The 2017 Ethical Fashion Report - THE TRUTH BEHIND THE BARCODE - Analysis & Policy ...
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THE 2017 ETHICAL FASHION REPORT THE TRUTH BEHIND THE BARCODE Date: 19th April 2017 Authors: Gershon Nimbalker, Jasmin Mawson, Hsu-Ann Lee, Claire Cremen Behind the Barcode is a project of Baptist World Aid Australia www.behindthebarcode.org.au Report Design Susanne Geppert Front cover photo credit: Asian Development Bank, used under creative commons license 2.0. 2
CONTENTS 1. Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2. Methodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 3. Made in … . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Bangladesh 21, Cambodia 23, China 25, India 27, Australia 29 4. Policies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 5. Knowing Suppliers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 6. Auditing & Supplier Relationships. . . . . . . . . . . . . . . . 37 Appendices 7. Worker Empowerment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Statements from Non-Responsive 8. Living Wage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Companies 80 Sources and Further Reading 82 9. Brand Index.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 About Baptist World Aid 85 10. Survey Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 Acknowledgments 85 3
1 Executive Summary This section outlines the research aims and scope, data collection and findings and overall results of all companies. 4
OVERALL GRADE Empowerment Worker Relationships & Supplier Auditing Suppliers Knowing Your Policies D– D+ D+ B Abercrombie & Fitch* D+ OVERVIEW B– A– A+ A+ adidas Group A– F C B+ A Aldi C+ F F F F Ally Fashion* F Overall Grades: A– P C– B– A A American Apparel B C+ C– C– B+ Anthea Crawford* C+ C+ B+ A+ A+ APG & Co A– D– C– B– A+ Arcadia Group C+ D+ C+ B+ A+ AS Colour B– D+ C+ B A+ ASOS B– F C– C A– Bardot C– D– D+ C+ B+ Ben Sherman Australia C– exploitation in their supply chains. EXECUTIVE SUMMARY F C C+ A+ Best & Less C F F F F Betts* F D+ D+ B+ A+ Big W C+ D– C C+ A+ Billabong C+ F F F F Bloch* F the risks of forced labour, child labour, and F B– C+ D– Blue Illusion C– World Aid Australia examining labour rights This is the fourth report produced by Baptist strength of their systems to mitigate against It grades 106 companies, from A to F, on the D+ C+ B A+ Boden B– management systems in the fashion industry. F D+ B A+ Brand Collective C D D+ B+ A+ Clarks C+ D+ C+ B A+ Coles C+ F F F D Corporate Apparel Group* F B– B+ A+ A+ Cotton On Group A– C+ B+ A A+ Country Road Group B+ C C+ C+ A+ Cue Clothing Co B– C+ B– B+ A+ David Jones B+ F F F F Decjuba* F D+ B– B+ A+ Designworks B– C– B A+ A+ Esprit B+ A– A A+ A+ Etiko A+ D C C+ A+ EziBuy C+ D+ C C A Factory X C F F F F Farmers* F F D D+ A+ Fast Future Brands D+ F D+ C B Forever 21 D+ C C+ A– A+ Forever New B C+ B+ A+ A+ Freeset A– C– C+ B+ A+ Fruit of the Loom B– lives of 1,134 garment workers. D– D C– A+ Fusion Retail Brands C– D+ C+ B+ A+ Gap B– F F F B Gazal* D– F C C+ A+ General Pants C C– C+ C+ A+ Glassons B– D+ C C+ A+ Gorman C+ D D B+ A+ Grosby C slavery. The report has grown in scope and C+ B+ A+ A+ H&M B+ work place, a living wage, and freedom from that the rights of the workers who make their C+ B+ B+ A+ Hanesbrands Inc. B+ F C– C+ A– House of Quirky C– It now assesses more than 2.5 times the number The first report was published in the wake of the industry engagement every year since its release. D+ D+ A– A+ Hushpuppies C+ products are upheld. These rights including a safe Since that time, the Report has benchmarked and factory collapse in Bangladesh, which claimed the tracked the efforts of fashion companies to ensure industry’s most tragic disaster; the 2013 Rana Plaza F F D D– Icebreaker* D– B A+ A A+ Inditex A C+ B– A– A+ Industrie B+ D+ B A+ A+ Jeanswest B+ C– C+ B+ A+ Jets B D D+ A– A+ Julius Marlow C+ D C+ B+ A+ Just Group C+ C+ A– B+ A+ Karen Walker B+ C+ B+ B+ A+ Kathmandu B+ C– B– B+ A+ Kmart Australia B D+ C+ B+ A+ Kookai B– A– A– A– A+ Kowtow A Australian release. F D+ D+ B– L Brands* D+ F C+ B– A+ Lacoste C+ C– B+ A+ A+ Levi Strauss & Co. B+ B+ B+ A+ A+ Liminal Apparel A D C C+ A+ Lorna Jane C+ F C– C– B+ Lowes D+ D+ B+ A A+ Lululemon Athletica B+ But the need remains pressing. D+ C+ B+ A+ Macpac B– D– D+ C+ A+ Max C A– B+ A+ A+ Mighty Good Undies A+ D+ C+ C+ A+ Myer C+ C– C+ B A+ New Balance B– D+ C+ B– A+ Next C+ Zealand, expanding beyond its traditional D+ C B A+ Nike* C+ Since the tragedy in Bangladesh, efforts to accelerated, spurred on by increased public D– C– C+ A+ Noni B C of companies of the first report, with 83% of improve conditions for fashion workers have B– B+ A+ A+ Nudie Jeans A– D+ C+ B+ A+ Oroton Group B– Ethical Fashion Report is being released in New process. And this year, for the first time ever, the F F F F Oxford* F companies being actively engaged in the research scrutiny and concerted consumer calls for change. C+ B+ A+ A+ Pacific Brands A– * = non-responsive companies 5
EXECUTIVE SUMMARY OVERVIEW The Asia Pacific has become the world’s garment both labour intensive and prone to employing factory, with more than 40 million workers vulnerable workers. The US Department of Labor These 106 companies represent employed in manufacturing apparel and textiles reports forced and/or child labour is used in 330 brands, to see the grades across the region. For the vast-majority of these garment, textile and footwear manufacturing workers, wages remain at levels well below what is throughout the region, including in China, India, of specific brands, go to the needed to lift them and their families out of poverty. Bangladesh, Malaysia, Vietnam, Indonesia, Brand Index on page 47. The International Labour Organisation (ILO) Cambodia, and Pakistan. estimates that more than half of the world’s forced And though safety standards are improving labourers (11.7 million), and that 78 million of its for this industry, progress is slow. Factory child labourers are in this region. Apparel is a fires and unsafe working conditions remain high-risk industry for these practices, being a persistent problem. Overall Grades: P– Z A+ C+ C+ C+ C+ C+ C+ C+ B+ D– OVERALL GRADE C– C– B– B– B– B– A Photo credit: gerrypopplestone, used under Creative Commons Licence 2.0. C C B B B F F F Pavement United Brands* Voyager Distributing Co* Specialty Fashion Group The Warehouse Group* Retail Apparel Group Webster Holdings Simon de Winter Target Australia VF Corporation The PAS Group Seed Heritage Sussan Group Zimmermann Roger David* R.M. Williams Tree of Life Patagonia PVH Corp Quiksilver UNIQLO Rip Curl Seafolly RREPP Wish* Puma Policies A+ A+ A+ A+ A+ A+ A+ A+ A+ A+ A+ A+ A+ A+ A+ A+ B– A A A A F F F F Knowing Your A+ A+ D+ C+ C+ C+ C+ C+ B+ B+ A– A– C– B– B– Suppliers A C C B B B B F F F Auditing & Supplier D+ D+ D+ C+ C+ C+ C+ B+ B+ B+ A– C– C– C– C C C C B B B F F F F Relationships Worker D+ D+ D+ D+ D+ C+ B+ D– D– D– C– B– Empowerment D D D D D D C F F F F F F * = non-responsive companies 6
