The Patagonia Problem: Fighting Persistent Labor Exploitation in Supply Chains

Posted on October 9th, 2019

The Patagonia Problem: Fighting Persistent Labor Exploitation in Supply Chains

The Patagonia Problem: Fighting Persistent Labor Exploitation in Supply Chains

We've all heard of sweatshops before––those dark, stuffy factories where children and adults alike suffocate in perilous working conditions and receive as little as 24 cents an hour in pay. We know that the treatment of sweatshop workers is appalling, and many companies are working to address the issue. But, shining a light on these shady practices have proved to be quite a difficult undertaking.

Responding to concerns over child labor in its sourcing of cocoa, Nestlé has stated that “no company sourcing cocoa in Côte d’Ivoire and Ghana can fully remove the risk of child labor in its supply chain.” Some of the most pronounced proponents of cleaning up labor exploitation by their producers––Apple, Patagonia, and even Nestlé––have realized the need to continually address the immensely challenging nature of this issue. Let's find out what makes “modern slavery,” the widespread abuse of laborers in today's global markets, particularly tricky to abolish.


With the emergence of a global economy, companies in the US and elsewhere face significant pressure to operate with the lowest manufacturing costs. This means that companies rely on many sources of labor from across the world in order to stay competitive; Nike products, for instance, are made in over 500 different factories spanning 6 continents, and Apple employs over 700 suppliers in 30 countries. With companies depending on such a vast network to source their finished products' materials, keeping track of how production occurs is exceedingly complex. Not only do finished products come from all over the world, but the multiple steps of the production process such as procurement of resources, manufacturing of separate product components, final assembly, storage, and transportation, are all rarely organized under one or even a few unified management teams.

In 2011, an internal audit by Patagonia found that beyond their “first-tier” suppliers––those who produce the company's final goods––a much more complex and exploitation-riddled chain of production lurked; the mills that process Patagonia's fabric were found to engage in several forms of worker exploitation. Labor sourcing issues are particularly complex because exploitation can take place through discreet practices such as imposing crippling debt on employees or withholding migrant workers' passports. Since the turn of the century, large corporations have increasingly realized the need to manage their supply chains, the entire process of manufacturing a product from start to finish, in order to ensure that their suppliers are conducting business in a sustainable and ethical fashion.


In the past two decades, corporations have mainly addressed modern slavery by creating supplier conduct guidelines and conducting audits of overseas producers to ensure compliance. The expectations and mechanisms of these policies can vary significantly from one corporation to another. For example, Nike conducts both internal and third-party audits to ensure compliance with both the company's own standards and local law. Contrastingly, Coca-Cola conducts only third-party audits and “does not devote resources to requesting that suppliers certify that they comply with the trafficking laws of the countries in which they do business”. Reports of abusive labor practices such as at Apple's primary supplier Foxconn and Samsung's Malaysian factories (just a few out of many such cases) have consistently applied pressure on corporations to increase the transparency and accountability of their operations.


Of course, accountability also requires that companies take concrete action to remedy the abuses they discover among their suppliers. Corporations like Coca Cola and Nike commonly seek to improve labor issues by identifying them to factory management and providing advice on how to adopt more acceptable business practices. Companies have also increasingly sought the advice of outside organizations such as Verité to ensure that they are addressing modern slavery in an effective and informed way. It's important to note that the recent upsurge in producer responsibility efforts does not necessarily mean that corporations will discontinue business with a supplier who is repeatedly found to fall short of producer expectations. For instance, Apple has recently faced criticism due to reports of continuing labor abuses at Foxconn and labor violation findings that are inconsistent with those of independent labor groups and journalists. Still, such findings should not discourage participants in the fight for Fair Labor; with such a widespread and elusive issue as labor exploitation, companies working to hold themselves accountable will inevitably discover their own shortcomings, and public scrutiny/criticism can actually assist companies in better managing their supply chains. Another thing to keep in mind is that as with many aspects of Fair Trade, the debate over how to best combat labor abuse is a continuously evolving endeavor.


Despite uncertainty regarding how to eliminate labor exploitation, we can all get behind the need to do so––achieving fairer labor has benefits for everyone involved. Not only can consumers feel better about buying products that are sourced responsibly, but businesses can also cut costs associated with worker strikes. And, governments may even need to impose fewer regulations if businesses take on the mantle of responsible production themselves. At the very least, we can expect corporations to adopt increasing transparency of their operations, and that's something to smile about. More knowledge will bring greater power to those of us who wish to see a better future and bring the world's workers out of the darkness of sweatshops––into the light of a freer world.

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