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Supply Chain Human Rights in Clothing Retailers

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Published: Wed, 07 Feb 2018

EXECUTIVE SUMMARY

The present report is about the Importance of upholding human standards of the workers both inside and outside their home countries in the large clothing retailers. Human rights still remain to be one of the most challenging issues all over the world because of international variations in politics, history, social and cultural differences. The implementation of human rights, however, does not go unexcused in any place of situation regardless of the circumstances. Upholding of human rights is very important and it is the fundamental right of every human being.

This report specifically focused on the Clothing Retailers operating in the United Kingdom. These include: Nike, Gap, Levi Strauss and Marks and Spencer. The task of this report was to examine how these multinational firms uphold human rights in their operations all over the world.

The report has found out that among other factors, globalisation also contributed to a great extent for international firms to violate human rights. In the 1980s, shaped by globalization, clothing retailers and brand manufacturers were forced to source their produce and manufactured goods from low-wage, economically less developed countries. These less developed countries were in most cases characterised by child labour, sexual harassment, and intolerable working conditions. Global awareness about inhuman conditions in working places drew together voices of numerous activists from all over the world to divert the trend.

During the 1970s, various national and multinational organization, Non governmental organization and trade unions accused these clothing retailers companies for violating human rights. These multinational companies were specifically blamed for their failure to put into consideration the economic level of less developed countries in which they operated. This criticism led to establishment of voluntary labour codes by these companies in an effort to uphold their image. Most of these voluntary labour codes adopted principles in the International Labour Organization (ILO) Conventions.

Among other things, this report examines the historical aspect of clothing retailers and the challenges involved in upholding human rights in their supply chain production. The report further examines the role played by these clothing retailers in upholding human rights in their operations all over the world.

CHAPTER ONE:

1. BACKGROUND INFORMATION

1.1. Introduction

Human rights or sometimes referred to as natural rights are free and fundamental liberties entitled to an individual without the interference from any government or group of people for whatever reasons. A person’s civil liberties are protected by the constitutions that define them and the organizations that exist to promote them. Under any circumstances the implementation of human rights does not go unexcused in any place or situation. Every individual regardless of his/her social economic status deserves to be treated with dignity. But due to rapid economic development, multinational companies are becoming more susceptible to violating human rights because of increasing international competition, undistributed wealth, and weak national laws (Krage, 2007).

The World Commission on the Social Dimension of Globalization (2004) in one of its reports indicated that the global economy is changing in many ways. These massive changes affect multinational investment, capital markets, technology and business, more specifically impacting companies, consumers, workers and governments. The report further concludes that globalization has led to interdependence in economic relations that has created more opportunities for the advancement in business, investment, finance, organization of global production, and also more social and political interaction between organizations and individual around the world (World Commission on the Social Dimension of Globalization, 2004). It is unfortunate that not all countries are developing with the same pace and outcomes. Some countries specifically the developing countries, cannot utilize these rapidly growing expansion to their advantages (Misol, 2006). For example, there are plenty of evidences that increasing global competition puts worker’s human rights in jeopardy because company protection standards are lowered and an employee’s civil liberties are often denied (Christerson and Applelbaum, 1995; Hathcote and Nam, 1999).

In the 1970s, considerable criticism was raised against multinational companies regarding their operations in less developed countries. Nongovernmental organizations, national and international trade unions and many host countries raised concern that these multinational companies carried out their activities without giving any considerable and attention to host countries where they subcontracting or outsourcing their clothing factories to the economic and social development of those countries. This endless criticism by a number of activists from all over parts of the world led to the establishment of voluntary labour codes of conduct by these multinational companies (White and Taft, 2004).

This report therefore is a result of the search of literature review regarding the upholding of human rights standards by large clothing retailers in their day to day operations, both within their countries of origin and overseas.

1.2 Aims and Objectives

The general aim of this report is to examine the trend of large clothing retailers in upholding human rights in their operations with particular emphasis to those operating in the United Kingdom. These multinational large clothing retailers in question are: Nike, Gap, Marks & Spencer and Levi Straus.

