This daylong discussion, attended by roughly 40 scholars and practitioners from universities, labor organizations, corporations and NGOs, focused on how companies can move beyond monitoring and compliance to build socially and environmentally responsible supply chains.

At two workshops in 2008, the group discussed a few key strategies, leading Josh Cohen and Rick Locke to seek funding for a new research center. These included:

1. Scaling up codes of conduct
2. Reinvigorating national regulation
3. Combining labor standards and trade rules

The event on January 29th covered the following topics, summarized below:

Panel 1.   Recent research on ethical consumption

• Michael Hiscox, Jens Hainmueller, Sandra Sequeira (Harvard)
• Margeret Levi (University of Washington)
• Yotam Margalit (Stanford University)
• Dara O’Rourke (GoodGuide, UC Berkeley)

Selected findings:

• The Average “Fair Trade” effect is 9%, based on a coffee experiment with Whole  Foods
• Consumers are willing to pay some premium for social labels (7.3-13.1%)
• Berkeley: Personal health and wellness and the environment outrank labor concerns for consumers of products listed on GoodGuide.com

Panel  2.   Best practices in the environmental area that might be carried over to labor/trade

• Edgar Blanco (MIT)
• Bonnie Nixon (HP)
• Erica Plambeck (Stanford)
• Charles Sabel (Columbia)

Selected discussion points:

•  Compliance-based regulation no longer works; there are new roles for NGOs, government, and public-private partnerships in creating incentives for suppliers
• Suppliers care most about volume and length of contracts; since not everyone is Wal-Mart, buyers may need to come together to encourage ethical behavior

Panel 3.   New regulatory strategies in labor markets in emerging economies

• Salo Vinocur Coslovsky, Massachusetts Institute of Technology
• Mary Gallagher, University of Michigan
• Andrew Schrank, University of New Mexico
• Rick Locke, Massachusetts Institute of Technology

Selected discussion points:

• Evidence from Brazil shows that law enforcement operates in parallel with private auditors in monitoring suppliers, becoming “shock troops of sustainable development”; some issues require state regulation
• There may be trade-offs between bureaucratic efficiency and equity in a compliance system, as in the Dominican Republic
• In some cases, the state’s role is to delegate work so private sector can police more effectively

Panel 4.   Looking Forward

• Caitlin Morris (Nike)
• Marcela Manubens (Phillips-Van Heusen)

Selected discussion points:

• Key issue is how to tie labor and environmental agenda together; for some companies, environmentalism is self-interest—materials like bamboo often resonate with designers. But who makes the bamboo shirt is less of an issue. One option is to derive cost savings from environmental policies and direct that money to programs for workers.
• Big question: in an entry-level sector, how far across the spectrum from minimum or entry-level to living wage do we go? How do we measure progress? Is it a 3% increase in labor value /product each year?
• Another issue in need of further exploration: where upgrading doesn’t reach lower down in the supply chain. There’s got to be a virtuous circle where technical upgrading and labor issues can be joined
• Environmental issues have won the battle because regulatory environment incents companies to care about it, and consumers care, too—it’s become hip. Maybe what’s needed is to institutionalize the “triple bottom line” approach to business such that companies with good labor policies get tax breaks.

» Notes and Presentations (password protected)

Co-sponsored with the Global Supply Chain Management Forum

David E. Sanger covers the White House for The New York Times and is one of the newspaper's senior writers. In a 24-year career at the paper, he has reported from New York, Tokyo and Washington, covering a wide variety of issues surrounding foreign policy, globalization, nuclear proliferation, Asian affairs and, for the past five years, the arc of the Bush presidency. Twice he has been a member of Times reporting teams that won the Pulitzer Prize. Sanger's new book, The Inheritance: The World Obama Confronts and the Challenges to American Power (Harmony, 2009), is an examination of the challenges that the tumultuous events of the past eight years have created for the new president.

Before covering the White House, Mr. Sanger specialized in the confluence of economic and foreign policy, and wrote extensively on how issues of national wealth and competitiveness have come to redefine the relationships between the United States and its major allies. As a correspondent and then bureau chief in Tokyo for six years, he covered Japan's rise as the world's second largest economic power, and then its humbling recession. He also filed frequently from Southeast Asia, and wrote many of the first stories about North Korea's secret nuclear weapons program in the 1990's. He continues to cover proliferation issues from Washington.

Leaving Asia in 1994, he took up the position of chief Washington economic correspondent, and covered a series of global economic upheavals, from Mexico to the Asian economic crisis. He was named a senior writer in March, 1999, and White House correspondent later that year.

Mr. Sanger joined the Times in the Business Day section, specializing in the computer industry and high-technology trade. In 1986 he played a major role in the team that investigated the causes of the space shuttle Challenger disaster, writing the first stories about what the space agency knew about the potential flaws in the shuttle's design and revealing that engineers had raised objections to launching the shuttle. The team won the 1987 Pulitzer Prize for national reporting. He was a member of another Pulitzer-winner team that wrote about the struggles within the Clinton Administration over controlling exports to China.

In 2004, Mr. Sanger was the co-recipient of the Weintal Prize for diplomatic reporting for his coverage of the Iraq and Korea crises. He also won the Aldo Beckman prize for coverage of the presidency, awarded by the White House Correspondent's Association. The previous year he won another of the association's major prizes, the Merriman Smith Memorial Award, for coverage of the emergence of a new national security strategy for the United States. In 2004 he and four other colleagues also shared the American Society of Newspaper Editor's top award for deadline writing, for team coverage of the Columbia disaster.

Mr. Sanger appears regularly on public affairs and news shows. Twice a week he delivers the Washington Report on WQXR, the radio station of the Times. He is a member of the Council on Foreign Relations and the Aspen Strategy Group.

Born in 1960 in White Plains, N.Y.,  Mr. Sanger was educated in the public school system there and graduated magna cum laude in government from Harvard College in 1982.

Electricity transmission pricing and transmission grid expansion have received increasing regulatory and analytical attention in recent years. There are two disparate approaches to transmission investment: one employs the theory based on long-run financial rights (LTFTR) to transmission (merchant approach), while the other is based on the incentive-regulation hypothesis (regulatory approach). The transmission firm (Transco) is regulated through benchmark or price regulation to provide long-term investment incentives. In this presentation I consider the elements that could combine the merchant and regulatory approaches in a setting with price-taking electricity generators and loads. A new price-cap incentive mechanism for electricity transmission expansion is proposed based upon redefining transmission output in terms of point-to-point transactions. The mechanism applies the incentive regulatory logic of rebalancing the variable and fixed parts of a two-part tariff to promote efficient, long-term expansion.