Marks and Spencer

Background

Marks and Spencer describe themselves as 'one of the UK’s leading retailers, with over 21 million people visiting our stores each week'. Their products are sourced from approximately 2,000 suppliers globally, they have over 600 stores in the UK and they employ 75,000 people in the UK and abroad.

They operate 285 stores in 40 'territories' worldwide, from Bermuda to Bahrain, Hungry to Hong Kong, Spain to South Korea and Poland to the Philipines to name just a few

They claim to be 'the number one provider of womenswear and lingerie in the UK', with their clothing and homeware sales accounting for 49% of their business. The remaining 51% of their business relates to the sale of food produce and products.

For the financial year 2007/08, M&S reported revenues of £9022 million, up from £8558 million in 2006/07. Their recorded profits also increased from £659.9 million for 2006/07 to £821 million for 2007/08

Biographical Information

History

Michael Marks, a Russian born Polish refugee who was a founding member of M&S began trading in 1884 when he opened a stall at Leeds market. In 1894 he began looking for a partner and was joined by Thomas Spencer. In 1903 Marks and Spencer Ltd became registered as a firm.

Ethical Trade?

Marks & Spencer claim that they have always taken their 'responsibilities to customers, employees, partners, suppliers and local communities seriously' and they are a member of the Ethical Trading Initiative (ETI) which operates a 'base code' for how its member businesses should operate . The ETI describes how it aims to develop good practice and provide a generic standard for company performance through its code which states its aims as to ensure that. :

• Freedom of association and the right to collective bargaining are respected
• Working conditions are safe and hygienic
• Living wages are paid
• Working hours are not excessive
• No harsh or inhumane treatment is allowed
• Child labour shall not be used
• No discrimination is practised
• Employment is freely chosen

Yet Marks & Spencer was named by Ethical Consumer magazine as the UK's 3rd least ethical place to buy clothes in 2005 which is a glaring contradiction. People and Planet may be shedding some light onto this when they state that a 'company’s membership of the ETI is no guarantee that conditions for its workers are acceptable. Retailers do not have to meet minimum standards to be members - they just have to commit to working towards these standards'.

In 2006, The Institute of Development Studies published the results of a study it had undertaken into the ETI. It is reported that the ETI 'has had little impact' and has 'failed to stop the exploitation of workers who produce the bulk of the products sold in UK shops'. Verkaik of The Independent describes how the report 'shows that while some working conditions have improved, in most cases the agreement has made little or no difference'. Workers continue to 'remain on low incomes, have no union representation and in some cases are harshly treated by their bosses'.

M&S advertise themselves as an ethical company through what they call 'Plan A'. This sets out their commitment to work 'with our customers and our suppliers to combat climate change, reduce waste, safeguard natural resources, trade ethically and build a healthier nation'. In describing the Plan they state that they're 'doing this because it's what you want us to do. It's also the right thing to do. We're calling it Plan A because we believe it's now the only way to do business. There is no Plan B'.

However evidence is emerging that points to a M&S that isn't as squeeky clean as it would like to have us think...

Breaches to the code

Child Labour

In 2007, BBC's Newsnight is reported to have exposed the use of forced child labor in the Uzbek cotton industry that had become a "deliberate state policy" aimed at "acquiring extra profits." Uzbekistan is the world's third-largest cotton exporter and whilst child labour had for many years been an issue there, it was reported that 'in recent years forced child labor has spread on a "mass scale," and that working conditions for thousands of minors who toil in Uzbek fields have worsened'. Children as young as 9 were described as being accompanied by police as they were sent to work in the fields. They were being paid just 2 pence per kilogram of cotton, which according to officials, is 40% less than pickers were paid.

The cotton was being used for making clothes sold in Britain and following the BBC's expose, M&S are reported to have said they would stop buying Uzbek cotton. This action was praised by some campaigners, yet it also begs the question of why did it take a very public expose in the British media before M&S took action, when child labour had been an issue in the country for many years?

