Institutional Consumers

Dara O’Rourke’s major point is worth reiterating: consumers can influence which products are made, their quality, and the sustainability of both workers and the environment throughout the production process.

I add to the mix the institutional consumer—universities, governments, churches, etc., especially in cooperation with key NGOs, labor unions, and sometimes a firm’s corporate responsibility officers. But there are limits to any buying or boycott campaign.

If countries universally enforced the laws on their books, the result would be significant improvements in workers’ lives. Yet this goal remains a pipe dream. Governments, contesting with each other for the business of brands and the location of factories, generally compete by offering lower costs. More often than not the state turns a blind eye to violations of labor and environmental standards. Too few countries attempt to win business by improving labor standards, management behavior, and consequent worker productivity.

Brands compete by lowering prices, usually by lowering input costs. Despite efforts by some brands to improve compliance with corporate codes through training and factory monitoring, the results are at best mixed. Compared to short-term contracting, long-term investment in local factories seems to lead to greater enforcement of national regulations as well as improvements in worker well being, as both growing statistical evidence and the Alta Gracia experience suggest.

To date, the most effective strategies appear to involve mobilization by organized labor or organized consumers. Changing consumer choices by making workers’ rights an issue could precipitate transformations in corporate practice. Although ethical consumption campaigns have made significant headway in some products, such as specialty coffee and chocolate, fair trade remains a niche market.

That being said, institutional consumers can have greater influence on brand behavior than can private consumers. Indeed, many of the important ethical consumption campaigns are less about persuading the general public than ensuring that certain institutions change their buying practices. In the United States, United Students Against Sweatshops (USAS), possibly the most important instigator of effective ethical consumption campaigns, has achieved its greatest wins in university procurement. In almost every case, the Students have worked closely with the Worker Rights Consortium (WRC), which offers detailed reports of firm abuses, identifies the licensees who purchase from those firms, and provides a plan for rectification. The WRC, in turn, partners with in-country unions or workers’ organizations.

At the University of Washington, where I am co-chair of the Licensing Advisory Committee, we participated in three successful campaigns to win benefits and terminal compensation long denied and legally owed to Russell Athletic and Nike workers in Honduras and to workers at the Guatemalan company Estofel. The demands of student groups, coupled with reliable information provided by the WRC and the Fair Labor Association, allowed us to threaten parent corporations with non-renewal of UW licenses. While the licensed collegiate apparel market represents a tiny fraction of their business, large sportswear companies fear reduction in brand loyalty and a loss of reputation. Universities can use the combination of their moral and scholarly authority to add credibility to the documentation of rights violations and do serious damage to brand status.

Without doubt, the economic well being of workers improves with the negotiated settlements of rights cases. However, in the vast majority of cases labor violations are not even reported, and in the few cases where grievances are filed, they usually fail. Sustainable improvements in the rights and material conditions of workers therefore depend on the enforcement by governments of national regulations and on corporate and factory self-regulation. Under-resourced and overstretched unions, NGOs, and activist groups bear an incredible burden as watchdogs, whistleblowers, and campaigners. So while the individual and institutional consumer are crucial for creating and sustaining ethical supply chains, equally important is a political strategy for making governments and corporations accountable for workers’ rights and health. Success depends on a long and sustained campaign, as much political as economic. Only when states are committed and corporate cultures transformed can we proclaim victory.