Future of work round table: do ethical consumerism and investment work?
'Fair trade'-style programmes exist to reassure individuals that the products they buy or the investments they make are responsibly created. Do they work? And if not, is there a better way?
This project is supported by the Ford Foundation but the viewpoints expressed here are explicitly those of the authors. The foundation's support is not tacit endorsement within.
Do you believe that existing strategies to promote ethical investment and ethical consumption have been effective in improving worker conditions and promoting workers’ rights? Do you have examples of new ways forward that could improve upon what is already being done?
Asia Floor Wage Alliance
Yale University’s Gilder Lehrman Center
China Labour Bulletin
Coalition of Immokalee Workers
Alejandra Ancheita is the founder of the Economic, Social and Cultural Rights Project (ProDESC) in Mexico City.
In our experience corporate social responsibility programmes can be useful in very specific cases. For example, when you have a factory producing shoes for a transnational corporation under very bad conditions and in a very small town, where most of the population is affected. In a case like that codes of conduct, due diligence, or nam-ing and shaming mechanisms can work when pursued alongside a proper legal strategy.
It's different when we're talking about an entire industry. At this broader level our experience shows that trying to improve worker conditions through certifications has minimal impact. Perhaps not zero, but minimal. We are now working with berry pickers in Baja, California. These workers work between 14 and 16 hours a day. The owners of the farm do not give them all the training they need. They do not receive all the tools necessary for their work. They are only hired by the day. They are not able to form an independent union or settle a collective bargaining contract. Yet all the products they pick are certified by one organisation or another.
What works better is to not only implicate the farm owner but also the companies that are buying, selling, and exporting these products. In order to do that we're supporting the workers to collectively organise and building a strategy of strategic litigation. We pursue lobbying and advocacy with the Mexican government as well as with the brands. We are creating a new narrative to inform the public about what is happening to these workers.
Explaining all the layers of violation that can occur can be very difficult. The structural conditions we face in Mexico usually mean that when one human right is violated others are as well. Take berry pickers on a farm. Their labour rights are likely being violated in the ways we have already talked about, even though the berries themselves are certified. Behind that, however, might lie a further violation: the farm they're working on might be located on former communal land.
You see, after the NAFTA agreement came into force indigenous communities did not receive support from the government to work the land. They owned the land, but not the means. So they sold it. Now many of those same individuals, who once collectively owned the land, pick berries for the new owners under precarious conditions. It's a chain of exploitation resulting from a failed economic model, one that cannot ensure labour rights or indigenous peoples' rights to territory and natural resources.
Those kinds of facts very complicated for consumers to understand, even those with good will. They want to support campaigns and thus try to believe in these mechanisms of social responsibility. But the reality is that companies use social responsibility mechanisms because they are cheap and make corporations appear as the good guys. What is much more expensive for transnational corporations is fulfilling labour standards and fulfilling human rights.
Shawna Bader-Blau is Executive Director of Solidarity Center.
It's really important that there be a variety of strategies that well-meaning consumers and investors can access and use to try to do good. Those of us in the field, therefore, need to find allies in these structures and these movements.
At the same time, a common pitfall of these strategies is that they are not directly tied to the needs of workers. They might be well-meaning but they aren't devised or co-created with the input of the affected people. That can lead to odd outcomes, such as a product boycott that the workers themselves don't actually want.
A stronger response would be if the people thinking about ethical consumption and its effects on the earth, indigenous people, and workers came together with the people producing food, clothes, and other goods and services. Different social movements crossing boundaries to come together in common cause. That's the future of how we build power. We can't do it in silos like we have so far. Neither of our strategies are effective enough, not on the worker end and not on the consumer end. The global economy is just too big.
There are great examples of how to converge interests in ways that really lead to positive change on the ground. Take the Accord on Fire and Building Safety in Bangladesh. We point to that a lot because it has global companies coming together with local NGOs, unions, and international civil society at one table to reach a negotiated and binding agreement on how to make workplaces safer. That is the sort of model of cooperation we should be pushing on private equity firms and the big investment companies behind the brands. We should push the idea that ethical investing means investing in brands that are signed onto these kinds of binding international standards.