Marks & Spencers document entitled 'GLOBAL SOURCING PRINCIPLES' may shed some light on this question. The aim of the document is to set out standards which suppliers for M&S are asked to follow. In the document, which sets the minimum age for workers to be at least 15 years old, it states that all production sites are visited and regularly assessed to ensure compliance. It does, however, go on to admit that it 'would be impossible for us to monitor or control the working conditions of each individual who contributes to what ultimately becomes a Marks & Spencer product' due to the complexity of supply chains. They exonerate themselves by stating that 'we establish a set of standards which includes specifications appropriate to the industries and countries manufacturing the products. It is the supplier’s responsibility to achieve and maintain these standards'.

According to Ethical Consumer, which declared M&S as the 3rd least ethical place to shop for clothes, 'ethical standards were so low among the 27 high street clothing chains surveyed that none of them could be recommended to shoppers with a conscience'. , They report that there is a general trend where 'fashion retailers seemed to be locked into a "race to the bottom" by selling increasingly cheap clothes made in low-wage economies with scant regard for workers conditions'.

Low wages and a death at a factory

Gokaldas Export, which supplies brands including Marks & Spencer, Mothercare and H&M, are reported to have confirmed that wages paid to garment workers were as low as £1.13 for a nine-hour day. This is a breach of the ETI's code as, according to factory workers and Indian unions, it fails to meet their basic needs. A factory owned by Gokaldas Exports was also the scene in 2007, where a young woman hung herself in the toilets. According to the Guardian, a 'report by a number of Indian NGOS alleges that she was verbally sexually harassed and repeatedly refused permission for leave on the day she died'.

Growing Pains: Poor wages, health problems and miscarriages in the cut flower industry

In 2007, War on Want report research findings of poverty wages, long working hours, health problems and anti-union hostility in the cut flower industry which includes Florverde (Green Flowers) certified farms, which is supposed to ensure ethical treatment for workers and the environment. Florverde farms are a supplier of cut flowers for M&S, with a significant increase in orders being reported as coming from the company. Tesco is also reported to buy from Florverde farms and Asda is described as showing an increased interest.

The research findings, which was supported by BBC 'Gardener's World' presenter Carol Klein, called on 'trade secretary Alistair Darling to allow overseas workers hit by UK firms to seek redress in Britain'.

It was reported that the research shows Columbian flower workers, who are mostly single mothers, were earning just over £24 a week. It is stated that this is less than half of what is needed as a living wage, which is in breach of the ETI code. Workers were also shown to have to work up to 15 hours a day and 'anti-union hostility' was reported at firms which included those certified as Florverde.

Issues surrounding the pesticides used to preserve the flowers is also of concern. The report states that:

'The World Health Organisation recommends at least 24 hours between the time flowers are sprayed with pesticides to preserve their beauty and when employees re-enter the area. But, as British supermarkets press for completed orders, many workers are told to enter greenhouses to cut the flowers without protective clothing right after fumigation. The report says Colombian women, forced to breathe in toxic chemicals, have above-average rates of miscarriages and children born with birth defects. Exposure to pesticides often results in fainting spells, chronic asthma, eye and breathing troubles, skin complaints, allergies and headaches'.

The experience of Esperanza Botina, a mother of four who worked at a Florverde certified farm, gives us an example of the poor treatment the women endure. The report claims that the company she worked with refused to allow her to go and see a doctor when she was suffering from a repetitive strain injury, in response they insisted on her working extra hours instead. Esperanza declined from the extra working hours and was then fired without compensation, which is described as 'a common fate for flower workers who fall ill'. The article reports that now, 'with severe arm pain, she cannot work on a flower farm and struggles to care for her family'.

