MGMT 320 Lecture 5

Human trafficking

(also called forced labor) is modern-day slavery—the illegal recruitment and movement of people against their will, usually to exploit them for economic gain, is an important ethical issue

sweatshops

A derogatory term referring to factories where workers toil long hours, at low wages, and under unsafe conditions

U.S. Sentencing Commission

A government agency created in 1984 to ensure that corporate crimes receive hefty enough punishments to be effective deterrents. responsible for setting uniform penalties for violations of federal law, has established guidelines for sentencing environmental wrongdoers Businesses that have an active compliance program, cooperate with government investigators, and promptly assist any victims would receive lighter sentences than others with no environmental programs or that knowingly violate the law. These guidelines provide an incentive for businesses to develop active compliance programs to protect themselves and their officers from high fines or even prison if a violation should occur.

integrated reporting

A process resulting in a report that describes how a company is creating value over time using financial, manufactured, intellectual, human, social, and natural capital.

Environmental Partnerships

A voluntary, collaborative partnership between or among businesses, government regulators, and environmental organizations to achieve specific environmental goals.

Even The Most Reputable Recyclers Export Notes

At two junkyards, Puckett finds labels from a library, a hospital and other organizations in Washington and Oregon. In 2004 Dell created a take-back program called Dell Reconnect. That made it the first major computer manufacturer to ban the export of non-working electronics to developing countries. The computer maker partners with the nonprofit thrift store chain Goodwill Industries, which collects any brand of old computer for free to be refurbished or recycled. BAN dropped off 28 tracked electronics at participating Goodwill locations and determined that six of the tracking devices went abroad — to Hong Kong, Taiwan, mainland China and Thailand. "I'm getting disillusioned by certification programs," Puckett said. "It is clear that these certifications need to be better enforced and we intend to do just that."

Civil and Criminal Enforcement

Companies that violate environmental laws are subject to stiff civil penalties and fines, and their managers can face prison if they knowingly or negligently endanger people or the environment

Transnational companies

Companies, businesses which operate on a global scale, in many countriesa dn depends on resources that are farmed/extracted

Supply Chain Risk

In short, supply chain managers face a number of significant social, ethical, and environmental issues. Failure to manage these social, ethical, and environmental risks in supply chains can be very costly, managers have learned.

Supply chain transparency

Occurs when a company's supply chain is fully disclosed to its stakeholders. As if seen through a clear glass window. n can enhance brand loyalty among consumers concerned about social, ethical, and environmental responsibility

Ethical Issues

Points of concern about what is morally right within business Things such as child labor. Child labor has been defined by the International Labor Organization (ILO) as "work that deprives children of their childhood, their potential, and their dignity, and that is harmful to physical and mental development.

Bear Market For Commodities Notes

Prices for many commodities found in e-waste, a major source of revenue for electronics recyclers, have plunged in the past year. Harris, from the Institute of Scrap Recycling Industries, said those falling commodity prices have put many companies in trouble. In a bear market for commodities, exporting waste is more profitable than processing it domestically. Recyclers simply fill a shipping container with whole electronics and an e-waste broker arranges for pick up.

Social Issues

Prominent among them are the wages, working conditions, and health and safety of employees in supplier factories Something like being perceived as a sweatshop The challenge for businesses, then, is to assure that their suppliers pay wages that are perceived as fair and that permit workers and their families to achieve a decent standard of living.

How have some companies responded to environmental concerns

Some companies have responded to environmental concerns by adopting a policy of local sourcing, seeking to source from nearby suppliers where practical

Patchwork Of Laws Notes

The United States has no federal laws banning the export of e-waste.5 Bills have repeatedly failed to gain traction in Congress going back to the 1990s. The Institute of Scrap Recycling Industries has opposed versions of those bills, arguing that these types of laws on exports would harm the recycling sector and are unnecessary because the industry is well-regulated by existing federal and state laws The country is home to a patchwork of state laws. In half of states, landfilling electronics is legal. Some states, including Washington and Oregon ,have paired landfill bans with laws that incentivize local recycling. The two Northwest states use "producer responsibility" laws similar to those in the European Union But according to BAN's tracking data, even audited companies were found to be exporting, including some in Oregon, Washington, California, Michigan and New Jersey. In addition, states don't have jurisdiction to ban exports.

Information Disclosure

The government encourages companies to pollute less by publishing information about the amount of pollutants individual companies emit each year Also called regulation by publicity or regulation by embarrassment Evidence shows that at least initially, reporting manufacturers in the United States cut their releases and disposal of these chemicals to the air, water, and land, apparently fearing negative publicity

Environmental Issues

When a supplier of raw materials, parts, or finished goods contributes to climate change, dumps toxic chemicals, emits air pollution, or reduces biodiversity, it can threaten the reputation of companies at the top of the supply chain. Another issue of concern to supply chain managers is the environmental impact of transporting products long distances from where they are made, grown, or extracted to where they are further processed or sold to consumers.

