Ethics
are moral codes of conduct that guide how businesses are conducted. It is about
establishing what is right and wrong. It goes beyond the legal principles where
the organisations are expected to desist from what may be wrong even where it
is perfectly within their rights to engage in unethical conduct (Leube, 2012).
At the centre of the considerations are the stakeholders of the business whose
lives are impacted by its existence and activities. The main stakeholders
include customers, suppliers, employees, government agencies and the general
public. The ethical responsibility of organisations has for long been arguably
limited to actions that they are directly engaged in (Krueger, 2008). However,
increased awareness among consumers and the general public makes it imperative
for organisations to take requisite actions to ensure that ethical standards
are upheld across the entire supply chains. This paper evaluates the approaches
taken by organisations in the UK fashion and energy sectors in ensuring that
their supply chains uphold good business ethics.
In
general, supply chains cover the entire value addition process which starts
from the acquisition of raw materials to the delivery of finished products to
the end consumers (Krueger, 2008). This means that there are many stakeholders
involved and the organisation has a responsibility to all of them.
Nevertheless, discussions on supply chains tend to assume a narrow focus on the
suppliers; a focus that has also been adopted in this paper (Berzau, 2011). The
most common trend among the consumers in the UK and around the world has been
the need to be assured that the products consumed have been produced under
circumstances that are acceptable. This is in addition to the need for them to
be good quality products. Organisations have accordingly been forced to apply
moral pressure on their suppliers to apply the minimum standards acceptable in
ensuring that the supplies that are provided to them meet the required ethical
thresholds.
The
typical relationship between the organisations and the suppliers is a
contractual one where supplies are provided at an agreed time and within the
allotted timelines (Withers and Ebrahimpour, 2013). The norm in the past has
been that of non-interference where the industry players do not meddle in the
operations of their suppliers. Considerations such as price and quality have
been the dominant factors used in selecting suppliers. Even where the suppliers
may have been engaging in certain unethical practices, it would still be
perfectly legal for them to ignore such knowledge and simply purchase the
products. Despite this legal loophole, there is the moral expectation that the
organisations would do all in their power to ensure that unethical conduct is
not tolerated within their supply chains (Withers and Ebrahimpour, 2013). This
is especially with regards to practices that are universally acknowledged as
unethical.
Universalism
in business ethics can be described as the existence of a consensus among
multiple stakeholders that certain actions are right or wrong (Leube, 2012). This
is as opposed to relativism where cultures and social context shape what is
right or wrong. While acknowledging these different viewpoints, it is important
to appreciate that an issue could move from relativity to universalism as
common viewpoints emerge. For instance, slavery was acceptable in some cultures
in the past but it is now universally recognised as wrong. In relation to
supply chains, it is increasingly being recognised that it is immoral and
unethical for organisations to fail to provide the producers of raw materials
the basic necessities that they need (Krueger, 2008). The workers that produce
the raw materials are expected to be protected from exploitation by getting
them paid a living wage. They should also be free from abuse and exploitation.
This is in addition to the need to provide good working environments for them
where they are protected from common workplace hazards.
The
question on whether the organisation should intervene in entrenching good
ethics in their supply chains is one that is quite common. At the centre of the
considerations are questions of price and the bottom line of the businesses.
Entrenching ethics tends to have an implication on the cost of supplies
(Berzau, 2011). For instance, an organisation that insists on suppliers paying
their workers better and providing good working conditions would need to be
ready to pay slightly higher for the supplies. While this could arguably not be
in the interest of the shareholders, it is viewed as positive for the
sustainable competitiveness of the organisation as customers are likely to
acknowledge the brand and purchase from it (Krueger, 2008). Good ethics
therefore have the potential to boost profitability hence the rationale for
investing in it.
The
hot issue in the fashion industry supply chains is the circumstances under
which the fabrics and the clothes are made. Critics decry the fact that with
every nice high-street cloth, there is a life somewhere that was oppressed and
denied their rightful share (Siegle, 2013). Many of the fashion houses in the
UK rely on sweatshops to manufacture the cloths that they sell to their
customers. The main characteristic of sweatshops is poor pay, poor working
conditions, and denial of certain basis human rights (Siegle, 2013). The owners
of the sweatshops maximise on these conditions to make a profit where they
either charge lower for the supplies or concentrate on making huge margins.
Countries such as Bangladesh are most famous for hosting a large concentration
of sweatshops which are poorly run and often putting their workers in mortal
danger.
In
April 2012, one of the buildings hosting several sweatshops collapsed killing
over 1300 workers (Siegle, 2013). This incident brought to the fore the unfair
conditions under which suppliers of clothes to the UK fashion industry and the
rest of the developed world work. Investigations into the incident revealed
that the employers had been warned of the impending danger but had opted to
ignore it forcing the workers to continue working despite the obvious danger to
their lives (Seeden, 2013). This led to questions on why industry players
should allow such unfair practices to go on when they can take preventive
actions to ensure that the suppliers’ employees are not exploited.
The
rationale for applying ethics in the supply chains is based on the fact that
supplier communities tend to be vulnerable and easy to exploit. In fact,
arguments for the continued exploitation of workers in sweatshops are that the
poor jobs are better than having no jobs at all (Wong, 2013). This makes it
important for parties that are in a position to protect such vulnerable
communities to play their part. In reference to worker rights, the moral
authority can be drawn from the international labour laws that outline the
minimum standards for worker pay and safety (Seeden, 2013). Several fashion
houses in the UK have taken measures to ensure that the suppliers apply these
minimum thresholds.
