3 The ethical environment
3.1 Codes of conduct
One of the principles of the European Union Emissions Trading System discussed by Schultz and Williamson (2005) is that an organisation accepts responsibility for the performance of their suppliers. In an age where multinational corporations are able to reduce the production costs of their goods and services by offshoring it to whoever can meet the specification at the lowest cost, what responsibility do they have for the conditions under which production actually occurs?
One of the first cases to reach the general consciousness was the working conditions in various Asian factories used to produce trainers for, amongst others, Nike. Allegations of sweatshop conditions (low wages, 70-hour plus working weeks, working practices dangerous to life and limb and no trade unions) sat uneasily with price tags of £100 or even more. Did the customer care, and if so by how much?
It is doubtful whether anyone would argue for a 37.5 hour working week and UK labour-rates. Not only would this severely distort the local labour market, but the business would simply go elsewhere and the jobs would vanish. Equally, few western consumers would be totally comfortable with the idea of unsafe working conditions such as unguarded machinery. Between these limits however, the debate rages, and most of it reduces to difficult judgment calls. How do you arrive at a ‘fair’ wage or a ‘reasonable’ working week? Such decisions must take some account of local norms. What about child labour? Should it be forbidden below the age of sixteen? Fourteen? Twelve? Is Trade Union membership a universal right or should we take care before exporting western custom and practice into a different culture?
Compliance with some sort of agreed minimum standards seems to be a realistic aspiration (although reaching such a consensus is a non-trivial problem), followed by the gradual evolution of precise conditions in accordance with public opinion. To this end, Nike have invoked their Code of Conduct.
Box 3 Nike Code of Conduct
NIKE designs, manufactures, and markets products for sports and fitness consumers. At every step in that process, we are driven to do not only what is required by law, but what is expected of a leader. We expect our business partners to do the same. NIKE partners with contractors who share our commitment to best practices and continuous improvement in:
Management practices that respect the rights of all employees, including the right to free association and collective bargaining.
Minimising our impact on the environment.
Providing a safe and healthy work place.
Promoting the health and well-being of all employees.
Contractors must recognise the dignity of each employee, and the right to a work place free of harassment, abuse or corporal punishment. Decisions on hiring, salary, benefits, advancement, termination or retirement must be based solely on the employee's ability to do the job. There shall be no discrimination based on race, creed, gender, marital or maternity status, religious or political beliefs, age or sexual orientation.
Wherever NIKE operates around the globe we are guided by this Code of Conduct and we bind our contractors to these principles. Contractors must post this Code in all major workspaces, translated into the language of the employee, and must train employees on their rights and obligations as defined by this Code and applicable local laws.
In terms of such things as the working week and child labour, Nike are quite specific …
The contractor does not employ any person below the age of 18 to produce footwear. The contractor does not employ any person below the age of 16 to produce apparel, accessories or equipment. […] To further ensure these age standards are complied with, the contractor does not use any form of homework for Nike production.
Hours of work/overtime
The contractor complies with legally mandated work hours; uses overtime only when each employee is fully compensated according to local law; informs each employee at the time of hiring if mandatory overtime is a condition of employment; and on a regularly scheduled basis provides one day off in seven, and requires no more than 60 hours of work per week on a regularly scheduled basis, or complies with local limits if they are lower.
The difficulties of monitoring such arrangements should not be underestimated. It will cost Nike to implement any realistic monitoring, and the local producer will have an economic incentive to limit costs by cutting corners.
Nevertheless, Nike has responded to criticism and the outcome of a protracted lawsuit by their resumption in 2005 of annual Corporate Social Responsibility (CSR) reports. Offering a new level of transparency, this now lists the names and locations of all the factories that produce Nike-branded products and at least indicates a willingness to be called to order in such matters.