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The Bangladesh Tragedy: The Tipping Point From Hell

BY CSA STAFF

By John Paluszek, [email protected]

This time it is different.

But the question remains: Is it different enough? Let us, then, count the ways.

The “tipping point” may seem facile, but the current dramatic increment of tragic incidents is now more toxic to more corporate reputations. That’s a big deal, generating a new dimension of company action.

This so-called “international sweatshop” issue is by no means new. Many apparel, sporting goods – and, more recently, computer – manufacturers and their retail outlets have been dealing with it for decades. But the momentum of recent worker tragedies in less developed countries and sustained media attention has generated new urgency.

The sudden, violent deaths of some twelve hundred Bangladeshi apparel workers at Rana Plaza came in the wake of similar recent tragedies in Bangladesh and Pakistan (and, to come forward, subsequently in Cambodia).

This is, of course, a greatly complex set of issues going to the very heart of business in our globalized economy.

Suppliers and retailers must confront and tease out a supply chain policy that balances answers to questions such as: How do you do “the right thing” for all the people you touch? What is the fairest and most responsible way to pay for the needed improvements; should it come out of profits (is that “fair” to shareholders to whom companies also have an ethical, moral and legal obligation)? Can the companies find efficiencies in operation or technological advances that will help absorb some or all of the related costs?

There is great reputational risk in each of these directions. And yet some companies have gone boldly forward with progressive supply chain programs integrated into their business model.

Examples abound:

Patagonia has centered its brand on its supply chain code commitments and built an upscale consumer base around it. Wal-mart has escalated its inspection of every Bangladesh factory producing goods for its supply chain and has launched its Women In Factories empowerment program in factories in India, Bangladesh, China and Center America. Last year’s work place controversy at its major supplier in China, Foxconn, certainly got Apple’s attention. The supplier then agreed to slash overtime, improve safety, hire new workers and upgrade dormitories.

That is more than the tip of this massive iceberg but much remains to be done. The current dispute over whether to join the international agreement on improving working conditions – championed by the labor organizations IndustriALL – or proceed unilaterally, misses a key point: What we are now witnessing is a newly-energized “race to the top” in a critical aspect of the globalized economy.

Most of the key players in this globalization dilemma are being heard: The workers, lamenting the tragic loss of life, their working conditions and pay; factory owners, with claims of being pinched economically by buyers for the apparel brands; suppliers and marketers of the apparel; organized labor; and a variety of highly concerned civil society/NGO organizations.

Many retailers, too, have had voice, mainly as members of the National Retail Federation which opposed the IndustriALL fire-and-building safety agreement for Bangladesh.

But what do American consumers, the “ultimate deciders”, think about this crucial issue – now?

In studies conducted in major retail stores in 2005, a majority of surveyed consumers said they would be willing to pay extra for products made under good working conditions rather than sweatshops.

But the study noted, “…there is no clear evidence that enough consumers would actually behave in this fashion and pay a high enough premium, to make social product labeling profitable for firms.” (“Is There Consumer Demand for Improved Labor Standards? Evidence From Field Experiments in Social Product Labeling” – Michael J. Hiscox and Nicholas F.B. Smyth, Department of Government, Harvard University)

Where is the current consumer opinion research?

John Paluszek is the executive producer of “Business In Society,” a series of video programs interviewing experts on corporate social responsibility issues, and senior counsel, Ketchum, a leading global public relations counseling firm. He can be contacted at [email protected].


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Board at Walmart greenlights new share repurchase program

BY CSA STAFF

BENTONVILLE, Ark. — Walmart’s board of directors has given the company the green light to repurchase $15 billion of its shares, effective June 6, the company announced at its annual shareholders meeting.

This program replaces the previous $15 billion program announced on June 3, 2011. As of June 6, the company had approximately $712 million remaining on the 2011 Authorization. Under the share repurchase program, repurchased shares are constructively retired and returned to unissued status.

“Our strong cash flow enabled the company to invest in growth and repurchase more than $14 billion of our stock during the last two years,” said EVP and CFO Charles Holley. “We’re pleased to continue our share repurchase program with this new $15 billion authorization.”

In addition to share repurchases, the company continues to return value to shareholders through dividends. Earlier this year, Walmart increased the fiscal 2013 dividend per share by approximately 18% to $1.88 for fiscal 2014, up from $1.59 in fiscal 2013.

“We’re proud of our long history of returning value to shareholders through the combination of dividends and share repurchases. Together, we returned $6.2 billion to shareholders year-to-date during fiscal 2014, including the recent payment of our second quarter dividend,” Holley added. “And during the last 10 years, Walmart returned nearly $100 billion to shareholders. We also increased our dividend every year since March of 1974, when we began paying a dividend of 5 cents per share.”

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Phillips Edison appoints new GM for The Shoppes at Parma

BY CSA STAFF

CINCINNATI — Phillips Edison & Company has named John S. Kokinchak, SCSM, SCLS, as GM of Parmatown Mall in Parma, Ohio, Cleveland’s largest suburb.

Kokinchak, a veteran executive of the shopping center industry, will assist in leading the transformation of the historic retail location into The Shoppes at Parma, a "Main Street" destination for shopping and dining that will act as a town center for residents of Parma and surrounding communities.

"A shopping center like this is the heart of a community like Parma," Kokinchak said. "I’m thrilled to be involved in a process that impacts tens of thousands of lives, the people who will shop and be entertained here."

Kokinchak comes to Phillips Edison from Developers Diversified Realty Corp., owners of lifestyle, specialty and community shopping centers across the U.S., Brazil and Puerto Rico. Kokinchak held several top management positions with DDR, most recently serving as chief administrative officer and senior executive VP. Prior to joining DDR, Kokinchak held management positions with Prizm Asset Management Company, Shopco Group and Simon Property Management.

"To have someone of John’s integrity and reputation as GM of our Parma center is a tremendous asset, and we are thrilled to make this announcement," said David Birdsall, president of the Phillips Edison Strategic Investment Funds. "John’s experience will be invaluable as we reinvent this great retail tradition."

"This redevelopment will impact the community by bringing fresh, exciting retail and entertainment to this market, while creating the neighborhood environment of the 21st century. What I’ve learned about Phillips Edison is that everyone’s philosophy is aligned. They very much care about this business and the communities and customers they serve. Those are the types of people you want to surround yourself with, and that’s why I’m here," added Kokinchak.

Kokinchak is a member of the International Council of Shopping Centers and currently serves as its chairman of the Governing & Admissions Committee, CSM Certification and co-chair of the Governing & Admissions Committee, CRX Certification. From 2008 to 2009 he served as the dean for the ICSC University of Shopping Centers School of Open Air Centers. He has also served on the advisory board of the Specialty Retail Report, an industry publication.

Phillips Edison & Company owns and manages more than 260 neighborhood and community shopping centers in 35 states. The company has headquarters in Cincinnati and Salt Lake City, as well as regional offices across the country.

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