Privatized Regulation – Fashion, Finance, Fertiliser

The CSR industry is to blame for lax standards and weak enforcement, ultimately leading to horrifying factory deaths, say American unions.

News of the terrible tragedy in Bangladesh - in which hundreds of factory workers were crushed to death in a collapsed building - reached me last week just as I was reading a report by the American labour unions on the failings of voluntary certification. With the death toll in this disaster now expected to exceed 1000, this report cited the factory fire in Karachi, Pakistan in September 2012 in which nearly 300 were killed.

The AFL-CIO concludes that voluntary certification standards simply aren’t working. They go further and say that the whole ‘CSR model’ is failing. Indeed they draw an “eerie parallel” with the failings in financial self-regulation that contributed to the banking crash in 2007. Privatized regulation, they call it. (You can read more here)

That said, poor construction standards, woefully inadequate health & safety protection and limited scrutiny are not limited to Bangladesh or Pakistan. Two weeks earlier, a fertiliser factory near Waco, Texas exploded with spectacular ferocity, destroying a whole residential neighbourhood and killing 14.

So it’s certainly not just fashion – very much the theme of our round-up this month – where questions arise about who sets the rules and who polices them – and who pays the price for failures.

The trouble is, I don’t think the AFL-CIO’s prescription is the whole answer, either. They call for governments to set tough laws and enforce ILO norms. They want workers to have effective rights to freedom of association. They say the ‘CSR industry’ works for management and can undermine legal enforcement and workers’ rights.

Surely it’s a case of both/and, not either/or. In addition to governments enforcing the letter of the law, we need genuine commitment from factory owners to go beyond mere compliance; customers in the extended supply chain to accept that tick-box certification is never enough; and ultimately western consumers to ask the right questions.

If so, then globalisation leads to adoption of the best international standards, not a race to the bottom. And in fairness to AFL-CIO they also call for reforms to voluntary social auditing, with global brands making big long term commitments…. Sounds like a job for the growing phenomenon of corporate sustainability ‘plans’. The many victims of current failings deserve nothing less.