To realize the desired aim, the report focused on the following objectives:

· To explore the historical background with regard to textile sector and their compliance to human rights.

· To examine the rise of the ethical business and the effects of Voluntary Labour Standards (Codes of Conduct) in the textile industry.

· To examine the role played by these multinational large clothing retailers in upholding human rights as well as challenges facing them.

CHAPTER TWO:

2. LITERATURE REVIEW, ANALYSIS AND DISCUSSION

2.1 LITERATURE REVIEW

2.1.1 Human Rights, Ethics and Business Ethics defined

Human rights, ethics and business ethics defined in differently ways by different authors and all the definitions in the essence of the same thing. According to Rory Sullivan, he define Human rights as a moral right that apply to all employees in all nations regardless and acknowledge and protects those rights in the sense that human right are said to be unchangeable. On the other hand, Boddy (2005) argues that human rights means the idea that people have fundamental rights and liberties, and affected, those rights include consent, privacy, conscience, free speech, fair treatment and to life and safe. Similarly, the United National Universal Declaration for Human Rights (UDHR) defines human rights as a way of the incorporated economic, social cultural rights, such as right to work, right for educations, respect for their culture and a decent standard of living (Rude Mares). Crane (2007) refers as the ethics as the study of morality and the application of reason to explain special rules and principles that determine right and wrong for a given situation at given time, those rules and doctrine are called ethical theories.

However Fritz et al, (1999), and Hunt et al (1989) define ethical company as the conduct of conduct which are positively related to employee’s organizational commitment. Boddy (2005) define ethics as code of right principles and values that guide the actions of people and groups through set standard of the behaviour which is acceptable, especially when an action or decision can harm others. Taylor (1975) define business ethics as the business environment and basis of right decision, principles, and set of laws of the ways of carrying out the businesses activities between different parties within the organization, such as employees, customers, suppliers and the shareholders in the determination of the what is right or wrong to all parties. White and Taft (2004) indicate that ethics have been divided into two main categories, namely: teleological and deontological. With teleological ethics the emphasis is on the consequences or results of actions. This approach to ethics takes no account of whether actions are rights or wrong but rather depends on whether harm or good results from the action. On the other hand, the teleological theories, includes utilitarianism, egoism, and care. The essence of the approach maintain that acts do not have intrinsic value but should be evaluated on the basis of the actions they produce and their effects others.

The utilitarianism approach is based on the early ideas from Jeremy Bentham’s belief in empiricism and that of John Stuart Mill in the 18th – century (Rosenstad, 1997; Velasquez, 1998). Utilitarianism takes a societal perspective on costs and benefits of ethical choice, indicating that any action should be evaluated in terms of its consequences. The idea is to determine how much good or harm it causes and the effects it impart on all parties. Utilitarianism is thus meant to promote the welfare of all persons by minimizing harm and maximizing benefits. This approach gives much attention to achieving desirable effects to many people taking into consideration human rights. The recent United States health care policy is seen as one of the utilitarian-driven public policy decision, in which the change is geared to a system that provides fundamental health and illness services to everyone.

With deontological approach to ethics, White and Taft (2004) explain that an action or a decision in itself has intrinsically good or bad (or right or wrong) and thus it can’t be judged by the mere results. Rights, justice, fairness, truth-telling, and virtue ethics form the deontological approach of reasoning. For example, a moral person would based on what is rights to her or him in making an ethical decision, putting into consideration the moral principles, rules or regulations, regardless of the circumstances of results.

