The price of buying ethical

In Part 2 of its series on the University’s purchasing policies, the Journal looks at the designated suppliers program, and whether Queen’s will adopt it

Kate Whitelaw, ArtSci ’08, says Queen’s should adopt a designated suppliers program to ensure the companies with which it does business adhere to ethical labour practices.
Kate Whitelaw, ArtSci ’08, says Queen’s should adopt a designated suppliers program to ensure the companies with which it does business adhere to ethical labour practices.

Concerned about the labour practices of Russell Athletic—the University’s exclusive athletic apparel supplier—students from Queen’s No Sweat met with Principal Karen Hitchcock and Dean of Student Affairs Jason Laker last November.

During the meeting, they discussed the possibility of Queen’s signing on to a designated suppliers program. The program is an initiative of the Workers’ Rights Consortium, an independent labour rights monitoring organization based in Washington, D.C., with which Queen’s is affiliated. The consortium assists universities in enforcing their manufacturing codes of conduct.

The program would require universities to source most of their logo apparel from supplier factories that are determined by the consortium to be in compliance with ethical labour laws. A complaint launched by a German non-governmental organization alleged that the Hermosa Factory in El Salvador, where Russell contracted out some of its product, closed suddenly in May 2005, leaving about 320 workers without employment.

As well, the complainant claimed workers were owed wages and overtime payments and didn’t receive severance pay. The Fair Labour Association conducted an interim investigation and determined that the workers were owed money; currently at issue is what party is responsible for compansating them.

Laker said he appreciated Queen’s No Sweat’s interest in the program, but it’s not something the University is ready to do.

“We have to, in good faith, make efforts to speak with our vendors about issues that arise,” he said, adding that he’s not comfortable with making this arrangement for only apparel suppliers and not other companies.

“One of them explained that clothing is very meaningful for young people and as well having the athletic team wear the clothes is meaningful,” he said. “I appreciate that, but I don’t think it mitigates my concern that if we’re going to develop a standard, it’s a standard that we use across every industry we do business with.”

Laker said he’s also concerned the program might be more complicated than students anticipate.

“Designated supplier sounds very neat and tidy, but executing it is very difficult,” he said. “We live in an internationalized economy, so any company that produces goods, whether those goods include in the supply chain only things from Ontario or whether they happen to receive, let’s say they make calendars and the ink comes from Malaysia, well if we’re just going to say that unless you can prove you have good labour practices even if you may or may not know. … You can see where it starts to become very cumbersome.”

Laker said the difference between the program and the trademark and licensing agreement the University currently makes licensees sign is that the former puts the onus on a company to prove its compliance with labour laws, while the latter assumes it is unless a complaint isbrought forward.

“What is the default assumption is, really, the difference,” he said.

“Do you have a situation where companies have to prove that they are doing all these practices worldwide? Or do you assume that they are and then when you find out from time to time that an individual company is doing business with an individual plant somewhere, you deal with it?”

* * *

Kate Whitelaw, ArtSci ’08 and co-chair of Queen’s No Sweat, said one of the concerns Laker raised
in their meeting was that holding companies directly responsible for factory conditions would raise
clothing prices. But Whitelaw said that’s not the case.

“It’s kind of a myth that it’ll really cause a difference in the price. Labour is such a small component in the price of a T-shirt,” she said. “Brands are making millions and millions of dollars and so little of it goes to labour, so they can absorb that cost. Even if they don’t … if you asked most Queen’s students, ‘Would you be willing to pay an extra two quarters so someone could have a living wage?’ no one would say no.”

Whitelaw said the current code of conduct system doesn’t work.

“You cannot expect a labourer to come forward; you can’t put the burden on people in repressive situations,” she said. “We know the clothing industry is exploitative. You can’t assume it’s all OK.”

Whitelaw said universities have a responsibility to take advantage of their influence as large-scale consumers.

“Universities have so much power as purchasers, so if you can create a critical mass of universities, you can create a market,” she said. “It is more expensive to pay a living wage so there isn’t much … of an incentive for [brands] to go to factories that cost more. The universities can apply the power they have on the brands to get them to commit. ” The designated suppliers program is an initiative of the Workers’ Rights Consortium.

