Business Ethics: An Ethical Issue Raised Against Ansell

This report discusses the ethical issue raised against Ansell, an Australian company which manufactures industrial and medical gloves. It identifies and analyses the various ethical concerns which are observed throughout the case and accordingly provides ethical judgement regarding the case through own ethical decision making process.

HC2121 Comparative Business Ethics and Social Responsibility
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Running head: BUSINESS ETHICS

BUSINESS ETHICS
Contents
Introduction......................................................................................................................................2
Discussion........................................................................................................................................2
Conclusion...............................................................................................................................6
References................................................................................................................................7
Appendix..................................................................................................................................9
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Introduction
Business ethics are code of conduct that is based on morals, values and principles which governs
actions and approaches of firms. In today’s business scenario, firms largely focus on practising
business ethics so as to attract and retail talented resources, investors and consumers. By
practising ethical codes firms enjoy brand recognition and goodwill in industry and in market
which is considered as a significant asset and to maintain this reputation many firms remain
committed to work on ethical foundation to ensure positive influences over business
environment, employees as well as over market. Also strong ethical practices have rapidly
become an aspect that customers and potential employees look for in a firm before getting
associated so firms focus largely to retain a good influence of favourable business ethics so as to
maintain good image and sustainability in long run. But maintaining business ethics and good
practices sometimes become challenging as several times firms get prompted to unethical
practices like bribery, illegal work practices and violation of corporate governance laws so as to
earn more profit in short time.
The current report focuses on an ethical issue which is raised against Ansell, an Australian
company which manufactures industrial and medical gloves. The article published on ABC news
states that international labour laws and regulations are being violated in the factories of Top
Glove, which is a company in Malaysia, from where Ansell source their products. The article
emphasizes on the point that as the supply chain of Ansell is located in Malaysia and as the
products of the company are manufactured in the Top Glove factories in Malaysia, therefore
Ansell needs to take adequate steps in order to promote labour welfare by taking ethical
decisions. The current report also helps in identifying and analysing the various ethical concerns
which are observed throughout the case and accordingly helps in providing ethical judgement
regarding the case through own ethical decision making process.
Discussion
Ansell is facing increasing pressure from various union and labour rights experts regarding
stepping up the efforts of the company in order to protect its workers at the Top Glove factories
in Malaysia which supplies gloves to Ansell. An investigation conducted by ABC news revealed
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that there are several issues which are being faced by the factory workers of Top Glove
companies which includes charging of hefty recruitment fees from the workers which keep them
in debt bondage, working excessive overtime which also includes working for 30 days without
their rostered day offs, passports being locked up, crowded living conditions and majority of the
workers of Top Glove being forced labourers. The issues which are being raised against the
company are drawing immense attention from various human rights organizations and trade
unions as the raised issues do not comply with the standards of the International Labour
Organization. As such, Ansell is facing pressure from its various stakeholders and also from the
media because they sources their products from Top Glove factories and therefore concerns are
raised regarding the ethical approach of the company.
As opined by Oumlil and Balloun (2017) the key ethical issues which are identified in the case
are lack of approach of Ansell regarding promoting labour welfare and labour rights as it is
bound to affect the profitability of the company. The labour practices which are observed in the
manufacturing operations of Ansell are highly unethical in nature as it violates the corporate
governance standards which are laid down by the International Labour Organization.
In my opinion, the most appropriate ethical decision has not been taken as Ansell has undertaken
investigations regarding the allegations which are raised regarding Top Gloves by various media
and other stakeholders of the company. As stated by Lehnert, Park and Singh (2015) the best
ethical decision in this scenario would have been stopping the manufacturing operations of the
company until the results of the investigation are available and accordingly taking steps after
completion of investigations. Another similar incidence of labour rights violation was reported
from suppliers of Apple where workers faced harassment and suppliers even employed child
labours in factories. After this unethical issue came into public Apple immediately imposed
sanctions and withdrew supplier contract to address the concerns.
The ethical decision making process which can be adopted in the current situations consists of
the following steps:
Establishing the facts in the situation- As stated by Sturm (2017) the first step in the ethical
decision making process is establishing the facts which are involved in the above situation. In the
current situation it is observed that the workers of the Top Glove company in Malaysia, are
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subjected to hefty recruitment fees which keeps them in bondage, excessive work overtime,
crowded living conditions and passports being locked up which violated the rules and regulations
of labour welfare.
Determining whether the situation involves legal or ethical issue- As stated by Starz (2015) the
concerns which were identified in the above situation are both ethical and legal in nature as the
concerns and issues which were identified in the current case does not comply with the standards
of labour welfare and does not also comply with the guidelines which are laid down by the
International Labour Organization.