EXECUTIVE SUMMARY INDUSTRY OVERVIEW C+ 13 10 China remains the most common country for production, followed A F by India, Bangladesh, Vietnam and Thailand. companies assessed median grade companies received companies received A range grades F grades 2016 2017 Investing in supplier relationships is high on the priority for many companies: 16% 26% 67% 67% of companies are making efforts to train suppliers, buyers and 77% 77% of companies are working to actively improve leverage and factory managers to relationships with understand human suppliers, through While transparency remains a challenge in the trafficking, child supplier consolidation industry, we have seen an improvement with the labour, and forced and/or industry percentage of companies publishing full supplier labour risks. collaboration? lists going from 16% to 26% in the last year alone. Worker Empowerment D+ remains the area where 7% Tracing of raw materials remains a huge the most work still needs to challenge with just 7% of companies knowing be done, with the median where all of their cotton is coming from. grade for that section of our assessment being a D+. 7
EXECUTIVE SUMMARY INDUSTRY PROGRESS Baptist World Aid’s first report on the fashion industry was published in 2013 and since 59% 59% of companies assessed then, we have seen the industry in the 2016 Report improved make significant progress in their grade in the 2017 Report the quality of their labour rights management systems… Traceability Companies tracing inputs suppliers Companies tracing raw materials suppliers deeper into the 2013 49% 2013 17% supply chains has increased steadily over the last four years: 2015 2016 61% 79% 2015 2016 31% 39% 2017 2017 81% 2017 45% 42% The number of companies investing in paying 2013 2015 11% 14% 2016 fairer wages to 2016 32% workers 2017 42% The percentage of companies tracking the presence of trade unions and collective bargaining agreements in the majority of their factories has doubled since 2016. 8
EXECUTIVE SUMMARY KEY FINDINGS Key Findings factory and were willing to publicly disclose where monitoring suppliers back to fabric production Company Performance they were producing. Etiko and Mighty Good (second tier suppliers), while Patagonia has done Undies, also demonstrated that many of their relatively more to trace its raw materials (third tier Niche ethical producers have consistently been the suppliers were paying a living wage. suppliers) and demonstrate improved wages for best performers when it comes to strong labour Of the multinational companies, Patagonia and workers. rights management. Etiko, Mighty Good Undies, and RREPP all scored the top grade, A+. These Inditex (Zara) scored the highest with an A grade. Cotton On Group, Pacific Brands and APG & Co companies knew their suppliers from farm to Inditex was particularly strong on tracing and were the best performing mid-to-large size companies headquartered in Australia, both scoring an A–. New Zealand’s best performers were Kowtow and Liminal Apparel, both scoring an A grade. One of the most encouraging trends has been the continued improvement in company efforts. Over the past 12 months, Macpac, OrotonGroup, Lululemon Athletica, and Karen Walker have all demonstrated significant increases of investment in their labour rights approach. Each have moved into the B grade range. OrotonGroup, for instance, tightened its policies, invested substantially in identifying the factories it sources from, and improved its supplier relationships. Subsequently, its grade moved from D+ to B–. Supplier Knowledge Knowing suppliers is a key pillar of a strong labour rights management system. If brands don’t know or don’t care who their suppliers are, there is virtually no way of ensuring that the workers who make their products are not being exploited. It is encouraging, then, that this continues to be one of the most significant areas of improvement within the fashion industry. Photo credit: Mark Fischer, used under Creative Commons Licence 3.0. 9
EXECUTIVE SUMMARY KEY FINDINGS The 2017 Ethical Fashion Report found that more collaboratively through the Better Cotton Initiative than three quarters of assessed companies knew (BCI) to do so. Companies that have published each of their final stage manufacturing suppliers BCI is a multi-stakeholder initiative that works with supplier lists in the last year: (first tier). For most companies, it is at this stage of brands, NGOs, farms, and cotton-traders to the supply chain that they have the strongest improve social and environmental protections, and • APG & Co • Jeanswest relationship. Thanks to this strong visibility, the increase farm yields (read more on page 36). • Big W • Lululemon Athletica worst forms of exploitation, forced labour, and Amongst mid-to-large companies, Kathmandu has child labour are now far less prevalent at this stage • Brand Collective • Pacific Brands been a stand out performer when it comes to of the supply chain. tracing raw materials. By using a combination of • Cotton On Group • R.M. Williams However, deeper into the supply chain, where BCI and Fairtrade cotton, Kathmandu has traced • Designworks • RREPP visibility is far less, the risks remain substantial. almost 80% of its cotton supply and through • Esprit • The PAS Group Encouragingly though, companies are increasingly Responsible Down Sourcing has traced 100% of its identifying their suppliers beyond the first tier. The down supply. • Hanesbrands 2017 Ethical Fashion Report found that 81% of companies are now actively tracing their fabric Transparency suppliers (second tier); this is up from 49% in 2013. One of the most notable trends for the industry These lists make it far easier for journalists, NGOs, Furthermore, 39% of companies now know all, or has been the improved corporate transparency workers and unions to verify that the claims almost all, their second tier suppliers (up from 24% around supply chain practices. Transparency companies make about their labour rights systems in 2013). demonstrates a company’s willingness to be are accurate, and that they are working as intended. But perhaps one of the most exciting accountable to consumers, the public, and their Workers and unions can also use these lists to developments is the improved knowledge of their workers. Transparency is critical to companies that communicate directly with brands about their raw material or third tier suppliers (usually cotton wish to build trust. grievances and concerns, and agitate for change. farms). As the majority of the world’s child One significant element of transparency is the Also, several companies have made significant labourers work in agriculture, the risks at this stage publication of a list of suppliers that includes their disclosures about their labour rights systems in the of the supply chain are acute. business names and addresses. Since the release past year. The increased openness from General When Baptist World Aid began this research in of the last Australian Fashion Report, the Pants, Gorman, Seed Heritage, Factory X, and the 2013, most companies argued that tracing back to proportion of companies publishing supplier lists Brand Collective group of companies is the farm was outside their scope of control and has substantially increased from 16% to 26%. The commendable. By sharing more about their labour responsibility. At the time, raw materials tracing move towards transparency is even more notable rights systems, they help consumers understand was largely restricted to Fairtrade companies. amongst companies that have been engaged with what efforts they are taking to ensure the rights of Now 45% of companies are seeking to trace their this project since it began in 2013; 45% of those workers are upheld. cotton suppliers, with many working companies are now publishing their supplier list. 10