Nancy Stefan, spokeswoman for the consortium, said the consortium currently monitors companies and factories for violations according to universities’ codes of conduct.

“The WRC reports on our findings on our views of the seriousness of various violations,” she said.

“The decisions of the universities on how to respond and how to enforce their code of conduct is one on which there’s been considerable university attention.
“That’s been effective in bringing attention to the case and encouraging the brands to work towards remediation.”

This method isn’t as proactive as that stipulated by the designated suppliers’ program, Stefan said.

“The DSP goes beyond the existing codes of conduct,” she said. The program also stipulates that a certain percentage of a factory’s production be comprised of university apparel. This way, Stefan said, universities have more leverage in convincing companies and factories to comply with labour codes.

“It also addresses the length of the relationship between the factory and the brand. Right now,
brands are free to use whichever factories they want and they stay there for as long as they want,” he said. “They’re not sure the brand requiring these standards is even doing to be there for a month—it’s not worth their while.”

Under the program, the Workers’ Rights Consortium would continue to monitor companies to ensure compliance.

Stefan said universities wield a lot of influence in the apparel industry.

“Universities have already been the leading force in these efforts to press apparel brands to ensure good conditions in their supply chain.”

* * *

Right now, about 30 American universities have signed on to the designated suppliers program.

They formed a working group in February 2006 to determine how best to implement the program. Jim Wilkerson, director of trademark licensing and stores operation at Duke University in Durham, N.C., is the working group’s chair.

“We feel the designated suppliers program holds some … promise for real compliance with our codes in the future,” he said.

“We felt the designated suppliers program will really get to the heart of some of the root causes of poor labour conditions in the collegiate apparel industry, such as the fact that it equires that a fair price be paid to factories for the products that are manufactured.”

Wilkerson said there are systemic problems in the clothing market that necessitate a designated suppliers program.

“For a number of years now, the market has been moving towards just chasing the cheapest prices for products all around the globe, wherever that may be, from month to month, and so factories have continually been paid lower and lower prices for products, which has not enabled factories to have the funds that they need to support higher wages and better working conditions, particularly over the long term,” he said.

Wilkerson said the program would try to consolidate the number of factories producing college clothing, so that universities would have more influence in working conditions in those factories because they would have a stake in a higher percentage of the factories’ output.

“[Right now] when problems occur and universities or their enforcement agents attempt to exert pressure on those factories to improve conditions, because we are not a significant portion of a factory’s business, many just ignore us.”

Wilkerson said the working group has made tremendous progress in working out plans to implement the program.

“A couple weeks ago … we sent a business letter of review request to the department of justice to get an answer from them on whether or not they saw any antitrust issues associated with the program,” he said. “We have to have that clearance before we can move forward with implementation.”

That should take four to six months, Wilkerson said. After that, they can begin to implement the stages of the program which would see universities increase incrementally the percentage of the approved companies they deal with.

An important step now is to get enough universities on board to wield a significant amount of influence over the market, Wilkerson said.

“If there’s a substantial part of the financial worth of the collegiate market, you know, big bucks will be at stake and licensees will be more likely to comply,” he said.

“If it’s a small number of universities with very little clout and some licensees think they can do without those schools then some may decide to do without. But … if it were to end up being a small number of schools moving forward with this, I think we could always find some licensees who would be willing to take our business and conduct it in a manner consistent with the DSP.”

Wilkerson said there hasn’t been much controversy at Duke as to whether or not to adopt the designated suppliers program.

“Duke’s administration has, more often than not over the past 10 years, been on the same page as the students regarding these issues,” he said. “This has really been a lot of sort of long-term work and long-term student activism here with the admin and students agreeing more often than disagreeing.”

Ivan Viera, Russell Athletic vice-president of international human resources and compliance, said he couldn’t state his opinion of the suppliers program until it’s approved by the department of justice.

“We need to get a reading from the department of justice because that could be a violation of the law,” he said, adding that he doesn’t think it would be possible to implement the program.

“There’s no way we can establish a living wage,” he said. “It’s not an easy thing to do.”

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