We need to reassert at every level of corporation and government that labour rights are critical to shared prosperity. In many of the ethical consumption and ethical investment initiatives I've seen, the core rights of workers are often missing – collective bargaining, freedom of association, and the right to have a say in one’s own working conditions. That's tragic because, while there are a lot of rights that we need to advocate for when we're trying to create fairness in the global economy and more positive corporate behaviour, core rights are absolutely key. Yet they're missing, I'd say, almost 70% to 80% of the time.
They're missing because they are perceived to hit the bottom lines of companies. I hope things like the Bangladesh Accord can be used to undo that assumption. You can't say that the global brands that signed onto the accord are diminishing, tiny little companies of no importance. They represent the 300 largest global garment brands on Earth. Somehow none of them went bankrupt or dissolved after they signed the accord. We should do a better job of advertising that fact.
Anannya Bhattacharjee is the International Coordinator of Asia Floor Wage Alliance.
We have not seen any of these programmes really change the lives of workers. I'm not saying that all of them are 100% rubbish. There could be a few pilots here and there which serve a few workers in a microcosm, and solve a problem for a period of time. But we have not seen any of these efforts really change the lives of workers.
Let's look at two ways in which workers are suffering, and let's see how these programmes could impact them.
The first is the day-to-day relationship between workers and the factory management. To a large extent those industrial relations – the way managers behave on the shop floor – are determined by the sourcing practices of the multinationals purchasing their products. Those sourcing practices frequently require managers to push workers extremely hard without fairly remunerating them. As a result workers face coercive, retaliatory, and often violent industrial relations. So: industrial relations can only improve if the extremely coercive practices that are needed to extract the work from the workers are removed. None of these ethical investment practises or CSR programmes really focus on what it would take to do that.
A second problem workers face is that of extremely low wages, if not wage theft. In many situations, workers are not able to fight for higher wages because the industrial relations I've described make sure that they do not exercise their collective power. This is no accident. Low wages and coercive industrial relations are in place so that the cheapest labour can be engaged to provide goods at very low cost. These problems aren't solved by the sorts of research and investment that go on. They may sound nice, but really at a ground level, they are not making any difference to workers' lives.
In my opinion things will only improve when workers' organisations are at the table to discuss, implement, and monitor the solutions. This rarely happens because most corporate activities tend to avoid dealing with workers' organisations. There's antipathy towards trade unions or any kind of representative organisations. The one exception is that sometimes they may engage at a very high level – a global union at the level of Geneva or Brussels – even though production is on another continent.
The point remains: the only time things have a chance of working is when an activity can be conceived, implemented, and monitored by local worker organisations. Of these there are really only a handful of examples. In the garment industry there is the freedom of association protocol in Indonesia, and there's the Accord on Fire and Building Safety in Bangladesh. These agreements were designed with the participation of labour organisations, they have a process of enforceability, and they bind signatories to certain activities. I would say these are some of the conditions for success, but they're extremely hard to achieve. Not because they're difficult to do, but because of the unwillingness of companies to engage in with them.
Workers as a bargaining partner at the site of production is the biggest piece missing from the picture.”
Ambassador Luis C.deBaca, of Yale University’s Gilder Lehrman Center, directed the U.S. Office to Monitor/Combat Trafficking in Persons under President Barack Obama.
For folks coming at this from a trafficking lens, a lot of the multi-stakeholder initiatives (MSI) look like they were either designed to be toothless or they became captive over the years. This group says, ‘Ya’ll don't have any teeth, and so therefore you're just helping to greenwash’. Then the established MSI participants turn back around and say, ‘You guys think that it's always about putting people in jail, you don't understand how hard this is’.
The truth is probably somewhere in the middle. But I think it’s very interesting that, by now, even many of the people who don’t consider themselves as part of the anti-trafficking or anti-slavery movements are pressing for more teeth and more public transparency. That shift has led to the creation of the California Supply Chain Transparency Act, which then morphed into the US procurement standards from former president Barack Obama, which came out around the same time as the UK Modern Slavery Act in 2015. Those were all very much being driven by that kind of rebellious, young, anti-trafficking movement.
