Reputational risks due to environmental performance of supply chains on the rise in China
Derek Langgons and Oliver Liu
Financier Worldwide November 2011
Feb 22, 2012
During the 1990s and 2000s, many big international corporations found their reputations tarnished due to labour issues at manufacturing operations in China. In many cases, it was not due to their own actions in producing clothing, electronics and other goods, but those of their independent suppliers.
International Non-Governmental Organizations (NGOs) accused the name-brand corporations of profiting from child labour, underpaying workers and tolerating hazardous work environments in the supplier companies. For many multinationals and name brands, the word "sweat-shop" became a PR nightmare.
Since then, many global companies have enacted and enforced strict employee health and safety standards, as well as good practice around issues like fair pay, forced and child labour, for their direct suppliers in China. These have helped improve working conditions for the employees who make their products.
Now, this pattern is repeating itself, with three important differences - the focus is on the environmental performance of the supplier operations, much of the pressure is coming from local individuals and groups, and many of the affected people are not employees of the suppliers but are external to the companies in question.
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