Identifying the options and possible consequences- As stated by Khalid, Eldakak and Loke
(2017) this step of ethical decision making process involves identifying the options which are
available to the company in order to address such issues and the consequences which are
associated with exercising such option. In this case there are several options which are available
for Ansell in order to address the ethical and legal concerns such as cancelling the contract with
Top Gloves Malaysia, in context of violation of worker rights which can result in improvement
of the ethical image of the company but on other hand this also can result in financial losses for
Ansell and degradation of the products. Other option available to address these issue is
implementing the labour policy of Ansell in the Top Glove factories of Malaysia which can
result in the improvement of the working conditions of the labours but it can also lead to
indifferences in decision making between both the companies which can disrupt the operations.
Another likely option is setting up own manufacturing facilities of Ansell in Australia which can
lead to non-violation of labour rights due to strict labour policies of the Government of Australia
but this can also lead to loss of financial gains enjoyed through outsourcing of manufacturing
process of Ansell to other countries with cheap labour facilities.
Evaluating the options- As opined by Johari, Mohd-Sanusi and Chong (2017) this step in the
ethical decision making process involves the evaluation of the options which are identified in the
above step. In this step of decision making the strengths and weaknesses of each of the above
identified options are carried out. The advantage for Ansell in cancelling the contract with Top
Gloves is that it will help in improving the ethical image of the company and will also help in
promoting the sustainability approach of Ansell. The weakness which is associated with the
option is that it will involve financial loss for the company due to termination of the contract and
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can affect the quality of the products of the company. As stated by Henderson (2016) the
advantage for Ansell in implanting the labour policy of the company at the Top Glove factories
of Malaysia is that, it will help in promoting labour rights and labour welfare in the
manufacturing operations of their suppliers which can in turn lead to increased labour
productivity and efficiency and it will also help in promoting the sustainability approach of
Ansell. As opined by May et al. (2014) the weakness which is associated with this option is that
it will result in conflicts with Top Glove as result of indifferences between the labour policies of
both the companies. The advantage for Ansell to set up its manufacturing unit in Australia is that
it can control all the operations of the company according to own guidelines and policies which
will help in promoting labour welfare and rights in the operations of the company and can also
ensure the effectiveness of their supply chain systems. As stated by Callaghan and Wood (2014)
the weakness which is associated with this option is that it will increase the expenses of Ansell
which will impact the profitability of the company. As opined by Voegel (2016) the advantage
for Ansell to outsource its manufacturing options to countries with cheap labour option is that it
can lead to increased profitability of the company due to low labour rates along with complying
to labour rights and welfare guidelines. The weakness which is associated with this option is that
it can lead to degradation of the product quality of the company due to lack of effective training
of the labours and also due to lack of quality raw materials.
Choosing the best option- As stated by Javalgi and La Toya (2018) the penultimate step of the
ethical decision making process involves choosing the best option among all the above identified
option. In this case the best option for Ansell, is to conduct an investigation of the manufacturing
operations at the Top Gloves factories in order to identify the reason for the arousal of such
issues and concerns and also analyse the degree of inclination of the issues with the actual
standards and regulations. As opined by Musbah, Cowton and Tyfa (2016) upon completion of
investigation, Ansell should approach Top Glove factories regarding such issues and concerns
and accordingly convince them to implement the policy and guidelines of their own company in
the manufacturing facilities of the Top Glove so that such issues and concerns are addressed
which will not only benefit the factory workers of the company but also will benefit both the
companies who are involved in the current scenario. As opined by Busila (2014) the ethical
decision or option which is being adopted in the current scenario is aligned with the utilitarian
philosophy of decision making as the philosophy of utilitarianism holds that the most ethical
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choice is the one which will produce the greatest good for the greatest number, therefore by
applying the theory of utilitarianism in the above case it will create good for not only the workers
of the Top Gloves but also will create good outcomes for both the companies.
Implementing the decision- As stated by Amirshahi, Shirazi and Ghavami (2014) the last step in
ethical decision making process is implementing the decision which has been taken and in case
of the current scenario, Ansell should implement their own laws and guidelines regarding labour
rights and welfare in the manufacturing options of the company and should conduct frequent
audits in order to determine that the practices which are being followed in the manufacturing
options of their suppliers are in line with the guidelines of Ansell and complies with all necessary
rules and regulations.
Conclusion
From the above report it is clear and evident that that there are various ethical issues or concerns
which are observed in the current case and ethical steps and decisions needs to be taken by
Ansell in order to promote labour welfare and also to promote ethics in their entire supply chain.
