Ethical Challenges in Global Industries

• Global industries like fashion and consumer electronics face scrutiny regarding supply chains, environmental impact, and labor standards.
• Many businesses have ethical codes, but their effectiveness remains questionable.
• The study examines the ethical practices of ModaTrend and TechNova
• ModaTrend is a global fast fashion retailer
• TechNova is a leading smartphone manufacturer
• Both companies claim strong corporate social responsibility (CSR) initiatives, but investigations have raised concerns

ModaTrend: The Fast Fashion Controversy

• ModaTrend is known for trendy, affordable clothing with quick turnaround
• The company claims a strong code of ethics: fair wages, sustainable sourcing, responsible waste management
• An investigative report showed Southeast Asian factories producing ModaTrend's clothing pay workers below minimum wage.
• Factories failed safety inspections.
• Employees reported excessive working hours with little pay.

ModaTrend's Ethical Challenges

• Ethical commitments appear strong on paper, but weak enforcement allows violations.
• Activists, media, and consumers are demanding greater transparency
• Internal audits are criticized as superficial and ineffective.
• Production contributes to excessive textile waste and pollution, despite claims of eco-friendly materials.

Supporting Data for ModaTrend

• 85% of all textiles globally go to dumps each year
• Textile production releases 2 billion tonnes of greenhouse gases annually
• Textile waste occupies about 5% of landfill space

TechNova: The Cost of Innovation

• TechNova is known for cutting-edge smartphones and sleek gadgets
• The company states its supply chain follows fair labor policies and uses responsibly sourced materials.
• Suppliers in China and South America were using child labor to extract rare minerals like cobalt and lithium
• Cobalt and lithium are crucial for battery production
• Workers in one factory reported harsh working conditions
• Reported conditions included 14-hour shifts and unsafe environments
• The company failed to disclose the environmental damage caused by mining operations in developing regions.

TechNova's Ethical Challenges

• Transparency & Accountability: Despite a CSR policy, supplier monitoring is unclear.
• Ethical Leadership: Executives face stakeholder pressure to take decisive action.
• Balancing Profit & Responsibility: The company must decide whether to increase production costs for better ethical standards.
• Consumer & Investor Trust is wavering, and TechNova needs to rebuild its reputation

Supporting Data for TechNova

• The Democratic Republic of Congo (DRC) has over 50% of the world's cobalt reserves
• Children routinely work in mines under hazardous conditions in the DRC
• Child and forced labor taint the cobalt supply chain, essential for lithium-ion batteries and modern technologies like electric vehicles.
• Cobalt is critical for rechargeable car batteries and the transition from fossil fuels to sustainable energy.

Assignment Pointers

• Business Ethics Management involves evaluating how companies manage ethics through codes of conduct, training, and leadership accountability
• Stakeholder Theory & Responsibility: Companies must balance the needs of shareholders, consumers, workers, and regulatory bodies.
• Analyze the effectiveness of ModaTrend and TechNova's ethical monitoring systems
• Corporate Social Responsibility & Sustainability requires exploring whether companies are truly committed to ethical business practices or just greenwashing
• Reputation & Consumer Trust involves discussing the impact of ethics on brand image, customer loyalty, and profitability.

Discussion Questions for Reflection

• Is codes of ethics enough, or do companies need stricter enforcement mechanisms?
• Should companies like ModaTrend and TechNova sacrifice profits to ensure ethical supply chains?
• What role do consumers play in holding companies accountable for unethical practices?
• How should ethical auditing be improved to prevent scandals?