It is not only women in Columbia who suffer from the negative impacts of the cut flower industry, as the report also cites similar poverty wages and unhealthy conditions for Kenyan flower employees. Again the employees here are mostly women who are single mothers that endure long working hours for little more than £5 a week. This again is well below half of a living wage, which leaves the women unable to meet the costs needed for food, housing, transport, education and health.

In conclusion, the article quotes War on Want's Chief Executive, Louise Richards, who states that:

"Mothers in Colombia and Kenya are paying a dreadful price for growing the flowers many of us will buy for Mothers Day. British supermarkets make huge profits, but fail to ensure decent pay and conditions for these workers. Now the UK government must act to right these terrible wrongs."

But War on Want does not want 'shoppers or supermarkets to stop buying flowers from the developing world, where people require jobs and countries need export income'. Instead they urge the people in Britain to press for legislation to make it a mandatory requirement for companies to ensure the welfare of the employees who supply their products.

Exploitation and discrimination in the meat supply industry

In 2008, workers demonstrated outside the Business in the Community (BITC), Annual Conference in London. The demonstration by Unite the Union was to highlight working conditions within Marks & Spencer's meat supply chain and call on M&S to deliver on their commitments to operate an ethical supply chain by ensuring an end to exploitation and discrimination within the meat supply industry which supplies their products.

Unite the Union states that:

'Whilst M&S claims to be one of the leading ethical supermarkets, Unite has evidence that there is widespread discrimination in the treatment of workers in the meat supply chain. A permanent two-tier workforce amongst many suppliers has been created, starting conflict between migrant and indigenous workers and helping cause community disharmony'.

The union reports that they have evidence of a permanent two-tier workforce that has been created. This has been acheived by mainly migrant workers experiencing even lower conditions than directly employed workers. Unite report that 'In some cases the exploitation of workers is shocking'. They presented their findings to M&S (& other major retailers) more than a year earlier, but despite 'talks and independent research which backed the workers claims, M&S has failed to take effective action by insisting that the meat supply industry stops exploiting its workforce'.

In the article Unite states that:

'Ethical retailing cannot simply be about making pledges, sitting on the right committees and receiving knighthoods. It has to be backed up by action. Words are meaningless and some might suggest cynical unless powerful retailers like M&S do more to put their own ethics into practice... Unite will leaflet delegates and demonstrate outside the BITC's annual conference, to send a clear message, that this world famous retailer needs to face up to its responsibilities and practice what it preaches'.

Brushing off accusations of exploitation

M&S are members of the Ethical Trading Initiative, which has a voluntary code of conduct for its members to commit to. However, as War on Want highlights, voluntary ethical initiatives make it possible for companies 'to brush off accusations of exploitation'. In the report in The Scotsman which explores the impact of the drive for cheaper and cheaper clothing, War on Want's Simon McRae is quoted as saying:

"Having an ethical code for these companies is such a contradiction. They may be signing up to ethical labour codes, but in pushing prices down and keeping them down they are actively hindering ethical practices. They can't keep pushing and pushing suppliers for cheap clothes and at the same time push for workers' rights."

Companies such as M&S may exonerate themselves by puting the responsibility for ensuring ethical standards onto the suppliers, but the current drive for cheaper products can often put the suppliers in an impossible position. The words of Luman Group chairman Mohammed Lutfor Rahman, who owns a factory in Bangladesh, sheds some light on this issue when he states that "Buyers who come to Bangladesh tell us, 'we are businessmen, we want to make money. If we see cheaper prices in China we will go there'." He then added: "I would be the happiest man in the world if I could provide my workers with good money, air conditioning, health benefits. They are like children to me. But if I cannot cover the costs of running a factory, it will close."