EXECUTIVE SUMMARY KEY FINDINGS Non-Responsive Companies Living Wage and Low Transparency The fashion industry continues to grow each year, Low transparency is often one of the biggest and is among the most labour intensive industries determinants for why some companies receive the in the world. It is also a significant driver of lowest grades. Companies are graded based on a employment for groups who have traditionally combination of publicly available information and struggled to find good jobs — women, migrants, any information they are willing to disclose to the and young people. Sadly, this cross section of report’s researchers. As mentioned previously, 83% society is also amongst its most vulnerable and, in of companies choose to engage, with most seeing many cases, rather than providing decent work, benefit in the process of being benchmarked and the fashion industry has exploited them. gaining feedback. A wage that is sufficient for workers to be able to Nike and The Warehouse are examples of afford the basics (food, water, healthcare, clothing, companies that still scored relatively well with electricity and education) for themselves and their C range grades, even though they did not directly dependants — a living wage — is a recognised a engage with the research process. This is largely human right. Yet the clear majority of garment due to their strong commitment to public sector workers receive wages well below this. It transparency. should come as no surprise then that the chief However, several companies have chosen not to concern among workers is their low wages. disclose or make any information publicly The benefits of a living wage are substantial. available. Without this information, it becomes In fact, payment of a living wage could transform nearly impossible for the public to make informed the lives of millions by allowing people to lift decisions about whether companies are investing themselves out of poverty and, at the same time, sufficiently to ensure that workers are not being drive economic growth within communities and exploited. For this reason, these companies have nations. Where living wages are being paid, the been awarded an F grade in this report. likelihood of other forms of exploitation such as For more information about the research process forced labour and child labour fall dramatically. and non-responsive companies, refer to the Finally, given the importance of wages to workers, methodology (page 16). Non-responsive being able to demonstrate that workers are companies were also given the opportunity to receiving a living wage is one of the most telling provide a statement about why they chose not to signs that a corporate labour rights system is engage with this research. These statements are genuinely responsive to the needs of workers. included on page 80. It is encouraging then, that the proportion of companies seeking to improve wages has Photo credit: Arne Hoel / The World Bank, used under Creative Commons Licence 2.0. 11
EXECUTIVE SUMMARY KEY FINDINGS continued to rise. In 2013, the proportion of Companies accredited with ECA include Anthea companies that could demonstrate improved Crawford, JETS, Cue Clothing, and R.M Williams. wages for workers was 11%, it has risen each year and now stands at 42%. It is worth nothing Trade Unions and Collective Bargaining however, that (in most cases) wages are still below It is workers that have the best visibility over a living wage level and only apply to a portion of workplace conditions. One of the most effective workers in the supply chain. ways to address exploitation is ensuring that Ethical Brands such as Liminal Apparel, Etiko, workers can organise and collectively bargain Mighty Good Undies, Freeset, Nudie, RREPP, and to see their rights realised. Research by the ILO Kowtow were the stand out performers for living has affirmed that nations with higher levels of wage payment. They each demonstrated that a collective bargaining also have a tendency toward significant proportion of workers in their better wages for low income earners. manufacturing factories were receiving living While progress in the last year has been promising wages, a number also demonstrated living wages in this area, the challenge remains substantial. The for their fabric production. number of companies that could report that at Hanesbrands is one of the leading companies least 50% of their suppliers had democratically- among larger producers. More than 80% of its elected trade unions, or collective bargaining manufacturing, and a significant proportion of its agreements has doubled since our 2016 research fabrics production, comes from company owned — however this is from a very low base. The facilities. Hanesbrands pays workers in all these proportion still languishes at around one out of facilities a living wage. every five facilities. Other commendable efforts include Kmart The low levels of unionisation and collective bargaining reflect one of the most troubling Photo credit: Baptist World Aid Australia Australia, which has benchmarked wages in a few of its Bangladeshi facilities and is now beginning to challenges identified in our research: worker implement initiatives to raise wage levels (see empowerment. This has consistently been the page 46 for more information); Patagonia, which worst performing area for the industry. In the 2017 pays a premium in its Fairtrade USA certified Ethical Fashion Report, the median grade for this factories to directly benefit workers; and pillar of companies’ labour rights management companies that are accredited with Ethical systems was a low D+. To turn this around the Clothing Australia (ECA). ECA ensures that wage industry must do more to listen and respond to levels and working conditions for Australian worker voice, and in particular, improve efforts production (at a minimum) meet with Australian towards collective bargaining and the payment of At a sewing factory in Cambodia. standards (see page 43 for more on ECA). a living wage. 12
