Multinational Companies and the greenwashing paradox

As scandals have shed light on workers’ exploitation in supplier chain factories owned by well-known Multinational companies (MNCs) over the past 30 years, consumers have become more aware of the conditions in which employees produce clothing, shoes, and toys that are mostly sold overseas.

The outsourcing process allows MNCs to enjoy comparative advantages and reduce manufacturing costs. Multinationals - like any other company - seek new ways of allowing their corporation to increase net profit. Consequently, reducing production costs has become an essential element in MNCs’ activities.

Most multinational companies today outsource production overseas, all sectors included. Major textile companies like H&M, Uniqlo or PVH Corporation (owner of brands like Tommy Hilfiger and Calvin Klein) all subcontract production to factories in China, Singapore or Bangladesh.

In April 2013 the Rana Plaza factory collapse in Bangladesh got important media coverage. The garment factory produced clothing for brands like H&M but did not meet basic safety standards.  The factory building collapsed, taking the lives of 1,135 people. This event was one among a series of accidents affecting workers in supply chain factories.

Employees that manufacture products for multinational companies often have to suffer poor working conditions, in addition to endangering their lives in unsafe places.

Left: The Rana Plaza collapse in April 24 2013

In order to meet imposed MNCs deadlines, local factory managers often have to increase the employees’ working hours. This allows the supplier factory to send production abroad on time. 

A report published by NGO China Labor Watch in 2014 showed that toy company Mattel imposed very strict deadlines on supplier factories in China, 

causing employees to even work sometimes until 5am. Extra hours were not paid.

Women working in one of Mattel's supplier factories in China

In recent years, articles were published about the high suicide rate of workers in MNCs supplier chain factories. In June 2011, a young mingong named Nianzhen Hu - the word mingong refers to peasants leaving the Chinese country side in order to earn a higher wage in cities – a worker at one of Mattel’s supplier factories in China, committed suicide.

Most mingongs are women who live in a city where they have no relatives, work all day, and sleep in substandard dormitories next to their workplaces at night. Revenues generated from their working activity are not sufficient to rent a place in the city, and most of them just have enough to get by. Their vulnerability and isolation makes them easy prey for abusive superiors. Verbal or physical abuse seems to be common practice at supplier factories, although most women do not share testimony regarding the issue. Nevertheless, China Labor Watch was able to infiltrate six Mattel factories, and their enquiry showed the abuse practices were not imaginary.

Most employees do not make extra pay requests or publicly complain about working conditions.

Environmental sustainability versus workers’ comfort

As most supplier factory workers are progressively turning into slaves, MNCs strive to convince consumers they have become “green” companies.

The sustainable policies embodied by MNCs imply the use of renewable energy, recyclable materials, and the adoption of purchasing policies that take natural resources into account. These measures have allegedly been efficient, and companies are still improving by making themselves more socially responsible. In 2014, H&M published a press release on its website informing consumers it was the world’s N°1 organic cotton user. This showed the company’s commitment to foster new production standards, ensuring a better treatment of the planet.

While these measures are honorable, it seems appropriate to question these companies’ orientations and motivations when it comes to preserving the employees’ well-being. Until now, despite the numerous articles, documentaries or videos shared on the subject, no significant measures were taken regarding the supply chain factories working conditions. Suicides still happen, workers are still being exploited, and as consumers we are still quiet.

MNCs have a relative control over what is happening in their overseas factories. After facing allegation about exploitation in its factories in China, Mattel implemented a policy aimed at improving working conditions at its supply chain factories.

It may be easy to think – and perhaps understandably - that MNCs are not responsible for what is happening in factories overseas. Surely enough, most of them subcontract their manufacturing process to foreign factories. Nevertheless, since they accept products from these local factories, sell them, and make a profit from them, the MNCs are equally accountable for what happens in those local firms.

Consequently, their duty is to require that their overseas partners adopt decent working standards, and to stop working with them if they do not respect those standards. By cautioning the exploitation of workers, multinational companies completely accept to be part of a system that normalizes this exploitation.

Again, let’s come back to the question of sustainability. Can a company be totally socially responsible, while people who produce its goods overseas and help it make important profit work in dreadful conditions?

This is the greenwashing paradox: the MNCs emphasis on environmental sustainability, and their utter carelessness regarding people’s exploitation.

Jeanne F.