Tuesday, May 7, 2013

CSR and Global Supply Chains

The tragic building collapse in Bangladesh has brought to the fore corporate social responsibility (CSR) issues involving global supply chains as the building is said to have housed factories employing workers manufacturing apparel for well-known global brands. Apart from the focus on local regulations and their enforcement in Bangladesh, the spotlight is now also thrown on the role of the multinational companies (MNCs), most of whom are domiciled in developed nations, as procurers of the products being manufactured in the building. While some of the MNCs have opted to withdraw from Bangladesh, others have vowed to stay on and improve conditions.

All of these give rise to CSR issues, which are not in any way novel. The intense competition and squeeze on margins place emphasis on cost reduction. While the benefits of the cost reduction are enjoyed by shareholders and customers, this leaves the employees vulnerable, as this episode has shown once again. This will only increase the demand for companies to meet “triple bottom line” with focus on workers’ rights, human rights, environment and even anti-corruption.

For a sampling of the debate that this tragedy has evoked, see Forbes, Economist and Reuters.

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