EXECUTIVE SUMMARY CONCLUDING COMMENTS Concluding Comments companies could argue that the responsibility to emphasising those areas of the supply chain that The garment industry can be a tremendous force uphold worker rights rested with their suppliers. are of higher risk. for good. Now, cultural and consumer expectations have This report hopes to assist those efforts and, in shifted and, as they’ve changed, so too has the doing so, help the fashion industry realise its In Cambodia, the industry employs 700,000 political and regulatory environment. potential to contribute to a world free from workers, around 4.5% of the population. In Bangladesh, the number of people employed by California, the United Kingdom, and the European poverty and exploitation. the industry has doubled in the last decade, and Union have each introduced regulations that Photo credit: Daro Sulakauri/Asian Development Bank, used under is now above 4 million. require companies to disclose what they are doing Creative Commons License 2.0. to address slavery risks throughout their supply Cambodians have been able to agitate for a near chains. The French and the Dutch governments tripling of the minimum wage for garment have gone a step further, calling for mandatory workers, despite heavy handed (and at times plans to address labour rights and environmental lethal) government crackdowns. And with global risks. Australia, inspired by the UK’s Modern attention drawn to Bangladesh, wages have Slavery Act, has just announced an inquiry into increased 87% and factory safety has improved whether similar legislation should be nationally substantially. adopted. Beyond jobs, garment production generates over a This shift in expectations has been welcome, and trillion dollars of export revenue, predominantly for the progress that the industry has made has been low and middle income countries. In Bangladesh commendable. But consumers, companies, and and Cambodia, the industry respectively governments can still do more to help accelerate accounted for 89.2% and 77.4% of total these gains. merchandise exports in 2014. You, as consumers, can do more by preferencing The industry has fuelled the growth of economies those companies doing the most to uphold the and at the same time, facilitated millions of people rights of workers in their supply chains, and by migrating from lives of subsistent rural agriculture calling on those that aren’t to do better. into factory work, giving them hope of a better life Companies can do more by strengthening their for themselves and their families. labour rights systems and by ensuring that However, we know that wherever measures haven’t workers, from farm to factory, receive a living been sufficient to uphold the rights of workers, the wage. And the Australian and New Zealand industry has also driven forced labour, child labour, governments can do more by introducing unsafe working conditions and exploitation. legislation requiring companies to publicly report Expectations of the role of individual companies on the measures taken to address slavery and At the Turkmenbashi Tekstil Kompleksi in Turkmenistan, to address these issues have changed. Once, exploitation throughout their supply chains, where over 3,000 mainly female workers are employed. 13
RAW FINAL INPUTS MATERIALS MANUFACTURING Monitoring Monitoring Monitoring Traceability Traceability Traceability Living Wage Living Wage Living Wage OVERALL GRADE Abercrombie & Fitch* D+ Key: adidas Group A– EXECUTIVE SUMMARY Aldi C+ Ally Fashion* F VISUAL OVERVIEW A– M American Apparel B 100% Anthea Crawford* C+ APG & Co A– Arcadia Group C+ AS Colour B– 76–99% ASOS B– Bardot C– * = non-responsive companies Ben Sherman Australia C– 51–75% Best & Less C Betts* F Big W C+ Billabong C+ 26–50% Bloch* F Blue Illusion C– Boden B– 1–25% Brand Collective C Clarks C+ Coles C+ 0% Corporate Apparel Group* F Cotton On Group A– Country Road Group B+ Cue Clothing Co B– David Jones B+ Decjuba* F Designworks B– Esprit B+ Etiko A+ EziBuy C+ Factory X C Farmers* F Fast Future Brands D+ Forever 21 D+ Forever New B Freeset A– Fruit of the Loom B– Fusion Retail Brands C– Gap B– Gazal* D– General Pants C Glassons B– Gorman C+ Grosby C H&M B+ Hanesbrands Inc. B+ House of Quirky C– Hushpuppies C+ Icebreaker* D– Inditex A Industrie B+ Jeanswest B+ Jets B Julius Marlow C+ Just Group C+ Karen Walker B+ Kathmandu B+ Kmart Australia B Kookai B– Kowtow A L Brands* D+ Lacoste C+ Levi Strauss & Co. B+ Liminal Apparel A Lorna Jane C+ Lowes D+ Lululemon Athletica B+ Macpac B– Max C 14
EXECUTIVE SUMMARY VISUAL OVERVIEW M– Z A+ A+ C+ C+ C+ C+ C+ C+ C+ C+ C+ C+ B+ OVERALL GRADE D– A– A– C– C– B– B– B– B– B– B– A C C C B B B F F F F Pavement United Brands* Voyager Distributing Co* Specialty Fashion Group The Warehouse Group* Retail Apparel Group Mighty Good Undies This table provides a summary on how companies Webster Holdings Simon de Winter Target Australia have performed on three of the most significant VF Corporation The PAS Group Seed Heritage Pacific Brands Oroton Group Sussan Group Zimmermann Roger David* R.M. Williams New Balance Nudie Jeans elements needed for a strong labour rights Tree of Life Patagonia PVH Corp Quiksilver UNIQLO Rip Curl Seafolly Oxford* management system. It breaks down by tier of the RREPP Noni B Wish* Puma Nike* Myer Next supply chain the percentage of facilities that have been traced, are being monitored and are paying workers a living wage. Traceability Monitoring FINAL MANUFACTURING Living Wage Traceability Monitoring INPUTS Living Wage Traceability Monitoring RAW MATERIALS Living Wage Key: 100% 76–99% 51–75% 26–50% 1–25% 0% * = non-responsive companies 15
2 Methodology This section outlines the aims and scope of our research, the process of data collection and evaluation, and our company grading system. 16
METHODOLOGY Aims While a number of the areas we assess will provide Our research provides a panorama of ethical a proxy for how well a brand is able to manage its Comment on non-responsive sourcing practices in the fashion industry as a environmental impacts, we do not directly assess companies resource for consumers, corporations, investors environmental impact for this report. It is our intent Brands which are non-responsive, along with and policymakers. that this will be a part of our future research. those that do not provide any substantive We seek to empower consumers to make more In 2017, our research covered 106 companies of information, are indicated in this report by informed and ethical choices in purchasing varying sizes across men’s, women’s and children’s an asterisk next to their name. They were apparel and footwear, and give investors insight apparel and footwear. It is worth emphasising also given the opportunity to provide a into supply chain governance. We aim to help that Baptist World Aid Australia does not do site short statement as to why they chose not to businesses with benchmarking and learnings, and inspections of factories. Therefore, our ratings are respond, and these can be found on page 80. identify issues for policymakers to address. By not an assessment of actual conditions on the We acknowledge that many