A report on the sweatshops of the UK apparel companies operating their (or vendor’s) plants in Asia reported in 1998, “workers in Bangladesh are forced to work 13-hour shifts, with no time off, for as little as 60 pence a day” (BBC News, 13 November 1998). Almost a decade later the BBC run this report. Another report in The Guardian stated similar conditions in the UK retailers’ plants in Bangladesh with equally deplorable and inhuman conditions and low pay (McVeigh, 16 July 2007). The report states:
When faced with previous allegations that their suppliers are exploiting factory workers, Asda, Tesco and Primark have spoken of their commitment to labour rights. All three have signed up to a code of conduct which sets out basic rights for employees, including that they shall not regularly work more than 48 hours a week, that overtime shall be voluntary and not exceed 12 hours a week, and that a “living wage” should be paid. But last month, employees of factories supplying clothes to all three retailers told the Guardian that their wages were so low that, despite working up to 84-hour weeks, they struggled to provide for their families. (McVeigh, 16 July 2007)
Such a situation raises serious concern for the compliance of the voluntary code of conduct that the companies have in place. The series of accusations against UK based garment companies like Primark, Asda, Tesco, Mothercare, Marks and Spencer’s, etc. their continuous violation of international labour standards raises questions regarding the viability and effectiveness of the code of conduct and CSR reports they voluntarily disclose. Thus, questions arise regarding their conduct and the ethical/unethical nature of it.
Aim of research
Ethics refers to “a set of rules of conduct” or “moral code” (Abelson & Nielson, 1967, p.81). This definition points at the integral part of ethics in the inherent apparatus of the economic mechanism, to ethical business and corporate conduct, and indirectly to the way of life in the world. Therefore, ethics is an integral part of markets, or seen reversely no market can exist without ethics. However, corporate power can skew the balance of ethical corporate conduct. For this purpose, nongovernmental organizations (NGO) and social movements have attempted to take advantage of the corporate reliance on “brand identity” and push for clean ethical conduct.
Especially, in the apparel industry, the infamous sweatshop scandal of the 1990s led to the development of laws and regulations, and various forms of code of conduct and internal and vendor auditing system that could verify ethical conduct. Presently the company literature has been flooded with corporate codes of conduct (CoC), labour standards that have started to affect global production, and many conies hire external auditors who could monitor and assess ethical compliance in factories in the US and around the globe.
The increase in a private voluntary initiative to disclose of their ethical conduct and the code they follow in order to ensure ethical conduct in the name of corporate social responsibility (CSR). However, a pertinent question that remains is if the regulatory tools adopted by private organizations intersect with government regulations and accountability of the public. Does the code of conduct presented by the private organizations justify legal and social responsibility of organizations? Does ensuring of code of ethical conduct by private organizations ensure improved labour conditions and ensure ethical conduct?
Is it correct on part of the retailers to indulge in unethical conduct when they pledge to be ethically compliant in their CSR reports? Conversely, it is wrong on part of the retailers to promote business practices that contribute to continuous downward spiral working conditions and pay for employees working in factories of their vendors. However, most of the big garment retailers in the UK have a code of conduct written in paper, but their implementation is restricted and ambiguous. Therefore, the necessity to understand the true nature of the public disclosure of the code of conduct by organizations and CSR reports of companies in order to understand the true effectiveness of the voluntary disclosure programs?
Rationale of research
Apparel industry around the globe is highly competitive and the recurrent need to slash prices and meet ever-increasing consumer demand, keeping the product line fresh, shorten the lead-time, and maximize shareholder return has become the oxygen for the retailers in the UK and around the globe. Thus, the need for the fast-changing industry falls on the employees who are responsible for cutting, packing, and sewing the garment. Although many companies have subscribed to CSR and code of conduct regulations by regulatory institutions and conduct social compliance audit both internally and of their external vendors, they fail to implement these rules and still adhere to exploitative labour practices. The equation seems to be simple for the high streets apparel companies who provide low priced clothes at the cost of low wages.
In the UK the appeal industry is highly competitive with the market leaders like Marks and Spencer’s, Sears, The Burton Group, etc. enjoying the lion’s share in the market. Therefore, unethical behaviour on part of the retailers has become the “code of conduct” for the retailers who strive to remain competitive in an ever-demanding and ever-changing consumer market. A recent report stated that GAP the US-based apparel manufacturers has instructed its London based European fashion section to enforce a cost-cutting drive (Jamieson, 10 August 2008). Further, with the recent recession, most UK based retailers like Marks and Spencer’s (Potter, 3 August 2010) have taken to cost-cutting measures.
Therefore, the recent recession has made many companies indulge in cost-cutting measures that invariably put greater pressure on the initial stage of the supply chain. A study related to the ethical conduct of the UK apparel industry is imported as no substantial study has been conducted on the UK apparel industry and its ethical conduct even though many have attempted such study on US manufacturers and transnational organizations (Kolk & Tulder, 2005 ). Further, a content analysis of the CSR reports and code of conduct of the UK apparel companies would enable to analyse their compliance to international and national standards of ethical conduct and their effectiveness in implementing the same. This research will be of importance to both the corporate, public, government, and NGOs as this would provide the effectiveness of the ethical conduct of the companies.
With the effects of globalisation, outsourcing of many parts of the production chain has increased dramatically. Stakeholders are not only found in the country where the company is based but are now very frequently based abroad, mostly in the southern hemisphere. Corporations have an obligation towards their stakeholders, but what happens when the suppliers are in developing countries where the regulation, standards, habits, etc are not the same as in the western world? What is the corporation’s responsibility? To abide by the local regulation and standards and follow the local customs, even though they’re not ethical.
With increasing global pressure from the customers for newer fashion and better quality products, retailers put increasing pressure on manufacturers to deliver more goods at lower lead-time. Therefore, a very high degree of pressure is put on the lower level of the supply chain. Due to the high demand from the consumers, the retailers are changing their fashion every month, thus increasing pressure on them which means they are now purchasing cheap “statement” garments that they will only wear for a few weeks before moving on to the next trend. Therefore, high street brands are forced to source at exorbitantly low prices. In this rush towards lower and cheaper products, how can they recon ciliate their ethical imperatives? Are ethics and fashion compatible?
The high demand for low-cost fashion products evolves the need to study the company’s strategies towards ethical trade, whether it is a mere response to the stakeholders or if their practices are genuine, and what is the level of ethics implemented in the industry. This paper therefore compares different reports and strategies of a range of companies in the industry. This research is also relevant to understand in business ethics in the garment industry is genuine or a mere response to the pressure groups and the stakeholders.
Most companies now intent to have high sourcing standards, as they know that bad practices would mean consumers rejecting the brand for another more ethical one. They therefore have a higher incentive to report about their CSR practices and make the reports available for a wider audience rather than just the internal stakeholders of the company. One of the main problems of the garment industry is that companies’ objective is to make higher profits by keeping the cost as low as possible. In these conditions, how do they manage to conciliate their commercial imperatives with their ethical promises? The main objective of the study is to ascertain the importance of ethical trade in their CSR reports, whether it is a core aspect of their business or not. In this effect, this paper attempts to analyse the content of the CSR reports and voluntary code of conduct disclosure of organizations in order to ascertain the following questions –
- Are such voluntary disclosure of code of conduct and CSR prevalent in the UK apparel industry?
- Does the disclosure vary with the size of the company and its target market?
- What are the differences observable in the modus operandi used for ensuring these codes?
- What the areas of code of conduct that are covered in the reports and the uniformity and diversity in their content?
