Spend Matters research suggests Corporate Social Responsibility (CSR) programs geared at retail and apparel supply chains add approximately 23.5 percent to the cost of every garment or item sold at retail in the US and EU today – over and above the added low-wage benefits of sourcing from developing markets. “Our research shows that the financial costs strongly outweigh the societal costs of such programs making it difficult for the middle class to get ahead,” said Thomas Kase, VP of Research at Spend Matters.
Spend Matters research’s recent report, Unchecked Capitalism – Sourcing for Me but Not for Thee, suggests that rampant capitalism in developing markets has resulted in suboptimal working conditions and factories with only a 99 percent expected annual survival rate in the lowest wage areas of China, India, Bangladesh and Vietnam. The report also references research from these regions that suggests workers earn an average of 123.7 percent more than wages they could otherwise expect to receive in rural, agricultural employment.
“The cost benefit analysis of these working conditions is clear,” notes Kase. “Workers are far better off with factory employment earning over 100 percent of the prevailing rural wage than toiling in fields having to dodge run-off chemicals from other factories.”
As a result of its research, Spend Matters has decided to endorse the program of a leading US retailer that has put its entire 2014 marketing budget behind a “Sweatshop Now” campaign that offers identical items to those made in sweatshops not certified to be CSR compliant to Western standards, but manufactured in the US, at 175 percent of the same price, next to the original globally sourced, offending items.
The early sales returns from of the program are fascinating, suggests Spend Matters. Less than 20 percent of consumers would pay the added cost of the domestically manufactured items over the absolutely cheapest globally sourced comparative products. However, credit card analysis suggests that consumers purchasing the less expensive items are far more likely to use Product Red affinity cards that support third world development than those purchasing the more expensive, domestically produced items.