According to a recent study by Brown University Provost Richard Locke and MIT Sloan Professor Greg Distelhorst, manufacturers that adhere to basic labor and environmental standards saw a four percent increase in annual purchases over those that did not.
In this study, Locke, who plays a critical role in the development of Brown’s suite of executive master programs, and Distelhorst examined more than 2000 manufacturers across multiple industries in 36 countries over a four year period.
As described in Science X’s, Factories get more business when they treat workers right, Locke and Distelhorst found most of these increases took place within the apparel industry which has also been the target of activists to end sweatshop labor practices. Their research showed that companies with improved compliance with labor and environmental regulations not only saw an increase in annual purchasing, they were producing better quality products and delivering them on time.
Locke and Distelhorst concluded that consumer-facing retailers risked losing business if they didn’t capitulate to pressure to deal with compliant factories.
“This shows that the interests of ethics and profit do align,” Distelhorst said. However, they noted that the effect of activists could be limited since non-compliance in the apparel industry remains the norm; the incentive is not strong enough for companies to improve working conditions.
At the Brown School of Professional Studies, we greatly appreciate the extensiveness of this research. Its findings support our mission to forge industry leadership committed to building sustainable brands to advance companies in line with the creation of a more just, prosperous and equal world.
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