CSR has evolved as an important instrument for apparel industry across the world. The reason for the increased importance of CR policy is due to the shift of the garment industry from the manufacturers to the brands and retailers that are designed primarily to trade the goods produced by others. This process has been termed by one company as “global flagship network” wherein “their brand as flag and controlling a global fleet of suppliers” (Merk, 2009, p.600). Thus, the suppliers or vendors functioning in low-wage cost countries perform the routine processes of the supply chain. This process enables multinational companies to enter the huge labour reserves like India, China, and Bangladesh and not enter into legal contractual relation with the workers.
As Merk points out “these corporations have disassociated themselves from strategic control over labour-intensive production and large workforces, despite maintaining operational control over production processes through the processes of conceptualisation, design, quality control, etc.” (Merk, 2009, pp.600-01) Therefore, literature evidently demonstrates that there has been a rise of the voluntary code of conduct for the apparel industry in the 1990s and it mainly aimed to regulate comply to the international regulations of the. The increase in the number of voluntary compliance codes has been observed in the apparel industry globally. With increased pressure from multiple stakeholders, companies started reporting their various activities regarding their CSR practices and about different activities in their supply chain. This literature review will deal with two main segments i.e. ethics in the garment industry, especially in the UK and the researches on voluntary disclosure in form of CSR or CoC.
Definition and Types of Code of Conduct
International code of conduct comprises of a set of rules and guidelines related to the society that details the behaviour of the corporate and helps them to enhance their corporate responsibility. Therefore the definition of code of conduct is “International responsibility codes encompass guidelines, recommendations or rules issued by entities within society (adopting body or actor) with the intent to affect the behaviour of (international) business entities (target) within society in order to enhance corporate responsibility.” (Kolk & Tulder, 2005, p.3)
According to this definition, the body that adopts the code can be anybody that works within the societal sphere. In case of corporate code of conduct, the companies are free to design their own code of conduct, adhering to the basic tenets of the internationally established code. Further, the codes that are formulated by companies are meant to influence other societal entities like the regulators, customers, suppliers, vendors, contractors, etc. therefore, as pointed out by Kolk & Tulder “codes may serve other purposes than social responsibility as such is relevant when analyzing their properties and substance” (2005, p.3).
Many NGOs and interest groups use codes of conduct as a tool to enhance corporate social responsibility in for-profit companies. Corporate today often use this tool as an opportunity for new market development, reducing risk, and/or increasing control over business partners. These codes allow companies to develop self-regulating norms to establish the competitive advantage for themselves. Therefore, these code of conduct voluntarily developed are used to develop mandatory regulations.
The stakeholder theory is a key concept of CSR reporting. In the past, companies were only responsible towards their shareholders, the latter were engaging their capitals in the business, and therefore had to expect dividends. Managers were working on behalf of the shareholders, and their main role was to maximise the profit of the company. With time, the financial bottom line as main purpose of the company changed towards a notion of triple bottom line, where the social and environmental sides were as important as the economical aspect. (Murray, 2008) Businesses had to empower the stakeholders in order for them to understand what ethical constructs should be included. Therefore, businesses have a responsibility not only towards their shareholders, but also towards their employees, their suppliers, NGOs, the government and the community where they operate. Freeman introduced the notion of stakeholder theory (Freeman, 1984) and puts the stakeholders at the centre of a company’s management strategies: managers must act in the interests of the stakeholders of their organisation. There is today a pressure from customers and society to invest in the community and the environment.
The main objective of CSR is to build trust in the stakeholder network, and to create a value in partnership with the key stakeholders. (Enquist & Johnson, 2006) Companies are given a licence to operate (Donaldson, 2001) which means they will require the approval of the stakeholders to run their business in an effective way. In the traditional way, a company gains its licence to operate by abiding by the rules and obligations, but the concept has been extended to the demand of social actors, and it now goes beyond the legal obligations of the company towards social and environmental obligations. Public values have changed, and now include actions towards working with the community for the well being and the advancement of the society. As Zinkin points out, a multinational can re-building its licence to operate by basing its business on mutual agreement, and having an interactive relationship with the different actors they have to deal with. (Zinkin, 2004)
Also, if companies don’t act ethically, they risk losing their licence to operate and be seen as practising an egotistical business. They will then be seen by the stakeholders as enemies, when they want to be seen as partners. Consumers in the western world feel more and more responsible towards the people who produce the products they’re buying , and expect the company not only to provide them with products, but to make sure that these products are sourced in an ethical way. They don’t want western companies to take advantage of poorer nations. CSR can be seen as a response to the excess of globalisation (Murray, 2008), and a way for other populations to benefit from globalisation and the wealth it can bring. As Zadek (Zadek, 1998)points out, the consuming public is an important stakeholder group whose ethical views may encourage companies to rethink their approach to business.
Businesses have a responsibility to all their stakeholders, and therefore, need to make sure all stakeholders are treated in a way that is approved by all and will benefit all. This is the reason why garment retailers need to assure that good working conditions are provided in the factories where they source their products from, and that poor nations are not being taken advantage of. As Jones (Jones, 1995) pointed out, ethical principles can bring a significant competitive advantage to a company provided that the principles are shared with the stakeholders.
From a CSR point of view, a company can only exist if “its core values are aligned with the core values of the society in which it operates (Murray, 2008) Therefore, corporations have to present their business as legitimate to the society (Deegan, 2000) In this context, companies have an obligation to disclose on their ethical and responsible actions. Companies want to get the implicite approval of the society on their actions and behaviour (Murray, 2008) and the only way they can get the aporoval is by disclosing the information about the corporations. Most large garment company now disclose their CSR practices and ethical trade initiatives either on their annual report, or on a separate CSR report, as we will see further in our research. The more attention a sector would get, such as the garment industry got in the 90s , the more information the companies will be willing to disclose. (Toms, 2000)
Ethics in the garment industry
Various studies have studied the content communication and compliance of the companies for CR (Stigzelius & Mark-Herbert, 2009). As there has been a shift of the apparel industry from the hands of the manufacturers to the brands and retailers, companies have developed chain of production houses under their banner in different parts of the globe. The routine works of the supply chain were outsourced to the vendors (or plants) in countries where labour is cheaper as in India or Bangladesh. As has been mentioned by Merk “more routine tasks of production are now being performed by suppliers operating in low-wage countries” (2009, p.600).
Therefore, it must be noted that in case of apparel industry, “this means that manufacturers must internalise the risks the branded companies and retailers seek to externalize (Merk, 2009, p.601). In other words, tasks like recruiting can be outsourced in order to gain cost advantage, whereas not loosing onto the vital part of the marketing of the product. Therefore, this new mode of doing business has helped many companies to grow in size, but they had to divulge a lot of information, which earlier was considered to be confidential in order to retain a transparent supply chain.
The stress on ethics in trade was a phenomenon that emerged in the 1990s and referred to superior labour standards for workers in the supply chain in developing countries (Kolk & Tulder, 2005 ). However, many scholars believe that environmental consciousness of the corporate should be included in CSR of the companies. The first aim of the companies is to comply with the national and international codes of ethical conduct (Zadek, 2004). Zadek points out how companies opt for “civil living” wherein they transgress to become more socially responsible. Therefore, the corporations decide to trade in an ethical manner, the action of the companies becomes more affirmative, they have to help protect the people they’re doing business with, and “provide assistance” to improve their conditions. In the garment industry, the retailers don’t normally own the factories from which they source their products, so the working conditions in place in the factory shouldn’t be of their responsibility, but rather of the local government and the factories management. However, since the high mediatisation over sweatshops and child labour in the 1990s, a lot of pressure was put on the multinational companies to react on these problems.
The beginning of the ethical concern for corporations started with the extreme exploitation of the athletic footwear industry in the early 1990s that ignited the anti sweatshop movement began that aimed to safeguard the labours and working conditions in outsourced plants in underdeveloped or developing countries (Merk, 2009). Apparel companies like Gap and H&M became the targets of such campaigns. Merk points out that there were “Numerous reports, scandals and campaigns have revealed repeated violations of the International Labour Organisation (ILO) core conventions” (2009, p.604).
