New report rips the mask off the CSR industry


After the huge organising drives of US workers in the 1930s and 1940s, a critical mass of garment workers belonged to unions – enough so that workers’ wages afforded them a secure and decent life.

Most worked directly for manufacturers.

And when those companies began to use contracting shops, the organised strength of the workers enabled them to force employers to agree to critical measures that protected their jobs.

As a new AFL-CIO report titled Responsibility Outsourced relates, the key was the “jobbers agreement.”

Each manufacturer or brand could only place orders with union contractors, which were guaranteed steady work to keep workers permanently employed.

No new contractor could be used unless existing ones had a full supply of orders.

And the manufacturers had to give the contractors a high enough price to guarantee the union wages.

Then the bottom fell out, as US brands closed their own factories and searched the world for contractors that could produce garments at the lowest possible cost.

The same process took place in Europe. Today the world looks completely different as a result.

“Manufacturing work has left countries in which there were laws, collective bargaining and other systems in place to reduce workplace dangers,” the report charges, while “jobs instead have gone to countries with inadequate laws, weak enforcement and precarious employment relationships.”

This transition was aided by negotiation of corporate-friendly trade agreements guaranteeing the products of these factories unfettered access to US and European markets, while simultaneously putting pressure on developing countries to guarantee the rights of foreign corporate investors and a corporate-friendly environment of low wages, lax enforcement of worker protections, and attacks on unions.

The result?

Factory fires like that at Ali Enterprises in Pakistan in 2012, where 300 people burned to death – making it the worst-ever factory fire.

But it was hardly the only one.

Last year in Bangladesh, workers jumped from the windows of the burning Tazreen factory because the doors were locked. They fell to their deaths on the pavement below, just as their sisters had done in the notorious Triangle Shirtwaist fire in New York City in 1911.

Workers are pushed so hard in the Foxconn plant in China, where iPads and iPhones are assembled, that there have been a rash of suicides since 2008.

Not good for the corporate image of WalMart, whose clothes were sewn at Tazreen, or Apple, whose devices are made at Foxconn.


PR cover

But the strategy employed by most large manufacturers was not to improve those conditions.

They were especially unwilling to recognise workers’ unions that would act as monitors and enforcers of signed agreements guaranteeing liveable wages and safety procedures that wouldn’t put lives at risk.

Instead, the big label companies “helped spawn an $80 billion industry in corporate social responsibility (CSR) and social auditing,” the Responsibility Outsourced report says.

“Yet the experience of the last two decades of ‘privatized regulation’ of global supply chains has eerie parallels with the financial self-regulation that failed so spectacularly...”

That CSR industry, the report charges “helped keep wages low and working conditions poor, [while] it provided public relations cover for producers.”

The report analyses key experiences to support its conclusion. At Ali Enterprises, for instance, one of the two CSR giants, Social Accountability International, subcontracted with an Italian firm, RINA.

“In Pakistan, RINA hired local firm RI&CA, which certified Ali Enterprises in August 2012. For two years, RINA had supervised by phone and meetings outside Pakistan. Nearly 300 workers died in a fire two weeks after the certification,” the report charges.

The report also reveals that use of the CSR process goes beyond garment factories.

At the Dole plantations in the Philippines, the company (with the help of the Philippine military) replaced the union organized by the workers, Amado Kadena-National Federation of Labor Unions-Kilusang Mayo Uno, with a company union.

At the same time Dole had a seat on the SAI board of directors and received its SA8000 certification. Afterwards, wages fell and Dole began replacing permanent workers with temporary ones.

At the immense Foxconn plant in China, according to the report, “when its brand’s reputation was endangered by worker suicides, deadly accidents and unrest at factories, it decided to use the FLA [the Fair Labor Association, the other pro-corporate CSR giant].

After a 250,000 US dollar membership fee, FLA inspected the Foxconn factories, initially praising Foxconn in the press before even completing the inspections, then issuing a moderately critical report, then insisting a few months later Foxconn was well on its way to solving its labor rights problems.”

Little changed for the workers, however. When 1000 workers went on strike at a Foxconn plant in 2013, “observers reported that riot police, water cannons and physical violence were used to suppress the strikers.”


Another way

The Responsibility Outsourced report concludes by looking at alternative models that could improve working conditions. It points to global framework agreements between global union federations and multinational companies as particularly effective.

“Because they are not unilateral, but are negotiated by workers, they represent progress over corporate codes [and] contain binding commitments by companies to respect international labor rights and national laws.”

Some national measures passed by the US Congress are another means, the report finds, including the Dodd-Frank Act, which reformed financial practices on Wall Street.

In Europe it points to the protocol on freedom of association signed by Indonesian trade unions with multinational sportswear brands, backed by IndustriALL, the European labor federation.

The Worker Rights Consortium (WRC) and United Students Against Sweatshops (USAS) have developed a Designated Supplier Program, in which participating universities only buy garments from brand name manufacturers that pay prices to contractors that can support living wages, and where workers have the right to organise.

Following the Tazreen fire, a binding agreement was developed by IndustriALL, the WRC and other labour NGOs, that seeks to prevent more fires by guaranteeing workers’ right to organise and enforce safety conditions.

Some companies, including PVH Corp. and Tchibo have signed on.

WalMart and Sears, however, not only refused, but would not even pay compensation to the Tazreen fire victims.

Finally, the report also mentions the potential impact of using the 11 trillion US dollars in workers’ pension funds, invested in corporate stock, as leverage to get companies to change their conduct.

At the same time it casts a skeptical eye on more corporate-friendly programs like Better Work, and on the idea of reforming the employer-sponsosred CSR process.

Ultimately, concludes Sharan Burrow, General Secretary of the International Trade Union Confederation, “it is through freedom of association and organizing unions that workers have the best chance to defend their interests.”