2.1.2 Sourcing in the Textile Industry

Christerson and Appelbaum, (1995) pointed that during the nineties there was a massive shift in the manufacturing of clothing to low wage countries throughout the world. International companies sourced products internationally in order to achieve a cost advantage. Traditionally, the framework of competition in the textile/clothing sector is described by dividing operators into two different strategic groups in terms of production management models. Firstly, there is a group identifiable as clothing operators (either manufactures or retailers). This group is primarily concerned with designing, modelling, forecasting and contributing to the development of fashion trends. Firms in this category are busy working on marketing strategies of product designed and proposed long before the actual time of consumption. The second group includes firms that compete with one another on the basis of their ability to adjust to the fashion trends imposed by others. By doing this they ensure speed and reliability to their already secured markets. These firms compensate for the lack of product planning by virtue of a production management model whose main characteristics are rapidity and flexibility. The two groups, therefore, have different factors that lie behind their success. In the first group, priority in their operations is to make sure that they have good command and influence fashion trends associated with a strong brand image. In the second group, the emphasis is on effective marketing strategies (Hathcote and Nam, 1999).

Stiff competition, shaped by globalization, clothing retailers and brand manufacturers were forced to sourced their produce and manufactured goods to low-wage, economically less developed countries (Crewe, 2004; Klein, 2000). Consequently the late 1980s and early 1990s saw traditional European and U.S. based garment and footwear companies start off shoring and outsourcing much of their production from developing countries (Jones, 2005). This trend was particularly visible in low-skilled industries, such as the garment, footwear, and toy industries (Christerson and Appelbaum, 1995; Hathcote and Nam, 1999).

Under conditions of competition, individuals cannot comply with moral norms. This leads to higher costs which in turn leave them worse off than their competitors. Situations like this systematically lead to an erosion of compliance with moral norms. Via evolution, individuals behaving ‘morally’ will be signed out. Karl Marx and Max Weber saw this problem clearly. Both pointed out that competitive market makes it impossible for single individuals to follow the calls of morality and self-interest at the same time. The structures of society have changed in modern times, but ethical concepts and categories have – at least to a large extent – not changed. Most conceptions of ethics still require us to be moderate, to share, to redistribute, to sacrifice. They call for altruism, for the priority of common good and the like. The pursuit of self interest, of individual advantages, is often still ultimately seen as something like and evil drive that needs to be tamed (Christoph, 2005).

Globalization has therefore been one of the factors for previous human rights violations in many multinational companies (Misol, 2006). Ambitious to mass super profits, these multinational companies embarked on child labour exploitation, suppression of labour rights in their supply chains. This led to persistence public outcry that helped to amplify global awareness about the injustices and human rights violations done by multinational companies in their chain supply production.

2.1.3 The Rise of Ethical Business and Corporate Social Responsibility

There is a wide spread attention and interest in self-regulation, corporate social responsibility that continually press many companies to adhere to human rights in their operations. Ethical business, involving corporate codes of conduct for worker welfare and environmental protection, it is a subject that has attracted significant interest from academicians, the media and nongovernmental organizations (NGOs) for many years now (Hughes, 2005). (Crane et al 2007) indicate how the importance of business ethics it is, in attracting different massive amount attention for various people example the shouter of the consumers and pressure groups that appearing to have an increasing of the challenging the firms in the asking of the more ethical and reasonably ways of doing business.

Ethical business has emerged since the early 1990s as a specific example of corporate social responsibility, most commonly involving the establishment of minimum labour standards for producers in supply chains (Hathcote and Nam, 1999). Blowfield (1999), however, highlights that the issue of ethical business is broadened to incorporate a wider range of standards, including those concerned with the environment. Furthermore corporate social responsibility stand in the implementation for set core values that includes avoiding human rights abuses, upholding the right for the workers to join or form labour unions, elimination of compulsory and child labour and avoiding workplace discrimination (Cavusgil, Knight and Riesenberger 2008)

However people like the later Rev. Leon Sullivan had been much concerned about code of conduct of human rights in workplace and in 1999, he developed a set of guidelines for corporate social responsibility, he argue that for the companies operations around the world should support and follow the Global Sullivan of corporate social responsibility. The aim and objectives was to maintain economic, social, and political justice by companies where they are doing business, to support human rights and to encourage equal opportunity at all levels of employment in developed and developing countries (www.thesullivanfoundation.org).