The main issues that were pointed out in the anti sweatshop campaigns were that of “substandard labour conditions”. This movement made the companies to comply with various national and international regulations and adopt codes of conduct. The main ethical issues found in the foreign supply chain in the garment industry are mainly labour and human rights issues such as child labour, prison, slave labour, the minimum wages – as often the minimum wages in developing countries is below a pound per day. Merk states, “Today, in industries like textiles, clothing and footwear, hundreds of ethical codes have been adopted and corporate social responsibility has turned into a ‘routine management function’.” (2009, p.605) The apparel companies, presently, have adopted the routine
Neve (2009) studied the garment factories of Tiruppur based on field research. His findings focused on the ethical nature of the corporate governance of the in the South Indian garment factories. His research suggests, “The most popular form of private standard initiatives in the Tiruppur garment industry is the company codes of conduct,” (Neve, 2009, p.65). The nature of the code of conduct has changed a lot over the years. Neve’s study demonstrates that in Tilruppur there is a certified standard for maintaining social and ethical health of the factories.
Tiruppur exporters can obtain certification for their garment factories by putting the required social management systems in place and having their units audited by an independent auditing company. Unlike the case of company codes, compliance with certified standards is checked through a “third-party” auditing process, which is said to enhance the standard’s credibility and hence, the value of certification itself. In Tiruppur, a branch of the Swiss international certification company Société Générale de Surveillance (SGS) was opened in 1996. Though initially they only undertook product testing and inspection, since 2000 they are also carrying out social audits, and they are now one of Tiruppur’s leading accredited auditors for SA 8000, WRAP and other certifications such as Environmental Management Systems (EMS). (Neve, 2009, p.65)
Egels-Zandén & Hyllman studied the transnational corporations (TNCs) and NGOs that were struggling for the clean clothes campaign in Sweden (2006). The paper studied the relationship between NGOs, TNCs, and union. Their study revealed that
… co-ordination relationships between unions and NGOs, particularly high-commitment co-ordination relationships, are likely to result in a broadening of the definition of TNC responsibility, while conflictual relationships, both high and low commitment, result in a narrowing of the definition of TNC responsibility. (Egels-Zandén & Hyllman, 2006, p.314)
The study therefore stressed on increased coordination between the three parties in order to increase ethical conduct and enforce corporate social responsibility.
Other researchers point out that compliance to ethical conduct has become the lifeline for entering a global market network (Nadvi, 2008). Therefore, the research article points out the relationship between the international compliance norms and the corporate governance. The article points out that “at convergence on standards, especially on social, labour, and environmental aspects of process standards, which involved complex networks of diverse public and private, local and global actors.” (Nadvi, 2008, p.16) Research also suggests that compliance with code of conduct is linked to changes in the working of the organization. In this context, it is important to understand that there has been a rise in the voluntary code of conduct by organizations that have strived to maintain a high degree of ethical conduct for the organizations. Given this increase in the code of conduct for the organizations, it is important to understand the researches that have been conducted in case of content of code of conducts and CSR reports.
CSR reporting has become a well-developed trend with corporate. Research shows that sustainability reporting in terms of environment, social and economic status has increased considerably in many countries (Kolk, 2004). Studies have demonstrated that the companies belonging to the “more ‘polluting’ sectors have been most active in this regard.” (Kolk, 2004, p.53) They can be instrumental/economical reasons – as bad or non-ethical practices might alter their reputation, and provoke boycott from the consumers – this is the main reason why companies in the clothing and retail industry would report on their social performance. The other reasons are political, to integrate demand from the stakeholders and ethical reasons as a response to external pressure.
Simon Zadek is a key author when it comes to CSR reporting. He pointed the following reasons why the companies measure and disclose their social and ethical performance (Zadek, 2004)
- to understand what they are trying to achieve and how best to measure performance against their aims;
- to know what they are doing;
- to understand the implications of what they are doing;
- to understand in what ways if any they can explain their actions to increasingly sceptical and aggressive stakeholders.
- to understand whether there are practical options for improving their social performance in ways that will not harm their business performance, and may in many cases improve it.
As CSR reporting is still voluntary, and not an obligation by law, it can be named in many different ways: Social audit, social responsibility reporting, social audits, ethical audit, etc. (Crane & Matten, 2008). The content of the social report will also defer depending on the type of company, size, type of business. Garment retailers would emphasize on their ethical practices in regards to their supply chain in developed countries. In this industry, they will also make this document available publicly to their stakeholders, whereas in other industries, the report would remain internal. (Zadek, 1998)
Corporate responsibility (CR) has become increasingly important for apparel and sports good industry. As it has been mentioned, CR assumes greater importance for companies that have a labour intensive production process, sell branded consumer products, and the ones that sell high end products by manufacturing them at a cost effective supply chain, as human rights are usually violated (Stigzelius & Mark-Herbert, 2009). One such example of a company that streamlined its CR policy is Nike. As Zadek points out:
In the 1990s, protesters railed against sweatshop conditions at its overseas suppliers made Nike the global poster child for corporate ethical fecklessness…. Nike’s model – to market high-end consumer products manufactures in cost efficient supply chains – is no different from that of thousands of other companies…. And the lessons it has learned will help other companies traverse this same ground. (Zadek, 2004, p.1)
In the garment industry, over the last decade, an increasing number of multinational clothing companies have accepted their responsibility to uphold human rights in all the operations in their supply chain. Increasingly attempts have been made to improve the working conditions at the factories have been mentioned in the company CoC and acceptance of global standards in enforcing the national labour laws (Stigzelius & Mark-Herbert, 2009). Therefore, monitoring global suppliers and vendors in relation to national and international laws and internal CoC has become mandatory throughout the global apparel industry in order to enhance and preserve consumer confidence. Various studies have been conducted related to the CR practices of companies and their supply chains. Ethical conduct in the supply chain has assumed paramount importance for both the corporate and consumers and therefore, it requires further understanding of the situations.
The literature review shows that code of conduct ad ethical understanding of the corporate is a concept that evolved three decades earlier. To be sure, this phenomenon has brought forth many areas of the ethical behaviour of the company. Further, corporate conduct was enforced through soft laws by private enforcers in order to make the operations of the transnational corporations more transparent. The researches related to the ethics in apparel industry abundantly discuss the nature of the ethical conduct and the content of the codes. Further, they also indentify plethora of difference between the codes, standards, and norms followed by corporate. Difference in the way code of conduct and ethical conduct is handled is evident from previous content analysis research of the code of conduct. However, there is no research that had seen the similarity or differences in the practical implementation and reporting of the practice through a content analysis of the CSR reports or annual reports of the companies. As voluntary disclosure of the ethical practices has become an unsaid norm in the manufacturing industry.
Content of CoC
The main issue areas that are dealt with in the code of conducts of UK apparel companies are environmental concern, labour condition and relation, disclosure of information, competition, taxation, policy regarding bribery and corruption, participation in research and development, consumer right protection, and other miscellaneous issues. Using these issues as the major areas on the basis of which the code of conducts and the CSR reports’ contents are analysed.
The trend of implementing and disclosing voluntary code of conduct was first attempted in the 1970s when international organizational like International Labour Organization (ILO) and Organisation for Economic Co-operation and Development (OECD) designed a code of conduct. Simultaneously, governments of both developed and developing countries and social interest groups stressed on the presence of corporate code of conduct in order to ensure ethical performing of transnational companies that were making steady inroads into different countries. However, there was little consensus that had been reached in this respect. Therefore, evolved voluntary code of conduct. For instance, when a company voluntarily adopted the ILO code, the trade unions used the code as an instrument to harass the company. This limited the adoption of such pro-labour code.
