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Kering, Gap, LVMH Among Fashion Giants Urged to Protect Virus-Vulnerable Supply Chain Workers

A shareholder advocacy group is urging dozens of fashion power players to protect vulnerable supply chain workers threatened by the coronavirus pandemic.

On Friday, Interfaith Center on Corporate Responsibility (ICCR), in collaboration with KnowTheChain, said letters sent to 43 apparel and footwear brands call on these companies to promptly pay their suppliers according to their contractual agreements and obligations, highlight the alarming trends of clothing companies reneging on financial commitments with vulnerable sourcing partners.

The May 1 timing coincides with the anniversary of International Workers’ Day and serves as a follow up to the group’s March 26 Investor Statement on Coronavirus Response, which now has the support of 314 signatories representing over $9 trillion in assets under management, the group claims.

“During this crisis, it is essential for apparel companies to implement their ‘responsibility to respect human rights,’ as outlined by the U.N. Guiding Principles on Business and Human Rights, and address the desperate needs of workers throughout their supply chains,” said David Schilling, senior program director for ICCR, which is targeting fashion heavy-hitters including Ralph Lauren, Hanesbrands, PVH, Michael Kors, VF, Gap, Foot Locker, Inditex, H&M, Fast Retailing, Burberry, Kering, LVMH and Prada.

The advocacy group represents a coalition of more than 300 institutional investors focused on improving corporate management of environmental and social risk, including forced labor. It is highlighting the impact felt by many migrant workers in the global apparel and footwear sector as brands either cancel or cut orders in the wake of depressed demand from COVID-19. ICCR seeks to safeguard not only the livelihoods of the workers, but also to provide investors, in working with KnowTheChain, resources to identify, address and root out forced labor in the supply chains.

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Dutch asset management firm Robeco, among the investors participating in the supply chain effort, also works with the Platform for Living Wage Financials, an alliance of 13 European financial institutions with more than $2.8 trillion in assets under management that engages with fashion brands over their globally dispersed supply networks.

Citing the firm’s track record as “long-term sustainable investors,” Robeco senior engagement specialist Peter van der Werf said the company “expects companies in the garment sector to be financially prudent whilst protecting labor and human rights standards in their own operations and across their supply chains.”

Paying living wages, on top of “adequate social protection floors,” he added, “is crucial to advance the respect for a number of fundamental human rights whilst building more resilient supply chains.”

An estimated 40 million workers in global garment supply chains face loss of work with little or no compensation, even for work already completed and ready to ship. A Penn State University Center for Global Workers’ Rights survey on Bangladesh apparel suppliers found that more than half faced order cancellations for work already completed. More than 1 million garment workers in Bangladesh have been fired or furloughed as work dries up and Western brands fail to pay for goods. This existential scenario is “replicated” in other sourcing countries, from Cambodia to Vietnam to India, the letter noted.

The letter asks brands to promptly pay factories and vendors for existing orders without renegotiating pricing; to resist punishing suppliers with price reductions for delays and supply chain shortages, such as late raw material deliveries from the original outbreak epicenter of China; to press suppliers to ensure that suspended or terminated workers receive legally mandated pay and severance; to actively engage workers and trade unions in restructuring work in response to the virus; to safeguards workers by ensuring hygienic working and living conditions, enforcing social distancing measures and offering and protective gear where suppliers continue production; and to refrain from using alternative sourcing or productions facilities that are tainted with human rights violations, including forced labor.

ICCR is also asking the apparel and footwear firms to report publicly on their responses to COVID-19 worker protections. Because companies profit from globalized supply chains, they also asked to share in the costs and burdens, including the creation of a fund providing support to suppliers in countries where local governments are unable to provide the same level of support available to firms located in wealthier nations.