of the non- presenting the performance of companies relative ground, but rather an analysis of the strength of responsive brands may be doing more to to each other via an A–F grading updated on an a company’s labour rights systems. We rely on improve their ethical sourcing than we have annual basis, our goal is to encourage individual data that is publicly available, alongside evidence been able to assess them on. However, if companies and the industry as a whole to engage of systems and practices that are provided by brands do not disclose, or are unwilling to in constant improvement of their ethical sourcing companies to conduct our assessments. disclose, what they are doing to ensure that practices. workers are not exploited in their supply At a system level, we recognise the positive chains, then it becomes near impossible for Data collection impact that the apparel industry can have around consumers and the public to know if these We assess a large selection of companies on the world. Our goal is to contribute to ending brands are investing sufficiently to mitigate 40 specific criteria at three critical stages of the worker exploitation and alleviating poverty these risks. supply chain as a proxy for the entire fashion in the developing countries where apparel is supply chain. manufactured. In conducting a brand evaluation, our research We actively seek to engage brands (and pursue team first assesses a brand’s own publications contact with non-responsive brands) using at least Scope of the research alongside any relevant independent reports and three different mediums: phone calls, emails and Our research classifies the garment manufacturing data. Our team then sends its findings — marked letters. All non-responsive companies receive our supply chain into three stages of production: final against the assessment criteria outlined above findings twice by post. Letters are also mailed to stage, inputs stage and raw materials, as defined — to the brand for comment and further input, the board chair and CEO. This process ensures that on the following page. Across these three stages which is reviewed in turn. We seek to engage in almost every instance where a brand has not of production, we look at four broad themes of with brands, collect evidence and understand responded, it is because it has intentionally chosen social responsibility: policies, knowing suppliers, their processes and systems; however, our not to do so. auditing/supplier relationships and worker voice, research team does not conduct any factory floor In this edition of the report, 83% of brands have also defined on the following page. inspections as part of the grading process. engaged directly with our research process. 17
METHODOLOGY What the research covers Policies Knowing suppliers Auditing and supplier Worker empowerment Our research collected and evaluated data (traceability and relationships (worker voice and from apparel companies using the following transparency) living wage) classification of the supply chain and themes of social responsibility. Why it matters: Policies Why it matters: In Why it matters: Monitoring Why it matters: For a labour form the standards order to ensure that facilities and building rights system to improve that brands want their worker rights are being relationships are critical to working conditions, workers production to adhere upheld, brands need to ensuring policies are adhered must be empowered, allowed RAW MATERIALS to. They are the baseline know which facilities to and improvements in a voice, and have their most • Cotton (farming) by which a brand can are responsible for the working conditions are critical concerns addressed. measure the effectiveness production of their being delivered. While no It is workers themselves who • Wool, rawhide etc of its overall efforts to product. monitoring process is perfect, have the best visibility of (husbandry, shearing etc) uphold worker rights. high quality monitoring working conditions. What we assess: How • Crude Oil for synthetic helps to provide a better What we assess: much of the supply What we assess: Whether fibres, plastics, etc Provisions to prohibit chain a company has understanding of the workers are able to unite (extraction, refining) conditions of workers. A focus forced labour and child traced; what it does to through democratic trade on strengthening relationships labour, allow for freedom monitor and address unions; whether collective allows trust building, and of association and protect subcontracting; what bargaining agreements increases a brand’s capacity worker health and safety; efforts it is undertaking have been established; to drive change. whether a brand intends to trace the remainder of whether effective grievance its policies to cover its supply chain; a brand’s What we assess: What mechanisms are in place; INPUTS PRODUCTION the entire production transparency and how percentage of production whether workers are receiving process; whether the willing they are to be facilities are audited; whether a living wage so they can • Textiles production brand is undertaking held accountable through unannounced and offsite support their families; a (ginning, spinning, knitting, important measures the information it shares worker interviews and brand’s efforts in moving dying, embroidery) towards improving about it’s supply chain.” anonymous worker surveys towards paying living wage. • Leather (tanning) working conditions in are used; whether checks are • Plastic (processing, moulding) facilities, such as multi- done on high risk activities stakeholder collaboration like labour brokers and and preventing price recruitment fees; whether squeezing. the brand is willing to be transparent about its results and remedial actions; whether brands are actively involved in building supplier relationships FINAL STAGE PRODUCTION through consolidation, • Cut-Make-Trim (CMT) collaboration, supplier training and long term relationship manufacturing (cutting, sewing, building. printing) 18