The scenario changed in the 1980s, the code of conduct for corporate was biased towards corporate ethics. The prevalence of the debate on code of conduct was based in the US. As pointed out by Kolk & Tulder (2005), “The international dimension of the debate, however, remained limited, and attention to business ethics in other than United States companies was rather modest.” (p.5)
During the 90s, global standards in corporate conduct gained prominence. There has been an increase in codes for corporate and organizations started voluntarily to adhere to such values and norms. Especially organizations having operations globally felt the pressure to adhere their allegiance to one such code of conduct. With the advent of the 21st century, the concern for corporate responsibility resurfaced, and brought forth the urgency to establish voluntary code of conduct. Social groups stress on transparency in corporate public image and their actual performance bringing forth corporate brands and logos in the question of ethical conduct (Bartley, 2005). Further, due to the high importance of shareholder value by corporate, they often fail to meet the greater social needs and adhere to the social norms. This brings forth cases of unethical behaviour in part of the corporate.
With increase in private regulation there has evolved “soft laws” that was used by corporate and NGOs in order to reduce corporate excess. Companies have undertaken code for labour practices, environmental safety, and others. Corporate have recently shown increased awareness regarding corporate social responsibility in the internationally. However, there evolved certain challenges regarding codification of the ethical codes. Many garments and sports goods companies like Nike, Levis, and Shell formulated responsibility code of conduct as a defensive stunt to counter attacks against their rampant labour exploitation and environmental hazard by government, NGOs, and social interest groups. As has been stated by Kolk & Tulder (2005, p.6): “For most other companies, the code was their first statement on their (perceived) social responsibility and approach.”
Therefore with the advent of the 20th century there arose a plethora of code of conducts by profit making companies to demonstrate their responsibility and duty related to the society, environment, and fellow human being. Thus, many companies have undertaken voluntary disclosure of codes in order to express their operations in transparent light and avoid any misgivings. Therefore, many companies voluntarily disclosed code of conducts in order to keep their supply chain transparent.
Therefore, there emerged a two-way space wherein the private regulatory authorities tried to implement “soft laws” and corporate voluntarily disclosed a code of conduct to ensure socially accountable policymaking. Thus, evolved many corporate codes of conducts that helped in understanding the nature of code that has been used by corporations to develop. The content of the code of conducts are of high degree of importance for researchers, companies, and regulators as they help to adjudge the nature of the codes in practice and their utility in actually making corporations for ethically aligned.
Research in the ethical conduct of apparel industry has been a popular area of research. The main reason behind the popularity of the apparel industry in ethics research is due to the sweatshop scandal against popular brands like Gap, Marks and Spencer’s, etc. Instances like the Nike’s “pull-out” from Sialkot vendors as the vendor was accused of using child labour. This stunt demonstrates the continuing challenge that corporate face in maintaining an ethical global supply chain. Due to globalization, there has been a high degree of the necessity to maintain an ethical distribution chain. In many cases, the apparel companies are found to operate in developing or less developed countries like Pakistan, China, Bangladesh, wherein work conditions and wage rates are not always the same as they are in developed countries. This is usually done to meet the profit maximizing interests and stakeholder interest of the company. Research in the area of ethics followed by UK apparel industry and a content analysis of the code of conducts is absent in the plethora of ethics literature. Therefore, this paper will aim at understanding the code of conduct that is voluntarily disclosed by the UK apparel companies.
The approach to codes of conducts and ethical compliance differ between organizations from different geographical background. A japanese and european firm will have a more inside oriented governance system while an American company will have more interest in institutional investors and social responsibility.
The paper aims to measure the importance of ethical trade. In order to do so, the paper analyses a range of garment retailers listed in the UK’s annual reports/CSR reports or any kind of external communication they diffuse to their stakeholders. The main objective of the paper is to analyse the information regarding ethical trading that is available for their stakeholders. The method that is used for this paper is content analysis as the core method of analysis. The paper deals with qualitative data collected on the companies’ websites.
Content analysis is a widespread method of analysis that allows us to directly analyse the texts and the communication that the companies are using and draw conclusions from them. It gives us closeness to the text, and enables us to code specific concepts and the relationship between them. Bowman, cited by Wilmhurst describes it as “an inquiry process which does not rely on casual reading but rather explicit counting and coding of particular lines of prose, word usage and disclosure” (Wilmshurst, 2000, p.13). However, word counting is a reliable method when the objective is to measure the space allowed to certain topic, this research paper prefers to analyse the sentences in their context.
Content analysis is a non-intrusive way to gather information about the supply chain of apparel companies under study in this research. The content analysis method helps to get an inside of the company in a non-intrusive way. This method involves both qualitative and quantitative data. It is considered as a relatively exact method of discourse analysis.
The research will mainly consist of a content analysis approach. Neuendorf (2002) describes content analysis as a method of quantitative analysis of that is heavily based on scientific procedure. It is not limited to the analysis of the variables or contexts in which these texts have been created. It therefore falls under quantitative research, (Neuendorf, 2002) which is a positivist approach of epistemology.
Following Bryman and Bell (2007) positivism is a deterministic position that “advocates the application of the methods of the natural sciences to the study of social reality and beyond.” (p.27) This approach is totally based on actual experience in order to gain knowledge. Therefore, the approach is more positivist in nature rather than interpretive. The social scientists have to understand the subjective meaning of socially conducted actions.
At first view, it will seem that our research is only positivist, however, our content analysis will be an analysis of qualitative data: text, messages reports. Therefore, our research will use a triangulation method, which will analyse qualitative data with a quantitative method. Our research will allow for different epistemological approaches, which increases the reliability of the study.
This research will use a content analysis method to analyse the CSR reports of a sampling of 15 garment companies selling their garments in the UK. This paper analyzes these reports and their content according the social reporting and ethical theories.
According to Krippendorff (1980, p.21) content analysis is more of a research technique that helps in “making replicable and valid interference from data to their context”. For Weber (Weber, 1990, p.9), it is a research method that uses a set of procedures to make valid interference from text. Berger (1991, p.9) defines it as a research technique that is based on measuring the amount of something in a representative sampling of some mass-mediated popular art form. For Bryman and Bell (2007, p. 304), it is an approach to the analysis of documents and texts that seeks to quantify content in terms of predetermined categories and in a systematic and replicable manner’. Neuendorf (2002, p. 10) gave a condensed definition of content analysis as a: “ summarizing, quantitative analysis of messages that relies on the scientific method… and is not limited as to the types of variables that may be measured or the context in which the messages are created or presented”.
The present content analysis aims to do a content analysis of the reports collected from the companies in order to analyze the substance characteristics of message content. The paper will also describe form characteristics of message content in the annual report and CSR report of the companies. Further, the report will draw inference to producers of content and the audience of content.
In effect, this method of analysis will allow us to understand what the ethical standards are for the companies, the specific topics they are reporting about, who is reporting, to which stakeholders is the message directed, and what are the effects on reporting on ethical trade for the audience (the stakeholders). Therefore, this research will deal with the analysis of the reports disclosed by companies in form of annual reports and CSR report.
Content analysis involves a process of two steps:
- Organisation of the data
- Interpretation of the data
We will intent to convert the qualitative data of the reports into quantitative data which will be r to analyse and draw results from. We will then interpret the results and confront it with our hypothesis. Thus, our method will involve a mixed method of analysis: quantitative analysis of qualitative data.
The main subjects and themes will be coded in order to categorise the phenomenon (Bryman, 2007). Coding is a crucial part of content analysis, as it will determine our interpretation. The coding rules will be drawn by the researcher, and it implies having a wide knowledge on the subject analysed prior to the coding process being conducted. Once the sampling has been chosen, the units of analysis will be considered according to our research questions. The significant concepts and the words associated with them will be counted.
