Social responsibility in business

Social responsibility in business

This is the first of two articles on business responsibility
by Mayling Oey-Gardiner and Peter Gardiner, both social
scientists and principal investigators in a factory human rights
audit for the Reebok shoe producer, to be referred to in the
following edition.

JAKARTA (JP): Business is no longer just about maximizing
profits. Today consumers make other demands on businesses. They
demand that businesses behave in a socially (and environmentally)
responsible manner or else they will not buy their products.

Under these conditions reports with titles such as "Cruel
treatment working for Nike in Indonesia" can be devastating for a
product, as consumers may not want to buy such goods from
companies where workers are said to be mistreated.

Particularly in developed countries where consumers are
becoming better off, better educated and increasingly concerned
about their environment, they are starting to demand products
that are not only of good quality, but that are friendly to the
physical and social environment as well.

Thus, consumers no longer simply seek the least expensive
products for a given quality -- they increasingly seek out brands
from companies known to be concerned with pollution control and
environmental sustainability.

An additional dimension today includes whether or not the
products are produced by businesses that are socially responsible
-- that is, whether they abide by human rights standards in the
workplace.

One aspect of business social responsibility is how business
treats its workers. Here, companies often express their social
responsibility in regards to workers as codes of conduct or
production standards.

These codes or standards frequently include articles on such
topics as non-discrimination, working hours and overtime, forced
or compulsory labor, child labor, fair wages, freedom of
association and collective bargaining, and a safe and healthy
work environment.

For example, there may be corporate rules prohibiting
discrimination against any worker or group of workers, large or
small.

There are often rules on regular weekly working hours and
maximum overtime hours and on conditions regarding overtime, i.e.
when it is compulsory and when workers can refuse overtime work.

To avoid unfair competition and to abide by existing
international conventions, such as the Convention of the Rights
of the Child, there are also often rules prohibiting use of
prison or forced labor as well as employing children below some
minimum legal age.

Most important to workers are rules or standards requiring
payment of "fair" wages and to allow workers freedom of
association with unions or other work-related organizations.

Finally, attention is often paid to standards in the quality
of the work environment -- the degree to which it is healthy and
safe.

Social responsibility issues have come to the fore in this era
of globalization. Multinational companies now produce branded
goods throughout the world. Thus branded automobiles,
electronics, garments, footwear and many other goods associated
with one country are derived from parts or even final products
produced in many other countries throughout the world.

This has increased pressures on producers to deal with human
rights production standards in a wide variety of national
contexts.

How branded goods are produced depends on the industry. In
some cases the main company establishes factories either as a
direct investment or as a joint venture. The toy industry is a
good example of this type.

In other cases, local companies serve as "suppliers,"
receiving and filling production orders. This is common in much
of the footwear and apparel industry.

In the case of actual ownership, the main company can directly
implement its own codes or standards. But, for suppliers, the
main company can only demand that their partners or suppliers
abide by its standards as a condition for receiving their
business.

This latter condition applies to Indonesian companies that act
as suppliers -- producing branded goods destined for export to
rich countries.

Here, for example, a number of American brand companies for
garments or footwear have established human rights production
standards that have to be followed by Indonesian suppliers if
they want to receive orders from these American companies.

It should be stressed that these developments did not come
about by themselves because employers saw the light and were
willing to share their profits with the workers.

Non-government organizations (NGOs) and labor associations
along with consumer groups have played a prominent role in the
drive to ensure that workers are properly treated. And NGOs and
journalists continue to monitor business activities in many
developing countries, including Indonesia.

In addition, new businesses and accreditation boards and
organizations have developed in recent years.

Business for Social Responsibility (BSR) is an established
association that meets annually and provides a forum where
business leaders can share and learn from each others'
experiences in creating a more socially responsible environment
for business to operate.

There are at least two ways for obtaining better conditions
for workers. The first is by dealing with workers only,
uncovering their problems and working to empower them in terms of
their rights.

The second is by working with both management and workers in a
transparent manner to improve human rights and working conditions
and with both sides being aware of exactly what is being
investigated. Both methods have been practiced in Indonesia.

An example of the first method can be seen in a study
commissioned by Jeff Ballinger of Press for Change from the
Jakarta-based Urban Community Mission, involving a survey of 11
Nike and two Bata shoe factories in Indonesia.

In September to October 1999, 25 interviewers were hired to
query 4,000 respondents willing to answer seven questions related
to human rights practices and with interviews conducted either in
the factories during breaks or else after work.

Work was carried out behind the backs of management. They were
neither informed nor involved in the survey.

Unfortunately, the scientific rigor of this exercise is open
to some question. For example, some of the questions were rather
subjective and inconclusive.

Respondents were asked if they had ever seen workers being
shouted at or mistreated in this factory, with no reference to
the time frame or whether they had experienced mistreatment
themselves.

They were also asked simply about their complaints or negative
experiences regarding their factory without any objective attempt
to assess (e.g. via observation) the seriousness of these
complaints.

Also unknown is sampling methodology and reliability of the
information, for example, the degree to which seeking workers
willing to be interviewed may have led to self-selection and
biases in the results.

The results were published under a very provocative title and
with a writing style designed to draw the attention of readers
and potential consumers and, of course, to shock the companies.

This may put some pressure on Nike or Bata to improve
conditions that are sources of major complaint or negative
experience.

But it is questionable as an approach to gain the willing
cooperation of management in improving human rights practices and
overall working conditions.

As well, this approach may fail to uncover problems that
require trained professional observation. Workers simply do not
always recognize the problems they face, such as whether their
working conditions are safe and healthy.