Corporate Social Responsibility and Apparel Industry Term Paper

CSR- History and Introduction

Over the years, there has been contention among scholars and industry experts on what exactly CSR means. Unfortunately, the contention and the debate that ensues have not resulted in a standard definition yet. Consequently, different people have different definitions of the term, and some scholars have even accused some researchers of distorting the CSR concept, so much that, it has become “morally vacuous, conceptually meaningless, and utterly unrecognizable” (Orlitzky 48).

Although scholars argue that CSR dates back to the 1920s, its first conceptualization in literature began in 1953, when Howard Bowen, an American Economist stated that organizations had a social obligation “to pursue those policies, to make those decisions, or to follow those lines of action which are desirable in terms of the objectives and values or our society” (Bowen cited by Maignan and Ferrell 4).

Following the conceptualization of CSR by Bowen in the 1950s, other CSR-related concepts such as corporate citizenship, social audits and corporate stewardship came into focus (Maignan and Ferrell 4). From the 1960s onwards, scholars and researchers have been more concerned about defining the CSR concept.

Defining Sustainability and CSR

The 1987 Brundlandt report closely ties sustainability to the sustainable yields concept. Specifically, the report argues that “sustainable yields development meets the needs of the present without compromising the ability of future generations to meet their own needs”. In other words, the Brundlandt report argues that sustainability is possible if the organizations (and humankind in general) consider the social, economical and ecological aspects similarly.

According to the report, organizations need to be responsible for their actions and inaction in both the short-term and long-term; if at all sustainability is to be attained. The report posits that the present action or inaction by organizations have an impact not only on its stakeholders, but also on the larger humankind with the inclusion of future generations.

Even though there is no standard definition of CSR, a literature review conducted by Dahlsrud reveals that a definition by the Commission of the European Communities is the most prevalent in literature. The Commission defines CSR as “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis” (Dahlsrud 7).

Among other terms that are popular in CSR definition include adhering to ethical values, complying with legal requirements, respecting communities, the environment and people, and contributing to the quality of life of the stakeholders and the larger communities. Among the vital indicators that come out of the CSR literature is the fact that organizations should not just pursue profitability without paying attention to the effect that their activities have on the employees, shareholders, communities, and the environment.

The importance of CSR for Textile and Apparel Industry

The textile and apparel industry has an infamous reputation for its use of cheap labor often sourced from overworked employees or underage workers. Most notable is the fact that most such industries are now in developing countries where labor laws are virtually non-existent, while unemployment rates are remarkably high.

Such combination of factors means that organizations can maximize output by overworking employees who are desperate to eke out a living in whatever way, and compensating them with relatively low wages.

The lack of legal and political frameworks in developing countries means that major players in the textile and apparel industry need to take the CSR initiatives a notch higher in order to cover for the management gap created by such legal and political inadequacies. After all, (Maignan and Ferrell 4) indicate that CSR operates outside the legal entitlement of an organization, and is usually voluntary in nature.

Why is CSR needed?

The need for CSR in the textile and apparel industry is underscored by the fact that in view of the lacking political, social and legal guidelines, the organizations operating in the industry have societal obligations that they need to meet. Notably, the need for such organizations to deliver societal values amidst high levels of poverty and insecurity where their business interests are located cannot be overemphasized.

Besides, the CSR hype has alerted employees, government, consumers and larger societies of the social responsibilities that organizations have towards them. Hence, adopting CSR initiatives serves the strategic business interests of organizations operating in the apparel and textile industry since it enables organizations to forge good and beneficial relationships with not only the employees, but also governments, non-government organizations and consumers.

The nature of fashion industry

The nature of the fashion industry is such that there are high lead times that require organizations to produce fashionable clothes at relatively low costs. The CSR in the fashion industry is therefore more focused on the production processes whose end results are the clothes people dress in.

