Ethical Performance
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Supply chain security never goes out of style

November 2013

The term ‘sustainable’ in the fashion world is a little like the word ‘natural’ in the beauty biz. It seems to mean different things to different brands. Different companies have different goals. Brands like Loomstate in the US focus on the use of organic cotton; Fruit of the Loom has its emphasis currently on its carbon footprint while at luxury basics brand Everlane worker’s rights is top of the agenda. What they all have in common, of course, is a spotlight on their supply chain.

And supply chain and the security of the supply chain are the top issues being discussed at boardroom level. Indeed, there is an increased demand for transparency in the supply chain from retailers and consumers following the Rana Plaza disaster earlier this year, in which 1,200 people lost their lives. A combination of corruption, ignorance and low working standards were the major cause of this particular disaster, but they are still commonplace.

As a result, retailers are increasingly looking to establish partnerships with their suppliers that promote sustainability and ethical working practices. At present, large retailers can easily exceed 100,000 plus suppliers, and therefore a scalable approach is required.

Jo Webb, the head of stakeholder relations for Sedex and member of the UN Global Compact Supply Chain Sustainability Advisory Group, explained at a recent Responsible Trade Worldwide event in Birmingham, ‘Achieving Supply Chain Transparency: From Compliance to Engagement’: “Risks increase further down the supply chain – whilst at the same time the capacity to address those risks decreases – it is the iceberg of non-compliances lurking beneath the surface.”

“Focusing on first-tier suppliers only is not enough. Collaboration is key. Some of the chronic supply chain issues we are seeing are endemic and no one company can solve them on their own. Duplication is still prevalent. However, if companies can treat sustainability as non-competitive issues and work together to drive convergence then more time and effort could be spent on addressing issues rather on commissioning constant audits to differing requirements,” she continued.

Major retailers are now taking action, identifying the challenges with their suppliers so that they can tackle them together, and offering greater equality to workers by encouraging open conversations at all levels.

Louise Herring, Ethical Trading Manager of Sainsbury’s, said at the same event: “We have been working with our suppliers to identify the root causes of labour issues as part of our 20/20 strategy. One example is women’s education and access to reproductive health which can be a major barrier in some developing nations. At supplier-level, our training programmes are helping women workers to understand the options available to them so that they can pursue a career and improve their standard of living”.

And yet the tragedies just keep on coming. There were more calls just last month for more probing examination of supply chains, a concerted effort on safety, and attention to employees’ voices, in the wake of another Bangladeshi garment factory catastrophe.

Nine or 10 people – reports vary – were killed and about 50 injured in last month’s fire at the Aswad Composite Mills fabric works in Gazipur near Dakha. A machine is said to have exploded, and the employees killed were thought to have been working overtime.

Officials were quoted as saying the fire spread because of water shortages and the absence of nearby fire stations. The government is investigating.

Although dozens of international retailers agreed after the Rana Plaza collapse to inspect Bangladeshi factories regularly, a lack of checks on supply chains was emphasised by Labour Behind the Label, a UK-based group campaigning for garment workers’ rights.

Policy officer Samantha Maher said: “The fire highlights how much there is to do to protect workers in the industry.”
She insisted that companies should trace suppliers through their chains to “make conditions visible to the end customer”. She said some retailers claimed not to know about Aswad, “but they should know”.

Full transparency will be achieved only when the industry and governments take combined action, said Rebecca Taylor, head of research and business development at Responsible Trade Worldwide, a UK organisation offering ethical practice advice.

She believed the employees themselves must be involved. “We’ll identify the fundamental issues when we engage the people who live and breathe the reality day to day,” she said.

She believed consumers were now developing awareness of garment trade conditions, which might spur retailers to act.

However, some of the large store groups that source fabric from Aswad are promising action.

Next said: “Once the [fire] cause is known, as routine Next will review its procedures, including the extent to which it needs to look further down the supply chain.”

Asda said it was trying to help the factory owners however it could. An Asda spokeswoman said: “As part of the Walmart family we have a safety programme that rigorously inspects the factories that make our garments and other products.

