Expectational gaps and China’s green business drivers
Fast fashion: who’s to blame?
It’s easy to point the finger at the Rana Plaza factory owner for the tragic building collapse that left 1,129 Bangladeshi garment workers dead last year. But what are the broader structural and institutional factors that led to so many poorly paid wage slaves being crushed into an ailing eight-storey factory in the first place?
Ian Taplin points the finger firmly at the west’s “throwaway culture”. The fashion industry’s constant churn of new season novelties feeds insatiable demand. Economics 101 sees this as a plus, although environmentalists worried about resource constraints tend to disagree. But the basic model to which the clothing sector adheres means that such demand is only achievable through low cost, fast turnaround processes. That leads inevitably to health and safety corners being cut and to labour abuses occurring. Furthermore, the complexity of the global supply chains on which fast fashion depends limits the capacity of buyers to adequately monitor or track their suppliers.
Taplin seriously questions whether the fast fashion industry can maintain safety standards while clinging to a model premised on near-immediate turnaround. Ditching suppliers for non-compliance, he argues, “does not guarantee the problems will not resurface, it merely postpones or transfers it”. Meanwhile, leaving Bangladesh altogether, as some would like, merely transfers the problem elsewhere. What started as a business strategy designed to speed throughput, reduce inventory and lower operational costs has, in the end, become a lifestyle choice for many consumers.
Tweaking the system so it favours workers as well as consumers is relatively simple. It just requires the latter to pay more. That’s tricky to push through if consumers are on low incomes, however. It’s trickier still when pitched as a threat to western consumers’ “freedom of choice”.
Taplin I (Nov 2014) “Who is to blame? A re-examination of fast fashion after the 2013 factory disaster in Bangladesh”, Critical Perspective on International Business, Vol 10 (1-2): 72-83.
Activist investors: a lesson in unorthodoxy
Socially conscious shareholder activism has skyrocketed in recent years. In Europe alone, investor activism now covers assets worth an estimated €1.95tr. The rise has generated debate in governance circles as to the function of active ownership and has led to calls for greater use of the so-called “voice option” by asset managers.
This fascinating paper examines the engagement strategies of three major faith-based investor organisations. It identifies seven primary tactics, from dialogue through to exit. The researchers reveal a gradual tendency away from selling up and towards “voice actions”, be they protests or more formal negotiations. The move away from exiting is a rational one given that most religious groups have small shareholdings and therefore their divestment exerts minimal economic impact. That said, the threat of exit could lead larger investors to exit, for which reason it remains a powerful “voice” tactic of ethical investors.
The paper highlights the practice of collaboration among investors, too. Engagement obviously carries a higher cost than exiting. By participating in larger coalitions, either religious or secular, ethical investors are able to reduce these costs while increasing their asset base and information resources.
One direct implication for management is that relations with activist investors are becoming increasingly complex. Another is that they should look beyond economic rationality. Religious investors aren’t half as worried about a company getting them good returns as they are about a company getting back on track ethically.
Goodman J, Louche C, van Cranenburgh K and Arenas D (Nov 2014), “Social Shareholder Engagement: The Dynamics of Voice and Exit”, Journal of Business Ethics, 125:193–210
Creating Integrated Value
In this short paper, Wayne Visser and Chad Kymal make their case for ditching corporate social responsibility (CSR) in favour of “Creating Integrated Value” (CIV). This isn’t about crowding the market with yet another acronym, the authors insist. It’s about finally harmonising the related themes of responsibility and sustainability.
The primary contribution of CIV is not theoretical but practical, the paper continues. This new approach marks an attempt to work out the “how to” of integration, enabling companies to chart their way through the proliferation of standards and the multiplication of stakeholder expectations. It does so by knocking down silos created by different interest groups: i.e. those concerned with quality, health and safety, environment, employees, supply chain management and communities.
CIV advocates a tri-partite approach that blends corporate responses to stakeholder expectations (using materiality analysis) through management systems (using best governance practices) and value chain linkages (using life cycle thinking). The value piece of the puzzle comes in the guise of innovation. The paper calls on companies to redesign products and processes to deliver solutions to today’s big social and environmental challenges. The paper’s authors make no claims about CIV being easy. The word they prefer is “transformational”.
Visser W and Kymal C (Nov 2014), “Creating Integrated Value: Beyond CSR and CSV to CIV”, Kaleidoscope Futures Paper Series, No 3.
Submissions for the Third Annual Conference on CSR and Sustainable Development in Dubai will close on 31 December 2014. The Society for Education & Research Development, which is organising the conference, will issue a special award for the best student paper.
Bath University has inaugurated its new Water and Innovation Research Centre. Supported by a £1.5m grant from Wessex Water, the centre will support advanced research on water treatment, water management and infrastructure resilience, among other water-related themes.Academic news Bangladesh Bangladesh factories Business School Bulletin integrated value religious investors