METHODOLOGY Data evaluation To verify the data provided by companies, we review company responses and ask for clarification and supporting documentation. In some instances, we have relied on audit data provided to us by companies to verify conditions and benefits that workers receive. Our research team and company representatives work through the survey questions until both parties are satisfied that the data presented is an accurate representation of the company’s policies and processes. To ensure consistency in our assessment of companies, after finalising company responses, we cross-check survey responses. This means that all data is reviewed at least three times by three different people. We then evaluate the data collected by using a Photo credit: Adam Cohn, used under Creative Commons Licence 2.0. Men unloading cotton from a truck. survey tool developed with input from supply chain specialists, NGOs and company experts. This tool provides a grade for each company and of that company’s products. Low graded strength of their efforts, similar to awarding grades across each area of our research. companies are those that are not taking these on a bell curve (i.e. best performers receiving A’s, initiatives, or those choosing not to disclose if they worst receiving F’s and many in the middle). Grading are taking such initiatives. Some company structures encompass several The grades awarded in this report are a measure It is important to note that a high grade does brands with differing labour rights management of the efforts undertaken by each company to not mean that a company has a supply chain systems. In these cases, we have graded brands mitigate the risks of forced labour, child labour which is free from exploitation. Rather, it is an separately and provided an average for the and worker exploitation throughout their supply indicator of the efforts and the strength of the company that owns or distributes them. Individual chains. Higher grades correspond to companies systems a company is undertaking to reduce the brands corresponding to a single company are with a labour rights management system that, risk of exploitation. Furthermore, our grading listed, alongside their grade, in the Brand Index on if implemented well, should reduce the risk and methodology is designed to spread companies out page 47. extent of worker exploitation in the production along the ‘A–F continuum’ based on the relative 19
3 MADE IN … This section examines the prevalence of child labour, forced labour and worker exploitation in a global context. It provides insights into specific risks of abuse that exist in garment production across multiple countries, as well as stories of the positive impact the apparel industry can have on the lives of workers. All stories and images are used with permission. 20
MADE IN … BANGLADESH The garment industry is central to Bangladesh’s gesture, as it is a legally binding agreement and Alliance for Bangladesh Worker Safety) has made economy, employing around 5 million workers. brands are collectively contributing $10 million important adjustments to the garment industry towards guaranteeing a safe working environment there, many insist that change is still too slow. Cheap labour makes Bangladesh a popular for the garment industry in Bangladesh.1 Inspections are behind schedule. The Accord sourcing country for foreign companies. covers only 60% of Bangladesh’s RMG industry, Three years since its inception in 2013 as a However cheap labour means exploitatively response to the Rana Plaza tragedy, close to and the Accord’s own executive director estimates that less than half of all exporting factories have low wages and risk-filled working conditions — 3,700 inspections and re-inspections have been conducted. According to Union Network been inspected.3 In other words, there may be the Rana Plaza collapse was a prominent but as many as 3.5 million workers who still have no International (UNI), one of two global union far from isolated incident in a series of deadly signatories, over 100,000 safety issues have been protection against hazardous labour conditions. factory accidents. identified and more than half of these have now Global will also stands opposed to the Bangladeshi been reported or resolved.2 government’s inertia in prosecuting those responsible for Rana Plaza and other factory The Accord: Improvements in safety tragedies in the country — Although culpable The Accord: Still a long way to go Two hundred and seventeen companies, NGOs homicide charges have been laid against factory Awareness of building safety in Bangladesh and global and Bangladesh trade unions have owners like Delwar Hossain (Tazreen Fashions and global will to improve conditions remain signed the Accord which covers 1,661 factories. factory fire, 2012), at the time of this report’s strong, but while the Accord (and the voluntary The Accord is more than lip-service or a symbolic publication not one factory owner has been Photo by ASaber91, used under Creative Commons Licence 2.0. successfully prosecuted. And, while the spotlight is on safety in Bangladesh, the country’s minimum wage does not constitute even a quarter of the estimated living wage.4 Millions of Bangladeshis remain unable to provide for their families’ basic needs. 1 Bangladesh Accord: Guide for Potential Signatories 2015. 2 UNI Global Union — The Bangladesh Accord. Includes 75% of electrical problems resolved. According to UNI, 53,091 of 103,846 (51%) hazards reported/resolved; according to Accord executive director, Rob Wayss, 64%: see Kaye 2016. 3 Kaye 2016. 4 Global Living Wage Coalition. Dhaka, Bangladesh. The country’s capital is home to an estimated 14.5 million people, many of whom work in the apparel industry. 21
MADE IN … BANGLADESH SALAHEYA’S STORY: Struggling to support her family Salaheya Khatun was a child bride and teen mother who suffered brutal domestic violence before she found a homeworker job stitching quilts. But poverty led her to leave her family and become a garment worker at a popular UK retailer’s supplier in Dhaka. Photo credit: Heather Stilwell / Labour Behind the Label. Now in her mid-20s, Salaheya is working 72-hour weeks and earning just 7000 Taka a month (roughly AUD$113). That’s only about half of a living wage!1 Sewing from 8am to 5pm, she then does three hours of overtime before returning to her room in a nearby slum, a tiny space she shares with two other garment workers. Salaheya only sees her daughter once every two to three months — her parents care for the child, but they live in a village six hours away. Because she is sending her parents almost half of her 7000 Taka salary to help care for her Bangladeshi garment worker Salaheya Khatun. daughter, Salaheya cannot afford to cover her own basic needs. Salaheya also explains that the factory where she “I just want to be able works is hostile to unions — about 50 employees “I am in debt by around 1000 Taka every month to support my family.” because I need to pay for groceries and supplies were fired for attempting to join one. She sees brand representatives visit the factory but has Salaheya, Bangladeshi on credit. I need to find work at a factory with a never been given the opportunity to speak garment worker higher salary,” she says. “I just want to be able to support my family.” with them. 1 Global Living Wage Coalition. 22