Voluntary codes are no substitute for mandatory ones. Mandatory codes are enforceable, voluntary ones are not. As Hertz has argued, voluntary measures are in effect quite meaningless as companies can always walk away from voluntary codes. They are unenforceable and if there are breaches, there can be little or no recourse. As with the ETI, all that is needed is a stated commitment to ethical codes, companies are only suspended from the scheme if they refuse such a commitment. But a commitment does not necessarily translate into action and outcomes: as is the experience of many of the workers described in this article. The ETI also has no power of inspection, they must simply take the word of their member companies and trust the reports that the companies submit about themselves as being an acurate reflection

Marks and Spencer state that in order to enforce their sourcing standards, they undertake regular site visits and assessment. Yet the same document also admits that they are unable ensure to that these standards are met. McRae from War on Want criticises companies for not doing enough to enforce their declared standards: "The whole system relies on audits. Workers can be questioned in front of their bosses; audits are often short and sometimes take place just once a year".

It has also been argued that signing up to voluntary codes for social responsibility is a tactic used by the business world to avoid binding regulations and constraints on corporate power. In other words, so that companies can be seen to be acting responsibly whilst behind the scenes they continue with business as usual. Such measures of corporate social responsibility have also been criticized as being little more than a PR exercise as companies are not driven by concern for people and communities, but by their own reputations. This could surely provide and explanation as to why it took a BBC expose into child labour before M&S took action with their cotton suppliers. Businesses are commercial entities acting in the pursuit of profit. Currently law states that actions must be in the best interests of their shareholders, in other words to maximise their returns. Their primary interests must be 'shareholder value and profit projections, not justice, equity or morality'. Initiatives such as membership of the ETI works to improve their bottom line as 'cause related marketing enhances corporate image, builds brands, generated PR and increases sales', which has been descibed as 'hypocritical window dressing'.

If voluntary measures are not making the difference, then mandatory regulations must surely be the answer, as John Hilary from War on Want has argued: "Exploitation of workers in developing countries such as India is standard practice for British retailers right across the spectrum. This just underlines the urgent need for Gordon Brown to step in now and stop these abuses once and for all."

This is a view shared by Unite the Union, who argue that: 'Ethical retailing cannot simply be about making pledges, sitting on the right committees and receiving knighthoods. It has to be backed up by action. Words are meaningless and some might suggest cynical unless powerful retailers like M&S do more to put their own ethics into practice... Unite believes supermarkets should face up to their responsibilities to workers and communities. M&S should put its warm words into action, and start putting people first'. .

Affiliations

• Oxfam - As part of M&S's Plan A, they have a partnership with Oxfam to 'encourage consumers to recycle their clothes'. This involved customers taking their old unwanted M&S clothing to an Oxfam store and in return receiving a £5 voucher to spend in a M&S store. Whilst initiatives to encourage our habits of reusing and recycling are much needed in our modern society, a more critical persepctive shows how this is a profitable move by M&S in terms of a marketing strategy. In order to spend their £5 voucher (which is only valid for a month), customers must spend at least £35 in a M&S store. So whilst the initiative encourages people to pass on their unwanted garments to be reused, it also encourages them to consume more and fuel M&S's profits in the process.

In 2009, other Plan A partnerships are listed as WWF | Woodland Trust | Shelter | Prostate Cancer Charity