This will be followed by the coding schedule and the coding manual. The coding schedule is a form into which all the data relating to the item being coded will be entered (Bryman, 2007), so the codes can then be entered into a computer based analysis system such as SPSS. The coding manual is the instruction to coders specifying the categories that will be used to classify the information, and how it should be classified.
Content Analysis of Company Codes
The increase in the content analysis of CSR and annual report of companies is necessary to develop a detailed understanding of the content of the codes that the companies follow. Kolk, Tulder, and Welters developed the model of content analysis that is followed in the paper (1999) called the “compliance likelihood” model. The model provides the probability of adhering to the codes that they voluntarily set for themselves or codes developed by other institutes or organizations. The model determines the likelihood of adoption and adherence to compliance that is determined by “the compliance mechanisms included in codes and the extent to which the claims put forward are measurable” (Kolk & Tulder, 2005 , p.9). Therefore, with greater transparency of the code, the greater is the chance of increasing the monitoring of the operations of the company. This is so because monitoring is expected to increase the comprehensiveness of the codes of conduct of the companies.
Originally, the model drew the framework to study the codes developed by many companies, international organizational, and NGOs. Therefore in the present study, following Kolk et al. (1999) the paper develops the coding scheme for content analysis. The issues that are analyzed using this model are social, environmental, and generic are analyzed. In this respect the social questions that would be used to understand are employment related issues like promotion, equality, treatment, work security, etc. then the second that will be analyzed is training that is given in employment, and the third area is the working condition of the employment that includes issues related to benefits, salary/wage, the work environment, and life and safety issues at workplace.
The other issues in the social category that are dealt with are related to child labour, forced labour, and disciplinary practices followed at the plants. In the environmental issues, the analysis will look into the management policies related to the environment, and the system. Then the areas that will be analyzed are related to the stakeholder relations, development of sustainability and finance for the organization. The third issue that is related to generic issues associated with industry that would cover areas related to consumer interest that includes consumer needs, disclosure of information regarding the organization, and concerns of the consumer, and the marketing practices.
These areas would allow us to ascertain the ethical behaviour of the companies in its marketing and disclosure areas. Other areas that are studied in this case are community interests i.e. involvement of the company in community activities, philanthropy, and sponsoring. The other areas that are considered important that will be analysed using the model are global development that encompasses areas related to global issues. Then areas related to ethical and moral uprightness of the companies are studied i.e. related to bribery, ethical values, payment facilitations, etc. other legal requirements are considered legal requirements such as legal compliance, and compliance related to business partners, etc.
Given this, the paper will try to ascertain how the data for the research would be collected. The data is collected from the companies’ website and extract their annual reports, CSR reports, and strategies. Mixed method of analysis is used as it will help collect qualitative data that will be transformed into quantitative data. The data is transformed using a coding process, in order to answer the research questions related to ethical trade in UK garment companies.
The research will study the UK high street garment retailing brands and the division that exists between them. The retailing has a basic division between: low-range brands, mid-range market, higher range, department stored and ethical brands. The companies have been purposely chosen to rule out the designer market, which is only accessible to a very limited category of customers to concentrate on brands that are widely accessible.
Within each division, we will randomly select 3 brands that operate in the UK. Therefore, 15 companies will be studied. The data that is analyzed are the CSR reports, annual reports, and strategies depending on the availability of such information. This will give us 45 documents to be analysed. No company will be analyzed that do not have any publicly disclosed information on their corporate social behaviour and annual report.
Content analysis is a helpful process for ascertaining the applicability of CSR by organizations. The analysis of the content of the CSR and annual reports is a method of collecting the data. The process involves codifying of the information in both qualitative and quantitative form into priory defied categories such that a meaningful pattern of reporting of the information may be derived. Therefore, in order to do an effective analysis, it is important to meet a few technical requirements. The first task is to define the categories very clearly and should be operational. Thus, these categories should become the unit of analysis. Further, clarifying the data capture is important as it must be systematic and clearly defined such that there remains no ambiguity regarding its categorization. Further, the content analysis must show valid and reliable results.
Unit of analysis
Unit of analysis is an important part of content analysis. Holsti states that the unit of analysis is the “the specific segment of content that is characterized by placing it into a given category” (Holsti, 1969, p.116). Therefore, words, sentences, or phrases are usually used as the basis of coding.
Gray, Kouhy, & Lavers (1995) points out that sentence are a better form of communication if the idea is to extract meaning out of the inference. Therefore most content analysis on ethics is done on the basis of coding. Sentences are believed to provide a complete and reliable data for analysis. The other method that can be used for coding is using paragraphs as the unit of analysis. This is a more appropriate method of coding than word count. This is because meaning is inferred more from the paragraph than through an isolated word. Therefore, paragraphs are a more appropriate method. Therefore, the degree of disclosure of a firm is measured by frequency of the occurrences of both the categories and elements. An organization’s total amount of disclosure is measured by counting the frequency that gives the overall index.
The data collected was from the annual reports and the CSR reports of all garment manufacturing companies operating in the UK. In total of 15 companies were researched upon and their annual report of CSR report was extracted from their website. The study analyzed these two forms of documents are they have the richest information regarding the company’s social responsibility. The research studied 15 companies with information regarding their CSR activities from their annual reports and/or CSR reports. The documents were publicly disclosed in the company’s websites. Content analysis has been widely used by researchers to analyze the content of the code of conducts of the many US based and European companies. However, research is scant in the area of analyzing the content of CSR reports and annual reports in order to understand the CSR activities that has been undertaken by the companies. The next section will undertake an analysis of the content of the CSR and annual reports.
The data is analyzed using Provalis content analysis software. First the reports were categorized into two sections – annual reports and CSR reports. Both the documents were simultaneously analyzed as some companies did not have a CSR report available in the website. Therefore the annual reports provided a vivid outline of the community and environment related activities of the companies. The documents were coded based on three categories – Environment, Generic, and Social. The codes under the Environment category are community interest, ethics, finance, global development, inventory, legal requirements, sustainable development, and management policy. Under Generic category there are two codes i.e. consumer interest and compliance. In the Social category, the codes that have been included are IR, employment, training, work condition, and labor force. The codes are attached with key words that have been derived from the thorough reading of the documents and previous research on content analysis of the code of conducts and CSR reports. The areas studied definitely demonstrate the areas that demonstrate the corporate social responsibility of the retail companies.
On analysing the 15 documents, when the sentences are searched for CSR there are 91 occurrences of the word in all the 15 files. The maximum occurrences are found in the CSR document of H&M that has 37 occurrences of the word CSR. Inditex has 26 occurrences of the CSR and Mango has 24 occurrences of the word.
Figure 1 demonstrates that occurrences of the phrases corporate social responsibility have the highest occurrence in the phrases. Code of conduct has the second highest occurrence rate. And the third phrase is policy in place.
The results of the text retrieval of the data analysed demonstrates that the maximum emphasis that is given by retail companies in the UK is on environmental issues. This is demonstrated through the highest frequency of the phrase The Environment in the documents. The second most important aspect of the reports is found to be the code of conduct and the rest dealt with CSR, stakeholder, and ethics. The next section of the analysis will deal with the inclusion of the words and phrases that are important for understanding and presence of CSR activities of a company.
The above data represents that the represents that the maximum amount of emphasis that is placed in the reports by UK based companies is on community interest works and employment. This is so because the frequency of occurrence of these two categories has been largest. Therefore as a percentage of words, community interest and employee codes attain the highest percentage of presence in the documents. This therefore, indicates that the retail companies in the UK are more concerned with community related activities and employee relations.