I helped promote the content of the California bill both nationally and internationally. Part of the reason we went down this route was that we felt, at the time, that MSI and social audits were largely being done by environmentally-focused folks with environmentally-focused approaches. They were forestry and biology majors who were good at measuring chemicals in the water but not necessarily good at talking to workers in their dorms. That scepticism combined with the fact that a lot of audits remained proprietary information for the companies concerned, and with the way employers could use the ILO’s tripartite consensus model to their advantage. They could point to a labour union representative in their MSI, while ignoring the fact that trade unionists were getting killed over where their third- or fourth-tier suppliers were operating. There was that sort of fiction that was happening in the CSR model.
This is one of the reasons why so many of us are interested in Worker-driven Social Responsibility (WSR) instead. It puts the worker a little bit further forward into the issue and it doesn't depend on the largesse of the company. Corporations can no longer claim to be committed to a tripartite, high-low style dialogue with the unions while simultaneously using lobbying and business associations to ensure unions stay powerless. My hope and dream for WSR is that it changes that dynamic.
A part of me also likes it because it does not necessarily require the worker's input to be filtered through official labour union structures. Trade unions in some countries are phenomenal with a lot of extremely brave people, but in some countries they're very captive. They're captive either to the government itself or to the companies. The entire focus on WSR puts the first and most important actor first in this, as opposed to corporate social responsibility.
Han Dongfang is the Executive Director of China Labour Bulletin in Hong Kong.
The corporate social responsibility and employer code of conduct strategy has been a necessary first step. The biggest achievement of these programmes, however, has been to highlight what should be done rather than to bring about real improvements. Brands are busy sending out auditors to the suppliers, auditors are busy travelling between different worlds and writing reports, employers are busy telling their workers what to say and what not to say to the auditors, and civil society organisations and media are busy finding the faults in the audits and accusing the brands of using them for PR exercises. It’s a never ending game of cat and mouse.
Workers as a bargaining partner at the site of production are the biggest piece missing from this picture. China Labour Bulletin (CLB) has been arguing for the last 20 years that the corporate social responsibility approach will never become an effective tool for protecting workers’ rights unless it involves the workers producing these goods as a bargaining partner. We believe that workplace collective bargaining will not only result in a better life for workers but also enhance the reputation of the brands, stabilise labour relations, and create stronger local consumption near the factories. In other words, workplace collective bargaining has multiple benefits for all stakeholders.
For many years nobody listened to this argument, so in 2005 CLB took the strategic decision of focussing on workplace collective bargaining as a means of protecting and developing the economic interests of Chinese workers. During this process, we were able to demonstrate the effectiveness of worker-led, enterprise-level collective bargaining in solving strike cases. Meanwhile, the process and the results demonstrated that worker organising was not necessarily a threat to the ruling Communist Party of China (CPC). It could instead bolster the legitimacy of the CPC by improving living standards for ordinary Chinese workers. This was one of the major elements that directly led to the CPC’s reform of the official All-China Federation of Trade Unions (ACFTU) in late 2015. It was the first time in history that Chinese workers actually had the opportunity, as members of the official union, to turn that organisation into a genuine trade union that represented workers at the enterprise level.
In early 2017, CLB brought our experience of promoting workplace collective bargaining in China to India, where we are working with a garment workers union in Bangalore. After one year of strategic training for worker activists and worker organising on the factory floor, a team of representatives elected by the workers initiated a bargaining process in one of the major garment factories. Although it led to furious retaliation, including physical beatings and dismissals, all the representatives were able to hold on without backing down. This allowed the CSR partners involved enough time to commission an in-depth report on the case, and in the end the management finally engaged in dialogue with the garment workers union. This example shows how collective bargaining and organising on the factory floor, combined with CSR, can actually get the employer to change its behaviour and become a leading role model.
Lupe Gonzalo works with the Coalition of Immokalee Workers.
Corporate social responsibility programmes exist to satisfy consumer demand for ethical products. Their primary purpose is to protect the brand by preventing consumers from taking their business somewhere else. They are not meant to and do not succeed in protecting the human rights of workers, or in reducing poverty for workers.
The reason that these programmes don't work is because there is no enforcement. There's no one actually ensuring that the high standards the companies talk about are reaching workers. For example, there are a lot of coffee products from Central America that are labelled fair trade, but the workers producing them have no idea they're a part of that programme. It doesn't actually affect their lives or change anything for them.
