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2006-2007 Report of the Committee on Manufacturer Responsibility
September 25, 2007, Volume 54, No. 5

The following was sent on June 15, 2007 to President Amy Gutmann from Dr. Howard Kunreuther, Chair of the Committee on Manufacturer Responsibility (CMR) in accordance with the Code of Workplace Conduct for University of Pennsylvania Apparel Licensees (click here). As outlined in the Code, the CMR will review the Code annually; review the effectiveness of monitoring; review the state of compliance of the apparel licensees and review any alleged violations of the Code.

This is a report on the activities of the Committee on Manufacturer Responsibility (CMR) for 2006-2007. This is the seventh year that the Committee has been operating under the University’s Code of Workplace Conduct (the Code) for manufacturers licensed to provide apparel with the Penn logo or identification. We held four meetings as required by the Code. Meetings were held on November 1, 2006; December 8, 2006; March 28, 2007; and April 23, 2007.  Membership in the CMR is continuing to undergo change. The 2006-2007 membership list is attached.

For on-going, re-certification of vendors, the Center for Technology Transfer has sent our License Compliance Questionnaire (LCQ) to the 51 current apparel licensees as part of their license renewal for the year July 1, 2007 through June 30, 2008. Of the 51 licensees, 47 have responded affirmatively and the remaining 4 are being contacted to determine their reasons for not responding. If any of the 4 do not re-certify by signing the LCQ, their licenses will not be renewed.

The License Agreement with Nike has not yet been finalized. Nike has agreed to specific language that satisfied the prerequisites of the CMR.  Outside counsel reviewed the agreement.  The agreement is now under consideration by Nike. Nike has indicated that the license is currently being held up by a strategic business review that Nike is conducting on College campuses. We expect to have a response from Nike by June 30, 2007.

The CMR focused on discussing the Designated Supplier Program (DSP), a Worker ’s Rights Consortium (WRC) initiative which the committee began discussing last year. The DSP is a new initiative intended to provide more stringent enforcement of the existing codes of conducts held by many universities. The distinguishing factor of the program is that it does not just apply to university licensed manufactures (e.g. popular apparel companies such as Champion, Jansport, Nike), but it is one that impacts the suppliers to the manufacturers i.e. the factories that actually produce the goods for the aforementioned companies (many of which are located in other countries). The Designated Suppliers Program Working Group was formed in March 2006 and is  comprised of representatives of universities that have publicly articulated support for the DSP and expressed a commitment to work together to move the program forward.  The Working Group also includes student representatives from USAS and is staffed by the WRC. 

A CMR subcommittee was formed to determine what DSP issues need to be addressed.  The subcommittee found that the DSP Working Group has made some progress such as reducing the power of the WRC in decision making relative to living wages and including more local voices on the issue; lowering the percentage of collegiate apparel business required by suppliers; and establishing an arbitration process for license compliance with the fair price standard/production agreements. Members of Penn’s CMR have attended DSP working group meetings as observers.  The WRC has submitted the DSP proposal to the Department of Justice’s antitrust division for an opinion.

The following are points of the consideration where devised by the subcommittee in order for the CMR to make an informed decision regarding the DSP :

I.   The committee supports the WRC’s goals of maintaining workplace safety, improved conditions for factory labor, and advocating the principles espoused in worker codes of conduct such as Penn’s own.
II.   The committee recognizes the DSP as the first newly proposed direction for University licensed manufacturers since the formation of the WRC.
III. The committee believes that the WRC’s DSP Working Group has provided a substantial improvement to the original document in its second version.
IV. The committee sees room for further growth through engagement with factory, licensee and retailer stakeholder groups whose acceptance is necessary for the program’s successful launch and long-term viability.
V.  Although the committee has collectively expressed some concerns regarding specific aspects of the DSP (e.g. potential for anti-trust violation, certain issues regarding implementation), the majority of members are interested in continuing to follow the evolution of the program.
VI. The committee finds the DSP a strong catalyst for encouraging universities to review and assess the aspirations of its current code relative to the aspirations set forth by the DSP.