To this end, (Dickson and Eckman 188) argues that CSR in the fashion industry is “an orientation encompassing the environment, its people, the apparel/textile products… and the systematic impact that production, marketing and consumption…has on multiple stakeholders and the environment”. Among the key factors that influence CSR in the fashion industry include the production of raw materials at the farm level, the production processes at the firm level, and the operational factors such as sweatshop and child labor.

On the environmental front, the extensive exploitation of natural resources such as water and farm land, and the use of chemical products impact negatively on the environment. Companies that have embraced CSR in the fashion industry therefore seek to address such issues though responsible and sustainable initiatives.

The background: conditions that propel companies to take sustainability into consideration

In literature, there are two basic reasons that propel companies to take sustainability into consideration: (I) the need to look good in the eyes of the employees, the consumers and other stakeholders; and (II) A genuine need to do well, and contribute to the welfare of all stakeholders affected by what the organization does.

In the first instance, organizations find adopting CSR initiatives necessary due to the reputational risk that comes with non-adoption. In the Nike case (explained elsewhere) for example, the firm was criticized for the use of child labor in its value chain, and the effect of such criticism in its sales volume in 2004 was far-reaching.

Internally, companies with a good social responsibility reputation are able to attract and retain employees more, while investors are willing to invest in such firms. In the second instance however, organizations adopt CSR/sustainability simply because “it is the right thing to do”.

The evolution of company’s initiatives- from merely safe guarding image to integrating it as part of their business strategy

CSR is no longer part of public relations practices for organizations. Rather, CSR is now being incorporated as part of the business strategy that organizations take. In the past, firms focused more in corporate communications and corporate philanthropy; nowadays however, CSR is viewed as an important differentiation tool especially in the competitive markets.

As Gildea notes, the consumers is at the middle of the revolution since contemporary purchasers boycott goods or services whose production harms the people, the society or the environmental resources (Gildea 21).

Public pressure

Non-governmental organizations (NGOs) have been on the fore front mobilizing and applying pressure on companies that violate what is considered as socially responsible/sustainable production or manufacturing processes. Among the most effective public pressure means are consumer boycotts. A 1990 article in the Economist, for example stated that “pressure groups are besieging American companies, politicizing business and often presenting executives with impossible choices.

Consumer boycotts are becoming an epidemic for one simple reason: they work” (The Economist 69). The public pressure through boycott is usually marked by negative publicity focusing on what a firm did or failed to do, and such sentiments usually affect its sales volumes and profitability. The public pressure is intended to coerce targeted companies to change their policies regarding an issue; or to communicate displeasure regarding how the target firm is handling an issue.

Global Sourcing Shift

The global sourcing shift is a product of globalization, where branded apparel manufacturers, lead firms, marketers and retailers in developed countries have all turned to bulk importation of their products from global suppliers, usually in developing countries (Gereffi 1).

Social and economic impact on countries

It has been argued that the relocation of apparel manufacturing industries to countries with cheap labor tantamount to moving jobs that would otherwise benefit local populations abroad. Incidentally, firms that have relocated their production to cheaper destinations usually have their largest markets in the same destinations they re-located from.

On the counter side however, developing countries where such factories are located benefit from foreign direct investments that creates jobs and earns such countries foreign exchange revenue from exports. However, such countries are now being forced to play catch-up with the developed countries as far as labor and environment-related laws are concerned.

Walmart

The catalyst of the Walmart’s Sustainability strategy

A report by the Stanford Graduate School of Business indicates that the Sustainable Value Networks (SVNs) adopted by Walmart acts as catalysts to the chain store’s sustainability strategy. Through the SVNs, Walmart is able to focus on specific areas in its supply chain such as food packaging, transportation or buildings among others.

The chain store identifies and develops any change that may improve sustainability in focus areas. Through the SNVs, Walmart identifies areas where it can enhance efficiency and/or reduce waste either single handedly or through engagement with its suppliers and other stakeholders.

