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WRAP CEO: Rethink Social Responsibility as an Investment

The responsibility for worker welfare extends beyond executives overseeing sustainability and sourcing. And truly moving the needle in this area comes down to collaboration and investments from both inside and outside the industry, experts said during the “Social Capital” panel at Sourcing Journal’s Fall Summit moderated by Sourcing Journal sourcing and labor editor Jasmin Malik Chua.

Jennifer Gootman, who recently joined Tory Burch as global head of sustainability and ESG strategy, and who was previously at Williams-Sonoma, explained the importance of educating staff across the organization about the effect they all have on people in the supply chain. “The way that you develop product, the way that you place orders, the lead time that you give, how you pay for them, has a huge impact on human rights,” Gootman said. For instance, how brands engage with factories determines the suppliers’ abilities to plan, ensure workers’ wages and keep within working hour limits.

Agreeing that everything is interconnected, Avedis Seferian, president and CEO of Worldwide Responsible Accredited Production (WRAP), said that social responsibility must be part of “holistic” supply chain management. “If you don’t give these things a high-profile visibility in the organization, they’re not going to get the attention they need,” he said. “What gets measured gets managed.”

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Having visibility into supply chains can uncover compliance issues, allowing companies to correct problems. As Simon Platts, director, sourcing, commercial ESG and sustainability at Asos, noted, “If you’re going to go looking for things, you’re going to find things, and you’ve got to deal with those things.” He also stated that partnerships with entities like NGOs and governments are “the heart” of Asos’ social activities. In 2016, Asos discovered that migrant workers at its suppliers in Mauritius were being forced to pay recruitment fees. To address this, the retailer worked with its vendor brands that were also sourcing from Mauritius, other industries operating in the country like fishing and sugar, and governments and NGOs to set up a resource center and app for migrant workers to provide information and advice to these individuals and change how labor was recruited.

This effort in Mauritius is an example of pre-competitive collaboration among brands, which Gootman views as an opportunity for the industry. She has seen increased information sharing and common acceptance of audits.

Rather than going it alone on audits, Seferian suggested, “Work with the independent programs that are out there that specialize in these areas. And together, you have a menu of options that gets rid of the audit fatigue, while giving you credible, independent, true audits.”

As Platts mentioned, brands hold the “power of purchase,” allowing them to “push the needle.” As a multi-brand retailer, Asos is also able to educate, learn from and engage with the brands on its platform around social responsibility to ensure that they’re also working toward human rights.

One of the hurdles for the industry in driving change, according to Seferian, is the tendency to think of sustainability as a cost, which turns it into something to avoid or minimize. A “mentality shift” would reconsider compliance activities as an investment instead, which becomes valuable over the long run. “There is a cost, but you also know there’s a return,” he said. “And as long as the return is more than that cost, it’s worth it, no matter how high the cost.”

In an example of the return on sustainability investment, Gootman shared that via Fair Trade programs, which come with a premium, vendors were able to maintain pay continuity during Covid factory shutdowns, which allowed them to get workers back into the facilities faster when they reopened. She recommended, “Think about how across different P&Ls, you’re connecting the dots to show the business imperative and the strategic imperative, in addition to the human imperative of this work.”

Worker voice

Within ESG—environmental, social and corporate governance—the G often gets less attention, said Gootman, but it is important in the context of social responsibility since governance determines whether companies have grievance mechanisms and processes to address worker complaints. Citing a survey of factory workers in China, she said that direct managers have the most significant impact on employee satisfaction, therefore these employees should take a “proactive” approach in tackling issues.

The panelists also stressed the importance of giving workers a voice. Seferian pointed out the limits of most audits at capturing the big picture of worker sentiment, since these inspections happen once or twice a year and auditors only speak with a small portion of workers. WRAP is using surveys and worker voice projects to have a broader and more consistent understanding of the worker experience, which can help identify problems earlier so they can be addressed.

Noting that “not all audits are equal,” Seferian said that sending a sourcing team member to visit a factory doesn’t count as an audit. Additionally, collecting data alone is not enough, and he stressed the importance of acting on the findings and making improvements.

Legislation

There’s been a lot of movement in due diligence legislation, including the Uyghur Forced Labor Prevention Act that went into effect in June, but panelists are divided on the benefits of laws in driving social change.  

Platts sees an opening for more laws that would address the factories that are still mistreating workers yet continue to distribute goods. “It’s not a level playing field out there,” he said. He pointed to the Bangladesh Accord as a “blueprint” that could be replicated in other countries such as Morocco and Turkey.

Mandatory due diligence legislation has raised the stakes for ESG, since brands are now protecting not only their reputations but also their bottom lines, Gootman said. If goods can’t be imported or sold, companies could lose revenue. “That element of financial risk has elevated the conversation across to the ESG committee of many boards,” she said.

Seferian noted that legislation’s downside is a potential to be either too broad or too narrow in scope. He added that enforcing laws requires time and expenditures. “There are situations where you have to step in, because it’s just gotten too much out of hand, and legislation becomes the only option,” he said. “But long-term, long run…voluntary, business-based solutions are much more effective, much more sustainable, in my opinion, than legislation.”

While there is still work to be done, Seferian held that on average, garment factories are safer today than they were 20 years ago. “Let us not conflate the fact that there’s still plenty of work to be done with the idea that no progress has been made at all,” he said.