Ethical Performance
inside intelligence for responsible business


ETI takes tough stance as Primark upsets members

February 2009

The Ethical Trading Initiative (ETI) has gained its members’ backing to consider sanctions against the UK clothing retailer Primark over claims of poor labour standards among suppliers.

The UK-based alliance of companies, non-governmental organizations and trade unions is investigating ‘whether or not there is a systematic failure on Primark’s part’ to implement the base code of the ETI, to which Primark has belonged since 2006. If breaches are found, sanctions could follow, including expulsion.

The inquiry has been prompted by allegations last month that a Primark supplier in the UK, the Manchester-based garment maker TNS Knitwear, has been paying illegal immigrants well below the minimum wage.

The allegations, which arose from an undercover investigation by The Observer newspaper and the BBC, follow Primark’s admission last year, also after a media exposé, that some of its Indian suppliers used child labour (EP10, issue 3, p6).

The ETI’s investigations are partly a response to members’ concerns that Primark, which is Britain’s second largest clothing retailer and is owned by Associated British Foods, is damaging the body’s reputation.

When the child labour revelations received worldwide coverage last year, the Initiative took a fairly relaxed view, offering to help Primark remedy the problem. However, this time it has been noticeably less supportive, asking the company to remove references to the ETI in its stores and on its corporate website during the investigations.

‘Companies that join us commit to adopting credible and effective strategies to improve conditions in their supply chains, and we hold to account members that demonstrate a persistent failure to do so,’ it said.

Primark’s reputational problems are arguably the worst to have hit any member since the alliance was formed in 1998, and some of the 54 corporate members have privately expressed worries that the budget retailer’s recent troubles could devalue the good work being done by the organization.

Primark said it was ‘surprised and disappointed with the public stance adopted by the ETI’, and accused it of ‘prejudging’ the issue.

However, Fiona Gooch, private sector policy adviser at the development charity Traidcraft Exchange, which is an NGO member of the ETI, said the stance had been necessary. ‘This is a learning organization whose members join to improve, but from its actions and performance Primark doesn’t appear to have adopted that learning approach,’ she told EP. ‘Therefore it is bringing the ETI – and the better companies that are its members – into disrepute.’

CSR consultant and former Marks & Spencer head of corporate responsibility Ed Williams told EP: 'The actions taken by the ETI in the wake of the allegations about conditions in part of Primark's UK supply chain are, in my view, fully justified. If the ETI had not responded in this way, it would have severely damaged its own credibility and that of  the base code of conduct which its members sign up to.'

Until now, the Initiative’s biggest problem with a member company has been with Levi Strauss, which it suspended in December 2006 after the business refused to adopt the ‘living wage’ provision of the base code (EP8, issue 10, p5). Levi Strauss then resigned in spring 2007.

Ethical Trading Initiative | Global | Supply Chain Management

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