Based on the analysis of the various identified ethical concerns in the case, it can be stated that
the most relevant and effective business ethics theory or philosophy which can be applied in the
current case is utilitarianism which helps in determining the right actions by focusing on
outcomes. As the philosophy of utilitarianism holds that the most ethical choice is the one which
will produce the greatest good for the greatest number, therefore by applying the theory of
utilitarianism, ethical decisions should be taken by the company as it will help in creating good,
for a large number of workers of the company and promote ethics in the business operations of
the company.
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References
Amirshahi, M., Shirazi, M., and Ghavami, S. (2014). The relationship between salespersons'
ethical philosophy and their ethical decision-making process. Asian Journal of Business
Ethics, [Online]3(1), 11-33. Available at doi:http://dx.doi.org/10.1007/s13520-013-0028-x
Accessed as on 04/02/2018
Busila, A. B. (2014). Ethical decision-making and religious identity: A phenomenological study
on the impact of religious identity on ethical decision-making in new and emerging accounting
professionals. Business Premium Collection. [Online]Available at
https://search.proquest.com/docview/1635302299?accountid=30552 Accessed as on 04/02/2018
Callaghan, M., and Wood, G. (2014). The engagement with business ethics. European Business
Review, [Online] 26(4), 286-304. Available at doi:http://dx.doi.org/10.1108/EBR-11-2013-0138
Accessed as on 04/02/2018
Henderson, J. (2016). An exploratory case study on the influences on ethical decision making of
senior leaders . Business Premium Collection. [Online]Available at
https://search.proquest.com/docview/1849497582?accountid=30552 Accessed as on 04/02/2018
Javalgi, R. G., and La Toya, M. R. (2018). International marketing ethics: A literature review
and research agenda. Journal of Business Ethics, [Online] 148(4), 703-720. Available at
doi:http://dx.doi.org/10.1007/s10551-015-2958-9 Accessed as on 04/02/2018
Johari, R. J., Mohd-Sanusi, Z., and Chong, V. K. (2017). Effects of auditors' ethical orientation
and self-interest independence threat on the mediating role of moral intensity and ethical
decision-making process. International Journal of Auditing, [Online]21(1), 38-58. Available at
doi:http://dx.doi.org/10.1111/ijau.12080 Accessed as on 04/02/2018
Khalid, K., Eldakak, S. E., and Loke, S. (2017). A STRUCTURAL APPROACH TO ETHICAL
REASONING: THE INTEGRATION OF MORAL PHILOSOPHY. Academy of Strategic
Management Journal, [Online] 16(1), 81-113. Available at
https://search.proquest.com/docview/1954957407?accountid=30552 Accessed as on 04/02/2018
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Lehnert, K., Park, Y., and Singh, N. (2015). Research note and review of the empirical ethical
decision-making literature: Boundary conditions and extensions. Journal of Business Ethics,
[Online] 129(1), 195-219. Available at doi:http://dx.doi.org/10.1007/s10551-014-2147-2
Accessed as on 04/02/2018
May, D. R., Li, C., Mencl, J., and Huang, C. (2014). The ethics of meaningful work: Types and
magnitude of job-related harm and the ethical decision-making process. Journal of Business
Ethics, [Online] 121(4), 651-669. Available at doi:http://dx.doi.org/10.1007/s10551-013-1736-9
Accessed as on 04/02/2018
Musbah, A., Cowton, C. J., and Tyfa, D. (2016). The role of individual variables, organizational
variables and moral intensity dimensions in management ethical decision making. Journal of
Business Ethics, [Online]134(3), 335-358. Available at doi:http://dx.doi.org/10.1007/s10551-
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Oumlil, A. B., and Balloun, J. L. (2017). Cultural variations and ethical business decision
making: A study of individualistic and collective cultures. The Journal of Business & Industrial
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Starz, T. D. (2015). Ethical perspectives on leaders: A universal decision-making process.
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Sturm, R. E. (2017). Decreasing unethical decisions: The role of morality-based individual
differences. Journal of Business Ethics, [Online] 142(1), 37-57. Available at
doi:http://dx.doi.org/10.1007/s10551-015-2787-x Accessed as on 04/02/2018
Voegel, J. A. (2016). An exploratory examination of the ethical decision making process of
entrepreneurs through the theory of planned behavior lens: A policy-capturing approach.
Business Premium Collection. [Online]Available at
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Appendix
Unions and labour rights experts call on Ansell to protect worker rights in its supply chains
By business reporter Nassim Khadem
Updated 12 Dec 2018, 10:21am
PHOTO: Top Glove products get shipped to global brands including to Australian-listed
Ansell. (Supplied)
Unions and labour rights experts have called on Ansell to step up efforts to protect workers
at Top Glove factories in Malaysia that supply gloves to the company.
