(This is the fourth post in a four-part series based on The Power of the Dragon: 2012 is the Year for Change in which we ask corporations to deliver on the Dragon's Four Blessings of the East. In this post, Longevity as it applies to a sustainable supply chain.)
With all of the recent focus on Apple’s supply chain woes, it can be easy to forget that there are companies making positive efforts to advance human rights within their supply chains. Some have implemented these efforts of their own accord while others, like Apple, were prompted to act due to public outcry when abuses were brought to light. There are many examples, but I’d like to tell you a story about a company that sensitively addressed local customs and culture to bring change to a community and help ensure the sustainability of its supply chain. It all started more than 10 years ago…
In the populous northern Indian state of Uttar Pradesh, a variety of industries flourish. One of these is carpet weaving, an industry that frequently uses child labour. In the mid-1990s, media reports exposed child labour practices in carpet-weaving companies, specifically targeting IKEA as one of the high profile companies using these suppliers.
IKEA claimed to have no knowledge of the practices and issued an apology for their ignorance of the issue, resolving to make changes. They implemented a zero-tolerance policy for child labour, pledging to cancel the contracts of any suppliers using underage workers.
The story could have ended there. IKEA had taken steps to stop the use of child labour in its supply chain and, by some standards, that would have been enough.
Instead, a partnership between UNICEF, IKEA and the Government of India was created in 2000 to address the causes of child labour, including debt, poverty, lack of education, and health issues. According to the UN Global Compact, "IKEA has helped to establish 1,600 women's self-help groups, reaching 22,000 women. In these groups, women learn about the rights of children, health and nutrition, savingn money and starting up small businesses in order to eliminate debts. As a result of the project, more than 80,000 children have enrolled in schools in 500 villages."
Again, the story could have stopped here. In probing its supply chain further, Ikea learned that the cotton fields supplying the weavers are also dependent on child labour. Cotton production, and in particular cottonseed pollination, is rife with underage workers, many of them pre-pubescent girls. (This was initially due to cultural practices that considered the period of menstruation as impure for important activities like pollinating seedlings.)
By 2006, IKEA was ready to expand its efforts into the southern cotton-producing region of Andhra Pradesh based on the success of its poverty reduction and education program in the north of India. At the time, some 200,000 children under 14 were working in the fields, causing them to be out of school for 2-3 months a year.Many of these underage workers, if they had even been allowed to attend school, ended up abandoning it altogether. Working with UNICEF and Save the Children, the IKEA Foundation (formerly the IKEA Social Initiative) continues to support long-term child rights and education programs in the region.
They also produced a special code of conduct, The IKEA Way on Preventing Child Labour, which requires that all suppliers recognize and comply with the UN Convention on the Rights of the Child, requires that suppliers maintain a labour force register that includes worker dates of birth, and allows IKEA to make unannounced visits to supplier sites to ensure compliance.
So rather than stopping at mere compliance, IKEA looked beyond their own needs to act in the best interest of the children in their supply chain. They engaged the expert opinions of organizations like UNICEF that have a long-term view of the needs in the local communities. Their programs do more than just address child labour; they provide a stronger, more sustainable future for the communities where their suppliers reside. And that contributes to the sustainability of the company.
Has IKEA perfected the model? Of course not. Managing a sprawling supply chain at this level of detail is a difficult endeavour. But they’re trying and, in many cases, succeeding. Most consumers want to see that supply chain issues are being identified and addressed authentically and transparently. Issues exist everywhere. It’s when they’re hidden that public outcry is strongest.
Corporations also have a powerful voice to effect positive change. More powerful than they realize and, increasingly, they are using it for the good of people right through the supply chain. And it’s good for business too. For those who look for the ROI in advancing the rights of workers, IKEA is a stellar example that it’s possible to take a holistic approach, maintain affordable prices and enjoy strong profits at the same time.