I drafted the first version of this article on May 17, 2006. While I have made some revisions and explored many alternative solutions since then, the core content has not changed. The decisions I propose here are the ones I was prepared to present to a group of student representatives in a meeting scheduled for May 29, 2007. Whether that group of students simply lost patience with the process or intuited a particular outcome and decided to cut off discussions, I do not know. The need for a decision, however, is no less critical, and it is time for the University to move ahead with a plan.

I apologize for the length of this piece, but the issues are not simple ones, and despite all the media coverage, a number of facts are not well understood, even by those who have advocated one or another position.

Stanford’s name is inextricably linked with the pursuit of knowledge and a commitment to using that knowledge to improve the world. The University exercises tremendous care in how it allows its name to be used. One of the most visible uses of Stanford’s name is through its licensing program. Stanford licenses its emblems to companies that oversee the production of all sorts of goods — from T-shirts and hoodies to watches and fine crystal. We want the manufacture of these products to be consistent with the University’s commitment to a safe and fair working environment.

In this new era of global supply chains, this poses a challenge since Stanford is several steps removed from the factories doing the manufacturing, which are primarily located in developing countries. The factories are owned not by the licensees (such as Patagonia or Nike) but by local companies. The degree of oversight and enforcement of local labor laws in these countries is often minimal, meaning that factory conditions are difficult to monitor and solutions not easy to enforce. Ironically, sweatshop conditions are created primarily by a local employer abusing the rights of fellow citizens.

In the long term, the solution to these situations is better local enforcement of labor standards, which in most countries prohibit child labor, unlimited forced overtime and similar abuses. Better enforcement and working conditions will come about naturally as economic growth improves quality of life for individuals in the developing world, as well as the ability of governments to enforce their laws. Efforts by multinational companies to enforce such standards in thousands of factories halfway around the world will always be challenging and raise larger questions. Indeed, some people have even objected that such attempts by institutions in the developed world to impose rules and cultural assumptions on the developing world constitute a sort of new-age colonialism.

Despite these challenges, I believe that if Stanford is to allow its name to be associated with a variety of such merchandise, we should do our best to ensure that the manufacturers of these products treat their workers fairly, with dignity and in accordance with the local laws that protect employees. Stanford is prepared to take steps to meet this challenge. For several months, I have been meeting with students on these questions, and while we share common broad goals, we also differ on how to best achieve those goals.

We all agree, for instance, that Stanford must spell out its Code of Conduct for its licensing activities. I have asked that such a statement of principles be drafted by the Advisory Panel on Investment Responsibility and Licensing, which has faculty, student, staff and alumni representation.

We also agree that such a code needs to be backed up by steps that can help ensure that the code is followed. Stanford is ready to support organizations and other mechanisms to monitor compliance and enforce these principles. Stanford will join two different organizations — the Worker Rights Consortium (WRC) and the Fair Labor Association (FLA) — each of which has markedly different approaches to improving workers’ conditions overseas.

The WRC includes representation from universities, students, international labor rights experts and the labor movement, and conducts investigations based on complaints from workers. If the complaints are verified, the WRC works with schools, licensees and local organizations to correct the problem. The FLA is weighted toward representation from licensors (such as Stanford), licensees (such as Patagonia) and other manufacturers, and uses both on-site inspections and investigation of complaints to ensure compliance. The FLA has generally managed to perform far more inspections and thus cover more workers, but the existence of the WRC creates an additional mechanism for monitoring.

While certain Stanford students have recommended that the University join only the WRC, we do not believe that the best long-term policy is necessarily to pick exclusively the FLA or the WRC; each has advantages. I believe the greatest improvement in workers’ conditions will occur if the WRC and the FLA can be persuaded to join forces and resources. Together, they have greater potential to develop more effective programs. I hope that Stanford will be able to influence this strategic direction as a member of both organizations. (It is useful to note that although Stanford has not belonged to these organizations, its licensees all belong to the FLA, so the Stanford-branded apparel is as “sweat-free” as the apparel at any other university.)

In examining these two organizations, we made a detailed review of their achievements of the last few years. While both groups have made some progress, it has been limited in scope primarily to single factories on which the FLA and WRC have shined their spotlights. Each group is now seeking a broader remedy, proposing more extensive programs to institute stronger safeguards for workers, but it remains to be seen how effective either will be.

The FLA has recently rolled out a pilot program in China that aims to provide factories with the incentives, capabilities and plans to develop sustainable compliance with its Code of Conduct requirements. The FLA and its members will monitor these results and terminate licenses with any licensees that continue to source from factories that do not comply after a reasonable remediation effort has been made. Stanford will be assessing the success of this program in the coming months.

The WRC supports the Designated Suppliers Program (DSP), which limits production of university-licensed goods to a small number of factories, each of whose output must be at least half university-branded merchandise. By concentrating production in a small number of certified factories with certain economic safeguards in place for the factory owners, the supporters of the DSP believe that the probability of unfair or unethical working conditions would drop, at least at DSP factories. Certain Stanford students have asked that we not only join the WRC but that we also endorse the Designated Suppliers Program.

There are, however, numerous problems with the DSP. First, it is unlikely to be effective for a number of years, if it succeeds at all. To understand why, you need to know that a small number of universities (less than 20) dominate the marketplace for athletic wear. Stanford is a very small player with much less than 1% of the university-branded apparel market. Unless the vast majority of the large public institutions embrace the DSP, it cannot be successful. So far, none of the top 10 licensing universities are among the small number of colleges and universities that have signed onto the DSP.

More importantly, if the DSP were truly successful, it could actually result in more harm than good for apparel workers. How can this be? Because the entire collegiate-branded market is only 5% of the athletic apparel market, the requirement that at least half a DSP’s factory consist of collegiate-branded apparel means that at most 10% of the factories will be manufacturing such apparel. Although the monitoring of those factories would be better than it is today, 90% of the athletic apparel factories would not be monitored by colleges and universities! This would result in a likely decrease in protections for the vast majority of athletic apparel workers.

Although an outcome that improves only the manufacturing of collegiate-branded apparel might make a few purchasers feel better about proclaiming themselves “sweat-free,” I find it hypocritical and morally objectionable to embrace a solution that is likely to decrease the protection of a much larger number of workers.

We need a better solution. It is possible that the DSP will evolve into a better solution, and we will continue to monitor its progress. In parallel, we have been exploring alternatives. One attractive possibility is to develop a method to essentially guarantee compliance with our new Code of Conduct by licensees willing to demonstrate such a commitment. Athletic apparel that was manufactured by such licensees could receive a designation, such as “GSW: Guaranteed Sweat-free.” It is possible that not all our licensees could meet this higher standard, resulting in fewer products bearing the Stanford name. If such a designation generated significant consumer interest, however, there would likely be more demand and growing availability. We are beginning to explore the possibility of identifying a core group of licensees who will be able to meet our rigorous requirements. If our idea is feasible, implementation will not be easy or quick, but if successful, we will be able to ensure that Stanford-branded merchandise is manufactured under the highest standards without compromising the welfare of other workers.

I wish there were a simple solution that did not have any disadvantages. There is not. Our commitment should be to work together to find new ways to ensure that Stanford continues to act as a force for good throughout the world.

John L. Hennessy is President of Stanford University. He can be reached at hennessy@stanford.edu.