For years, labor and environmental groups have criticized and pressured companies whose suppliers pay low wages, run sweatshops, use child labor, or use other similarly illicit labor practices. However, only recently have U.S. companies begun to come under fire for sourcing materials from foreign companies who are contributing to massive pollution problems in their local environments.

When it was discovered that the Fuan Textiles plant in southern China, a major fabric supplier for companies such as Nike, Liz Claiborne, and Target, had been dumping large quantities of untreated wastewater into Chinese lakes and rivers, many U.S. companies downstream in the Fuan supply chain were forced to take notice. As Daryl Brown, VP for ethics and compliance at Liz Claiborne noted, "[T]he environment is the new frontier. We certainly don't want to be associated with a company that's polluting the waters.

1. Should companies such as Nike, Liz Claiborne, and Target avoid structuring their supply chains so that they include polluters, even if the pollution is occurring somewhere far from the United States?

2. What are the pros and cons associated with using supplies and/or labor sourced from supply chain partners (direct and indirect) based in countries that do not have strict pollution standards?

3. Does the AMA Statement of Ethics address the issue of environmental protection in supply chain management? Go to www.marketingpower.com and review the code. Then, write a business memo to the Liz Claiborne president that describes how the AMA Statement of Ethics addresses the dilemma faced by the company.