Concerns in the early 1990s over child labour, physical and verbal abuse and violations of core labour rights in the production of toys, soccer balls, rugs, and garments marked the beginning of a wave of anti-sweatshop protests and media campaigns (Varley, 1998). Some of the earliest campaigns focused on production in China – for companies like Levi Strauss and others, where the Tiananmen Square massacre in 1989 and U.S.-China trade negotiations drew special attention to human rights abuses. Bonacich and Appelbaum (2000) mentioned other anti-sweatshop protests that brought remarkable attention regarding human rights violations were those that showed child labour in the production of soccer balls in Pakistan, rugs in India, and garments in Bangladesh and Honduras. One of the most dramatic early sweatshop scandals occurred in the U.S, in the Los Angeles, California suburb of EI Monte. It was there, in 1995, that government inspectors discovered Thai immigrants working as indentured servants in an apartment complex, sewing garments to be sold by major retailers, including Montgomery Ward, Target, and Sears (Su 1997). The next year, labour rights activists brought sweatshops further into the American media spotlight, by exposing child labour in a Honduran factory producing Kathie Lee Gifford’s line of clothing for Wal-Mart, as well as a New York City sweatshop also producing Kathie Lee Gifford’s brand (Bonacich and Appelbaum 2000). Further to this, the suppression of labour rights in Indonesia, El Salvador, and several shocking instances of physical abuse in other parts of the developing world raised concern.

In the early 1990s activists first accused footwear companies like Nike, Wal-Mart, and the Gap of profiting from exploitation, child labour, and the suppression of labour rights in their supply chains. These companies, however, responded by denying the responsibility (Hughes, 2005). According to Cavusgil, Knight and Riesenberger (2008) activists also accused International business specifically in the case of the multinational companies for ignores human rights by exploited workers around the world mostly in labour standard; low wages factories in developing countries by create substandard working conditions, example for the sweatshops in Asia where they imported clothing and auto workers in Mexico.

Jenkins et al (2002) argue that the rise of voluntary corporate code of conduct in the 1990s can be linked to some extent to the processes of globalization. They mention the specific drivers of voluntary ethical trading initiatives as being: a) the growth of global supply chains that extend beyond the reach of national governments; b) the rise in the power of corporate brands and reputation, which makes large companies vulnerable to negative publicity; c) an increase in public awareness of overseas production conditions via improvements in global communications; and d) the growing importance to the investment community of ethical performance on the part of public companies.

Furthermore, there were various initiatives concerned with labour and environmental issues that were categorized as ethical business. These included: (1) Multistakeholder organizations such as the UK Ethical Trading Initiative (ETI), the Dutch Fair Wear Foundation, and the Fair Labour Association and Worker Rights Consortium in the USA, which all set minimum labour standards for producers; (2) labelling initiatives such as the Kenya Flower Council, which cover industry-specific environmental and labour standards; (3) individual corporate initiatives for establishing minimum standards in supply chains (Blowfield, 1999).

These early initiatives were among the significant steps in promoting ethical business. Blowfield (1999) and Jenkins et al, (2002) argue that these initiatives also developed within the context of the United Nations Global Compact such as international standards which aimed to promote corporate citizenship in the global economy. Despite the organizational differences between existing ethical trading initiatives, most companies used some kind of code of conduct as the key tool for establishing workplace standards.

2.1.4 Voluntary Labour Standards (Codes of Conduct)

Pressures on multinational companies by anti-sweatshop groups, labour unions, shareholders, activists, and consumer groups played an important role for companies to adopt labour standards. ‘Standards’ refer with corporate code standard mention International by ILO (International Labour Organization) to the extent to which is explicitly or implicitly can either be done through the inclusion of the basic provisions of international organizations’ in the corporate codes standards (Van Tulder & Kolk, 2002).

Similarly, there were also greater pressures from governmental campaigns all over the world. Where in European countries, some of the government such as France were be advocating for greater attention to human rights in the sphere of international business. Along with such efforts from various countries, the European Commission had been carried out a research in the international subcontracting companies’ about the social aspect of textile clothing and footwear firms. Aiming to the extent in which the researches discover that these multinational companies adhered to human rights in their operations (Kolk and van Tulder, 2002).