The details of the strategy – specifically to textile and apparel

In the textile and apparel industry, the SNVs strategy in Walmart entails extensive life-cycle analyses done on the apparel production processes with the intention of understanding the exact impact that such processes have on the environment.

According to the report by the Stanford Graduate School of Business (6), it was found that “soap was responsible for an alarming level of greenhouse gas emissions, primarily due to the palm oil used in soap products”. Consequently, Walmart started working with suppliers in view of introducing the sustainable use of palm oil in soap products.

Walmart and Patagonia

In 2010, news broke that Walmart and Patagonia were partnering in order to help the former “move up the sustainable business learning curve fast” (Kimball n.pg.).

Through the partnership, Patagonia would help Walmart in developing a sustainability index for its products like it (Patagonia) had done with other entities such as Nike and North Face. As Walmart sought to introduce a scorecard to rate all its products on social impact and eco-friendliness, Patagonia seemed like the most ideal partner (Kimball). It is worth noting that Patagonia is revered as a leader in sustainable business practices.

Progress- result

In just one year, the Walmart-Pantagonia partnership has opened up to include other players in the apparel industry leading to the formation of the Sustainable Apparel Coalition (SAC). SAC has 40 members, who include industry heavy weights such as Patagonia, Walmart, Nike, Gap, and JC Penney among others.

Together, the 40 member in SAC came up with the Sustainable Apparel Index, which is defined as an “Industry-wide tool for measuring the environmental and social performance of apparel products and the supply chains that produces them” (Kirsten n.pg.). Through the index, the SAC members hope to promote efficient use of water and energy; less use of chemicals; less waste production; and enhance the working conditions in the apparel industry (Kirsten).

Nike

The initiatives that Nike have undertaken

Ever since the 1990s when Nokia took a hit from consumer boycotts and other forms of public pressure for the alleged use of child labor and sweatshop conditions by some of its suppliers in Asia, the company has taken up CSR initiatives to remedy its dented image. Key among such initiatives was the introduction of a Code of Conduct, which the company demanded that all its suppliers should abide to (Locke, Qin and Brause 8).

The company has further put the minimum age for workers to 18 years, and insists that the indoor air quality in all its supplier factories must meet the ‘Occupational Safety and Health Administration’ (OSHA) standards as used in the US. To boost compliance, (Locke et al. 9) observe that the company trains its suppliers, and has put together a team that monitors compliance in 21 countries.

By 2008, Nike has a further 1,000 production specialists employed to work with its suppliers globally for purposes of enhancing compliance to the Code of Conduct. But perhaps the most significant CSR initiatives by Nike are in the auditing systems, which include: (I) ‘Environment, Safety and Health (SHAPE) audit’; (II) ‘Management and Working Conditions Audit (M-Audit)’; and (III) annual inspections by the ‘Fair Labor Association (FLA)’ (Locke et al. 9).

The minimal impact in monitoring

While monitoring is one way of ensuring compliance of CSR and sustainability initiatives along the supply chain, its impact is often cited as inadequate (May, Cheney and Roper 413). In the apparel industry for example, questions are raised about whether CSR should just stop at ensuring that underage labor is not used, or whether organizations should go a step further and ensure that children go back to school.

Enforcing/ Monitoring CSR initiatives

Enforcing and monitoring of CSR and sustainability initiatives have been the subject of countless debates, both at the organizational level and on other social levels (May et al. 413). The European Union for example founded the ‘Business Social Compliance Initiative (BSCI)’ for purpose of monitoring how organizations complied with established social standards.

The monitoring is either scheduled or impromptu. While the enforcement of CSR initiatives especially in the Apparel industry is left to individual companies, monitoring is conducted by accredited monitors or independent monitoring agencies.

Lack of effectiveness

The lack of effectiveness in enforcement and monitoring of CSR initiatives is persistent in the apparel industry. Companies which shadow dress their production processes in order to create a positive feedback usually improve the working conditions whenever a scheduled audit is about to happen.