Marks
& Spencer avoids cheap supplies and focuses on long term relationships with
suppliers (Siegle, 2013). It is said to be the first major fashion house to
institute measures to compel suppliers to pay their workers a living wage for
suppliers situated in India, Bangladesh and Sri Lanka. In addition to this, the
company has pioneered a model factory program in Bangladesh whose re-engineered
assembly line enables factories to pay their workers better. The company’s
commitment to ethical supply chains has been consistent in the past. In 2004,
Marks & Spencer partnered with Shell Foundation a new type of supply chain
aimed at alleviating poverty in Africa (Marks & Spencer, 2005). In this
programme, the poor suppliers are provided with expert advice on how to thrive
in their business.
John
Lewis has a firm focus on promoting quality lives among the supplier
communities. It has developed a long term approach with its suppliers where
there is collaboration in ensuring that workers are treated right and that the
communities benefit from the company’s activities (John Lewis, 2013). While
Tesco is not strictly a fashion house, it stocks and sells clothes to the end
consumers hence its inclusion. Tesco is noted to have been the first major
retailer to ban Uzbek cotton from its list of products (Tesco, 2013). This was
because the cotton was being picked by exploiting forced labour among children.
Primark
was deeply affected by the Bangladesh accident in which 1300 workers died with
over 450 workers working for a factory that supplied to Primark (Primark, 2013).
In addition to providing material help to those affected, Primark resolved to
conduct a survey on all factories from which they source materials. This is
with the intention to ensure that all suppliers comply with the basic ethical
standards by 2014. The company also
collaborates with suppliers and other stakeholders to ensure that the rights of
women are respected (Primark, 2013a). The application of ethical standards in
the energy sector is as shown below.
In
the energy sector, the ethical concerns include the need to management climate
change responsibly even where this calls for forfeiture of profits. There is
also an ethical dilemma when it comes to the need to weigh between the quality
of supplies and the price of energy (Bahaj, 2013). Energy is a necessity in the
society and this makes it important that it be kept affordable. Failure to do
so can make life unbearable for the vulnerable poor populations. The concerns
on the fate of the workers also lingers among the main ethical concerns for the
energy sector players (Bahaj, 2013). Different organisations take different
approaches in ensuring that their suppliers adhere to the established ethical
thresholds. One good example is EDF Energy.
EDF’s
determination to maintain an ethical supply chain is reflected in its decision
to establish a framework for the prequalification of suppliers (EDF Energy,
2013). The prospecting suppliers are taken through a prequalification process
that test their compliance in terms of their human right records,
anti-corruption record, environmental conservation, and other metrics. Since
the institution of the process, EDF has reviewed over 1,000 responses and
certified about 639 of them as compliant with their ethical standards (EDF
Energy, 2013). The preoccupation of British gas is on the responsible disposal
of wastes and minimisation of pollution (British Gas, 2013). The company
embraces the challenge to ensure that the future generations are secure and
endeavours to stay below the legally allowed emission minimums. This is a
consideration that is emphasised greatly when choosing their suppliers. Joint
initiatives for research and determination of waste disposal as well as discovery
of more energy efficient products dominate the relationship with suppliers.
Like
the fashion industry, the question of worker rights is very crucial. EDF cites
the human rights record as among the main considerations when prequalifying
suppliers (EDF Energy, 2013). Work in the energy sector can be very hazardous
with workers handling corrosive chemicals and handling equipment with a grave
potential to cause bodily harm. This requires training and provision of
protective gear. Worker rights are universal and are protected through various
unions in addition to the international labour organisation. Players in the
energy sector, like their counterparts in the fashion industry, understand that
the ethical standards in their supply chains can determine their level of
competitiveness hence the need to invest in it.
As
can be seen from the examples provided, the major industry players take a keen
attention on the ethical standards within their supply chains. This is the
clearest indication yet that investing in good ethics can determine the
competitiveness of businesses. The main concern in supply chains is the ability
of the organisations to impress on their suppliers to entrench acceptable
ethical standards in their practice. This is especially with regards to worker
rights and the welfare of the local communities. It is generally acknowledged
that the industry players have a moral authority to whip suppliers into action.
For instance, prequalification of suppliers can be done on the basis of certain
ethical thresholds as is the case with EDF Energy. Similarly, a proactive
approach can be done to impose requirements for worker pay and working
conditions as has been done by Primark in Bangladesh, India and Sri Lanka.
These proactive approaches contribute to the entrenchment of ethical standards
in supply chains and are justified by better brand image and increased consumer
support.
Bahaj, A.S., 2013. Ethical Aspects of Energy Mix: an
engineer’s view. University of
Southampton. (Online) Available at:
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Berzau, L., 2011. The Business Social Compliance
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http://www.britishgas.co.uk/blog/articles/why-we-need-to-use-energy-more-sustainably
(Accessed 21 November 2013)
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(Accessed 21 November 2013)
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(Accessed 21 November 2013)
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(Accessed 21 November 2013)
Primark, 2013. Ethical
trading: our work in summary. (Online) Available at: http://www.primark-bangladesh.com/
(Accessed 21 November 2013)
Primark, 2013a. Better
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(Accessed 21 November 2013)
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Available at:
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(Accessed 21 November 2013)
Tesco, 2013. Corporate
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http://www.tescoplc.com/files/pdf/reports/tesco_cr_review_2009.pdf (Accessed 21
November 2013)
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Faces of Economic Development: The Ethical Controversy Surrounding U.S.-Related
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(Accessed 21 November 2013)
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