CSR and Global Supply Chains

The tragic building collapse in Bangladesh has brought to
the fore corporate social responsibility (CSR) issues involving global supply
chains as the building is said to have housed factories employing workers
manufacturing apparel for well-known global brands. Apart from the focus on
local regulations and their enforcement in Bangladesh, the spotlight is now
also thrown on the role of the multinational companies (MNCs), most of whom are
domiciled in developed nations, as procurers of the products being manufactured
in the building. While some of the MNCs have opted to withdraw from Bangladesh,
others have vowed to stay on and improve conditions.
All of these give rise to CSR issues, which are not in any
way novel. The intense competition and squeeze on margins place emphasis on
cost reduction. While the benefits of the cost reduction are enjoyed by
shareholders and customers, this leaves the employees vulnerable, as this
episode has shown once again. This will only increase the demand for companies
to meet “triple
bottom line
” with focus on workers’ rights, human rights, environment and
even anti-corruption.

For
a sampling of the debate that this tragedy has evoked, see
Forbes,
Economist
and
Reuters.

About the author

Umakanth Varottil

Umakanth Varottil is an Associate Professor at the Faculty of Law, National University of Singapore. He specializes in corporate law and governance, mergers and acquisitions and cross-border investments. Prior to his foray into academia, Umakanth was a partner at a pre-eminent law firm in India.

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