I think what is necessary is just doing the hard work of directly educating consumers as workers. Consumers see us as human beings. They don't see us as machines. Our message is that workers and consumers can do something together. Our campaigns open the eyes of people, but it is only through concerted and conscious consumer demand that these types of programmes can actually be enforced. Companies will only invest in them if consumers actually demand high standards and enforceable programmes.
The essential elements of the Fair Food Program model can and have been replicated in many contexts.
First, workers need to be the authors of the campaigns. It is critically important that workers themselves are establishing the goal posts, as they are the only ones who can really identify what they need.
Second, consumers need to be involved. Signing the necessary binding agreements is not something companies want to do, so you have to build power with consumers and have them as allies in this process in order to make companies sign these types of agreements.
Third, workers must be educated about their rights, ideally by other workers. People who not only literally speak their language but also who have a deep and personal understanding of the industry by having worked it. This is very powerful. Not only is the information better communicated, but having workers as educators inspires confidence in the programme.
Fourth, buyers and suppliers must understand that this is not a losing situation for them. The lead brands are going to gain something, because they now have a product that is actually responding to consumer demand. That will give them more consumers, not less. In turn, suppliers can be confident going forward that they will continue being able to sell their products.
Finally, mechanisms have to be in place to consistently monitor and enforce rights in the place of work. When are abuses are found, there needs to be consequences for that behaviour. Workers have to be able to see that the person who committed abuses was fired for doing so. That gives them trust in the programme, and makes it more likely that they will also report abuse. This is the key to making it work.
Translated by Marley Moynahan at the Coalition of Immokalee Workers.
Change the rules, not the game
Reading through the responses, there’s a noticeable split between those saying, ‘here's what we're working on, and we just need to keep working on it’, and those saying, ‘we really need to shake this up’. I focus a lot on questions of disruptive potential, and I do wonder how much is actually possible when we all seem to drift – whether it's through funding pressures or otherwise – into the dominance of multi-stakeholder initiatives, public partnerships, and other schemes where business maintains a strong presence.
I totally understand why we want business at the table. But it becomes very easy to forget that management and the capital they serve are not cooperatives and collectives. These are for-profit corporations who see work and workers as inputs. They are not necessarily looking for ways to have that input talk back to them. While we should continue to engage in partnerships, we need to remain cautious and with eyes wide open.
If the potential for disruption is currently limited, then it’s worth considering changing the playing field to make better use of those old techniques championed by the first group. I grew up on a ranch, and I learned that the only way to stop a herd of cows walking away is to put some strategically placed fences in their way. With the right fences, you can get them going wherever you need to them to go.
Industry has done a very good job of removing all fences on their behaviour. Whether it's by jumping the restrictions, or by whittling down enforcement in labour inspections, or what have you, they have made it so that they can just evade responsibility. Then, when we come in and say, ‘we want better work, we want unions, we want all of these things’, they walk right around us. We need the structures and intervention patterns in place that force them onto a fairer path.
Theresa Haas & Penelope Kyritsis
Theresa Haas is Director of Outreach and Education at the Worker-driven Social Responsibility (WSR) Network.
Penelope Kyritsis is Outreach and Education Coordinator at the Worker-driven Social Responsibility (WSR) Network.
Penelope: The prevailing corporate response to addressing labour exploitation in global supply chains over the past 20 years has been a boom in corporate social responsibility schemes, including social auditing and certification schemes. The major flaw of these programmes is that they are typically voluntary and lack enforcement. There are no consequences for failing to comply with standards. That makes standards without enforcement programmes little more than Band-aids, obscuring how downward price pressures create exploitative conditions in the first place.
Theresa: I would also note that ‘multi-stakeholder initiatives’ – e.g. the Forest Stewardship Council or the Rainforest Alliance – are sort of like round tables for civil society, brands, suppliers, and some types of government. Everybody supposedly comes together in dialogue and talks about how to fix the problem.
The fundamental flaw in those schemes is that they do not include or represent a fundamental shift in power. There is a significant imbalance of power between workers at the bottom of the supply chain and brands at the top of the supply chain. And unless you have legally binding agreements with mandated enforcement you're not fundamentally shifting power.
