Supply Chain Digest: Will Environmental Groups Target Western Companies Over Pollution Issues in Chinese Manufacturing?

By SCDigest Editorial Staff
Through a special arrangement, what follows is an excerpt of a current article from Supply Chain Digest, presented here for discussion.
For many years, labor and other groups have put pressure on Western companies for using offshore suppliers paying low wages, running alleged “sweatshops,” or otherwise abusing developing nation’s labor standards.
These attacks have had some success, such as the on-going campaign targeting worker pay and conditions in Asian suppliers to Nike. This publicity seems to have certainly caused Nike to shift some of its policies and sourcing decisions over time. For example, in November 2006, Nike ending its relationship with a Pakistani supplier of soccer balls over alleged violations of its labor policies.
With the growing focus on green supply chains, interest groups may try similar strategies by targeting the environmental friendliness of a company’s offshore suppliers. In the past, labor groups often criticized a given country’s environmental standards, or cited the unfair cost advantages a country with more lax environmental controls would have, in pushing for tariff or other protectionist policies. But little has been done to specifically investigate or target the individual suppliers of U.S. or European companies.
That may change. The Wall Street Journal, for example, recently reported on the huge pollution problems associated with China’s textile and apparel production, which are placing a large toll on the environment there.
“After labor issues, the environment is the new frontier,” Daryl Brown, vice president for ethics and compliance at Liz Claiborne Inc., told the WSJ. “We certainly don’t want to be associated with a company that’s polluting the waters.”
The comments come after Chinese authorities raided the mill of Fuan Textiles in southern China, after local complaints about fouled waters around the plant. Chinese apparel and textile companies generally dump untreated water used in production directly into lakes and rivers.
Fabric from Fuan Textiles’ factories is used in apparel items produced by other Chinese manufacturers and ultimately sold by U.S. companies including Wal-Mart, Lands’ End, Nike, Liz Claiborne, The Gap, Target, and more – a virtual “who’s who” of retailers and apparel marketers. Companies will likely also have to increase their costs for environmental monitoring, just as they are likely to incur for better safety and quality monitoring coming out of the Mattel recall and other safety concerns about Chinese imports.
“Prices in the U.S. are artificially low,” said Andy Xie, former chief economist for Morgan Stanley Asia and now an independent analyst. “You’re not paying the costs of pollution, and that is why China is an environmental catastrophe.”
Discussion Questions: Do you see a green supply chain protest movement against Western companies becoming as pervasive as the anti-sweatshop movement? What factors would drive or impede any such movement? What steps should Western companies be taking to address such protests?
- Global Sourcing and The Green Supply Chain: Will Environmental Groups Target Western Companies over Pollution Issues in Chinese Manufacturing – SCDigest
- China Sharpens Its Focus On Braking Growth Surge – Wall Street Journal (Sub. required)
Join the Discussion!
11 Comments on "Supply Chain Digest: Will Environmental Groups Target Western Companies Over Pollution Issues in Chinese Manufacturing?"
You must be logged in to post a comment.
You must be logged in to post a comment.
American companies who source goods in China and other countries with lax environmental standards would be smart to pay attention to this issue. It’s very much tied to the issues of labor conditions and product safety (the lead paint problems that may cost Mattel and U.S. toy retailers some serious sales this year). You can’t do global sourcing on a lowest-cost basis and then turn a blind eye to the negative consequences. More stringent quality control (and other inspection standards) needs to be the “lesson learned” here.
It isn’t easy to go green in China. Yes, the textile factory doesn’t have to pollute the waters. But how will it get its electricity? Chinese power plants burn coal, and China is legendary for its air pollution. Most of the mass market simply wants inexpensive goods, and overlooks the sustainability issues. A minority cares about sustainability, and an even smaller slice of those folks are willing to pay extra (a lot extra).
It’s only a matter of time before various special interest groups go after the environmental friendliness of Western companies’ supply chains. However, unless environmental pollution can be tied directly to human misery, it will not draw as much attention or will not have as much impact as “sweatshop” issues. For ordinary consumers, it is easy to visualize poor and pathetic working conditions but it is a little difficult to visualize effects of environmental pollution.
I agree that this is an issue that will only continue to grow in importance. What could drive the timetable? Intense media coverage, for one, and restrictions on trade by the EU for another. And, let’s not forget consumer pushback.
Environmental issues can easily become a media focal point. U.S. companies would do well to examine their procedures and processes at this point in time and get prepared for the attention that will come in the future. Cleaning up the environmental problems will take longer but needs to begin.
The fashion world is on a fast track towards embracing sustainable design, organic apparel, and eco-friendly home products. Look at Patagonia’s focus on organic cotton, Linda Loudermilk’s Luxury Eco line, Wal-Mart’s Green store, and many, many others who are changing how the operate their business. Eco-stores, green design, and other movements are catching on quickly around the globe and are here to stay, not just a trend. The students entering the fashion workforce today are highly conscious and highly concerned about issues concerning pollution from textile plants, recyclable materials, and energy reduction. So those companies that refuse to be actively involved in how their manufacturing resources produce their products, will most certainly face criticism from activist groups. But what could be worse for them is the loss of sales from the powerful silent customer, who decides to buy from those companies who do care how products are produced. There are already many of these customers, particular amongst the current college age consumers, who are conscious of labels that read “Made with Organically Grown Cotton.”