Many multinationals do not own the means of production of their goods. Fashion c

Question

Many multinationals do not own the means of production of their goods. Fashion companies like H&M rely on thousands of suppliers and technology companies like Apple depend on multiple third-party contractors to produce components or assemble whole products.

- How can these companies insure quality, safe and just working conditions?

- How do they work towards a positive or at least a neutral environmental impact?

- Milton Freidman the famous economist once said, “The social responsibility of business is to increase profits.” https://hbr.org/2012/04/you-might-disagree-with-milton

- Do corporations have a right or a responsibility develop corporate social responsibility programs?

- Should companies make charitable donations or political contributions?

Explanation / Answer

Ans:-

The quality of material is ensured by regular supplier training and grooming. H&M and Apple invest in the development of suppliers/contractors in terms of technology and quality. These companies has set up supplier code of conduct and ask them to adhere by it. These companies also prevent any discrimination on the basis of gender, ethnicity, colour or religion. Apple and H&M has guidelines regarding human trafficking, underage labour, health and safety, working hours. These regulations ensure safe and just working condition.

H&M and Apple is commited towards environmental sustainability. H&M has reduced shipping through road transport and increased rail or sea route or shipping. This has reduced carbon emission due to supply of material. H&M has also invested in green technology and raw material procurement. For example:- H&M has invested to provide technology and raw maetrial to suppliers and produce green cotton. Apple ensured that its contracts have all the environment permits. Apple works towards zero waste policy by recycling.

The statement as per Milton Freidman is vague. Merely increasing profit is not going to solve the purpose unless it impacts the lives of people in better way. Only sharing of profits up to shareholders is not social resposibility. The companies have responsibility towards environment nad society in which they are working.

Corporates should take part in CSR programs and increase the contribution to society. CSR activities help different layer of society and impact thier lives by different initiatives like education support, providing clean water in rural areas, making shelter for poor people etc.

Companies should make charitable or political donations whithout any bias towards political parties up to the point that it doesn't leads to compulsion.

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