The subcommittee presented the CMR with three choices for recommendation to the University:

1. Recommend that Penn formally support the Designated Suppliers Program and join the DSP working group. In doing so, Penn would join approximately thirty schools already in the working group.

2. Recommend that Penn continue its current status as an “observer.” In this capacity, we would be allowed to attend meetings of the DSP workgroup but participation and commentary would be more limited than that of a full supporter.  Remaining independent of the formal endorsement would not prohibit us from advising the WRC on provisions or issues within the DSP that make us hesitant to join. The WRC is a receptive, member-centered organization; if we find the DSP to be unacceptable, or misdirected, we can inform the working group and the WRC of how their current mission might be modified to improve its standing with our group.

3. Recommend that Penn choose not to act, or not to act in any formal way in terms of public endorsement of the DSP.  Doing so would not necessarily preclude other efforts to strengthen efforts involving our current Code of Conduct or other pursuits aimed at furthering Penn’s efforts to increase work towards manufacturer responsibility.

The committee also discussed alternatives to the DSP proposal such as more aggressive monitoring, publicity campaigns aimed at making the general public more aware of the problems, enlisting the active support of humanitarian agencies (UN, USESCO, UNICEP, and foundations).

By simple majority of its voting members, the committee recommends that Penn not formally endorse the DSP at this time but instead maintain its status as one of the growing number of universities that routinely attends the DSP Working Group meetings. The committee recommends that, through its attendance, Penn takes advantage of the available opportunities afforded to observers and engage with the representatives from the WRC, peer institutions, and licensees in conversation and continued assessment of the proposed program.

—Howard Kunreuther
Chair, Committee on Manufacturer Responsibility
Cecilia Yen Koo Professor of Decision Sciences and Public Policy
Operations and Information Management Dept., Wharton School 

Members, Committee on Manufacturer Responsibility

Howard Kunreuther (Chair), Wharton School
Gregory Possehl, University of Pennsylvania Museum
William Laufer, Wharton School
Colleen Rotindo, PPSA
Carli Koshal, Civic House
Ashley Templeton, Civic House
Alex Flamm, Undergraduate Assembly
Candice Cozart (Acting), WPSA
Ryan Burg, GAPSA
Lynne Hunter, Provost’s Office, Ex-Officio
Leah Popowich, President’s Office, Ex-Officio
Christopher Bradie, Business Services, Ex-Officio
Ilene Wilder, Business Services, Ex-Officio
Pierce Buller, Office of General Counsel, Ex-Officio

The following response from the president was sent on July 18, 2007.

Response to the Chair from President Amy Gutmann

Thank you for your comprehensive report detailing the activities of the Committee on Manufacturer Responsibility (CMR) for the 2006-2007 academic year. 

I applaud you, and all of the members of the CMR, for your thoughtful deliberation of the Designated Suppliers Program (DSP) proposal.  I support your recommendation that Penn maintain its status as one of a number of universities that routinely attends the DSP Working Group meetings as an observer.  I commend the CMR for its thorough research and consideration of the critical issues surrounding the proposed program and for continuing to monitor its status.  I also appreciate the Committee’s continued diligence in monitoring the compliance of Penn apparel licensees with the principles articulated in Penn’s Code of Workplace Conduct. 

Howard, please accept my thanks and appreciation for your dedicated service as Chair of the CMR, and for agreeing to serve as a faculty representative for another year.  I want to offer my gratitude to Professor Gregory Possehl, who retired in June, and served on the CMR for many years, including in the role of Chair. I also extend a special note of recognition to Jackie Miraglia in the Center for Technology Transfer for so ably staffing this important committee.  As the 2006-07 year demonstrated, there are still many emerging issues that can benefit from the Committee’s input and guidance.  I look forward to working with future CMR members to rearticulate and advance our commitment to ensuring that Penn apparel is made under safe and appropriate conditions.  I greatly appreciate the time and effort all the members of this Committee have spent convening around these important issues.

Almanac - September 25, 2007, Volume 54, No. 5