The Illusion of Choice: Labor Rights and Sustainable Business

Yahoo

01-04-2025

Corporate social responsibility (CSR) efforts tend to play favorites.
While the environment, social and governance (ESG) framework is a trident, they're not always equal. Some argue that the middle pillar—which addresses social issues such as labor practices and human rights—tends to take a backseat as brands prioritize the first (E) and last (G) columns.
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However, the global supply chain's ongoing challenges with labor workers' rights were in the limelight at Sourcing Journal's Sustainability Summit.
In what SJ's sourcing and labor editor, Jasmin Malik Chua, described as a 'tasting menu of the labor rights landscape,' a panel of relevant players examined these increasing complexities, considering the interconnectedness of labor rights and sustainable business.
'It's absolutely essential to think about workers' rights as part of a sustainable business,' Tiffany Rogers, director, innovation and development, manufacturing, for the Fair Labor Association (FLA), said in a conversation with SJ's during the ambition-versus-action summit. 'If you treat workers as replaceable units, you will absolutely spend so many resources—on turnover, on HR management, on training—and you will lose on the efficiency gains that everyone is hoping to get when we're talking about sustainability.'
She also warned of the potential to 'spend millions' in the consequential damage done to consumer faith for labor rights violations. Rogers (the mind behind the FLA's Fair Compensation Program) went on to explain the FLA's role as a multistakeholder initiative (born out of the Clinton administration some 25 years ago) with members across universities, civil society and businesses) focused on developing the international 'gold standard' of labor rights.
When a company commits to joining the existing 200(ish) members—separate from the 2,500-plus affiliates—they're agreeing to a few things, Rogers said.
'They're committing to upholding our workplace standards, in their factories and their farms; they're committing to upholding our principles, at their headquarter-level in their social compliance and human rights due diligence, programs for their supply chains,' she said.
The mind behind FLA's Fair Compensation Program also emphasized the collaborative work with fellow panelists—the Worker Rights Consortium (WRC) and Transparentem—and efforts to support the U.S. government's messaging on garment workers' holistic rights.
This is perhaps a topic of particular pertinence, Chua suggested, given the 'firehose of layoffs' at various humanitarian organizations at the federal level. It's a serious question (granted, one that brusquely boils down to the concept of compassion) with a simple answer, per panelist Thea Lee.
'I actually love that question,' the former deputy undersecretary of the DOL's Bureau of International Labor Affairs (ILAB) said. 'Which is, essentially: Why do we have to care? Don't we have enough problems at home?''
The American frustration over globalization perhaps benefitted the current administration well, per Lee.
'I don't personally think that the current administration's policies are going to actually address those problems, but it is the frustration over many, many decades. And we know that; we [the USA] have rules. It is unfair—and irrational—to have rules at home and then tell American businesses that they're in competition with the Wild Wild West out in the rest of the world.'
The solution? Options. Like taking a multi-pronged approach, as voluntary codes of conduct efforts alone can't keep both the worker and the business out of the red, per the Worker Rights Consortium (WRC).
'The fundamental problem is it costs more to produce under good conditions than bad conditions. You cannot protect the rights of workers without increasing labor cost,' WRC executive director Scott Nova said. 'And when you increase labor cost, you increase product cost.'
The problem won't go away quietly, he continued, not until retailers recognize they're going to have to pay more for products and promise to prioritize labor rights while also maintaining the same level of quality and delivery deadlines.
'We're not going to see progress,' Nova said. 'Codes of conduct and sustainability will continue to function, primarily, to create the appearance of due diligence in the absence of real due diligence.'
The persistent problem of deeply embedded exploitation was discussed, considering the hero's journey through the supply chain beyond Tier 1. Transparentem's Tom MacMillan, for example, noted that such voyages would be in vain due to lack of visibility.
'You're looking at then a lot less leverage, or a perceived lack of leverage, by those brands,' MacMillan, program manager at the non-profit organization investigating human (and environmental) rights abuses in global supply chains, said. 'They might feel like these suppliers are a couple of degrees separated from them, so they just don't have any leverage to get them to move. And together, that leads to sometimes buyers saying, 'This isn't my responsibility.''
He argued for an 'expansion of the idea of corporate responsibility,' suggesting that brands have a 'duty to act and to respond to credible reports of abuse,' even if the affected party is not an immediate partner. This is where collective action can come into play, MacMillan said, before sharing an anecdote on alliances.
'Imagine you buy bread at this grocery store, and you're very pleased with the bread. Maybe you even know the bread is ethically-made. And then you come to find out that the muffins, which are for sale right next to the bread, are made by forced labor,' he said. 'Our argument is, then, you have a duty to act and to respond to that; even if you're only buying the bread, you have a duty to respond to the credible reports of abuse out there.'
'We wanted to engage with a really large group of buyers so that they can [jointly] combine their leverage,' he said. 'Alone, each one might say they don't have that much [individual] influence. But when they join, they can really exert more influence over suppliers.'
Tangential to enforceable brand agreements, Lee underscored the government's role in creating a 'global economy where workers rights are respected' through trade measures. She suggested that shifting focus to enforce and use the country's existing agreements made over the decades could make it 'economically suboptimal to violate workers's rights.'
'That is the way of creating the level-playing field,' Lee said. 'And that can change the economic calculus for companies.'