thenextwave

Toy stories and global ethics

Posted in affluence, business, consumers, emerging issues, ethics, trade by thenextwavefutures on 27 December, 2007

I blogged earlier this year on the toy industry and Chinese production, and on the idea of ‘toxic consumption‘ – that the things we buy are bad for our health. Christmas seems a good time to come back to it, and Core 77 (thanks) points me in the direction of a long article by Jonathan Dee in the New York Times on Mattel and its attempts to manage reputation in low cost global markets.

The piece partly profiles the work of Prakash Sethi and his International Centre for Corporate Accountability at New York’s Baruch College. Sethi has been an independent adviser to Mattel for ten years, and has to a large extent steered its corporate oversight policies within China and elsewhere. I’m just going to post some extracts from the article here which I hope will catch the main points

For the last decade its factories have operated under an unparalleled degree of oversight, at least concerning wages and working conditions. And it still wasn’t enough. The past several months have provided an object lesson in the inherent limits — its sterner critics would say the fundamental hypocrisy — of Mattel’s efforts to lessen the bad side effects of its global search for cheap labor and maximum profit.

One of the striking features was the level of detail needed to translate high-sounding corporate principles into practice within the suppliers’ factories:

 It took 18 months for Mattel and Sethi to settle on an audit protocol, including a fantastically detailed 75-page checklist for quantifying conditions inside every one of Mattel’s factories and vendor plants. A sample entry: “Are eyewash stations and safety showers installed in areas of corrosive material use (e.g., battery servicing areas, cooling towers, storage of corrosive material, electroplating) and in high-volume solvent usage areas (e.g., paint mixing, chemical storage and dispensing, solvent distillation)?”

But although it was important to focus on work conditions and factory standards, it wasn’t enough, as Mattel consumers discovered earlier this  year with its product recalls:

“In retrospect,” Murray Weidenbaum, a former I.C.C.A. board member, told me, “the mission we were assigned was narrower than perhaps it should have been. We focused on the working conditions, because that was our task, and because critics at the time were focusing on it — child labor, prison labor, all that. It turns out we missed the big picture, which is the nature of the product.”

The trends which caused the product safety failures were pithily summarised in an email from Sethi to the NYT reporter, although he didn’t criticise Mattel directly:

  “Empty promises on the part of the multinationals, lack of transparency as to their conduct and a poor regulatory environment created the environment where the current malaise of substandard and dangerous products is the logical outcome and should have been anticipated.”

Now Mattel is planning a second code – this time to cover product safety and integrity. This was judged outside of the scope of the earlier ICCA work. But the question remains as to whether this is a circle which can be squared while companies such as Mattel drive prices down for reasons of competition. The overall system it’s operating in leads to short-cuts being taken, sooner or later, without market intervention.

“The suppliers have conflicting incentives,” says David Vogel, a business professor at the University of California, Berkeley, who writes about corporate social responsibility more skeptically than many. “They want to reduce their costs because they have to keep prices low in order to hold onto the business, but at the same time they have to comply with the standards in order to hold onto the business. The real black box of this issue is, what does it cost the suppliers to comply with these codes, and who bears those costs? We know remarkably little about that.”

The whole article is worth reading because of the level of detail it goes into.

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