Is corporate self-regulation in the United Kingdom falling out of fashion?
Asos, for one, is urging British lawmakers to fortify the country’s 2015 Modern Slavery Act by implementing mandatory human-rights due diligence that would legally require businesses to mitigate labor risks in their supply chain, rather than merely hand-wave their actions.
While the London-based e-tailer, which published its fifth modern slavery statement this week, is committed to “tackling the root causes of modern slavery” by addressing the impacts of its operations and encouraging its brand partners to do the same, wrote CEO Nick Beighton, in The Times Wednesday, the “difficult reality” is that such disclosures are largely voluntary and taking “meaningful action” is easily avoidable.
“Aside from reputational and financial concerns, opting not to publish detailed modern slavery statements results in few legal or regulatory repercussions for businesses,” he said, noting that companies currently face no penalties if they fail to publish a modern slavery statement or fail to meaningfully engage on the issue. “Businesses may even publish a report stating they have taken no action on modern slavery whatsoever and still comply with the legislation.”
The government must remedy this shortcoming, Beighton said, by introducing new laws much like the ones the European Parliament is in the process of drawing up for companies that sit within or market to the European Union.
“Companies already have a responsibility to undertake this due diligence under the United Nations Guiding Principles on Business and Human Rights,” he said. “Legislation would make this legally binding by requiring UK companies to report on their efforts to mitigate risk and protect people in supply chains globally.”
By following the lead of the 2010 Bribery Act and building a “failure to prevent” mechanism into this legislation, the United Kingdom could hold businesses to account for not doing enough to prevent all forms of human rights abuses, including modern slavery, wherever they occur, while ensuring that victims have “access to justice.”
There are other steps Britain can take to “regain its lead” on combatting forced labor, Beighton said, adding that Asos has backed calls by the British Retail Consortium to introduce a licensing scheme that would require all U.K. garment factories to honor their legal obligations to their employees. It has also advocated for the introduction of a single enforcement body for employment rights that would “beef up” compliance, he added.
“These steps, taken together with international action on problems facing U.K supply chains further afield, including in China, would help create real change in the fight against modern slavery. Like Asos, many businesses are willing partners in this fight,” Beighton said. “The U.K. must reclaim its position as a world leader on modern slavery, or risk permanently playing catch-up.”
Extending producer responsibility
Asos’s plea arrived just as the Environmental Audit Committee (EAC) of the House of Commons published correspondence from the Business Secretary confirming that the government is mulling the appointment of a “garment trade adjudicator” to improve environmental, social and governance compliance, though it’s approaching the issue cautiously.
“The exploitation of vulnerable workers for commercial gain is unacceptable and the enforcement of employment rights is a priority for this government,” Kwasi Kwarteng wrote to EAC chairman Philip Dunne in a letter dated March 25. “We are engaging with the sector to understand the factors that lead to non-compliance and what measures could be used to tackle them. Given the seriousness and spectrum of issues, it is imperative that we have a strong evidence base to inform the options we are considering to protect vulnerable workers and drive up standards.”
The EAC had made the suggestion in March amid mounting concerns that voluntary corporate social responsibility initiatives have failed to generate significant improvements to pay and working conditions in the upstream fashion supply chain.
“We consider that mandatory regulation and greater enforcement efforts are now necessary,” Dunne had said.
The EAC also held a hearing Wednesday to solicit evidence about a possible extended producer responsibility (EPR) policy for textiles similar to the one France launched in 2007 to keep clothing and footwear castoffs out of landfills. The French scheme, which charges brands a fee based on the average weight of their items, raised 25 million euros ($30 million) in 2019 to finance a slew of collection, sorting and recycling initiatives.
“The positive thing is that we are now able to have full traceability of all textile and footwear waste streams from the [moment] brands put a new product on the market until the end of its life cycle,” Maud Hardy, circular economy director at Refashion, the nonprofit company that manages the EPR program for the French government, told ministers. In the more than one decade since, collection rates have spiked from 20 percent to 40 percent, Hardy said. There has been one significant downside, however.
“We haven’t been able to really create a profitable recycling industry,” she admitted. “So far, the products that are being collected and sorted are mainly being re-exported to Africa or Asia, both for reuse and recycling. So our next challenge…will be to focus all our financial support toward the industry of recycling.”
The task of managing the United Kingdom’s textile waste is a daunting one. ReLondon, formerly known as the London Waste and Recycling Board, collects some 70,000 tons of clothing every year from Londoners alone. Of that, 42,000 tons are exported and 22,000 tons are reused indigenously, said Wayne Hubbard, its CEO. Just a small percentage is recycled because many of the technologies required to turn old clothes into new don’t yet exist at scale.
“The issue here is one, we consume too much clothing,” Hubbard said. “And second, we don’t have the appropriate infrastructure to sort and recycle that clothing. So, in my view, an EPR scheme would be really useful to start thinking about how we could invest in local indigenous sorting and recycling capacity, but also, more importantly, promoting and encouraging, as much as we can, more circular business models at the outset, so that we can reduce the quantum of material on the market.”
Regarding legislation, it’s “actually really important to have clear, consistent rules that create a level playing field that doesn’t incentivize a race to the bottom be,” Joe Papineschi, director of circular economy policy, strategy and operation at Eunomia Research & Consulting, told lawmakers.
But laws and voluntary agreements can “go hand in hand,” said Catherine Salvidge, sustainable textiles sector specialist at the nonprofit Waste and Resources Action Programme, better known as WRAP, which rolled out Textiles 2030 last Monday to “transform the way the United Kingdom supplies, uses and disposes of” clothing and textiles, with key carbon, water and waste milestones for 2022, 2025 and 2030. So far, the program has amassed 68 signatories, including 19 brands and retailers that account for 60 percent of the clothing sold domestically.
“Obviously Textiles 2030 with a kind of EPR scheme would be a perfect combination,” Salvidge said. “All the evidence insights that [we’re bringing] from Textiles 2030 can support the development of those policies that are coming. And it will obviously be stronger if we have some kind of policy and legislation behind it as well.”