The Ugly Side of Globalization in the New York Times this Week

This week, the New York Times week published articles about Apple Computer ( here and here) which paint a grim picture about the prospects that manufacturing will ever move back to the U.S. and an even grimmer picture of life in Chinese factories.  This news has shocked many readers, but not me.

As NRDC’s health director, my charge is to follow the pollution – and then get rid of it.  In recent years, the pollution trail has led me to China, which is a global hotspot of toxic water and air pollution, thanks in large part to the vast number of U.S. companies that have shifted overseas and set up shop. 

I would have never imagined I’d be spending so much time halfway across the world for my work.  But before I knew it, I had racked up more than 200,000 frequent flier miles, a large collection of Chinese tea, and more stories than I can tell about polluting and wasteful factories churning out every kind of product imaginable.    

Here’s the perspective I can offer to anyone now pondering where we find ourselves in today’s globalized world:  It might be the 21st century here in America, but it is more like 1910 on environmental and labor issues in most factories in the developing world. 

The biggest companies in the world – Apple, Wal-mart, Mattel, and the like, have left America to manufacture the lion’s share of the goods we consume in what I’ve dubbed the wild, wild east, where their supply chains now reside.  There are no troubling labor unions there or “environmental nannies”, as I’ve been disparagingly called.  For years, the human and environmental impacts of their sourcing decisions have not been evident to us, their stockholders, their customers, -- or even their own top executives in some cases.   But they are evident to the people living near these factories, and with articles like those this week in the New York Times, the curtain is rising so that more people in the west can see.

The shift to the developing world has put multi-national corporations in a tricky spot.  They wonder, does anybody out there think it is the responsibility of corporations to address these huge labor and environmental problems in a country like China of over 1.3 billion?  Fundamentally, they hope the answer is no.

 After all, multi-national corporations rationalize, they are just the buyers.  They don’t own the factories because they outsource their supply chain.  Surprisingly, many do not even know where most of the components of their goods are made; they have a business relationship only with the tail end of their supply chain, where environmental impacts tend to be small.  Ignorance is bliss in these matters… at least until the New York Times comes a callin’.  And because many of them do not buy more than 20 or 30% of their production from one factory, they have plausible deniability that any problems made public are theirs. 

The companies’ “mission”, after all -- as several have pointed out to me -- is not global development or protection of human health or the environment around the world; it is to make things people will buy and sell them at a profit.  Environmental protection and labor laws are more rightfully the purview of governments.

However, as everyone (and I mean everyone) who’s spent time abroad will agree, government regulatory agencies in countries like China are ineffective;  ministries of labor and environmental protection there are under-staffed, overwhelmed by the scope of the challenges facing them, and – most importantly – routinely trumped by economic development agencies looking to grow the economy with whatever it takes.  The results can be stunningly horrific from both a human and environmental perspective.

So what are companies to do – do they tackle these problems all by themselves?

My response is an unambiguous yes.  It was their decision to move abroad for manufacturing to benefit their markets and profits.  If as a result, big bad problems arise, then forgive me if I’m neither surprised nor very sympathetic.  Tackling these problems is part of what an ethical company must do in today’s globalized world.

And guess what – it’s not an impossible request.  Through NRDC’s work it’s become clear that there are a number of things multi-national corporations can do.  Some of our recommendations are efficiency oriented; corporations can save money and save the world at the same time.  Others are more basic:  corporations must ensure compliance with environmental discharge requirements to protect people’s drinking water. 

Apple, as a matter of fact, has recently come to NRDC in response to a report by an NGO in China that found a number of its factories violating environmental law.  Apple moved forward expeditiously to address these violations through an impressive set of audits of these problematic factories and requirements for immediate corrective actions.    NRDC and Apple are now working together with the Chinese NGO to create an effective way to report on progress to local communities and affected workers, and on ways to implement more pro-active audits and supply chain policies.  No company seems better suited to create a model program in this area than Apple, given its corporate reputation for creativity and leadership in the industry. 

And so as the two recent New York Times articles illustrate, the curtain is rising.  The internet is giving stories and pictures at the click of a mouse, and isolated incidents in a single factory are finding their way into the eyes and ears of reporters through text messages and cell phone connections.  Even countries like China have environmental activists networked to improve protection of human health and the environment. 

And it is thus becoming clear to at least some multi-national corporations that they need to step up.  The best of these corporations are rolling up their sleeves and beginning to ask how.

It’s a work in progress for all of us, and I’ll share more with you soon.