Social Compliance Reporting in the Clothing Supply Chain: MNCs’ Disclosures on Social Compliance Measures Taken in Supply Chains

With the global shift of production locations to developing nations, retail MNCs have started to express concern and address social performance in supply chains. For example, within the Bangladeshi clothing industry, from the early 1990s, the export-oriented clothing supply companies were blamed to utilise child labour. This had a negative impact on the industry’s reputation, because the supply companies have widespread interaction with retail MNCs and their reputation extends across national boundaries. The use of child labour, and the existence of dangerous working conditions in Bangladeshi supply companies that manufacture goods for retail MNCs, caused significant concern to those companies. MNCs became sensitive to the possible negative impacts on their reputation in North America and Europe, where the general public are more aware of issues surrounding child labour than the public in Bangladesh. Open discussion of such issues, and the ensuing pressures exerted in developed nations on MNC executives, forced a change in the operations of Bangladeshi supply companies, so that the credibility of MNC was not damaged further. This chapter provides some examples of social compliance reporting and auditing as a response to widespread global concerns over MNCs’ supply chains in developing nations.