MIT Sustainability Summit 2010
Last Friday I had the pleasure of attending the 2010 MIT Sustainability Summit. Unfortunately, I had classes that day, so I was only there for part of it, but the two breakout sessions that I attended were great. One was about sustainable supply chains. The speaker was Richard Locke, an MIT professor at Sloan, who did some work with Nike, Coca Cola, HP, and other global corporations. He was specifically looking at labor standards and working conditions, and how to improve them without compromising profitability. The current model seems to be that these companies have certain cost requirements, and whichever supplier can best meet those requirements is contracted for that batch. Then, they would send someone out to the factory and check things off of a list to make sure that the supplier complies with their labor standards. This sounds fine, but the problem becomes apparent if one looks at the performance of these suppliers over time. Not only are a majority of suppliers not satisfying basic labor conditions, but they do not seem to be improving over time. The main reason appears to be the incentives. The supplier has to compete with the other suppliers, so whoever can make the products cheapest and fastest is going to win the contract. Also, since these corporations are usually not the suppliers’ only customers, losing that one contract is not that big a deal. Contrary to popular belief, the corporations are not in control of whether or not their suppliers are in compliance with labor standards. The suppliers have no incentive to improve labor standards; in fact, the possibility of decreasing productivity makes them less likely to improve working conditions. The corporations have little incentive to increase their costs when everyone uses suppliers that are questionable. The speaker mentioned that they investigated a company that was famed to have suppliers that are most in compliance with labor standards, and even they only had about 25% of their suppliers satisfying all of the labor standards that are in place. So what can we do about this? The speaker suggests a new model that emphasizes commitment over compliance. Instead of forcing suppliers to simply comply with the regulations, corporations can form longer-lasting relationships and commit to them so that they have enough security to experiment with new organization in their factories. There are ways to improve working conditions and maintain productivity or even increase profitability. The supplier just needs to go through an initial adjustment period during which production may not be optimal. That’s why it is important that the corporation commit to the supplier so that they have enough security to take this risk. This all seems very logical to me, but I think convincing people to do this in reality will be difficult.
The second breakout session I went to was a panel talking about how to promote sustainability locally. I think the actual discussion moved away from sustainability exactly and went more into what modernization is doing to local communities. The Ward 6 Alderman of the City of Somerville Rebekah Gewirtz emphasized how she supports local businesses in Davis Square and has very strict rules about which national corporation she would let in to their local community. The argument seems to be that local independent businesses help foster a feeling of community that strip malls simply cannot. I am personally a little conflicted on the issue. On the one hand, I understand what she means when she says that big box stores are impersonal and take away from the identity of the place, but I also think the natural flow of economic efficiency points towards these chain stores. I talked to a friend about this, and we decided that each kind of place caters towards different populations. For cities with a large transient population such as students whose low incomes are the limiting factor, big box stores make the most economic sense. For places catering towards families and community, locally owned businesses offer an atmosphere that makes the higher prices worth it. In the end, I suppose you can’t really say that one is better than the other, but that there are just different places for different people.
