On Your Behalf - December Report
Advocating for Workers' Rights Around the World
The holidays are upon us again and 'tis the season to go shopping. Do you know where the gifts you bought were made? Did you check the labels of that shirt you purchased? Was it made in Malaysia? Bangladesh? Belize? Where was that cell phone manufactured? Was it made in Mexico? China? India? And where were those running shoes produced? Are they from El Salvador, Macau or perhaps Tunisia?
Abusive Working Conditions
In our increasingly global economy, many manufacturers and retailers rely on suppliers located primarily outside of the U.S. By outsourcing to distant suppliers, companies seek to remain competitive. Being competitive often comes with a price, though. More often than not, that price may be low wages, excessive working hours or generally unsafe working conditions. Workers' rights advocates long have claimed that sweatshop conditions prevail in many of the factories that make our clothing, electronic devices and other manufactured goods. Such abuses include:
- the use of child and/or forced labor,
- excessively long working hours,
- low wages,
- intimidation of union organizers, and
- unsafe working conditions.
These are issues that have occupied the attention of The United Methodist Church for many years. Methodism's first written social statement (adopted by The Methodist Episcopal Church in 1908 and still relevant today) called for "the abolition of child labor,...the suppression of the 'sweating system,'...and a living wage in every industry (¶59, Appendix, The Doctrines and Discipline of The Methodist Episcopal Church 1908)." Most recently, the Social Principles, recognizing the "right to a job at a living wage," call for measures that "ensure the physical and mental safety of workers (¶163C, The Book of Discipline 2004)."
Codes of Conduct
One way to push for improved working conditions in supplier factories is to encourage companies to institute, enforce and monitor codes of conduct. These codes—also referred to as vendor standards, global labor standards or contract supplier standards—describe in some detail what a company expects the working conditions to be in its many supplier factories. In other words, these codes articulate the standards to which suppliers are expected to adhere.
Companies are well-advised to establish vendor standards and monitor them for factory compliance. Exposure to the allegation of workplace abuses can result in widespread public criticism, loss of reputation, possible lawsuits and boycotts and, ultimately, a decrease in shareholder value. It is not surprising that socially responsible shareholders frequently are the first to call upon company executives to establish and enforce vendor standards. In 1996, the General Board was the first shareholder to call upon Nike, Inc., to report on its efforts to ensure that supplier factories treat employees with dignity, fairness and humaneness.
Codes vary widely from company to company but usually are structured to mirror standards adopted by the United Nations and the International Labor Organization. These standards include the:
Of particular importance for faith-based investors are the Principles for Global Corporate Responsibility, first released in 1999 by an international, interfaith shareholder steering group (available at http://www.bench-marks.org/). With cooperation from the Interfaith Center on Corporate Responsibility (ICCR), the Principles were designed "to promote positive corporate social responsibility consistent with the responsibility to sustain the human community and all creation," by establishing "comprehensive standards and expectations fundamental to a responsible company's action."
In particular, these standards call for the:
- right to unionize and bargain collectively,
- prohibition of conscripted, forced or prison labor,
- prohibition of child labor,
- right to equal treatment and opportunity,
- right to safe and healthy working conditions, and
- right to a sustainable wage.
Comprehensive codes are more than written standards, however. To be truly effective, codes of conduct must include methods of enforcement and allow for monitoring or auditing. Some companies that have adopted codes of conduct also may have aggressive auditing programs with compliance officers and entire departments devoted to corporate social responsibility. Levi Strauss & Company created one of the first codes back in 1991. Other important codes include that of the Gap (http://www.gapinc.com/public/Investors/inv_compliance_cbc.shtml) and Nike (http://www.nike.com/nikebiz/nikebiz.jhtml?page=25&cat=code.) Nike's code includes a list, published on its Web site, of all of the factories with which it does business. Inspections at supplier factories may take place regularly, with substantial penalties for continued infractions. Independent monitoring by organizations such as Verité (http://www.verite.org/) and CSCC (http://www.cscc-online.com/) is becoming more important, however, as even the most comprehensive codes may be circumvented at supplier factories. Reports of factories concealing abuses or maintaining two or more sets of books are becoming more widespread.
Even though many companies have responded to shareholder calls for vendor standards, companies with codes of conduct are the exception rather than the rule. At the end of 2005, only 79 companies in the S&P 500 had a code of conduct. Where codes exist, however, shareholder advocacy has played an important role and is responsible, according to the former Investor Responsibility Research Center (IRRC), for the adoption of at last 20 new codes over the past five years.
Over the past 10 years, the General Board has been instrumental, through shareholder resolutions and dialogue, in encouraging companies to adopt rigorous codes of conduct. Some of these companies include Apple Computer, Delphi, The Walt Disney Company, McDonald's and Wal-Mart Stores.
This holiday season provides investors and consumers with opportunities to renew our commitment to the values of The United Methodist Church.
|