To increase effectiveness in enforcement and monitoring of CSR initiatives it is recommended that auditors should make impromptu visit to companies, establish complaint procedures for employees and other stakeholders, establish contact with local government agencies, and check and audit the company records regularly.

Conclusion

Summary

Generally, CSR initiatives lead to better working conditions for employees, cleaner production processes, energy efficiency and enhanced employee and consumer loyalty. Hence, organizations not only reap direct and indirect benefits from the CSR initiatives. Suppliers in the apparel industry are for example able to attract big clients and even financiers who are keen to protect their brand reputations. In the end, CSR becomes a business strategy, which effectively increases the gross returns in firms in the apparel industry.

Challenges still faced

One of the major challenges in CSR is contained in the fact that the concept is more of a fad than the reality in most contemporary firms. Hence, firms attempt to ‘look good’ by claiming to adopt CSR/sustainability initiatives, while the reality may be completely different. Additionally, the imprecise definition of the CSR concept may mean that different firms adopt different CSR initiatives, which as (May et al. 413) observe, may not be sufficient enough to address the contradictions caused by capitalism on societies. In the apparel industry for example, CSR may not be able to compensate indigenous people who have been of the receiving end of poor working environments, poor pay, long working hours and victimization at the work place.

Recommendations

Awareness creation regarding CSR practices and issues is needed if at all companies regardless of their sizes or financial positions are to benefit from the concept. Additionally, solutions to the different challenges facing the textile and apparel industry need to be found. For example, the competing codes of conducts need to be rationalized.

Lastly, (May et al. 413) observe that implementation and evaluation of CSR initiatives is always done away from the public eye, and this may create room for organizations to whitewash their activities by initiating programs, which are never followed up, or implemented to the full. In future, the implementation and evaluation of such initiatives should be conducted in a transparent manner.

Works Cited

Dahlsrud, Alexander. “How Corporate Social responsibility is defined: an Analysis of 37 Definitions.” Corporate Social Responsibility and Environmental Management, 15 (2008): 1-13. Print.

Dickson, Marsha and Eckman Molly. “Social Responsibility: The Concept as Defined by Apparel and Textile Scholars.” Clothing and Textiles Research Journal, 24 (2006): 178-191. Print.

Gereffi, Gary. “Global Sourcing in the U.S. Apparel Industry.” Journal of Textile and Apparel, technology and Management, 2.1 (2001):1-5. Print.

Gildea, Robert L. “Consumer Survey Confirms Corporate Social Action Affects Buying Decisions.” Public Relations Quarterly, 39 (1994-95): 20-22. Print.

Kimball, Jay. “Walmart Partnering with Patagonia on Sustainable Business Practices.” 8020 Vision, 01 Jul. 2010. Web.

Kirsten, Ann. “Promoting Sustainable Apparel.” Katerva, 2 Aug. 2011. Web.

Locke, Richard, Qin Fei and Brause, Alberto. “Does Monitoring Improve Labor Standards? Lessons from Nike.” Industrial and Labor relations Review, 61.1(2007): 3-31. Print.

Maignan, Isabell and Ferrell O.C. (2004). “Corporate Social Responsibility and Marketing: An Integrative Framework.” Journal of the Academy of Marketing Science, 32.1(2004): 3-19. Print.

May, Steve Kent, Cheney George and Roper Juliet. The Debate over Corporate Social Responsibility. Oxford: Oxford University Press, 2007. Print.

Orlitzky, Mark. “Payoffs to Social and Environmental Performance.” Journal of Investing, 14.3 (2005):48-51. Print.

Stanford Graduate School of Business. “Walmart’s Sustainability Strategy (B): 2010 Update.” (2010):1-21. Print.

The Economist. “Boycotting Corporate America.” The Economist, 26 May (1990): 69-70. Print.