The Latest in the Journey to Make Sourcing Responsible

In the aftermath of COVID-19, startling reports of working conditions have emerged globally and across industries. The attention and response to address concerns by brands, regulators, and investors has not been equal.

Forbes examines the differences in engagement with a focus on the garment industry in its recent editorial Why does the fashion industry care less about garment workers in other countries?, written by Brooke Roberts-Islam (source). The editorial contrasts the collective response to allegations associating UK fast-fashion retailer Boohoo with unsafe working conditions and modern day slavery risks involving a UK supplier compared to the response to brands withholding payment to suppliers based in developing countries.

The author expresses a startling concept: the inherent value of a worker is not equal across geographies in a supply chain. Instead, the value of a worker is dependent on the country in which they live and work. Roberts-Islam states, “a horrible truth at the heart of the unethical treatment of garment workers: brands care (and act) when the exploitation is on their doorstep, but not when it is further afield in Asia. The proximity of the factory to Boohoo operations in Manchester and U.K. retailers were too close for comfort” (source). At a time when social injustices based on race are being examined globally, the article calls us to evaluate whether the speed and level of response are dependent on geography and if this is linked to an unequal perception of workers. It is a reminder of the complex challenge inherent to responsible sourcing, programs must be designed to protect the brand while ensuring basic human rights are respected throughout the global supply chain.

There are remedies and guidance put forward to support and ensure the concept of ‘corporate social responsibility’ has teeth. Ten years ago, the United Nations Guiding Principles on Business and Human Rights’ human rights due diligence was introduced creating a framework by which many companies commit to upholding human rights in their global value chain. Regulatory requirements mandating non-financial due diligence disclosures have also been introduced. With these voluntary and optional due diligence requirements, why must workers still fight to be paid fairly?

Gaps in national and subnational workers’ rights regulatory frameworks make it difficult for companies to make sense of requirements.  However, supply chain disclosure legislation, such as the California Transparency Act, UK Modern Slavery Act, French Due Diligence Law, and Modern Slavery Act Australia are increasing buyer accountability in their supply chain and are drawing increased investor and NGO scrutiny. Coupled with the rise in internet and smartphone penetration enabling workers to report real-time working conditions, it is harder for all stakeholders to turn a blind eye to what is happening in the global workforce.

History has shown us that it takes media or activist attention to spur action with regards to “out of sight, out of mind” workers in developing world factories. This was evidenced in the response to Boohoo and the recent #PayUp Fashion campaign, which applied media pressure targeting brands to pay for in-production and completed orders impacted by COVID-19 (source). This is further supported by recent headlines coming from the U.S., “Wage theft plagues L.A. garment workers. Why aren’t fashion retailers held accountable?” (source). L.A. garment workers have been victims of wage theft for decades. California legislation hasn’t changed since 1999 when garment manufacturers were made liable for wage violations by contractors. This legislation came four years after an expose revealed Thai workers in slavery-like conditions in a suburb of LA (source). Under U.S. federal law, brands cannot be penalized for wage theft in factories if they can credibly claim that they did not know their clothes were made by workers paid illegally low wages. The Labor Department has collected millions in back wages and penalties from Los Angeles garment businesses in recent years but has not fined a retailer. As the New York Times reported, one L.A. garment worker questioned, “why the brand did not visit the factory floor to check on how its clothes were being made for such low prices” (source).

The regulatory trend appears to be moving more towards forcing a more comprehensive and effective supply chain due diligence. These disclosure regulations are increasing buyer accountability in their supply chain and are drawing increased investor and NGO scrutiny.  Monitoring programs should probably be more rigorous and equally applied between bigger and smaller retailers and brands.  As corporations recover from the aftermath of COVID, and companies rethink their responsible sourcing programs, there needs to be a collective review to see whether the current trends in monitoring (less of it, audit sharing programs, lighter touch self-assessments) reconciles with regulatory trends and the increasing scrutiny of investors. As we think through the future of responsible sourcing and how to embed sustainability and responsible business into core values and business processes we should ask:

1. How are working conditions being monitored and addressed as needed by brands?
2. What is the impact of a company’s purchasing practices on working conditions?
3. What is the role of workers in monitoring working conditions?
4. How do we ensure workers have access to effective grievance mechanisms?
5. How should investors evaluate company ESG performance to drive accountability?

Image Credit: Getty

These blogs are written by ELEVATE staff members or associates and the views and opinions expressed are not necessarily those of ELEVATE.