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)