MADE IN … CAMBODIA Apparel is key to Cambodian industry, making Labour Organization (ILO) factory assessments a In fact, the two are related: because 60–80% up 80% of the country’s total exports. 700,000 prerequisite for exporting factories. They’ve gone of garment workers belong to 30 unions and a step further by publishing those audits. associations — compared to 5% across other workers make garments for a living, supporting industries — these labour unions can advocate It’s been 15 years since the ILO’s Better Factories around 2 million Cambodians. on behalf of almost 600,000 workers.1 Thanks program began in Cambodia. Relative to other apparel-producing countries, Cambodia is strong to dialogue and conflict resolution between Minimum wage and unionisation on worker wage and voice. Almost all factories employers and employees, workplace rights Cambodia has developed a niche for ethical are now paying a minimum wage and there education, legal support for workers, and public production in the garment industry, being the is a high level of unionisation thanks to Better media campaigns on the plight of garment first country in the world to make International Factories. workers, industry wages have climbed to US$153 per month in 2017.2 Piece wages and gender inequality Despite the positive changes seen with respect to wages, there are some concerning signs that ‘piece wages’ may compromise worker safety. Earning a piece wage, rather than a salary based on hours worked, means that a worker is paid per garment. The pressure to create more clothes Photo credit: Chhor Sokunthea / World Bank, used under in less time puts workers at risk of exhaustion and incentivises overtime. Product quality also deteriorates as a result. Another point of concern is the uneven impact of conditions on women, who make up 90% of garment industry workers. Piece wages and Creative Commons Licence 2.0. the lack of job security afforded by short-term contracts weaken both the health of overworked women and their position within their own households and communities. 1 Merk 2016. 2 Deutsche Welle 2016. A garment worker in Phnom Penh sews garter to a skirt. 23
MADE IN … CAMBODIA THEARY’S STORY: From garment worker to development professional Theary Som had heard that being an apparel worker was a good employment opportunity to set you up for your future. So, at 16, she lef t high school and moved with her family to Phnom Penh, where she found a job at a garment factory. She, like the five hundred other Cambodian men and women at the factory, worked for a Chinese company producing uniforms for a US brand. She spent seven years working here, and a total of Photo supplied by Theary Som. eight in Cambodia’s garment factories. When Theary first started as a sewer, Better Factories did not yet exist in Cambodia and the conditions for workers were poor. Only one of her co-workers was a union member. Theary’s workday started at 7am and officially ended at 6pm; one hour was given for lunch, but she regularly worked Theary Som left the Cambodian garment industry to study English and now works for an NGO serving her local community. an additional two hours of overtime in the evening. She was there seven days a week, with only one day off a month. years. During that time, she received a university Theary is still in contact with her friends at the It was exhausting work but Theary was committed degree in accounting. garment factory. And even though they tell her to preparing for her future. In her gruelling time as Theary now coordinates an education program that conditions have improved, they still look at a sewer, she managed to save up enough money for poor children in her community. She has loved Theary and tell her how blessed she is to have to leave the garment factory and study English. watching the kids grow — some of her former made a better life for herself and her family. With these language skills, she found a job at a students are now teenagers. She says their English She has shown them there is a future beyond not-for-profit, where she has now been for six is now better than hers! the apparel industry factories. 24
MADE IN … CHINA China is the world’s largest textiles producer. Labour shortages in the Pearl River Delta gave the production schedules and increased demands. In 2015/16, it fell to second place behind India 30 million migrant workers in the region greater So, a workday may be as long as 17 hours, and no leverage to bargain with employers. However, rest day is guaranteed. Compounding this situation in cotton production, but remains the biggest there has been an increasing clampdown on union is the fact that overtime may only be paid yearly consumer of cotton, importing from countries activity coinciding with government concerns — meaning workers do not even see the fruit of like the United States. China continues to lead about a shift in production to cheaper countries their overtime from month to month. This gives like Vietnam. employers significant power over workers who the world in polyester production. The Country become more vulnerable to exploitation. is also infamous for restricting union activity. Excessive overtime Of the audit reports we viewed in our research this The key risk for worker rights in China is excessive year, there was a pattern of overtime rates as high Wage increase overtime. Despite relatively good wage growth, the as 200%, and even 300% for public holidays — a Of the world’s top garment-producing nations, current salaries are insufficient to cover the cost of huge incentive for poor labourers to work longer China has seen a significant rise in worker wages, living, leading most workers to seek overtime. hours. In some cases, especially in China, what which in Shanghai almost doubled between 2010 To address a lack of ordering predictability from workers earned in overtime was higher than their and 2016. The current minimum wage, which varies brands, factories use overtime to meet spikes in base wage. by region, is now 2190 yuan (US$327) per month in Shanghai — merely 57% of what Asia Floor Photo credit: Ed-meister, used under Creative Commons Licence 2.0. Wage considers a living wage.1 Despite severe restrictions on union activity, worker strikes are contributing to this progress. Organisations are finding ways to empower workers — for example, China Labour Watch educates workers on labour rights and collective bargaining, and provides free advice and counselling services for them via a hotline. In the same vein, the China Labour Bulletin, which offers legal assistance for workers disputing their employers, is building a network of trade union representatives and has put together a Collective Bargaining Handbook for worker training. 1 ‘Wages and employment’, China Labour Bulletin 2016. China sets its minimum wage rate by region. In Shanghai, where wages are highest, this went from 1,120 yuan in 2010 to 2,190 yuan (US$327) in 2016. Living wage calculation based on Asian Floor Wage for China, which Clothing factory in Dongguan, China. is US$570. 25
