIs there has been a vivid academic debate around the effectiveness of MSIs and codes of conduct (e.g. Fransen & Kolk, 2007, Egels-Zandén & Lindholm 2014, Locke et al. 2007, Locke et al. 2009).
Building upon the existing academic debate and by taking a close look at the impact one of the leading MSIs, the Fair Wear Foundation (FWF), had on the social responsibility (SR) program of one of the leading outdoor companies, Mammut, this paper is answering the following question:Governmental and intergovernmental failures to tackle global justice issues such as human rights abuse have motivated international actors to turn towards private regulatory measures (Fransen, 2011). Demands for global labour norms and standards are around for over one century and historically states have played the key role by passing national labour laws, participating in international organizations as the International Labour Organization (ILO) (Toffel, 2015). However, with the extension of supply chains around the globe the regulatory power of the state has decreased and it has become common strategy to develop private regulatory programs under which firms engage with issues as human rights abuse under the banner of Corporate Social Responsibility (CSR) (Fransen, 2011; Toffel, 2015). A myriad of private regulatory regimes have been created. Corporate self governance is one way of private voluntary regulation but an increasing number of initiatives now reunite, private sector companies, non-governmental organizations (NGOs), trade unions, social movements and sometimes states in so called multi stakeholder initiatives (MSIs) (Burgoon & Fransen; 2014). MSIs and other forms of private regulatory initiatives have especially mushroomed after the highly publicized textile and garment factory accidents of the past years (FU Berlin, 2017; Toffel, 2015). Four years after the deadliest accident of the garment factory industry, the Rana Plaza accident, the impact of the various private regulatory initiatives on the social standards of the supplier countries is still unclear (ibid).
MSIs, defined as “a universe of initiatives in which expertise, skills and finance of non-profit and for-profit organizations are pooled”, are still seen as the most promising initiatives (Fransen, 2011: 166). The embracing of MSIs by a large number of Europe’s leading apparel companies raises the following question Can multi stakeholder initiatives lead to social responsibility activities that produce real improvement of working conditions in countries supplying Europe`s apparel industry? MethodologyDespite theoretical benefits of MSIs there has been a vivid academic debate around the effectiveness of MSIs and codes of conduct (e.g.
Fransen & Kolk, 2007, Egels-Zandén & Lindholm 2014, Locke et al. 2007, Locke et al. 2009; see literature review). This paper contributes to the academic debate and may be relevant for practitioners, too. By drawing upon discussions on the impact of MSIs in prior literature, the paper gives a clear overview of the opposing views on the topic. The case study of Mammut, a Swiss outdoor company with high SR demands, adds to the discussion as Mammut`s SR activities ex ante and ex post MSI membership will be analysed. In methodological terms, this paper mainly focuses on the past two decades in order to cover several years prior Mammut`s joining of FWF in 2008 as well. The MSI at hand is the Fair Wear Foundation (FWF), which is “recognized as conducting some of the most rigorous and trustworthy audits worldwide” (Egels-Zandén & Lindholm, 2015:32).
Therefore, outlined best practices can potentially be transferred to other companies. At the same time, there are some limitations to this paper. For the project to be a manageable size and fit the given frame, one detailed case study was chosen. Generalization on the case of Mammut is only possible to a certain extent since the case study is potentially analyzing the “leader of the leaders”. However, it is possible to generalize the pitfalls based on this assumption. This paper is structured as follows.
The first part is dedicated to introducing the discussion on MSIs. After a brief outline, existing perspectives on the efficiency, potential benefits and pitfalls are set against each other and called into question. The second part of this paper focuses on the case study, which illustrates the impact and the current state of affairs of MSIs. It empirically draws on an existing academic literature, journalistic sources, civil society reports and interviews. In other words, both primary and secondary sources will be used. Engagement with academic literature ?An important academic debate is centred around the question why private companies voluntarily agree to participating in MSIs. In the past decades, literature in this field has flourished and Wright and Rwabizambuga (2006) analysis of firms committing to codes of conducts is only one example among many. They argue that codes of conducts primarily function as a positive signal to stakeholders and customers, strengthening reputation as well as organizational legitimacy especially when and where threatened (Wright & Rwabizambuga, 2006: 90-91).
Fransen (2011) takes another perspective as he compares business driven voluntary programs and MSIs theoretically and empirically, outlining the potential for competition on the basis of legitimacy. Illustrating that multi-stakeholder-governed programs promise more legitimacy, because of their distinctive decision making process, he highlights another aspect worth consideration (Fransen, 2011: 169). Burgoon and Fransen`s paper (2014) further investigate the companies choice of one private voluntary program over another, pointing to the effect of societal pressure from consumers, media and NGOs and the industrial institutional conditions.
