Can Factory List Disclosure Improve Labor Practices in the Apparel Industry? A Case Study of Nike and Levi-Strauss

Abstract

How would multinational apparel companies and retailers react to a requirement to disclose the identity and address of the factories in their global supply chain? Could disclosure regulation of this sort cause management changes that could lead to improved labor practices in those factories? Disclosure regulation is a common tool in the arsenal of socalled “decentered” regulatory strategies, which emphasize ways that law can be used to guide and influence the private development of behavioral norms that are consistent with the state's policy objectives. The author traces the history of factory disclosure, and theorizes that mandatory factory list disclosure introduces into the management system a new “risk virus” that companies will seek to manage through systems changes that can ultimately lead to improvements on the factory floors. To explore this theory, the author conducted extensive interviews with senior executives of Nike, Inc. and Levi-Strauss, two companies that recently released their global factory lists “voluntarily”. The research indicates that these companies prepared extensively for the moment of disclosure by significantly improving and investing in their global labor practices monitoring and inspection systems. Neither company identified any negative business effects from the factory disclosure, but both emphasized that the disclosure had facilitated greater collaboration within the industry emphasizing shared strategies to improve supply chain labor practices. These outcomes are potentially useful in the struggle to improve labor practices. Therefore, the author proposes factory list disclosure regulation as an attainable and relatively subtle use of law that might nevertheless contribute in meaningful ways to the challenge of improving working conditions around the world.