Brands are facing more pressure than ever to protect human rights in their supply chains. But while brands’ individual reputations are at stake, achieving supplier visibility and ensuring ethical practices is going to come down to collaboration.
First and foremost, partnerships are crucial because brands share suppliers. During a panel at the Fairchild Media Group Sustainability Summit last month, Amy Hall, social consciousness strategic advisor at Eileen Fisher Inc., explained that smaller labels like her company are only a fraction of a factory’s output. This means, for example, that they can’t single handedly support payroll progress.
“It has to be a systemic approach; there’s no choice about it,” said Hall. “We can influence where we can, but our best influence as a brand…is to strive for a collective solution.”
Achieving this level of collaboration will require buy-in from multiple competitors. One of the factors that could push brands to joint action is legislation, which would make social compliance mandatory. Kate Larsen, director, ESG supply chains at SupplyESChange, sees a need to go beyond voluntary oversight, citing the current model’s inability to sufficiently move the needle on issues including worker wages.
Germany has introduced a Supply Chain Act that would make companies legally responsible for ensuring social and environmental compliance. Similar legislation has been proposed in the European Union and the Netherlands. With these laws, companies would have to prove their compliance, and violations could result in penalties ranging from fines to import bans on their products.
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“These new laws require companies to make sure that people in their supply chain are not suffering human rights abuses because the buyer did not do due diligence to prevent or influence remediation of that,” said Larsen.
Legislation could also create fairer competition by making all brands invest in social compliance.
Supply chain visibility
Brands’ globalized supply chains could leave them vulnerable to numerous geopolitical situations across their footprint. Two of the most recent crises intertwined with the fashion industry are reports of forced labor in the Xinjiang Uyghur Autonomous Region of China and a military coup in Myanmar.
Given these risks, companies must be proactive. “Stay on top of the issue, get ahead of it if you can, try to take action before it gets all splashed across the news,” said Hall. A first step is investigating and identifying how connected their own supply chains are to these issues. “If you wait and see what happens, you run the risk of faltering, and really subjecting your brand to greater harm,” she added.
To get proper visibility, companies must consider the credibility of their audits. “There’s a lot of corruption happening; there’s a lot of factories that are willing to try to bribe auditors and many auditors who will take that,” said Larsen. This risk can be lowered by sending a team of more than one auditor, but that adds costs. To spread the expense, brands can join forces to monitor their shared factory partner.
Brands should also build trust with manufacturers to get the full picture. Suppliers’ audits on worker rights might not be perfect, partly due to pressures put on them by downstream partners. For instance, last-minute orders could force factories to use overtime. To encourage transparency, Larsen said companies should make it clear they won’t cut ties if a violation is revealed, and that they will work with factories to improve.
Even as more consumer attention turns toward social responsibility, some issues have become polarized. For instance, recently, Chinese netizens have called for boycotts of brands who came out against forced labor in Xinjiang. Although entering these conversations can be a potentially risky move for brands, Hall sees the value in speaking up.
“We need to take a stand on behalf of human beings in our supply chain,” said Hall. “And if that means we’re going to lose some customers, then so be it. We’re going to lose customers one way or the other, whichever side we choose. And I say, choose the side that will allow you to sleep at night.”