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Covid-19 Is Changing the World—and it’s Shifting Social Compliance, Too

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.

2020 has been one the strangest and most challenging years in modern history. As it draws to a close, the Covid-19 pandemic rages on, dominating the scene with lasting implications for retailers and brands; in particular, for sourcing practices in the apparel and footwear industries.

The social compliance landscape has likewise felt the effects of this global scourge. What we are seeing under Covid-19, however, is an acceleration of the pace of changes that began in the pre-Covid days. Brands and retailers have been placed under extreme pressure to manage cost, explore alternative sourcing models, and consider alternative approaches to social compliance. For some, time has run out; for others, the window is closing.

Significant developments on the trade front over the past few years have already been driving shifts in sourcing patterns, moving away from China and other established sourcing countries and exploring new—and still untested—opportunities in places like Myanmar and Africa. Such shifts are likely to accelerate faster in the years ahead, and carry important social compliance implications, including the simple challenge of getting acquainted with working conditions and practices in unfamiliar labor markets.

This will be further complicated by another trend that was already emerging pre-Covid—increased legislative, regulatory and policy activities touching upon supply chain management by governments in all the major consumer markets. In Europe, there is a strong expectation of EU-level legislation addressing mandatory human rights due diligence requirements for businesses; there are already several individual nations that have passed laws relating not just to reporting on, but also remediation of, labor conditions in the supply chains of companies doing business in Europe.

Add to this the fact that the incoming U.S. administration is almost certainly going to focus more on human rights and labor issues, and the conditions become ripe for enhanced legal requirements when it comes to social compliance in apparel and footwear supply chains.

More generally, the pandemic has had a powerful impact on supply-chain dynamics overall, calling particular attention to buyers’ purchasing practices and how they can lead to social compliance problems in a facility. There is increasing recognition lately that buyers need to be aware of, and address, their own sourcing decision-making processes and the effects these have on their manufacturing partners, all in the light of ensuring acceptable working conditions in the factories they are sourcing from. If suppliers are unable to pay their workers due to cancelled orders, the supply chain will break.

All these issues draw on the fundamental idea that supply chains ought to be run with close attention to core human rights issues as underpinning responsible sourcing. Chief among these is the issue of forced labor, and the notion that no one should work involuntarily, or under conditions of servitude.

Modern forced labor is a very nuanced problem. Whether viewed in specific contexts (such as the vexing, and highly publicized, treatment of the Uyghurs in China’s Xinjiang region) or more generally, it presents difficult challenges of identification and remediation. Responsible sourcing practices must also include securing labor responsibly, meaning that care must be given to ensuring proper hiring practices (how, and from whom, workers are employed) in a supply chain. This is particularly relevant for more vulnerable labor, like migrant workers, who, being unfamiliar with local laws and regulations, are more at risk of exploitation.

All this is happening in the context of modern communication tools (the ubiquity of social media) enabling activists to magnify their voices in ways that are unprecedented in history. Well-funded foundations are playing an increasing role in social compliance by lobbying governments on changes to their labor laws and making donations to like-minded groups. But what is particularly significant is that the latest increase in activism is not being driven solely by activist NGOs.

The Socially Responsible Investing (SRI) community is getting in the game, leveraging their dollars—investments in the apparel and footwear industries—to promote social responsibility (for example, it is very telling that the major civil society coalition that has formed around the Uyghur issue has SRIs playing a core, central role). This is the investment community saying to business that human rights are no longer ‘soft’ issues; they are business issues core to profitability and necessary to sustaining a financial stream.

Ultimately, it comes down to proper management of supply chain social compliance due diligence.

Between the heightened public scrutiny and expected legislative moves, the shifts in the social compliance landscape over the coming months will have major implications on how brands and retailers approach supply chain due diligence. In particular, there will be an increased realization of the importance, and economic practicality, of using established social compliance schemes that provide independent third party verification, rather than relying on internal proprietary codes of conduct and dedicated staff to validate their supply chains are in compliance with responsible sourcing requirements.

Now, more than ever, this industry needs to work together to address the whole range of social compliance challenges effectively, by avoiding audit fatigue through collaboration, mutual recognition and symphonization, a term WRAP coined in a white-paper published earlier this year (and discussed in a prior Sourcing Journal op-ed). These shifts in the social compliance landscape are here to stay, and it is the steps taken today that will determine the future success of the industry in handling them.

Avedis Seferian is president & CEO of WRAP (Worldwide Responsible Accredited Production).

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