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Maintaining Compliance in Apparel Industry is the Responsibility of All Stakeholders

Rivet's 2020 Denim Circularity report takes a deep dive into how the global denim industry is plotting its circular future amidst a worldwide pandemic.

Compliance is a term that those of us involved with the ready-made garment (RMG) sector of Bangladesh are more than familiar with, as the tragic events of the Rana Plaza disaster in April 23, 2013, quite rightly, brought huge international focus on the compliance of manufacturers working in the apparel sector.

Bangladesh’s RMG industry is now subject to the harshest scrutiny regarding all aspects of health and safety in the workplace, as well as guaranteeing that ethical and environmental standards are upheld.

The Accord, Alliance and NAP initiatives implemented since that fateful day have ensured that the standards within the Bangladeshi RMG sector have greatly improved. The country now has some of the highest-rated LEED factories in the world along with complying with the highest ethical and environmental international standards throughout the industry.

However, the investment to achieve such improvements is not always recognized by the immediate customer. A recent research study by Penn State University reveals that the amount paid by western brands for men’s cotton trousers, produced in Bangladesh, has fallen by an average of 13 percent since 2013 despite increases in raw material costs, labor costs and the investments made in the upgrading of manufacturing facilities to conform to the highest international social and environmental standards.

In light of the vast improvements that have been made regarding compliance across the apparel industry of Bangladesh since 2013, I believe that it is not unrealistic to expect customers to be prepared to offer better unit prices for products in recognition of what has been achieved over the last five years.

The onus of the adoption of transparent manufacturing processes and adherence to compliance initiatives has, to date, largely rested upon the Bangladesh manufacturers themselves, with little or no financial support from the brands and retailers that trade with them.

Surely, for compliant, transparent practices to be maintained within the industry, it is time that some of the financial burden and responsibility associated with adoption of best practices is recognized by the customers themselves, and through a process of healthy dialogue, improved unit prices can be negotiated to ensure that the current, or improved, levels of compliance are sustainable within the industry.

It is a logical step that, given the heightened attention paid to all aspects of compliance, transparency, ethical and environmental standards by the end consumers of apparel products, the brand or the buyer must also take responsibility for the product being purchased and follow the same transparent principles as those imposed upon their suppliers—and take responsibility for communicating transparent initiatives effectively to the end consumer in a global standard format.

Standardization of compliance practices is an area that urgently needs to be addressed by brands and retailers. It is now abundantly apparent that there needs to be a universal language and standardized policy that is applied to all apparel resources, combined with one global strategy for advancing transparent trading practices and championing sustainable initiatives, compliance and improvements in social conditions for workers.

Currently, in addition to any improvement that has to be undertaken by an RMG manufacturer following Accord or Alliance inspections, they are responsible for conducting individual social audits by each customer, which, although they do not vary hugely in the principles they follow, are not recognized by the individual audit bodies (e.g., BSCI, WRAP or ETI), resulting in an overlap of efforts and extra costs for the manufacturer. So, a standardized policy for all manufacturers and their customers would be of great benefit to all involved and would help clarify the whole compliance issue.

Such a strategy does not yet exist but requires the brands and buyers to agree to such a global standardized policy. This policy then needs to be implemented throughout the global supply chain and communicated to the end consumer by the brands.

There are cost implications inherent in adopting transparent practices, and if one factory is fully transparent and compliant with all the stipulations from their customer but another factory has differing levels of compliance to achieve, then the manufacturer will face an immediate cost-price disadvantage.

What I believe needs to be established is a level playing field for all, regardless of where in the world manufacturing is taking place, hence the importance of establishing a standardized global policy.

Similarly, the level playing field approach needs to be applied to customers globally—there needs to be one set of criteria established for manufacturing garments, regardless of the origin of the goods being manufactured.

Global compliance standards need to be established that do not vary from country to country, and in line with these standards a change in buying practices that discourages the practice of sourcing product based purely upon the lowest labour cost.

It would be negligent, at least, if the brands and buyers trading with Bangladesh—after all the effort and investment that has been made over recent years—were to move production to a lower labor cost area of the world, rather than working together with their partners in Bangladesh to both recognize the efforts and investment that have been made and to develop a healthy business relationship for the future.

I do not suggest blanket cost-price increases across the apparel supply chain in Bangladesh, but it is high time that it is recognized during the process of price negotiations between suppliers and buyers that, in order to safeguard the improvements in compliance and to ensure these improvements continue, a fair price should be paid to all involved in the supply chain.  If that necessitates price increases, then these need to be explained to the end consumer to ensure we have a sustainable level of business and profits to safeguard the development of the apparel industry for the future.

There needs to be a forum whereby all parties can raise the issues that they face, and those issues can be addressed and resolved at an international level, with NGOs and similar organizations taking on the role of watchdog to ensure all stakeholders fulfill their responsibilities.

Mostafiz Uddin is the managing director of Denim Expert Limited, Bangladesh. Founder and CEO of Bangladesh Denim Expo and Bangladesh Apparel Exchange (BAE). Email: mostafiz@denimexpert.com.

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