Welford

Slide1: 

Time to sack the auditors? CSR in Asian supply chains Richard Welford CSR Asia and University of Hong Kong

The context: 

The context 70% of all kitchen appliances are now made in China 50% of clothes are made in China, 70% in Asia 50% of toys are made in China, 65% in Asia 90% of sportswear is made in Asia 75% of all footwear is made in Asia 80% of all ceramics and pottery are made in Asia

… boys between the ages of six and 14 work at low work tables sewing beads and coloured threads on to vast lengths of fabric. The boys work 20-hour days, seven days a week, in dingy sized rooms… with hardly any ventilation. Each room has a small smelly bathroom located in one corner. They sleep, bathe and eat in this same room. They are given two meals a day and are rarely allowed to leave the room. Last year, 11-year-old Ahmed Khan, died after being beaten severely. Six year olds earn US$1.12 a month. The Hindu, March 25th, 2006: 

… boys between the ages of six and 14 work at low work tables sewing beads and coloured threads on to vast lengths of fabric. The boys work 20-hour days, seven days a week, in dingy sized rooms… with hardly any ventilation. Each room has a small smelly bathroom located in one corner. They sleep, bathe and eat in this same room. They are given two meals a day and are rarely allowed to leave the room. Last year, 11-year-old Ahmed Khan, died after being beaten severely. Six year olds earn US$1.12 a month. The Hindu, March 25th, 2006

Research Objectives: 

Research Objectives What CSR practices are we seeing in supply chains in the region? Are there benefits associated with CSR-related supply chain management? What obstacles exist for good CSR practices? What should be the emphasis of CSR in the future?

CSR Managers: 

CSR Managers    

Factory managers and owners: 

Factory managers and owners    

CSR Experts: 

CSR Experts  

Current drivers and issues for CSR: 

Current drivers and issues for CSR Consumers? NGOs and trade unions Media Shareholders Risk reduction, brand, reputation Rationalisation of supply chains

Some of the problems: 

Some of the problems Accurate payroll Unpaid overtime Payment on time Health and safety Pollution Dormitory accommodation Treatment of migrant workers Sexual harassment Recruitment and retention Child and bonded labour

Codes of Conduct: 

Codes of Conduct Compliance with local laws or moving beyond it? Lack of compliance with Codes of Conduct – Implications? Too many codes of conduct? The audit and inspection system (internal and external) Cheating and counter-auditing Are auditors complicit in the deception? Are auditors qualified? Can a factory obey Codes of Conduct and make a profit? Do Codes of Conduct go beyond the first tier of suppliers?

The Good and the Bad…: 

The Good and the Bad…

… and the ugly?: 

… and the ugly?

Slide16: 

… and even uglier?

Beyond Codes of Conduct: 

Beyond Codes of Conduct Auditing is necessary but not sufficient to deliver CSR Capacity building (managers and workers) From inspections to consultancy Building trust and reducing risk Pilot projects to date – who is going to pay? The experience in Cambodia

The perceived benefits of good CSR: 

The perceived benefits of good CSR Risk management Staff recruitment and retention Cost reductions Enhanced reputation and image Market access Relationships with government, other businesses, stakeholders

Obstacles to CSR in supply chains: 

Obstacles to CSR in supply chains Limited awareness of CSR, stakeholder demands and drivers Codes of conduct perceived as a nuisance to be ‘got around’ Compliance seen to be costly Reducing margins, lower prices and increased demands Lack of skills, knowledge, expertise Need for education, training Inadequate consultancy expertise

Some conclusions: 

Some conclusions A recognition that problems still exist but that CSR has helped The implications of supply chain rationalisation Codes of Conduct and inspections and audits are failing to deliver good CSR alone Need for increased capacity building centred about labour standards and human rights What should we do about the full supply chain?