WSR is fundamentally about shifting power. It’s about shifting power, resources, and control from the entities at the top to the workers at the bottom in ways that legally obligate companies to prioritise the needs and rights of workers. There is currently a lot of pressure on companies to produce products in ways that are ethical and responsible. It's something that consumers seem to want and investors seem to want. Fair trade doesn't do it. Rainforest certification doesn't do it. Currently WSR is the only way in global supply chains to do that.
And the reality is that any company that is not currently implementing a WSR programme in its supply chain is at very significant risk of having deeply embarrassing labour issues in their supply chains exposed. All the way up to slavery and trafficking. Yet companies have obviously made the calculation that they would rather do the thing that is cheaper and easier than the programme that actually protects workers and also protects the brand's reputation.
There is a lot of debate around whether WSR is good for business or not. I think it ultimately is good for business, but I don’t think that really matters. I don't think any company decides to do WSR because they've taken a hard look at what the right thing to do is. They do it because they face massive pressure from consumers, workers, and the public over one or more serious violations of labour rights in their supply chains. They feel that this is what they have to do in order to protect their reputation. I don't think there's any brand that has independently looked at WSR and decided that it was an attractive business opportunity.
Emily Kenway is senior advisor on human trafficking and labour exploitation at Focus on Labour Exploitation. Until recently she was private sector adviser to the UK’s office of the Independent Anti-Slavery Commissioner.
My previous work at ShareAction and at the Living Wage Foundation focused on investment and consumer strategies to address corporate responsibility issues. I think both are problematic. They can win marginal gains, but overall the war is still being lost and such strategies may actually distract us from that fact.
Responsible investment programmes at big investment houses have analysts who focus on the environmental, social, and governance risks of companies, and then engagement teams who talk to the companies about those things. You can win changes by engaging with those teams; ShareAction has done so plenty of times. However, responsible investment will always clash with the drive for profit and maximisation of share value which is legally and culturally bound into this sector.
Take labour exploitation in supply chains. Investment managers may tell their companies that they need to have an ethical supplier code of conduct in place about how suppliers’ should treat workers. What you’re less likely to find is them saying that companies need to change their purchasing practices, because the prices they offer bind suppliers into paying poverty wages and using labour that may have been trafficked. Likewise, you won’t find investors promoting union recognition despite it being key to protecting labour rights. Fundamentally, investors are on the side of capital, not labour, and so investment strategies target the softer and weaker things. They feel nice and sound nice, and they will probably make a small amount of difference. But such strategies will never achieve far reaching, systemic, rights-oriented change.
I have less time for ethical consumerism. Obviously, it will only ever be applicable to a small and privileged segment of the economy because it comes with a price premium. It's also based on certain signals, such as the stamps you see on packaging. That's how we know that it is better to buy this tea than that tea. But when we look under the hood of those certifications, they don't necessarily look like they are doing what we would hope.
A new report out from the Sheffield Political Economy Research Institute found that labour conditions on tea and cocoa plantations were relatively similar for those in certified supply chains and those which were not. Some of the worst abuses were actually found on plantations producing certified products. No one wants to have a go at these certifications, but we really need to call them out if they're not working. Their shortcomings make the whole idea of ethical consumerism quite difficult.
We also have to ask ourselves about the principles underlying the approach. We are living in a world that places the market at the heart of things, and strategies like ethical consumerism inherently place the responsibility on individuals. That is a neoliberal approach to responsibility. We need to question whether that's something we want to promote, or whether actually we need legislative and regulatory mechanisms which place responsibility on the companies themselves, making labour rights, environmental impacts and so on a core requirement for their business models.
Campaigns or certifications like ‘fair trade’ exist to attract customers and increase market share.
Reema Nanavaty is Director of the Self-Employed Women's Association (SEWA).
I do not think these campaigns are at all effective. Companies use these opportunities to show how they are working with a cotton farmer, or with a poor producer. But in reality I do not believe they want to distribute any part of their profit to those end producers. It's not that they fail in their efforts. It's only a question of pass or fail when they attempt. I don't think there is an attempt at all by the tops of the global supply chains to engage directly with the end producers.
