The corporate world has made commendable progress in adopting Diversity, Equity, and Inclusion (DEI) practices in the past two decades. However, this transformative journey shouldn't be confined within a company's borders. The true essence of DEI lies in its extension to every facet of a corporation's influence, especially its global supply chains.

While many multinational corporations proudly showcase improved minority representation, a critical examination reveals that DEI principles often stop at their workforce. It's time to question if our commitment to DEI is genuine when subcontractors in developing nations face economic injustices that breach the very codes of conduct multinational corporations uphold.

Diversity should transcend the boundaries of a corporation's internal structure, reaching every worker, irrespective of their place in the supply chain. Equity, likewise, must encompass the entire journey of a product, ensuring fairness, justice, and impartiality prevail at every step.

Some global entities have taken notable strides in extending DEI practices to their upstream supply chain, as seen in Japan's Fast Retailing Group. Regular audits, legal payment of wages, and fair working conditions exemplify their commitment. However, on-the-ground research in countries like Bangladesh and Pakistan unravels a stark reality – there is much to be done.

Factory owners share tales of financial struggle in Bangladesh, the second-largest clothing exporter worldwide, with payments from multinationals not accounting for rising material costs. The repercussions? Inadequate wages and economic exploitation of workers. Similarly, in Pakistan, a soccer ball factory's human resource manager coerced female workers into resigning after injuries, exposing the lack of dignity and safety.
Local factories in these countries often lack written rules for workers, let alone codes of conduct. The multinationals they supply, however, have extensive principles emphasising "fairness in every aspect of employment." The challenge now lies in translating these lofty ideals into action and supporting the least-resourced players within the supply chains.

To manifest DEI principles, multinationals must go beyond verbal commitments. Clear rules and codes of conduct should be put in place. These must be tailored to local contexts and should dictate fair and timely pay, promotion policies, and performance reviews. Transparent monitoring involving internal and external stakeholders is paramount. Factory audits must address economic concerns, ensuring that issues like wage exploitation are not left unattended.

Often, multinationals deflect responsibility by attributing low wages to factory owners. However, proper accountability demands a deeper dive. Audits must be extended to scrutinise pay practices at local subcontractors comprehensively. This proactive approach can uplift workers throughout the supply chain and reduce societal economic inequality.

However, DEI isn't merely an economic concern; it's a call for empowerment. Many factory workers suffer from low self-esteem, especially female workers in patriarchal societies. Training programs, skill development, and support initiatives such as free meals and health insurance can be transformative.
Most multinationals claim compliance with minimum wage standards, but this stance sometimes ignores the economic realities of developing nations. For instance, low minimum wages in countries like Bangladesh aim to protect manufacturers' cost competitiveness. By looking the other way, multinationals compromise their social responsibility for profit maximisation.

In conclusion, companies can genuinely contribute to addressing social and economic inequality by providing fair pay and financial support and recognising the dignity of workers in the most vulnerable positions of their supply chains. It is time to take a natural step forward in the Diversity, Equity, and Inclusion journey, making it an inclusive endeavour that leaves no worker behind, regardless of where they come from.

Professor Yuka Fujimoto
Sunway Business School 
Email: @email

This article was first published in NIKKEI Asia, 21 September 2023.