For
many years, labor and other groups have
put pressure on Western companies for using
offshore suppliers that paid very low wages,
ran alleged “sweatshops,” or
otherwise abused 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 Nov. 2006, Nike
announced it was ending its relationship
with a Pakistani supplier of soccer balls
over alleged violations of its labor policies.
(See Nike
Ends Orders With Soccer Ball Manufacturer.)
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, reported this week on the huge
pollution problems associated with China’s
textile and apparel production, which are
placing a large toll on the environment
there. Currently, there is little regulation
on the industry in China,
and the country has seen a huge surge in
its apparel and textile manufacturing exports
after tariff protections and quotas were
dropped in 2005.
"After
labor issues, the environment is the new
frontier," the WSJ quotes Daryl Brown,
vice president for ethics and compliance
at Liz Claiborne Inc. as saying. "We
certainly don't want to be associated with
a company that's polluting the waters,”
he added.
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
the company’s 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.
Nike, in
fact, told the Wall Street Journal it did
some environmental monitoring of the company,
but that testing involved having Fuan Textiles
send water samples to the testing facility,
making it easy to provide false samples.
The
issue of supplier environmental friendliness,
especially in China,
almost certainly will become higher profile
over the coming months. Buyers can also
expect the Chinese government to crack down
to avoid the bad PR, especially before the
2008 Summer Olympics in Beijing.
But this will add cost to Chinese apparel
and textile goods, and 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. (See
Mattel
Incident Shows Companies Can't Go On the
Cheap when Sourcing from China, Must Take
Proactive Control of Entire Supply Chain
.)
"Prices
in the U.S.
are artificially low," says Andy Xie,
former chief economist for Morgan Stanley
Asia and now independent analyst. "You're
not paying the costs of pollution, and that
is why China
is an environmental catastrophe." |