People

The Board

Board Members listed in 2009

• Stuart Rose became Chairman and Chief Executive in 2008. he is also non-executive director of Land Securities plc and Chairman of Business in the Community. Formerly serving Burton Group, was Chief Executive of Argos plc, Chief Executive of Booker plc and was Chief Executive of Arcadia Group plc. Spencer has flitted to and from M&S throughout his career and he was knighted for his services to the retail industry and corporate social responsibility (which is ironic when some of the examples in this article are considered).
• Sir David Michels - Deputy Chairman who is also senior independent director of easyJet plc, previously non-executive director of Strategic Hotels & Resorts and Jumeriah Group Dubai (until 2008), non-executive director of RAB Capital (until 2008), Grand Metropolitan, Ladbrokes and Stakis
• Ian Dyson - Group Finance and Operations Director. Formerly Finance Director of The Rank Group plc, Group Financial Controller of Hilton Group plc, Finance Director with Le Meridien (a division of Forte plc), Chartered Accountant & Partner with Arthur Andersen, non-executive director of Misys plc.
• Steven Sharp - Executive Director, Marketing. Also non-executive director of Adnams plc, a Fellow of the Chartered Institute of Marketing, The Marketing Society & The Royal Society of Arts. He is also visiting Professor of Glasgow Caledonian University and is a special advisor to the Tate Members’ Council. Formerly serving the Argyll Group, Marketing Director of Asda (in 1987), Board member of Debenhams (in 1989), Marketing Director of the Burton Group, Booker plc and Arcadia Group plc.
• Kate Bostock - Executive Director, Clothing. Formerly serving Next and Asda
• Jeremy Darroch - Non-Executive Director. He is also Chief Executive of British Sky Broadcasting Plc (BSkyB]]. Previously Group Finance Director and Retail Finance Director at Dixons Group plc, served Procter & Gamble for 12 years in a variety of roles. He qualified as a chartered accountant with Deloitte Haskins and Sells.
• Martha Lane Fox - Non-Executive Director. Also non-executive director of Channel 4 Television, a Trustee of the charity Reprieve, director of mydeco.com and parton of CAMFED. She founded the karaoke clubs Lucky Voice and grant giving foundation Antigone and co-founded lastminute.com.
• Steven Holliday - Non-Executive Director. Also Group CEO of National Grid plc. Formerly executive director of British Borneo Oil and Gas, served 19 years with the Exxon Group (where he held numerous senior positions).
• Louise Patten - Non-Executive Director. Also non-executive Chairman of Brixton plc, a non-executive director of Bradford & Bingley plc and a senior adviser to Bain & Co. Formerly serving Citibank, partner with Bain & Co, non-executive director of Hilton Group plc, GUS plc, Somerfield plc and Harveys Furnishings plc.
• Graham Oakley - Group Secretary and Head of Corporate Governance
• Jan du Plessis - Non-Executive Director. Also Chairman of British American Tobacco & non-executive director of Rio Tinto plc. Formerly non-executive director of Lloyds TSB Group plc, served the South African Rembrandt Group, Group Finance Director for the Swiss luxury goods group Richemont, Chairman of RHM plc until its takeover by Premier Foods in 2007. He is a South African Chartered Accountant.with degrees in Commerce and Law.

Executive Committee

As well as serving on the Board, Stuart Rose, Ian Dyson, Steven Sharp and Kate Bostock are also on the Executive Committee. Other Committee members as listed in 2009 are:

• Clem Constantine - Director of Property and Store Development. Fromerly Chartered Accountant at Stoy Hayward, Financial Analyst for Debenhams served the Burton Group plc and the Arcadia Group plc.
• Tanith Dodge - Director of Human Resources. Formerly Group Human Resources Director at WH Smith, Senior Vice President Human Resources with InterContinental Hotels Group, served Diageo Plc and was International Human Resources Manager for Prudential Corporation Plc.
• Carl Leaver - Director of International, Home and M&S Direct. Fromerly Chief Executive of De Vere Group plc, served Whitbread plc, was Managing Director of Travel Inn, worked for Nomura International plc, Forte Hotels and Pedigree Pet Foods.

Other Committee members are John Dixon - Director of Food | Nayna McIntosh - Director of Store Marketing and Design. Formerly serving ASDA | [[Steve Rowe - Director of Retail. Formerly serving Top Shop and McKinsey Consultants | Andrew Skinner - Trading Director, per una | Darrell Stein - Director of IT and Logistics. Fromerly serving Ernst & Young and Vodaphone.

Lobbying firms

• Fleishman-Hillard

Publications, Contact, Resources and Notes

Contact

Address:

Marks & Spencer Head Office

Waterside House

35 North Wharf Road

London W2 1NW

Phone:

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