Figure 3 demonstrates that that there has been a prevalence of community interest for companies like GAP. Ethics has been a priority for Primark. On the other hand, Arcadia Group has stressed on employment. This shows that not all companies are concerned equally on the same initiative. Some companies may have their stress on community welfare while others may be interested in getting the ethical conduct in place. However, mostly companies have a stress on employee relations.
Figure 5: Categorization of Documents
The above table categorizes the reports based on three categories – generic, social, and environment. These categories have sub categories that in turn have key words attached to them in order to understand their presence in the documents. The above table in figure 5 demonstrates shows the number of cases of occurrence of the words and their keywords in the documents of the 15 different retail companies of the UK. A more general understanding of the categories and their presence in all the documents is derived from the table shown below as figure 6.
Figure 6: Categorization of the documents
|FREQUENCY||% SHOWN||% PROCESSED||% TOTAL||NO. CASES||% CASES||TF • IDF|
According to the findings and the keyword classification of the categories, it is found that among the 15 UK based garment retailers; the category that has the maximum frequency of occurrence is for the generic category. The percentage of occurrences of the keywords that had been derived by doing a phrase analysis in from the sentences, were then segregated into two lists – categorization and exclusion list.
The table demonstrates that the maximum occurrences of the category in the documents analyzed are that of generic. This generic category deals with the consumer interests and consumer concerns, community interests including disclosure of information, involvements of the company in community work and philanthropy done by the organization. The consumer marketing policy and product development would fall under this categorization. Therefore advertising ethics and marketing principles fall under this category.
It also includes developments in the global arena such as socio-political issues, trade and fair trade practices of the company, relation and association of the company with the less developed countries, and other external issues. Further it also includes ethical concerns of the company that arises out of the practice of human rights, fundamental rights of stakeholders, ethical nature of values of the company and policy towards bribery and gift taking or giving. The environmental issues entailed management policies, and system of the companies. The third is social causes that affect the employment of the labours. Employment is related to the employment promotions, equality of wages, non discrimination, equal opportunities, and employment security.
Further, social category also pertains to maintaining training of the employees on social responsibilities of the company. Further, under this section working condition of the employees must be looked after. The working condition of the factories also entails the wages and benefits that are given to the employees, working conditions of the plants and the condition of work life of the employees is considered. Further, health and safety of the employees is considered under this category.
The next step is to ascertain the different frequencies of the coded segments. As mentioned earlier the coded segments included change in climate and how CSR of companies affected the awareness of the companies regarding climate change. In this respect, a content analysis was run for Climate for all 15 documents and the following result was derived.
Figure 7: Content Analysis of coded segment Climate
|FREQUENCY||% SHOWN||% PROCESSED||% TOTAL||NO. CASES||% CASES||TF • IDF|
The above analysis demonstrates that there has been a high degree of change in the three categories. It is found that the segment that has been coded as climate has the maximum frequency in generic category while least in social category for all the 15 companies together. This demonstrates that the UK based retail companies are more inclined towards keeping their employees happy rather than entertaining philanthropic endeavours.
Figure 8: Cross tab results
The cross tab analysis demonstrates that generic concern is most for companies like Esprit and Inditex. For others like ASOS, Debenhams, H&M, Marks and Spencer’s, Mothercare, etc. the stress is on social concerns like employee relations and industrial relations. Therefore, the CSR activities in these firms and majority of the companies is based on maintaining equality at work, equitable wages and services, and better work conditions for employees. This is a concern that has been found to be dominant in most of the code of conducts of companies especially garment and sports good companies due to the emergence of the sweatshop issue in the eighties.
Therefore most companies still try to maintain a healthy work condition such that their brands are not diluted due to bad work conditions and unsatisfied labours. The companies who feel that generic category assumes greater importance feel that generic category causes such as customer interests, stakeholder interests, and philanthropy and societal concern assumes greater importance in having a high degree of social awareness. The main idea of the companies is to be socially responsible in these areas. The main concern of the companies is to undertake CSR activities that would keep their closest stakeholders satisfied.
The next step is to understand what is keyword-in-context that is included in the files that are related to the CSR activities of the companies. In respect to the Social category, it is important to understand the nature of concern the companies have for the areas that are being studies. This section will deal with the keyword-in-context analysis, which is primarily a descriptive analysis. Here we will try to understand the main concerns of the coded categories that are faced and CSR activities undertaken by the companies.
Figure 9: The occurrence of the keywords in the documents.
The frequency of occurrence of the key words is divided into three categories. The percentage of the frequency occurrences in the total number of words is given for all the 15 documents. The above table shows that in 3 out of 15 documents, the main issue that has been dealt with is environment, while in 5 out of 15 documents the stress has been social issues. While in rest of the 7 documents, the stress has been on generic issues.
A descriptive non-numeric analysis of the documents demonstrates that the phrase corporate social responsibility occurred 136 times in the 15 documents studied. The percentage of cases in which these occurred is 53.3 percent. The occurrence of legal documents and reporting related phrases that have been found in the 286. The presence of law and legal compliance has been mentioned only in the document of one company i.e. Inditex. The case occurrence percent is 13.3 percent. code of conduct has been found in 235 instances, and in almost all the documents. This demonstrates that most of the UK based garment retailers have a stress on the presence of internal code of conduct that they follow in order to be socially responsible.
There is the presence of “remuneration committee” that has occurred in 220 instances, comprising of 13.3 percent of the total instances. Further for internal and external audits there is the presence of audit committee that has been found in many case i.e. 212 instances, that accounts for 13.3 percent of the total occurrences. Further there is another instance of presence of “audit and control” that demonstrates the presence of internal social auditing for both financial and non-financial matters in order to remain socially responsible. This ensures that the companies are continually undertaking the practice of auditing their operations and in the process of identifying the areas that need to be stressed upon.
The other area is the remuneration committee that is in place and effect and has been found in 182 instances demonstrates that there has been the requirement and presence of remuneration distribution and a committee to look into the matters of equal distribution of remunerations.
“Health and safety” occurred 152 times in the documents. This demonstrated that the stress on safety issues at the plant or factory level and health issues of the employees is a great concern for the companies under study and have assumed an important position in the documents under study. Corporate governance also assumes 135 occurrences in the documents thereby assuming a 46.7 percent presence. This shows that the corporate governance is of high priority for the companies. They want the companies to undergo proper governance. “Internal audit” of the companies too occurred in the company. Therefore, these occurred 60 percent of the cases, thereby assuming great importance for these documents. Internal audit indicates the presence of internal control over the financial and social issues of the company. Therefore they assume greater importance in case of social responsibility of the companies as auditing can only help to keep the internal operations of the company into proper place.
This section deals with the areas of the coding that is retrieved from the documents. The first code that is retrieved is community interest. This shows that there are 91 sentences related to the community interest code. This demonstrates that the organizations work in relation to the development of the society. The first occurance for instance demonstrates the importance of community interest taken by the garment companies that cater to renewable energy resources and cutting down emission in order to help the society:
committee, works on the key objectives for the organisation in this area (i.e. reducing energy usage and transportation costs) Membership of key industry bodies to provide awareness of changes to standards and legislation Executive Health and Safety committee who works to review compliance for organisation in this area Code of Business Conduct Policy in place and compliance noted (Content Analysis)
Further, in order to help the community the code of conduct that is established internally within the organization is enforced by both the managers of the organizations and also by the vendors and merchandisers.
