As the European Union mulls a new due-diligence law that could hold large corporations operating in the bloc legally liable for environmental and human-rights abuses in their supply chains, a first-of-its-kind platform seeks to help fashion brands and retailers understand the role of transparency in improving performance, hone their own disclosures and navigate increasing regulatory headwinds.
Launched Monday by the Laudes Foundation, the free-to-use Transparency in Action portal pulls together disparate and often fragmentary transparency resources into a central location, creating a “one-stop shop” for companies to make sense of rapidly changing expectations from governments, investors and consumers alike.
“What it is is a site where we try to demystify transparency, especially for brands and retailers that are new to sustainability—to make it so it’s not such a scary topic,” Jill Tucker, head of labor rights at the philanthropic organization, a successor to the C&A Foundation, told Sourcing Journal. “While it’s a site for everybody, it’ll be most useful for the many brands, particularly online brands, that haven’t started on the journey.”
Transparency in Action zooms in on three types of transparency, each of which boasts its own set of disclosure requirements: transparency in sourcing and production locations, transparency in factory working and environmental conditions, and transparency in purchasing practices. Each section comes with an interactive (and downloadable) checklist of the most important tasks to address. The platform also includes a slew of transparency-centered initiatives brands and retailers can join, a list of existing and pending legislation to watch for, and interviews with experts such as Bill Anderson, Adidas’s head of social and environmental programme, and Aruna Kashyap, associate director of the Human Rights Watch.
“Some brands that are members of multi-stakeholder initiatives might get a bit of guidance, but honestly we haven’t seen a tool quite like this,” Tucker said. “Brands [used to] kind of ignore transparency because it seemed so far away. But now that it’s more accepted and talked about, I think there’s more of an appetite for brands to learn more and maybe take some action as well.”
With the recent release of the EU’s draft directive on corporate sustainability due diligence, the United States’ impending Uyghur Forced Labor Prevention Act and the looming prospect of New York’s Fashion Sustainability and Social Accountability Act—not to mention fomenting human-rights and environmental due diligence laws in Germany, Spain, the Netherlands and Norway—transparency is no longer just a “nice to have.” Still, more needs to be done.
Of 250 of the world’s biggest fashion purveyors, just 47 percent opened up their supply chains in 2021, according to Fashion Revolution’s annual Fashion Transparency Index. What they divulged was also a mixed bag: 27 percent of them published their processing facilities beyond the first tier, 26 percent disclosed science-based targets and only 4 percent offered data on whether the people who made their clothes were being paid a living wage.
“Due diligence will be hard to implement if you don’t have some visibility into your supply chain—you’re going to always be at risk,” Tucker said. “One thing that several of the people who are interviewed on the site say is, ‘Just get ahead of the curve,’ because it’s not about if but when.”
This applies especially to the issue of forced labor, which governments are especially keen to address in light of reports of human-rights abuses against persecuted Muslim minorities in the Xinjiang Uyghur Autonomous Region of northwest China.
Its mandatory due-diligence measure aside, the European Commission announced last month that it is preparing a new “legislative instrument” to “effectively ban” products made by forced labor from entering the EU market. In early February, Senators Kirsten Gillibrand and Josh Hawley introduced a bill that would require large corporations involved in mining, manufacturing and the production of goods such as clothing to conduct regular audits aimed at rooting out forced labor in their operations—or risk harsh penalties.
“I know people in Canada and Australia are talking about it,” she said. “So I think it’s just a matter of time before there are import bans all over [the world] on forced labor. There’s also a recognition that you have to have a level playing field, and that businesses are never going to be [equally] competitive if some are not using forced labor and others are benefiting from being able to use forced labor.”
Several of the measures have come under fire for not going far enough. The European Coalition for Corporate Justice wrote last week, for instance, that the EU’s proposal only applies to fewer than 0.2 percent of EU companies and that a “dangerous loophole” risks limiting its effectiveness in preventing harm beyond the first tier of the supply chain while preventing victims from holding companies liable. A group of labor and human-rights organizations is urging the authors of the New York Fashion Act to require businesses to provide or cooperate in remediation for damages they cause or contribute to.
But Tucker thinks that the momentum is at least moving in the right direction. “Just like the nonfinancial reporting directive that was limited at first and is now being expanded, I’m sure the same thing will happen with these proposals as well,” she said. “Let’s just get them implemented first.”