An ABC News investigation has reported claims of several problems at Malaysian company Top
Glove, the world's largest rubber gloves manufacturer.
The complaints include that migrant workers from Nepal and Bangladesh are being charged
hefty recruitment fees that keep them in debt bondage; that they are working excessive overtime
including 30 consecutive days without a rostered day off; that their passports are being locked
up; and that there are crowded living conditions.
According to the United Nations' International Labour Organisation, about 21 million people
worldwide are forced labourers, half of them in the Asia-Pacific region where many large
Australian businesses have their supply chains.
Mahmood Bhutta, founder of the British Medical Association's Medical Fair and Ethical Trade
Group, is hopeful that the conditions workers in Malaysia and elsewhere face steadily improve as
governments take more notice.
He said companies like Ansell also needed to take notice and force change.
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"If companies, such as Ansell, are taking on ethical procurement correctly, it is incumbent upon
them to ensure that workers in factories throughout their supply chains are protected," Mr Bhutta
said.
Health and aged-care providers not happy
Australian Council of Trade Unions (ACTU) president Michele O'Neil said major corporations
like Ansell must set decent standards in their own factories and throughout their supply chains.
"The onus is now squarely on them [Ansell] to demonstrate that they will not participate in and
profit from the exploitation, abuse and mistreatment of vulnerable people in their supply chain,"
Ms O'Neil said.
She said Australia's healthcare providers were some of the major purchasers of these products
and may reconsider "whether they're willing to do business with a company that is alleged to be
profiting from slavery, abuse, exploitation and misery".
PHOTO: Workers at rubber gloves producer Top Glove say they are charged hefty recruitment
fees. (Supplied)
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The Uniting Church's senior social justice advocate, Mark Zirnsak, said Ansell supplied gloves
to its aged-care centres around the country.
He has sent a letter to Ansell requesting an urgent meeting to "discuss our serious concerns
regarding allegations of severe human rights violations and illegal treatment" of workers at Top
Glove.
He said in mid-2016 the Uniting Church had sought assurances from Ansell that the people
working in factories in Malaysia were being employed in compliance with Malaysian labour law
and these assurances were given.
He is appalled new allegations have surfaced.
"We will seek to ensure the people making the rubber gloves for Ansell get proper wages and are
treated with the dignity and respect they are entitled to," Mr Zirnsak said.
Worker exploitation in glove manufacturing: an old battle
Both Top Glove and Ansell have faced allegations of worker mistreatment in the past.
In 2014 there were media reports of incidents at Top Glove's factory in Meru, Malaysia,
including workers being locked up against their will.
Paying the price of our fast fashion addiction
Textile workers in Myanmar struggle to make ends meet as big brands such as H&M move their
production to the country chasing the lowest price of production.
At the time a migrant Indian national employed at the Meru factory, employed at the safety and
quality control section, had an argument with another factory worker leading to a physical
altercation.
According to human rights group Tenaganita, Top Glove invoked its disciplinary procedure,
which comprised forcibly detaining the employee for five days in the factory.
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Tenaganita's co-director and consultant on human trafficking, Aegile Fernandez, said around the
same time, several workers, including Nepalese workers, had made complaints to Tenaganita
about the way Top Glove was treating them.
The accusations by the Indian national were the subject of a local police investigation but never
went to trial as he was sent back home and never heard from again.
"We don't know what happened," Ms Fernandez said, adding that, at the time, the group's direct
inquiries with Top Glove went unanswered.
"Were they threatened? Did they get paid off? We don't know. It [the Indian national's
disappearance] happened 1.5 weeks before the case."
Top Glove says practices have improved
Top Glove, which exports 60.5 billion products to 195 countries each year, had a slightly
different take on what happened.
In a statement to ABC News the company said the male Indian worker physically assaulted and
seriously injured a female foreign worker, and "to prevent him from further injuring the female
worker and possibly other workers, he was quarantined in the hostel".
"However, a friend of his reported this case to the embassy, upon which embassy representatives
came to the hostel to secure his release," the statement said.
"The worker subsequently filed a complaint to the labour office, but failed to show up for the
court hearing, after which the case was dismissed in Top Glove's favour."
'It's like a prison here'
Ansell is caught up in accusations a foreign supplier has been abusing workers rights
The statement said Top Glove had since implemented better practices with regard to managing
problematic or dangerous workers, who would now be handed over to police custody prior to
being repatriated to their home country.