Further in case of employment related activities, the content analysis shows that the committee is responsible for equity among employees. As in case of ASOS, the company mentions a Muslim employee being a trustee – “Waheed is also a trustee of the Elton John”. Further, in its CSR report Inditex mentions the unbiased way the company operates –
… programmes were signed at Zara Logistic, joining the 2008 signatures for the Zaragoza logistics centre and the manufacturing centres at Arteixo and Narn (A Corua). Likewise, situation diagnostics were agreed by the Meca (Madrid) logistics centre and the Bershka and Massimo Dutti centres in Tordera (Barcelona). In 2009, the number of part-time employees, as opposed to full-time, increased slightly to 60% of the workforce. This shows that more workers are choosing this formula in order to combine work with studies or family. One of the main characteristics of the Inditex business model is flexibility, which is reflected in the human resource policy. The company offers a range of positions with different working hours so as to facilitate, to the extent possible, stable work shifts.
Further, the company also mentions the non discriminatory practices that are endorsed by the company in case of employee relations –
The commitment to both vertical and horizontal equality was endorsed in 2006 with the ratification of the Equal project, Active Diversity, co-financed by the European Commission and with its social responsibility activities managed by the Spanish Coordinator from the Women’s European Lobby and the Carolina Foundation which promote the implementation of measures for reducing inequalities between men and women in businesses…. Inditex made a significant effort to incorporate equality programmes in the Group companies during 2009.
Further Mango mentions its CSR activities in terms of the educational and training programs of its employees that have been growing. H&M confirms in its report that its employee relations are in confirmation to the ILO convention – “… policy is based on the ILO convention (C111 Discrimination). In addition to this, we also have a global diversity policy.” Further equal employment opportunity is provided to employees in order to guarantee “opportunities for all… employees” and “aim to create an environment that offers all employees the chance to use their skills and talent”. Therefore, the employment policy and to enhance equality among employees has been adequately embraced by most of the employees.
All the companies shave strong policy regarding discrimination against employees. ASOS has a strong policy regarding discrimination. The company report states that no form of discrimination or harassment will be tolerated –
The Group gives full and fair consideration to applications for employment when these are received from disabled people and employs disabled people whenever suitable vacancies arise. Should an employee become disabled while working for the Group, efforts are made to continue their employment and retraining is provided, if necessary.
Similarly, other companies like Marks and Spencer’s, Mango, Next, Primark, etc. Have explicit policies against discrimination. Marks and Spencer’s also coins a term “victimisation” that is related to the “everyone will receive equal treatment regardless of gender, colour, ethnic or national origin, disability, age, marital status, sexual orientation or religion. All decisions relating to employment practices will be objective, free from bias and based solely upon work criteria and individual merit.” The report further mentions that “The Company is responsive to the needs of its employees, customers and the community at large and we are an organisation which uses everyone as talents and abilities and where diversity is valued.”
In case of climate change and environmental awareness of companies, there has been limited response by companies. When searched for pollution in the document, only 5 sections were retrieved with the word pollution in it, and they were all from H&M. H&M shows concern for pollution and climate change. The sections thus retrieved from the CSR report of the company are quoted below –
“… pollution and climate change H&M places demands on…”
“…pollution reduced across the whole production process, from the raw cotton to the initial product.”
“… pollution levels and suspended solids within the waste water.”
Further H&M has a carbon disclosure project that entails the divulgence of the carbon emission through the company’s plants that are harmful to the environment. In case of Burberry, the company states in its annual report that
Reduced air travel for UK employees by 10% per annum £1,000 of turnover, through utilisation of virtual meetings via video conferencing facilities globally Waste Renewed focus on increasing recycling globally. In the UK, recycling has increased to 47% of the total waste produced… Developed a closed loop textile recycling system in the UK. The Group’s global recycling partner converts sample and raw material waste into car door insulation.
Further companies like Debenhams report that they help in “contributing 5.1 per cent and 4.3 per cent of the emissions respectively. All remaining sources within the footprint scope contribute less than 3 per cent of the total footprint.” Further packaging waste is reduced to a great extent by companies like Mothercare. Some companies like Next has developed in-house recycling faculties to help reduce wastage and pollution –
Our in-house recycling centre became operational in 2009 and this has helped us divert 68% of the waste we produce from landfill. Waste reduction and diversion from landfill continues to be a key focus for the business and we are continuing to work towards our long term aim of working towards sending no operational waste to landfill.
Corporate philanthropy is a common phenomenon and community concern or societal concern for the UK garment industry is highly prevalent. A content analysis of the section of the document coded as community involvement shows that the all the 15 companies were involved in some kind of community activity. While some companies like Mothercare and Next provide huge donations to the community, others provide training, or engage in child care or other social activities through NGOs. One example of the donation given by the retainers is – “Donations range from one-off gifts of fabric or materials for an art or design course, to a large-scale annual Christmas Coat donation programme which saw approximately 1,500 coats distributed to charities globally.”
(Mother Care, 2010, p.12) While another case wherein the stress is more on community work – “The third category is Workplace and community which covers employment practices, learning and development, disability awareness, health and safety and community and charity engagement.” (Next, 2010, p.23) Therefore, the retail companies are concerned with the doing things for the society and acting socially responsible. The main concern for them is to guarantee a high degree of responsiveness towards the society.
In terms of legal compliance to an organization or adherence to a set of codes set by international organizations like ILO, this is found to be prevalent among the retailers in the UK. Further there are explicit remarks regarding the gift giving policies of the companies as mentioned in one of the reports –
It is the Group’s policy not to make donations to political parties. There were no disclosable expenses made during the financial year which fall within the definition of a political donation under the Political Parties, Elections and Referendums Act 2000.
Further compliance with ETI norms shows adherence to the ethical conduct. One of the references to the ETI related activity conducted by a garment company is presented below – “Building on the learning from ETI projects, we have arranged for the training of Next auditors by a leading NGO in the area of worker interviews.”
Consumer interest is also safeguarded by the companies. The companies are responsible for the disclosure of information to the auditors that show the importance of disclosure of information to the consumers. Esprit mentions that it is committed to on time disclosure of information. They indulge in responsible marketing such that no information that needs to be duly disclosed remains hidden from consumers. Such an act would be unethical on part of the companies, and therefore, result in socially irresponsible behaviour. Some of the problems that pertain to the main concern of the companies are to market their product in such a manner such that they remain socially responsible as well as project a healthy image of the brand. Therefore socially responsible marketing and consumer information disclosure assumes important position for the UK based garment retailers.
In terms of work benefit provided to the employees and working condition at the plants, all the companies have set guidelines regarding the work conditions to be provided to the employees at plants. There has been a lot of stress placed on the amount of the benefit to be provided to the labours. Most of the companies have a health and safety policy that guides their activities related to the area. For instance, Debenhams has a policy related to the health and safety of the employees and the customers – “Debenhams believes that the key to maintaining a safe environment for both employees and customers is through training on general SAFETY for all employees when they are initially employed and through a programme of training on new developments, policies and trends.”
Further there is a problem of the companies undertake to help the employees and customers alike – “Quality Assurance process in place to ensure the integrity of own bought products. Active member of Ethical Trading Initiative (ETI) and expect all suppliers to follow the ETI base code. Excellent supplier relationships maintained to ensure ethical sourcing and compliance. Executive body, who form the CSR committee, works on the key objectives for the organisation in this area (i.e. reducing energy usage and transportation costs). Membership of key industry bodies to provide awareness of changes to standards and legislation. Executive health and safety committee who works to review compliance for organisation in this area. Code of Business Conduct Policy in place and compliance noted.”
The supply chain of the garment companies is important as they are the main indicators of the compliance of the international labour code and fair trade norms. As garment procurement from third world countries has been popularized by the likes of Gap and Nike, there has been a high degree of shift of the manufacturing bases of the UK garment industry to procure their finished products from vendors in the third world countries. Therefore relationship with the different points in the supply chain and to have a clean supply chain is important. Thus the content analysis shows sentences that indicate that the companies take great care to have a clean supply chain – “We treat our SUPPLY CHAIN partners fairly and we respect the people who make our products.” In another case, the companies ensure that the supply chain is clean.