“Typically that programme does not extend to the facilities that make materials like fabric for those garment factories.

“Given the situation in Bangladesh, we, along with Walmart, believe the government of Bangladesh and the industry should consider whether to extend factory safety programmes to this next level of production.”

Earlier this year Walmart gave $600,000 (£375,000, €442,000) to a project to empower workers to have a say on factory conditions.

The Irish chain Primark, estimated to be Britain’s second largest clothes retailer, finished dealing with Aswad in March, accusing it of refusing to stop violations of its code of conduct.

The Canadian retailer Hudson’s Bay halted business with Aswad in April but did not give any reasons.  

Compensation claims

Nine clothing companies are holding talks to determine compensation for the injured and the families of those killed when the Rana Plaza complex housing garment factories in the Bangladeshi capital Dhaka collapsed in April.

Altogether 1,133 workers were killed and more than 2,500 hurt in the tragedy at Rana Plaza, from which factories supplied dozens of garment retailers.

At the first meeting of customer companies a compensation scheme was submitted by the Clean Clothes Campaign, which lobbies for garment workers’ conditions, the international trade union group IndustriAll, and the Worker Rights Consortium, an independent monitoring body.

The three groups proposed compensation of $74.5m (£46.7m, €55m). The brands and retailers failed to reach agreement but are continuing discussions.

The Irish retailer Primark, meanwhile, has paid compensation and three months’ salary to affected families for emergency relief, and has offered its Bangladesh banking network to deliver any funds contributed for immediate needs.

Additionally, Primark is working on a scheme under which victims would receive long-term compensation.
Monika Kemperle, IndustriAll’s assistant general secretary, said: “Consumers will be shocked that almost a half-year has passed since the Rana Plaza disaster with only one brand so far providing any compensation.”

Kamrul Anam, of IndustriAll’s Bangladesh council, said: “Please, all brands and retailers, match that three months’ salary.”

The anti-poverty charity War on Want has urged the Matalan model Abbey Clancy, a participant in the popular UK television programme Strictly Come Dancing, and the Mango model Miranda Kerr to back its call for relief for the victims – both fashion companies sourced goods from Rana Plaza factories.

Only C&A and Karl Rieker attended earlier discussions on compensation for victims of last November’s Tazreen factory fire in Dhaka, in which about 120 workers were killed and more than 200 hurt. Both promised compensation.

Kemperle complained: “The disregard of the absent brands for the plight of workers in Bangladesh whose lives have been destroyed by the avoidable accidents at Tazreen and Rana Plaza is shocking in the extreme.”

The Clean Clothes Campaign says it will continue the pressure on those companies.

Besides Primark, the Rana Plaza meeting was attended by Bon Marché, Camaieu, El Corte Inglés, Kik, Loblaw, Mascot, Matalan and Store Twenty One.

Other invited companies failed to attend: Adler, Auchan, Benetton, C&A, Carrefour, Cato Corp, The Children’s Place, Dressbarn, Essenza, Gueldenpfennig, Iconix Brand, Inditex, JC Penney, Kids Fashion Group, LPP, Mango, Manifattura Corona, NKD, Premier Clothing, PWT Group (Texman) and Walmart.

Twelve invited companies missed the Tazreen meeting: Delta Apparel, Dickies, Disney, El Corte Inglés, Edinburgh Woollen Mill, Kik, Li & Fung, Piazza Italia, Sean John, Sears, Teddy Smith and Walmart.

In Pakistan bereaved families and injured survivors of a fire at the Ali Enterprises garment factory in September 2012 are also awaiting a full settlement. Investigators found blocked exits and barred windows contributed to the 250-plus death toll, even though a fire safety certificate had been issued a few weeks earlier.

The German retailer Kik, the only known buyer of Ali garments, agreed in December to pay $1m in emergency relief, most of which has distributed. Final long-term compensation will be negotiated with stakeholders but the social auditing organisations have snubbed the labour rights groups.

Samantha Maher, policy officer of Labour behind the Label, which campaigns for employees’ rights, said: “The death of hundreds… has highlighted, in the most tragic way, that audits do not protect workers’ rights.”  

Global | supply chain


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