Exporting Harm: The High-Tech Trashing of Asia: Notes

When your electronics break, it is common that it is cheaper the buy new than fix. E-Waste is hazardous and should be recycled appropriately. Most recyclers are just distributers to Asia to reuse them. Fred Lorch with Total Reclaim from Seattle. Doesn't want to export but that is where the money is. There is a domestic market, but it is tiny which forces them to export the plastics. No idea what happens once exported but they know it is more money. Exported to Guiyu which was once a rice village and now it is basically a junk yard whom the workers get $1.5 per day of work. 100000 people here.

conflict zones

Where ethical issues take place regularly.

sustainability report

a comprehensive report of what a business has done, and is doing, with regard to social issues that affect it

supply chain map

a visual representation of the multiple links between a lead firm (in this case, the novelty clothing maker), its suppliers, and eventually its customers. It shows the movement of a particular product from the beginning of the supply chain to the end, superimposed on a geographical map.

Lecture 4 Summary

as we think about globalization, it's also important to keep in mind the major types of political and economic systems in which companies operate A full democracy: 8.9% of world population* A flawed democracy: 39.5% of world population A hybrid regime: 17.5% of world population An authoritarian regime: 34.1% of world population THE ECONOMIC SYSTEM (FREE ENTERPRISE VS REPRESSED) IS ANOTHER IMPORTANT METRIC: "Free trade" (through "Free Trade Agreements" FTAs) has been the policy of the US government: these agreements make it easier/cheaper for US to export goods and services - by lowing or abandoning tariffs or quotas - this also provides similar benefits to those also exporting these goods to the US. Why do we participate in Free Trade: It simply makes sense to produce something somewhere else when it is cheaper. A corollary of this is the idea that countries should produce what they produce most efficiently, relative to other things they might produce. First, the country needs to look inward, and ask itself a simple question: What does it produce efficiently - widgets or computers? And secondly, each country needs to ask itself: What products can we produce more efficiently, relative to the costs other countries have in producing the same product. This is known as the LAW OF COMPARATIVE ADVANTAGE There is no question that "free trade", as a public policy, wins - if you apply a "utilitarian" analysis (e.g., on a macro level, it makes sense). The problem is that free trade often means structural job/industry losses if Country A's widget producers are no longer the "low cost" producer in a world market. You want "protectionist" trade policies so you will be protected from losing your job due to cheaper options over seas. People prefer this free trade until it hurts THEIR job A tariff is a duty, or tax, levied on goods when they arrive in a country that did not produce the good. Tariffs are used to (1) protect local industries and jobs from less costly foreign competition; (2) as anti-dumping measures; and to compensate for (3) local governments subsidizing the production costs - this is known as "countervailing tariffs". Essentially trying to protect jobs here by making foreign goods more expensive Anti-dumping measures - as a motivation for imposing tariffs - has a different rationale: these tariffs are to punish the foreign producer and its government for consciously taking actions that help their local companies, often by selling at below cost to keep the industry going. Countervailing tariffs are more problematic, because they attempt to get at more indirect ways that local governments try to help their local businesses. Quotas limit the amount or number of specific products that a country will allow to be imported (from foreign countries) each year. The US, for example, has limited (by quotas) the textiles (fabrics) that may be imported. (If not, cheaper textiles from 3rd world counties would overwhelm us, ending all local production.) THE COSTLY TRUTH ABOUT AUTO IMPORT QUOTAS Wharton Econometrics calculated that the average price per new car has risen by $2,600 since the market restrictions were imposed. The low supply of imported cars mandated by the quotas added $1,000 to the price tag of every Japanese car sold in the U.S., a total of $1.85 billion in extra consumer costs. FROM THE PERSPECTIVE OF THE MNC 1. The primary goal of every company is to maximize its profits. 2. Selling products in more markets often means overseas markets. 3. Sales offices in foreign countries are often necessary to coordinate things. 4. MNC's may license use of patents and technology to foreign firms that make and sell MNC's products. 5. Ultimately, the foreign branch of a MNC may become, in ways, autonomous, with the authority to make decisions in light of local needs. At this point the MNC has a subsidiary that is a partner, rather than a subordinate, taking orders exclusively from the home office. 6. Manufacturing in foreign countries often saves money, and also placates local governments by creating jobs, and stemming the flight of capital. CHALLENGES TO MNCS PROBLEM #1: LACK OF PREDICTABILITY. #2 MNC'S HOME/HOST COUNTRIES' LAWS MAY MAKE DOING BUSINESS ABROAD MORE DIFFICULT. CHALLENGE #3 to MNCs BUSINESS CAPITAL DIVERTED FROM THE BUSINESS. 1 Countries may have a high tax rate. 2. A poorly trained workforce (South Africa v. BRIC) 3. Inadequate infrastructure (transportation, etc.) to support a MNC. Wal-Mart in India / WSJ Challenge #4 to MNCs -- Corruption THE FOREIGN CORRUPT PRACTICES ACT The FCPA prohibits: (1) US business and their agents (2) from bribing (3) foreign officials (4) to influence an official act (5) to gain or retain business. Challenge #5 for MNCs -- The environment (more than just "quality of life" - life itself) Challenge #6 for MNC's (and the home government of the MNC) Technology transfers.

