The Costs and Benefits of Supply Chain Transparency

Should firms be required to disclose the negative social impacts of their suppliers?

For the past decade, policymakers and nongovernmental organizations have pushed for greater transparency in supply chains, with the goal of encouraging more responsible sourcing practices. The Dodd-Frank Act, for example, required firms to disclose their suppliers’ involvement with any “conflict minerals” such as gold, tin, or tantalum, a metal used in phones and computers. More recently, France passed legislation to ensure carbon emissions reporting.

At the same time, many companies have pledged to be more vigilant and open about protecting the people who manufacture their products. After the Rana Plaza disaster in Bangladesh in 2013—a building collapse that killed more than a thousand garment and textile workers—a number of brands joined a coalition to hold their suppliers accountable.

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Disclosure and Ethics

One of the problems in the Ethical Disclosure might become the difference in view point. What is unethical for US could be perfectle legal (and hence ethical) in somewhere else. In this time of multi-national business, how does one exactly address it?

Consider the case of the Devayani Khobargade case - the remuneration to maid servant was not only alright but many times higher considering what she would have earned (even without the free boarding and lodging she was getting) at home in India, but it was not OK for US. Similarly the conditions of the supply-chain managers (even for that matter the owner himself) might not satisfy the Euro or US Social morale, but it could be alright for say Bangladesh or many African Countries. For example in many of these countries, a wage of say $100 per month is good enough for a small family to survive, comfortably, because cost and standard of living that exist there. But increasing to to say $1000 per month would not only be uneconomical for the orgainsation, but would have hight disruption on the economy of country, ending up in purchasing powewr of this $1000 as it (was) for $100.

The other way too are there, the GHG emission per capita is astronomical in US, but that are far better in most of AFrrica, even with the GHC emission in certain african countries, it would be several digits less than the US from its own domestic industry, so by Walmart geetting it from there, how is it in fact impacting the over-all, by what percentage?

I for once don't advocate that any further stress should be put, and hence I too advocate the control even in the greenest country, but imposing one's failure at home, shouldn't be forced upon other either.

While looking for these Voluntary disclosure, and also impact - one should look from the specific society angle, and human living condition, and alternate opportunity in case something is enforced. We can close an industry due to certain practices not meeting a 'Foreign' standard, but what would be the impact of taking action and trying to impose? The cost benefit of this angle to be taken into account. Only compromises that should not made are - basic minimum living condition, which includes the human and societal safety (another Gas leakage, or Oil Spill shouldn't attack the people not even involved in it).