OPINION – In this special op-ed for Apparel Insider, supply chain and human rights expert, Kate Larsen, argues that by raising the bar beyond commercial audits via multi-stakeholder partnered initiatives, we might finally deliver scaled improvements of decent work and sustainability in supply chains.
Due to COVID-19, millions of the world’s most vulnerable workers in sourcing hubs such as India, Pakistan and Bangladesh have lost their jobs or a significant part of already meagre incomes.
People who make our clothes are suffering in the shutdown as most have little savings to fall back on due to years of being paid below living wage rates. Monthly wages for garment workers only recently reached even US$200 maximum per month in Bangladesh, Cambodia and India, and have not been much more in Indonesia and China for long. This generally affords little more than slum living, housing without hot running water, or crowded homes.
Wages have, in real terms, gone down for garment workers in many countries. Yet in the same period, profits and wealth of the world’s largest fashion brands and their owners (in the world’s top 20 billionaires, which does not include garment factory owners), have increased.
It has been long needed, but COVID has reinforced that we must strive for a more balanced deal for all in our apparel industry, not just for ethical reasons, but also social stability. Protests by workers have already begun – a human rights concern as well as supply stoppage risk.
Workers have been protesting as in many cases, buyers have not paid suppliers, so some factories have been unable to pay workers. For those concerned about modern slavery, many believe COVID layoffs increase risks of forced labour in global supply chains as poor people become even more vulnerable to agents charging them unethical fees for jobs. Business must step up.
A fairer deal
As our societies shift post-COVID, we need fairer terms for apparel factory suppliers so they can pay their workers’, and decent wages so workers might finally realise living wage conditions.
When I say ‘responsible sourcing’ most people, even many business leaders, still don’t know what I mean until I say ‘Nike sweatshop’, and they then say ‘I try not to buy Nike’. I generally correct them that, while there may be more ethical brands around, Nike has done more for workers in its supply chains than many sports brands.
Companies like Nike have been auditing their Asia and global supplier factories’ labour standards for 20 years. But this auditing alone doesn’t work (as Nike also states), at least to realise sustained decent labour, safety, and environmental standards.
Why haven’t efforts to date worked?
It’s disingenuous to say that auditing doesn’t work, as what can work is audits with rigour, with stakeholder engagement and collaboration, capacity building, transparency, business integration and industry accountability to deliver supply chain improvements.
In terms of accountability, for years, many have reported how fashion and brand buyers demand lower prices from suppliers in Bangladesh and around the world, whilst also requiring improved labour standards, and (whilst brand billionaire owners flourish), not taking into account that prices should support at least local inflation and legal minimum wage, benefits and safety standards increases.
Yet even if media or lawyers try to hold an occasional big name buyer to account, improvement by a few will not cause sustained decent conditions for workers (and when buyers, maybe you, are usually pressured by job descriptions to seek ‘margins’ in sourcing). Supplier monitoring is undermined when companies don’t reward purchasing teams to factor in buying from factories which treat workers better, and when other buyers are not also required to. Therefore, many companies now support laws to require or influence scaled accountability, as laws for seatbelts delivered in auto, and electrical safety standards deliver for our electronics and toasters.
In late 2019, over 100 global NGOs, trade unions and other civil society players published a joint letter calling on the EU to pass business due diligence legislation, i.e. binding rules on corporate respect for human rights and the environment, and in supply chains. Shortly after this, over 40 companies, including apparel players Primark, Tchibo, KIK and others signed a similar joint letter stating: “Under the UN Guiding Principles on Business and Human Rights companies have a responsibility to respect human rights – including in their value chains … experience has shown, however, that voluntary commitments alone are not sufficient. There is a need for mandatory due diligence adequately implemented by all … [which)] would help create … a level playing field..”
How might such laws help deliver more balanced deals for people who make our things?
What we’ve learned in the 20 years since the first Nike ‘sweatshop’ allegations, is how scale (of requiring almost all buyers from a sector and country to deliver fairer purchasing practises) has more sustainable impact on the ground.
The response to Rana Plaza offers a case study in scaled impact, and in what businesses, investors, and policy makers can learn to help realise supply chain human rights. The key innovation in the Rana response, was the Bangladesh Accord on Fire and Building safety. This trade union and non-profit led initiative, had scale as 200 of the world’s largest apparel buyers of Bangladesh garments joined. It also showed how accountability and key “beyond audit” approaches deliver the scaled rapid improvement.