Campaigns or certifications like 'fair trade' exist to attract customers and increase market share. They are used to convey to the customer that a company believes in fair trade or that a product was produced in fair ways. But what is the guarantee for that? Corporations say that they do audits, but do they ensure that the minimum wage is met? Do they ensure that the farmers who grow the cotton or the spices get the minimum support price? Do they have access to childcare or healthcare services?
In my work I have not observed them doing this at all, so it seems that poor and informal sector workers are being commodified for use in sales and marketing. This is so unfortunate.
Elizabeth Tang is the General Secretary of the International Domestic Workers Federation.
When I was at the Confederation of Trade Unions we had very little involvement with such campaigns. They are more popular in the West, and there they are more successful.
One time I participated in a project to monitor a supplier of a major retailer in China. It was a great project. All the stakeholders were cooperative: the retailer, the supplier, our partner at the Ethical Trading Initiative, the British Trade Unions Congress. We succeeded in checking on working conditions, we even set up workers' committees. It went perfectly. We were so successful that the factory owner actually closed down the factory. He opened a new production line in the southwest of China, which was far enough away that nobody was bothered to monitor it.
I don't object to companies trying to do these projects, but they are incredibly challenging. For me, I will focus all my limited power on building workers' power and building my organisation. That is also hard, but I see progress. As a trade union movement leader I always feel that we have never done enough. We need to do more ourselves. We cannot expect our employers to change.
More useful in my opinion would be if the groups that support workers' rights – the funders – better understood how crucial it is to invest more in organisation building and movement building. It's necessary to invest in campaigns as well, obviously, but before that we need the capacity. We are currently very weak. But once we reach the levels of membership we need and have the leaders in place, we will know what to do. Unfortunately, lots of people only want to invest in the last step: fix this problem, change that policy. But they don't realise that the first half, the work that enables us to have the capacity to take that last step, hasn't been done yet. Investing only in the last step can consume large amounts of resources, but it will be less likely to succeed.
Alison Tate is Director of Economic and Social Policy at the International Trade Union Confederation (ITUC).
Ethical investment, ethical consumption, and ethical trade programmes have been going on for decades. They've been really important for raising the awareness of consumers, workers, and businesses about the ethics involved in production, trade, and consumption. They've played a really important role in promoting the concept of worker's welfare, if not worker's rights.
The limit to those programmes is that they're all voluntary initiatives. They’re about standards that are applied in particular companies. For example, in the way in which buyers engage with their suppliers. That has been really important, and continues to be important to ensure an understanding that fairness and decency should be a part of the trading relationship. That it's not just a financial transaction, but there are social consequences and social responsibilities involved.
That said, we will only see real change when companies and investors really take on their responsibilities around ensuring decent work. That means ensuring that, no matter in which country or under which legal system, the company's profit has been derived while respecting fundamental labour and human rights.
For investors, engaging with the companies in which they invest is not just about asking whether forced labour exists in a particular company's operations or supply chain. It is about asking what is being done about it when it’s found. And if it's not being found, is the company looking hard enough? Investors need to demand that companies set up rigorous due diligence processes and provide workers with a voice in that process, and a mechanism for reporting grievances and seeking remedy.
We’re working with the union trustees of pension funds to help encourage that process. Pension funds are one of the big investors of the world. They represent $30 trillion in the global economy, as owners of workers’ capital, meaning that they are the stewards of the money contributed by workers to pension systems from their pay, as deferred wages.
Pension funds decide where those assets are actually invested. Their criteria for doing that is ultimately up to them, but those looking to invest according to ESG standards (environmental, social, and governance standards) must also take into account labour standards. That’s part of the ‘S’, and it’s upon those pension funds to look at the working conditions of the companies in which they’re investing.
Pension funds are ideally placed to spearhead a shift towards fronting working conditions as a basis for investing. Their aggregate capital is enormous, and the union representatives on their boards, as both representatives of workers and as caretakers of workers’ capital, have a direct interest that the working conditions and that the rights of workers are respected. There is a lot of potential for more action there.
This project is supported by the Ford Foundation but the viewpoints expressed here are explicitly those of the authors. Our support is not tacit endorsement within. The aim was to highlight new ideas and we hope the result will be a lively and robust dialogue.
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