Environmental Auditing and Reporting

companies not only organize themselves to achieve sustainability goals; they also closely track their progress toward meeting them

e Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal Notes:

usually known as the Basel Convention, is an international treaty that was designed to reduce the movements of hazardous waste between nations, and specifically to prevent transfer of hazardous waste from developed to less developed countries (LDCs). It does not, however, address the movement of radioactive waste. With the tightening of environmental laws (for example, RCRA) in developed nations in the 1970s, disposal costs for hazardous waste rose dramatically. At the same time, globalization of shipping made transboundary movement of waste more accessible, and many LDCs were desperate for foreign currency. Consequently, the trade in hazardous waste, particularly to LDCs, grew rapidly.

Undercover In The New Territories Notes:

Basically a recap of the video I watched earlier about them visiting one of these over seas recyclers But a crackdown by the Chinese government on whole electronic imports, part of a border control operation called "Green Fence," has prevented many electronics from moving across the border. This allows the mess to end up in Hong Kong. "Exporting Harm: The High-Tech Trashing of Asia." It captured the crude recycling methods taking place in Guiyu, a cluster of villages in southeastern China that has since become known as the world's biggest graveyard for America's electronic junk The United States is the only industrialized country in the world that hasn't ratified the treaty. Its hazardous waste is still getting exported to countries with fewer health and environmental safety laws, according to Puckett's latest investigation. Estimates of U.S. e-waste exports vary widely. The United Nations says that between 10 and 40 percent of U.S. e-waste gets exported for dismantling. While the International Trade Commission — through a survey of recyclers — said in 2013 that a mere 0.13 percent of all used electronics collected in the U.S. went abroad for dismantling. Burning e-waste is known to generate dioxins, a family of cancer-causing chemicals that endure for long periods of time in the environment and human body. Hong Kong bans the import of hazardous e-waste like cathode ray tubes and flat screens from the United States and other developed nations, according to Environmental Protection Department spokesperson Heidi Liu

Where does America's e-waste end up? GPS tracker tells all Notes

But a two-year investigation by the Basel Action Network, a Seattle based e-waste watchdog group, concluded that sometimes businesses are exporting electronics rather than recycling them. Puckett's organization partnered with the Massachusetts Institute of Technology to put 200 geolocating tracking devices in stuff About a third of the tracked electronics went overseas The tracked electronics ended up in Mexico, Taiwan, China, Pakistan, Thailand, Dominican Republic, Canada and Kenya. Most often, they traveled across the Pacific to rural Hong Kong.

Tod Lecture on Notes:

Jim Puckett came in for a presentation. Founder of the Basel Action Network which tries to ban toxic trade. Basle convention: The only treaty on waste. that sought to control waste exports. Cost Externalization: Exporting since it is cheaper to do and they do not have to think about it. US dragged down the efforts to reduce these exports. Was able to get Total Reclaim (one of the biggest recyclers in the North West) to go along with E-Waste safe procedures. Enterprises like companies like UW and Boeing Resouce enterprise program. Cybersecurity is apart of this as well. They are fearful of bad press so that is why they do this. CRM. This program was based on bids Some do not want to join like Disney but are still required to adhere somewhat BAN is the group that tracks e-waste via trackers. Total Reclaim who was the poster child of good recycling is caught sending waste overseas and making fake reports to seem like they are only exporting plastic. Seth Wilkenson prosecuted the case against Total Reclaim. Exporting overseas was not a federal crime even when looking at the Resource conservation and recovery act. But what these companies did do was commit fraud. False representations to acquire money is Fraud. They were saying that if you pay us a premium then we will treat it right. They were not doing this at all. Coverup following BAN Revelations: They denied sending their stuff to Asia and panicked enough to falsely more documents from Flat screens to plastic mix.

The Circuit: Tracking America's Electronic Waste Notes

Jim Puckett seeks to find where recycled e-waste goes. He is apart of Basel Action Network that investigates the recycling of electronics. Placed GPS in electronics and recycled them to track where they went. 1/3 were exported to Hong Kong (new territories) which is about 2000 miles No protections to the labor force which are dealing with carcinogenic materials like printer ink. Unlicensed and unregulated. The US is the only country that hasn't signed an international treaty to prevent 1st world countries form dumping e-waste on third world countries Other countries require domestic companies to pay for domestic e-waste processing. No federal laws that force companies to recycle and lets them use landfills Dell was the first company to restrict exporting waste to other countries and partnered with GoodWill to allow people to drop off their goods to be recycled or reused. This has saved over 427 million pounds of used electronics from landfills. But when traced it was found that some waste ended up in Hong Kong, China, Taiwan, and Thailand.