As one aspect of accountability, the Accord required a binding five-year commitment from global brand buyer members that they retain a near same percentage of sourcing from Bangladesh. This helped reduce the risk of Bangladesh factories investing in safety improvements being undercut by orders moving to countries where standards were not enforced.
Transparency on the Accord (and Bangladesh Alliance) websites relating to supplier performance helped bring faster change. The ILO Better Work programme has also since circa 2014 published information about factories it monitors in Cambodia, Vietnam, Jordan, Nicaragua. This information shows those which have not remediated critical labour non-compliances, versus those which have.
In my experience in Cambodia, this drove long awaited improvements for workers, although to achieve its true potential, Better Work needs expansion to more factories and countries, and more brands to join in. The Fairwear Foundation has since taken transparency the step further that is needed by all initiatives (such as the Ethical Trading Initiative (ETI), Fair Labor Association, Amfori-BSCI, and Sustainable Apparel Coalition), by regularly publishing ratings of its fashion brand members’ performance.
Rigour was designed into the Accord as stakeholder involvement, representing the voice of workers, meant an unwillingness to accept lowest common denominator standards, and for audits and training. The high-profile nature of multi-stakeholder environmental programmes (such as the Leather Working Group), has delivered similar rigour, with Greenpeace critiquing (including supporting the positive) traceability efforts of the Leather Workgroup so brands and tanneries got ahead of potential criticism (if they implemented). Some would say some ETI projects deliver similar, and that the Zero Discharge Hazardous Chemicals (ZDHC) fashion initiative has similar potential.
Pre-competitive brand collaboration, as factories tend to have 5-20 buyers, helps influence factory improvements for workers faster. Solo buyers can influence factory labour, safety, and environmental improvements, but in my time in Asia, Chinese and Bangladeshi factory managers’ biggest complaint after prices and audit integrity issue are overcome was, “why can’t you brand people all agree on one standard instead of so many audits to (confusingly) different standards.”
Finally, business integration of supply chain monitoring ethical trade work is needed for any company to gain return on investment. If efforts to assess and encourage suppliers to improve are undercut by the cheapest supplier usually getting orders, then steps fail (hence this article).
Companies which have integrated Balanced Scorecards for supplier order consideration, with fair and rigorous labour and environmental standards ratings data feeding in, can achieve better risk management, as they place business with suppliers with better conditions, and (while retaining competitiveness in this levelled playing field), reward supplier investment in improvements in the most important way: with orders.
I recently heard an MNC vice president state, “we need to change business models; pure monitoring is not driving the change that we want to see.” Another ILO expert stated that, we’ve been helping reduce forced labour in Uzbek cotton picking by global-level driven change, but with the local player involvement that multi-stakeholder initiatives bring.
Drafting of the potential EU level business human rights due diligence (HRDD) laws is now underway, and with COVID heightening our concern about social concerns, we must take the chance to apply past lessons.
Companies, investors and advocates should call for the new HRDD laws to require that ALL importing brands and buyers must join transparent multi-stakeholder initiatives for their key footprint hotspots. Legal requirement levels business model playing fields, and supports the scale needed for sustainable impact. Companies, western governments, and other funders should ensure that initiatives engage (worker unions and other stakeholders) locally, and in beyond audit capacity building (and for suppliers and local government inspectors as ILO Better Work does).
We should all encourage that these initiatives regularly publish supplier audit results (as ILO BW, Accord and Alliance have done), and most key, transparently publish (as Fairwear has done) ratings of brand performance, in improving purchasing practises and human rights due diligence. In these ratings, brands and buyers that pay suppliers on time (except in the few circumstances agreed with stakeholder partners as acceptable) should get better performance ratings (so ESG investors reward them).
By raising the bar beyond secretive commercial audits, and requiring participation in robust multi-stakeholder initiatives, with local engagement and accountability, and especially, with transparent ratings of brand buyer purchasing practise ethics, new business human rights due diligence law could help us finally deliver decent work and sustainability in global supply chains. We hope you join the call.
About the author: Kate Larsen is the founder of SupplyESChange. Kate is a former director responsible sourcing for a US apparel retailer, senior manager corporate responsibility Asia for Burberry, and in recent years, fellow for anti-slavery charities Unseen UK and G-ASSC Japan, INNO Handshake China worker helplines, Fashion Revolution, apparel projects expert for The World Bank and Human Rights Watch, Trustee The Rights Practise, and a UK Top 100 corporate Modern Slavery influencer 2018.