Outsourcing Responsibility

A morning discussion at the sustainability department of a large textile retailer.

[fiction based on real cases]

  • Good morning. Did you look at the football match last night?
  • Yes, but it was a bit depressing to see how they lost against this second class club from Bremen …
  • I agree, but there is something else we should discuss: I just heard that there was a fire in a Bangladesh textile factory last night. Do you know more?
  • Yes, it seems that it was not as bad as the Rana Plaza accident in 2013 where more than 1000 people seem to have died. I heard some 10-15 women have died from smoke poisoning. The other 250 could leave the building safely. The building has not yet collapsed.
  • Are we somehow involved? Are we connected through one of our supply chains?
  • I did a quick scan of our supplier data. There does not seem to be a direct connection, although we suspect that one of our main suppliers is using (or has been using) the company that owns the production facility that just burnt down. Moreover, I checked on the website reprisk.com whether we should worry about any reputation risk now. It seems that we are not in the spotlight this time, but H&M and C&A should be worried more.
  • Yes, it seems very unlikely that NGOs like the Clean Clothes Campaign or similar NGOs will find out our third-tier-link to the accident spot. So we need not worry too much.
  • But we should follow this closely. In any case, we should have a good story ready before NGOs will try to damage our reputation. To build a good reputation and a strong brand takes years. It can be destroyed overnight.
  • What story do we need, just in case?
  • In any case, we should emphasize our strong commitment to BSCI, the Business Social Compliance Initiative, including our efforts to audit at least all our first-tier suppliers. Moreover, we should mention our participation in ACCORD, the Bangladesh Fire and Safety Accord and our policy with respect to the Living Wage issue. But I do not expect that we will be grilled by NGOs this time.
  • And what about our supply chains from Latin America? There appear to be some issues related to freedom of association and labour safety there.
  • Don’t worry too much. We are working with some companies to get things better, but public attention is not focussing on those countries. The issue has not yet been discovered by our stakeholders. We should not create an issue where it has not developed yet.
  • I will go for a cup of coffee. Can I get one for you, too?
  • Yes, strong coffee, no sugar, no milk please.

Rescuers search for survivors of Bangladesh building collapse

http://www.abc.net.au/news/2013-04-26/up-to-1,000-feared-dead-after-bangladesh-factory-collapse/4652206

What is wrong with this discussion? A virtual interview.

  • What do you think when hearing these CSR managers discuss the Bangladesh accident?
  • On one level, it is completely reasonable and understandable that they discuss the business risks as a result of this accident. On another level, it is almost depressing to hear that the death of 15 women is only discussed in terms of risks to the company. It seems that issues of responsibility and issues of business risks are not being distinguished at all.
  • I do not follow you. My understanding is that the company’s stakeholders act as watchdogs. These watchdogs then create business risks for the company. The business risks create a motivation for the company to act, to improve their own management and to create pressure on their suppliers or even on the suppliers of their suppliers to organize corrective action. In the end, the affected people only profit.
  • Yes, that is the theory. But I do see fundamental problems. The first problem is that the company’s ethical obligation to respect human rights (including worker safety such as fire protection) is virtually being replaced by purely commercially motivated risk management. The goal of reducing risks to people (violations of human rights) is being replaced by the goal of reducing risks to the company.
  • I do not see the problem. As I said: by reducing the company’s risks you are automatically reducing the risks to the people. Is not that great?
  • No, you are not doing this automatically. Therefore it is not great. The company is not acting on the basis of its own values, but on the basis of issues that come up. Issues are defined by stakeholders with their selective agendas and their selective capacity to observe and to report. Issues that are not on their agenda can be disregarded. Places where they are not present do not matter. This is a potentially dangerous tendency. Although companies like to call themselves proactive, they are increasingly becoming reactive, reactive to what selective stakeholders, those stakeholders that matter in terms of risk creation, define as issues. This is what I call: ‘outsourcing responsibility’.
  • What would you do differently then?
  • Companies should become more ‘proactive’ in the sense that they go beyond the agendas that their stakeholders define and commit themselves to solving problems that even their stakeholders have not yet defined. The best companies do already understand this.

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