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Asked whether treatment of workers had improved at the company, Ms Fernandez said: "I don't
know if things have changed."
Top Glove remained "very powerful" and workers may fear coming forward to groups like
Tenaganita as a result, she said.
Ms Fernandez's hope is that Malaysia's recent change of government would mean labour
standards at Malaysian firms generally improve.
"There has to be transparency … whether you are the biggest company in Malaysia or not,
violations are violations," she said.
The Swedish audit of Ansell
Ansell has also itself been the subject of worker rights abuse complaints in the past.
A 2016 report, In Good Hands: Tackling Labour Rights Concerns in the Manufacture of Medical
Gloves, produced on behalf of the British Medical Association Medical Fair and Ethical Trade
Group, documented serious labour rights concerns.
One was a complaint that IndustriALL — an international trade union federation representing 50
million workers in 140 countries worldwide — had made in 2013 against Ansell's factory in Sri
Lanka.
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PHOTO: Workers on the production line at a Top Glove factory. (Supplied)
It detailed production speed-up targets that required workers to make 60 to 70 pairs of surgical
gloves per minute.
This, the union reported, led to some workers fainting or being forced to urinate at their
workstations in order to try to meet their quotas.
In 2015, there was a separate Swedish audit of Ansell's factory in Melaka, Malaysia.
Audit firm Goodpoint looked at the supply chain for the gloves procured through the Swedish
supplier Broderna Berner, a distributor of gloves for Ansell.
Goodpoint reported that although the factory provided adequate salary, there were some breaches
in labour standards, similar to the ones being raised in this ABC News investigation.
Following the complaints and international campaigns by unions in several countries, Ansell
subsequently made changes to working conditions in its Sri Lankan and Malaysian factories.
The company also assumed responsibility for recruitment fees in all their factories.
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In January 2016, a follow-up audit to the Swedish audit found that most of the issues had been
rectified and zero-cost recruitment was to be implemented.
Ansell to move to third-party audits of suppliers
The recently legislated modern slavery law requires Australian companies with annual
consolidated revenue of more than $100 million — and other entities such as NGOs — to report
annually on risks of slavery in their supply chains and the actions they are taking to reduce the
risks.
In a statement to ABC News Ansell said from next year it would be reporting under the laws,
and by 2020 it would provide a public statement on what it uncovered in its supply chains.
Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume.
AUDIO: Turnbull Government introduces new modern slavery laws (The World Today)
Ansell said the company had also introduced a mandatory standards framework for foreign
worker recruitment and retention within the Ansell group.
"This comprises of: a prohibition of confiscation of passports, provision of secure lockers for
workers, safe travel to and from work, a ban on workers paying recruitment fees, a general
requirement that salaries and benefits meet or exceed local and country laws; and improved
hostel facilities, in addition to expanding safety and other training and onboarding for all
workers," the statement said.
It was also rolling out other changes next year to "further mitigate the risk of slavery and human
trafficking in Ansell's business and within its supply chain".
This would include the company working with the Supplier Ethical Data Exchange (Sedex) to
begin third-party audits of its top-tier global suppliers. Currently the company relies on its
suppliers doing self-assessment audits.
Experts say it's time for proper due diligence
Katherine Moloney, a research affiliate of the Centre for Values, Ethics and the Law in Medicine
at the University of Sydney, said that often improvements in labour conditions and remediation
of adverse human and labour rights impacts, where they occurred, were minimal and case-
specific.
On that basis, Ms Moloney said the actions taken previously "do not represent the necessary
mainstreaming of human rights due diligence throughout Ansell's global supply chains".
"As an industry leader in the provision of medical gloves … this would require that they embed
human rights due diligence protections and provisions into all their commercial contracting
arrangements and ensure effective compliance due diligence," she said.
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Ms Maloney also took issue with Ansell's current policies that require its companies to do self-
assessment audits, saying it represents an "inadequate strategy of compliance due diligence".
Justine Nolan, a University of New South Wales law faculty associate professor, has for 20 years
carried out research on the risks of worker exploitation in supply chains.
She said while issues had been raised about labour conditions at Top Glove and Ansell in the
past, the problems had not gained as widespread media attention as problems in other industries.
"It's an industry with low-wage, low-skilled workers … and it's not consumer facing so it escapes
attention," Ms Nolan said.
"People don't think about rubber gloves like they do about T-shirts so it comes under less
scrutiny."
She said Australia's new modern slavery laws would ensure greater transparency about supply
chains, and she thought while some may see it as a ticking-the-box exercise, most local
companies would take it seriously.
"It's shining a spotlight," she said.
"And the Government is thinking that by doing that, this may well change processes."
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