In 1996, President Clinton Launched the White House Apparel Industry on Workplace Standard (AIP), he launched the AIP after seen the violation of human rights in the clothing industries by multinational companies, the aim was to established standards and to ensure apparel and footwear were not made under sweatshops working conditions (Meyer and De Wit (2004). Due to the human right violation in textiles sectors precisely in the sweatshops conditions, The Clinton Administration established campaign against sweatshops in the clothing Textiles worked under sweatshops conditions in USA, the campaign was called No-Sweat and was introduced for the purpose fighting against sweatshops in which resulted to establishment of the Trendsetter List of companies in the Textiles Clothing and Footwear Factories. The campaign was aiming for the Clothing Textiles Factories to respect human rights and labour legislation in the production and marketing activities of the clothing and footwear in general, to make sure that both the clothing companies and their subcontracting companies as are, they must significant put into consideration and respecting these rights. The lack of the about not respect the rights, a number of labour legislation and human rights had been identified by the Department of Labour in the Textiles Clothing and Footwear factories, in subcontracting in particular of apparel production, facing the multinational companies, that was exploitation with a number of cases involving in human rights particularly the immigrant workers in sweatshops established on the United States regional, took steps to clean up the sectors.

However, United States boundary put up on the sweatshops issue, took up steps to clean the sector (Elliot and Freeman (2001). Specifically in the area of child labour and, for example, the United States Government took a number of steps to alleviate the problems. Between 1994 and 1996 because of the important of the issue, the Bureau of International Labour affairs managed to organize three public gatherings to have views on child labour. These public platforms brought together a number of activists and the public at large to discuss various issues related to child labour. Specifically, they focused on the worst conditions of child abuse in the less developed countries that they exported products to the United States. A number of resolutions were made but all geared to put to end the merciless violations of human rights and child labour (Elliot and Freeman (2001).

The Association of the Clothing Manufacturers of the USA and the Amalgamated Clothing Textiles Workers’ Union in 1995 agreed to have a National Branch for Collective Agreement. The agreement among other things included: the need to establish minimum standards regarding number of working hours, wages, and working conditions. In addition, the agreement also focused on a number of issues ranging from non-intolerance forced work, child employee, liberty of association, to occupational safety and health (White and Taft, 2004; and Giwerth, 1982). This was a trend in many parts of the world. Several national and multinational organizations and trade unions endeavoured to draw attention to respect human rights. Pressures from activities increased the formation of human rights association and in 1998 established of the Fair Labour Associations (FLA) to the overseas compliance, the Workplace Code of Conduct. The goals of Fair Labour Association (FLA) were for the companies required to monitor their own factories and their subcontractors to make sure there is compliance of the Code of Conduct in the textile factories (Meyer and De Wit, 2004).

Klein (1999) pointed out that many firms had invested heavily in branding and reputation capital and therefore any high profile scandals and political pressures could tarnish their reputation. In the face of such pressure, it was not surprising that firms adopted voluntary standards to try to deflect criticism, pre-empt regulation, and signal their social responsibility to consumers and investors. The important factor in adoption of voluntary labour codes was to uphold public image which the company wanted to project to its customers, employees, suppliers and shareholders. Thus the clothing retailer’s public image became important than anything else. These multinational companies worked hard to clear their images and had no option but to promote codes of conduct. The public image was particularly important because it determined the extent to which the company’s products could be bought. Given the rapidly growing competition in the global markets and communication in technology, it was essential for a company to improve the working conditions in its operations and retain its good image to customers (Kolk and van 2002).

The United Nation Universal Declaration of Human Rights was adopted by the General Assembly in 1948 (Schulz, 2001). The declaration proclaims on the issue of the slavery or servitude subjected to inhuman or degrading treatment or punishment put them into detention or exile and arbitrary arrest subjected. Moreover the declaration goes on to proclaim that everyone needs to live in liberty and everyone have a right to security, everyone have equal protection against any discrimination, and everyone have a the rights for work, everyone have free choice of employment, to just and favourable conditions of work, and to protection against unemployment as a result of discrimination has entitled.

