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New Book Highlights Flaws of Private Regulation

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Labor standards in global fashion supply chains are inherently complex, with a tangled web of country-specific regulations, scarcity of data, reporting inconsistencies and an increasingly concerned consumer pushing for change. Throw geopolitics and a global pandemic into the mix, and the ground shifts further underfoot.

To help make sense of it all with an unprecedented data trove, the new book “Private Regulation of Labor Standards in Global Supply Chains” sheds light on the issues preventing change while providing a roadmap for better enforcement.

Written by Sarosh Kuruvilla, the Andrew J. Nathanson Family Professor of Industrial Relations, Asian Studies, and Public Affairs at Cornell University, the tome examines the effectiveness of corporate social responsibility on improving labor standards in global supply chains.

In simpler terms, in an industry based on private—and voluntary—regulatory initiatives, what companies say they’re doing and what are they actually doing is not often in sync.

“This book provides people with a new way to think about corporate codes of conduct with regard to labor standards and global supply chains,” Kuruvilla told Sourcing Journal. “It provides an explanation for why things have not worked so far, and what needs to change for things to work.”

Divided into three parts, the book is about the current state and future trajectory of this form of private regulation. Part one focuses on the problems, part two is an evaluation of progress, and part three looks to the future.

Kuruvilla’s work provides a comprehensive evaluation of industry performance and progress, utilizing 40,000 audits conducted over a seven-year period in more than 12 countries and 13 industries, as well as from data from global companies, multi-stakeholder institutions and auditing firms.

The key contribution here, Kuruvilla said, is to show the problems through a deep dive into data that has eluded the industry thus far. “Data in this field is difficult to see, and nobody analyzes it. And the way to improve things is to move everybody to more evidence-based analysis, or evidence-based decision making.”

Kuruvilla’s goal is to get companies to be more transparent about how well their programs are working so the industry can learn and improve practices. “Companies don’t share data, and best practices are not known. So we want to bring the field to a place where best practices are visible, so that everybody can follow them. And one way to make best practices visible is for companies to analyze their programs and tell us what works and what doesn’t work. And that they don’t do.”

The book stemmed from The New Conversations Project, an ongoing endeavor conducted by Cornell’s Industrial and Labor Relations (ILR) school. The New Conversations Project has been publishing its latest research findings on private regulation in a series of Sourcing Journal articles designed to de-code important academic research for actors in the global supply chain.

Sarosh Kuruvilla

Sarosh Kuruvilla, author of “Private Regulation of Labor Standards in Global Supply Chains” and professor at Cornell’s school of Industrial and Labor Relations.

The first column describes de-coupling in the practices of private regulation and their expected outcomes; the second installment shows how sourcing and labor practices often don’t work together; the third column explains Kuruvilla’s analysis of over 40,000 factory audits which found no overall improvement in the number of labor violations between 2011 and 2018; and the fourth column explains how opacity—the inability of stakeholders to see what works, and where, and under what conditions—underlies the lack of progress in labor conditions in global supply chains. The most recent edition examines “behavioral invisibility,” the inability of global buyers to accurately measure the behavior of their suppliers.

In the absence of a global system to regulate and enforce labor standards, and given the inability of third-world countries to enforce their own laws, private voluntary regulation has become the standard. Yet this system, spearheaded by the likes of Nike and Reebok, is rife with problems. The book considers ways to improve the private voluntary regulation, and thus the lives of workers in global supply chains.

Overall, Kuruvilla said he found some of the findings “disconcerting,” and was surprised at the unreliability of the auditing system and the rate of data falsification. However, he remains optimistic that the data can effect positive change at every level. “Consumers want transparency,” he said. “But I’m saying that transparency helps a supply chain, too.”

Join the Cornell New Conversations Project and Sourcing Journal at 1 p.m. on May 25 for a live book launch and debate covering Kuruvilla’s work.

Kuruvilla will lay out the book’s key findings from analysis of previously unavailable data about labor practices in global supply chains, and Sourcing Journal founder Edward Hertzman will lead a debate about what it means for global labor governance in apparel and other sectors. Click here to join the event.

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