Therefore, they undertake audits of the supply chain in order to keep the supply chain clean from any unethical conduct. Further special emphasis is given on the ethical conduct of the suppliers. This is demonstrated through the ASOS CSR report – “The Group is committed to ensuring that the workers who manufacture its products are treated fairly and that its products are made in accordance with good environmental standards.” Thus, there is a great importance that is laid on the clean supply chain. Suppliers of Burberry too have to adhere to the code of conduct laid by the company – “All new Burberry SUPPLIERS, regardless of location, must be approved by the Corporate Responsibility team prior to production taking place.”
(Burberry, 2010) Further, the suppliers of the company are governed by ethical trading practices, “All Burberry SUPPLIERS are governed by its Ethical Trading Policy that sets clear expectations regarding issues like living wage, child labour and regular employment.” Debenhams too undertakes such compliance of the suppliers – “Our SUPPLIERS and manufacturers are required to adhere to our Code of Conduct and their compliance is regularly monitored to ensure that everyone involved in manufacturing products for Debenhams can work in a well -maintained, safe and caring working environment. We believe our customers have a right to expect every product we sell to be produced in safe and free environments, compliant with our Code of Conduct, and that all workers are treated with dignity and not exploited or discriminated against in any way.” (Debenhams, 2009, p.27)
Many of the suppliers undergo compliance with the contractors that they collaborate with in order increase efficiency in the production process. These subcontractors too have to adhere to the codes laid by the company – “as some SUPPLIERS may outsource to subcontractors, to conduct an audit on compliance with predetermined criteria such as working time, compensation, child labour or young employees, forced labour and occupational health and safety.” Further for those who fail to comply to the codes laid by the company they are – “For those who do not meet our standards, the compliance team will work closely with the suppliers to provide assistance and guidance in order to bring them up to the BSCI audit standard within 18 months.”
The main concern of the content analysis shows that there are many instances when the companies have maintained a strong CSR report wherein they have mentioned all the areas that had been mentioned in previous research. The content analysis shows that the companies have gained access to the code of conduct and they understand the reason for which the compliance is necessary. Therefore, they maintain a strong compliance report and follow the norms laid down by the international organizations and they themselves have set internal codes to practice ethical trade.
The research is based on the garment companies of the UK. The study undertook a content analysis of the CSR and annual reports documents of 15 UK based companies. Ethical trade has been a concern for the companies for many years.
As ethics is an integral part of markets or seen reversely no market can exist without ethics. However, corporate power can skew the balance of ethical corporate conduct. The aim of the paper was to understand the ethical conduct of the garment manufacturers in the UK. For this purpose a content analysis was conducted for 15 garment manufacturers operating in the UK. The increase in the sweatshop syndrome in the 1990s, and the cry for ethical trade increased the importance to understand the meaning of ethics in trade. Therefore this research sought to answer a few pertinent questions. Does the code of conduct presented by the private organizations justify legal and social responsibility of organizations?
Does ensuring of code of ethical conduct by private organizations ensure improved labour conditions and ensure ethical conduct? Is it correct on part of the retailers to indulge in unethical conduct when they pledge to be ethically compliant in their CSR reports? Conversely, it is wrong on part of the retailers to promote business practices that contribute to a continuous downward spiral working conditions and pay for employees working in factories of their vendors of. However, most of the big garment retailers in the UK have code of conduct written in paper, but their implementation is restricted and ambiguous. Therefore, the necessity to understand the true nature of the public disclosure of code of conduct by organizations and CSR reports of companies in order to understand the true effectiveness of the voluntary disclosure programs?
There has been an increased awareness and importance of relating to ethical trade in the garment industry. With increasing global pressure from the customers for newer fashion and better quality products, retailers put increasing pressure on manufacturers to deliver more goods at lower lead-time. Therefore, very high degree of pressure is put on the lower level of the supply chain. Due to the high demand from the consumers, the retailers are changing their fashion every month, thus increasing pressure on the which means they are now purchasing cheap “statement” garments that they will only wear for a few weeks before moving on to the next trend. Therefore many questions like the compatibility between ethics and fashion has been raised. In the garment industry, over the last decade, an increasing number of multinational clothing companies have accepted their responsibility to uphold human rights in all the operations in their supply chain.
Increasingly attempts have been made to improve the working conditions at the factories have been mentioned in the company CoC and acceptance of global standards in enforcing the national labour laws. Monitoring global suppliers and vendors in relation to national and international laws and internal CoC has become mandatory throughout the global apparel industry in order to enhance and preserve consumer confidence. Various studies have been conducted related to the CR practices of companies and their supply chains. Ethical conduct in the supply chain has assumed paramount importance for both the corporate and consumers and therefore, it requires further understanding of the situations. The literature review conducted showed that code of conduct ad ethical understanding of the corporate is a concept that evolved three decades earlier. To be sure, this phenomenon has brought forth many areas of the ethical behaviour of the company.
Further, corporate conduct was enforced through soft laws by private enforcers in order to make the operations of the transnational corporations more transparent. The researches related to the ethics in apparel industry abundantly discuss the nature of the ethical conduct and the content of the codes. Further, they also indentify plethora of difference between the codes, standards, and norms followed by corporate.. Difference in the way code of conduct and ethical conduct is handled is evident from previous content analysis research of the code of conduct. However, there is no research that had seen the similarity or differences in the practical implementation and reporting of the practice through a content analysis of the CSR reports or annual reports of the companies. As voluntary disclosure of the ethical practices has become an unsaid norm in the manufacturing industry. This content analysis demonstrated that the there has been an increased ascendance of the ethical conduct among garment manufacturers.
The research is conducted using a descriptive content analysis methodology. This research is done using content analysis method to analyze the CSR reports of a sampling of 15 garment companies selling their garments in the UK. This paper analyzes these reports and their content according the social reporting and ethical theories. The present content analysis aims to do a content analysis of the reports collected from the companies in order to analyze the substance characteristics of message content. The paper will also describe form characteristics of message content in the annual report and CSR report of the companies. Further, the report will draw inference to producers of content and the audience of content. In effect, this method of analysis allowed us to understand what the ethical standards are for the companies, the specific topics they are reporting about, who is reporting, to which stakeholders is the message directed, and what are the effects on reporting on ethical trade for the audience (the stakeholders). Therefore, this research will deal with the analysis of the reports disclosed by companies in form of annual reports and CSR report.
The paper follows the methodology developed by Kolk, Tulder, and Welters in undertaking the content analysis for the paper. Content analysis has been widely used by researchers to analyze the content of the code of conducts of the many US based and European companies. However, research is scant in the area of analyzing the content of CSR reports and annual reports in order to understand the CSR activities that has been undertaken by the companies. The next section will undertake an analysis of the content of the CSR and annual reports.
The data is analyzed using Provalis content analysis software. First the reports were categorized into two sections – annual reports and CSR reports. Both the documents were simultaneously analyzed as some companies did not have a CSR report available in the website. Therefore the annual reports provided a vivid outline of the community and environment related activities of the companies. The documents were coded based on three categories – Environment, Generic, and Social. The codes are attached with key words that have been derived from the thorough reading of the documents and previous research on content analysis of the code of conducts and CSR reports. The areas studied definitely demonstrate the areas that demonstrate the corporate social responsibility of the retail companies.
The analysis demonstrates that the garment manufacturers of UK are ethically motivated and have a strong CSR reporting system. They divulge to the world what they are doing, how they are doing and why they are doing the same. They follow the ethical standards set by other organizations like the ILO and ETI in order to comply with internationals standards. Their adherence just do not pertain to mere philanthropy, rather they are actively participating in various ways to keep all the stakeholders of the company satisfied. Therefore, the research demonstrates that the companies are ethically motivated.
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