MADE IN … CHINA HAN’S STORY: Labour rights activism in China Independent unions are banned in China — only the All-China Federation of Trade Unions (ACFTU) is authorised to resolve disputes between employers and employees. In response to concerns that the ACFTU represents managers more of ten than it does workers, around 70 labour NGOs have sprung up, many out of Hong Kong. One of these labour NGOs was the Panyu Workers’ Photo credit: China Labour Bulletin. Centre (PWC). It supported workers at the Lide Shoe Factory — which produces for brands like Calvin Klein, Coach and Ralph Lauren — educating them about their rights. After over 2,500 workers went on strike they were, collectively, able to negotiate overtime, social insurance and housing contributions with factory management. It was a great achievement, but it came at a heavy Meng Han received a jail sentence for his labour rights activism on behalf of factory workers. cost. In December 2015, four staff members of the PWC were arrested. Three men and one woman were eventually convicted and sentenced despite They were pressured into making false statements home as part of state pressure exerted again union questions over the protection of their civil rights in court about being duped by “hostile” foreign organisers. Meng refused to assist the case against during the legal process. Director Zeng Feiyang organisations to “incite” workers into engaging in Zeng in return for a lighter sentence, insisting that and colleagues Tang Huanxing and Zhu Xiaomei “extreme” behaviour. Former PWC staff member PWC’s role was vital because the government and were detained without access to lawyers before Meng Han was convicted the following month for ACFTU let workers down. being found guilty in September 2016 of “ignoring “gathering crowds to disrupt public order.”2 He national laws and organising mass gatherings that had been detained beyond the legally permitted 1 Hong Kong Free Press, 27 September 2016. disturbed social order.” 1 time, and his parents had been harassed at their 2 Lai 2016. 26
MADE IN … INDIA Globally, India is the largest producer of cotton Similarly, the Better Cotton Initiative has been and has the largest land area under cotton improving production in ten states in India since 2009. This improved the livelihoods of 270,000 cultivation, accounting for around 26% of BCI farmers in the 2014 harvest.3 BCI also partners Photo credit: © Fairtrade Photographer: Didier cotton production and a quarter of all cotton- ginners and spinners, strengthening traceability producing land. However, 90% of Indian cotton and standards at the inputs stage of apparel Gentilhomme, used with permission. production. is genetically modified, which means that the seed costs farmers more to buy and are not Empowering cotton farmers is also good for the environment, as these communities have an reusable.1 India is also a hotspot for human interest in refining farming techniques in order to trafficking and forced labour. Much of this increase yields. Methods that maintain and care takes the form of bonded labour in all stages for the land — for example, by reducing the use of pesticides and other chemicals — mean that it will of garment production. continue to serve families for generations to come. Women harvesting cotton at a Chetna Organic farm. Fairtrade and Better Cotton Farms Human trafficking and forced labour Given India’s prominent place in global cotton Modern-day slavery is a reality despite being Human trafficking and forced labour — including production and the prevalence of genetically outlawed in almost all countries. The ILO estimate child prostitution and forced marriage — are illegal modified cotton in the country, the work of that 21 million are subject to forced labour, with but enforcement is still problematic. Forced labour Fairtrade and the Better Cotton Initiative (BCI) some estimates suggesting up to 40% of victims is outlawed in the Constitution but curiously not is of particular significance. are in India.4 There are even generations of covered in the regulation of human trafficking workers born into bonded labour, never knowing under the national penal code. Fairtrade certification provides direct traceability from cotton farms through to factories because life outside the factory. Owners create a situation India has ratified four of the International Labour member farmers then sell to member spinners whereby the worker repays a debt by performing Organisation’s eight fundamental conventions, but and ginners, and so on. This transparency in labour — however the interest is set at extortionary is yet to ratify conventions relating to child labour, the supply chain, when paired with the worker rates so that the worker is essentially held as a freedom of association and collective bargaining, empowerment that Fairtrade standards promote, slave, spending their lives repaying the debt. living wage, occupational health and safety, is effecting real change for cotton farmers in The fact that 75% of India’s rural workers and 69% working hours, social security or migrant workers. Gujarat, Tamil Nadu, Andhra Pradesh, Orissa, and of its urban workers are in the informal economy Karnataka. Fairtrade’s work with Chetna Organic exacerbates their vulnerability. Other factors 1 Better Cotton Initiative; Vachharajani 2016. is directly benefitting 80,000 Indian farmers, increasing the risk of slavery are embedded caste, 2 Nath 2016. 3 Better Cotton Initiative. including 6,000 cotton farmers.2 gender, and socio-economic inequalities.5 4 International Labour Organization 5 Global Slavery Index. 27
MADE IN … INDIA PADMA BAI’S STORY: Transforming her community through Fairtrade Padma Bai is challenging socio-cultural norms with her agricultural leadership. A tribal Girijan farmer, she was elected sarpanch (statutory village head) of eight villages that are home to more than 2,000 Fairtrade farmers. Padma Bai herself cultivates cotton, red gram, black gram, castor and soya on her three acres of family land in Patelguda Village in the Telangana province of India. Photo credit: Devina Singh. This extraordinary woman has used her positions of influence to transform her community and empower her people. She built cement roads in three villages and one fair weather road with dry mud using Fairtrade Premium Funds. She arranged for the government to make ponds for rainwater harvesting and made clean water available in the Padma Bai and her husband. village school through a water pump. She has been a member of Chetna Organics, a as pick-axes, sickle, spades, hoes and good things to say about his wife’s achievements. Fairtrade certified producer organisation in India wheelbarrows. The centre then hires out these “Women can influence laws better,” he says. “I’m since 2007. Her relationship with Chetna made it tools to farmers in neighbouring villages. For poor very proud of her.” possible for her to secure a Rs. 30,000 loan from farmers who cannot afford to buy their own tools Many Australian Fairtrade companies source their the Fairtrade Premiums Committee. Using these the marginal rate of 2–5 rupees per day equips products from Chetna Organic’s cooperatives. funds, Padma Bai established Exacuniverse, a them with the resources they need to effectively Those included in our report are: Etiko, Kowtow, equipment hiring centre. cultivate their land. Liminal and Mighty Good Undies. Under the guidance of Chetna Organics, her Her husband Atram Rajeshwar works as a field venture invests in labour reducing tools such assistant at Chetna Organics and he only has 28
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