In short, there are a multitude of voices on this topic, and considering the motivation behind joining a MSI is one important aspect of understanding the influence of MSIs on SR activities. The more concrete question on the impact of codes on conducts for the workers in the developing countries is also intensely debated. This question has been approached with great methodological difference ranging from qualitative studies based on a relative small number of firms (e.g. Locke et al.
, 2013), to quantitative studies (e.g. Locke et al. 2007a, 2007b; Egels-Zanden & Lindholm, 2014). As a matter of fact, Egels-Zandén and Lindholm (2014) paper aims at answering the question whether FWF`s codes of conduct improve working conditions on the factory floor of the developing countries. By drawing on 43 garment factory audits and analyzing the improvement between a first and a second round of audits they have been able to detect a slight overall improvement of worker rights over time (ibid.). Improvement, however, has been uneven across different labour rights (Egels-Zandén and Lindholm, 2014: 8).
Furthermore Egels-Zandén and Lindholm (2014, 38) find that suppliers “move in and out of compliance,” hence, outline that the main problem of auditing and codes is the inability to incentives compliant companies to stay compliant. An important limitation to their thorough study is the lack of a test group, which has not been exposed to FWF codes over the same time (Egels-Zandén & Lindholm, 2014: 38). FWF has also been subject of a recent study conducted by Marx and Wouters (2017) who have compared the FWF practices with the OECD Guidelines for Multinational Enterprises.
They came to the conclusion that the number and the role of intermediaries involved in the regulatory process influence the effectiveness of global regulatory initiatives. Their measurement of effectiveness is based on theoretic assumptions that FWF´s member companies engage more actively in improving working conditions because FWF demands are higher and take multiple forms (Marx and Wouters, 2017: 199). Despite the fact that multiple researchers have already tried to tackle the question whether MSIs improve working conditions in the supplier countries and FWF has already been the subject of comprehensive research papers before, knowledge remain limited. This paper aims at adding to the debate through the insights gained on the impact FWF membership for Mammut`s SR activates. Empirical Sketch The case study approach was chosen to gain a thorough understanding of the reality, the motivation behind FWF membership and the impact a such may have one a firms SR activities.
Mammut`s interaction with FWF was chosen because both position themselves among the leaders: Mammut concerning SR in the outdoors industry and FWF respectively in the field of MSIs. As previously outlined, FWF is considered to have among the most trustworthy and most stringent audits and potentially the strictest social standards in the apparel industry. (Egels-Zandén & Lindholm, 2015; Mammut, 2017: 34). The independent, private, non for profit sustainable standard organization was established in 1999 by the retailer associations, trade unions, NGOs and Dutch garment supplier (FWF, 2009). Its board and ownership are equally divided between the above mentioned, in other words it is governed by a multi stakeholder board (Marx and Wouters, 2017: 198). The eight international labour standards the FWF tries to enforce are based on the International Labour Organization (ILO) Conventions and the UN’s Universal Declaration on Human Rights (FWF, 2009: 4). Factory audits form the core of the monitoring program and are conducted by multiple intermediaries, including member firms, supplier firms, FWF departments, NGOs as well as other local stakeholders, audit firms and workers who are the beneficiaries (FWF, 2009; Marx and Wouters, 2017: 201).
In realization of the fact that many labour conditions in many production countries are far below FWF standards, the MSI forces the participating companies to draw up corrective action plans leading to an improvement over time (FWF, 2009:5). FWF is very unique in the sense no “certificates” are handed out to participating companies but they become actually members of FWF (Marx and Wouters, 2017: 202). Moreover, the regulatory approach of FWF comprises more than only traditional monitoring. Two easily accessible complaint procedures on both the FWF and the company level are installed and benchmarking through a Brand Performance Check (BPC) has been put in place (Marx and Wouters, 2017). The later is regularly published on the FWF website. The benchmarking system, which was introduced in 2014, labels the approximately 80 as either “leaders”, “good”, “needs improvement” (idem.)Mammut, has since the introduction of the benchmarking system been classified as a “Leader”.
As a matter of fact, the Swiss company joined FWF in 2008 as a first mover in the outdoor industry (Mammut, 2017). The firm has very high Corporate Social Responsibility (CSR) as it strives to be “among the leading brands concerning social responsibility.” (ibid.). Production takes places in sixteen countries by and almost all 56 suppliers of sewn products are covered by their social monitoring system (ibid.). Prior to FWF membership, SR activities existed but took a very different form and had potentially a more limited impact. To sum up, Mammuts interaction with FWF was chosen based on the belief that an analysis of the “leader of the leaders” can best create an understanding of the reality, meaning that if FWF membership for a company with high SR standards did not lead to improvements the value MSIs could be questioned, altogether.
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