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Patagonia Releases New Standards After Uncovering Slave Labor in Supply Chain

Outdoor brand Patagonia prides itself on ethical and socially responsible apparel, but after an audit uncovered exploitative labor practices, the company found much remains to be done.

In a new report, Patagonia divulged that its Taiwanese fabric mills used labor brokers who then charged workers—often from other countries—exorbitant fees to work these jobs. Broker fees up to $7,000 were automatically deducted from paychecks and it could take workers who were signed on for a three-year contract up to two years to pay off the debts. Patagonia didn’t shy away from the implication.

“It creates a form of indentured servitude that could also qualify, less politely, as modern-day slavery. And it’s been happening in our own supply chain,” the company said on its Cleanest Line blog last week.

Patagonia’s announcement came with the release of its Migrant Worker Employment Standards, which have now been adopted throughout the company’s entire supply chain, but the incidents date back to 2011 when the company first found forced labor among its suppliers. The new standards were implemented in its Taiwanese supply chain last year.

Taiwanese factories and mills at times struggle to fill positions with domestic workers and often turn to labor brokers to hire migrant workers from neighboring countries like Thailand, Vietnam and the Philippines to do the jobs. These workers sign contracts with excessive fees, and sometimes face threats (implied or real) of losing their jobs due to their citizenship status.

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In essence, a ripple effect runs down the supply chain where there is far less oversight, and often, that is where the unethical labor practices hide.

“It turns out, this is an issue plaguing manufacturers of all kinds in many industries, and for Patagonia, it became an urgent priority to fix it,” Patagonia noted in a statement.

What sets the outdoor retailer apart is that it went in search of such problems along its supply chain. After previous investigations turned up issues with its finished-goods and first-tier suppliers, Patagonia started digging deeper. The company first discovered this blemish to its “cleanest line,” in 2011, when it partnered with Verite, an NGO dedicated to safe and legal work conditions, to audit four of its Taiwanese suppliers.

Patagonia changed its audits and began working with its suppliers on new standards.

“We set out to develop a new standard, institute changes in our supply chain, repay current workers, and share our recommended standards with other companies that want to eradicate similar practices by their suppliers,” the company noted.

The new standards call on companies to hire workers directly or to pay any broker fees without passing those costs on to the workers. It also includes training the workers and suppliers on issues like recruitment fees, wages, discrimination, housing and contracts. Short-term contracts continue to be a vulnerability for workers.

Patagonia wants to maintain and improve its supply chain, rather than pull up stakes and risk repeating the same cycle in another supplier country.

Whether other manufacturers will follow suit, or work together to mandate similar standards in the industry remains to be seen. In November 2013, Patagonia invited 40 brands to a forum in San Francisco to discuss human trafficking in the supply chain. Only seven brands showed up.