The international Labour organization (ILO) was created in 1919 as a tripartite organization of government, business, and union representatives from 174 nations. Since then, it has adopted 177 lengthy labour conventions or standards. Seven of these are considered fundamental human rights, addressing issues such as forced labour, equal pay for men and women, discrimination in the workplace, and the minimum age for employment (White and Taft, 2004).

Organizations such as Amnesty International have specified clearly workers right such as freedom of association, the right of collective bargaining and working conditions and soon. The organization is for Human Rights and as Watch Report on human rights well being all around the world and strives to ensure the protection and progression of them as well. Amnesty International is an organization whose vision was derived from the United Nation’s Universal Declaration of Human Rights, was adopted by the General Assembly Resolution in 1948. It is adopted for the reasons monitoring the protection and standard of human rights as were established in thirty articles that later set the primary foundation to the policies and standard that carried out by NGOs and other agencies with the purpose to protect and promote fundamental rights (www.amnesty.org).

The Social Accountability International (SAI), established in 1977, is an organization that for promotes human rights for workers around the world. Its SA8000 standards are obtained from the Universal Declaration of Human Rights and the International Labour Organisation (ILO) convention. The standards are designed to make workplace more humane and also to offer more benefits for the companies and its employees. Employees that work under SA8000 standards they have profit from the enhanced opportunity of collective bargaining and to organize trade unions. Also, employees become more educated about their rights which in turn, commits to have assurance for a better work environment. The companies as whole, benefits from the SA8000 guidelines because it strengthens and put company values into action and enhances the company reputation (Krage, 2007).

The International Labour Organization Declaration (ILO) on the Fundamental Principles at work were adopted in 1998 and was an expression of commitment by governments, employers and workers organizations to uphold basic human rights (Kolk et al 2001).The Declaration covers four areas; liberty of the trade union and the right to collective bargaining, elimination of forced and compulsory work, Abolition of child employee and elimination of discrimination of human rights.

The Voluntary Principles on Security and Human Rights were developed by governments of the U.S. UK, Norway, Netherlands and NGOs, who all were have the common interest in human rights and corporate social responsibility (voluntaryprinciple.org).

There were six principles that all participants agents agreed on in order to promote and protect human rights in multinational companies. The six Voluntary Principle as stated on their website are as follows: acknowledge that security is a fundamental need; Understanding that governments have the primary responsibility to promote and protect human rights; Particularly those set forth in the Universal Declaration of Human rights; Emphasizing the importance of safeguarding the integrity of company personnel and property; Taking note of the effect of those companies, activities and decisions affect the local community; Understanding that useful, credible information is a major component of security and human rights.

The Global Reporting Initiative (GRI) is multi-stakeholder governed institution that provides global standards for the promotion of sustainable development. Judy Henderson, immediate past-Chair, Board of Directors says The GRI is a unique, multi-stakeholder organization founded on the conviction consistent, regular and comparable reporting, provides transparency and can be a powerful catalyst to improve performance (globalreporting.org). There are nearly 1000 organization in over 60 countries that have established their involvement with the GRI reporting framework. This reporting framework guides corporations and organizations on the reporting their sustainability performance to promote company progression and improvement in all area of business. The reporting guidelines contain principles, guidance, and standard disclosures that formulate a structure that cooperating organizations can voluntarily adopt (www.globalreporting.org).

The UN’s Global Compact is a purely voluntary guide to promoting responsible corporate citizenship. Its two main objectives are: to mainstream its ten (10) principles in business activities around the world and initiate actions to support United Nations goals (www.unglobalcompact.org)

2.1.5 Adoption of Voluntary Labour Standards (Codes of Conduct) by Multinational Companies and their Impact

The rapid diffusion of labour standards (codes of conduct) stems from the response to external pressures (actual or threatened) from media, activists, government, and consumers (Shaw, 1999). In a like manner, (H


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