The 2018 Ethical Fashion Report - THE TRUTH BEHIND THE BARCODE - Tearfund
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THE 2018 ETHICAL FASHION REPORT THE TRUTH BEHIND THE BARCODE Date: April 2018 Authors: Gershon Nimbalker, Jasmin Mawson, Claire Harris, Meredith Rynan, Libby Sanders, Claire Hart, Megan Shove. Behind the Barcode is a project of Baptist World Aid Australia. New Zealand headquartered companies researched in partnership with TearFund New Zealand. www.behindthebarcode.org.au Sponsored by Baptist Insurance Services. Report Design Susanne Geppert Front cover photo: © Baptist World Aid Australia. 2
CONTENTS 1. Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2. Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 3. Five Years since the Rana Plaza Disaster. . . . . 24 4. Interwoven Stories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Consumer Advocacy 28, Governments 29, Companies 30, Workers 32 5. Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 6. Transparency and Traceability. . . . . . . . . . . . . . . . . . . . . 36 7. Auditing and Supplier Relationships. . . . . . . . . . . . 40 8. Worker Empowerment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 9. Living Wage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Appendices Statements from non-responsive brands 93 10. Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Sources 96 11. Brand Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 About Baptist World Aid Australia 98 12. Survey Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Acknowledgements 99 3
1 Executive Summary This section outlines the research aims and scope, data collection and findings and overall results of all companies. 4
*= empowerment Worker relationships supplier Auditing and traceability OVERALL GRADE Transparency and Policies F D D+ B+ Abercrombie & Fitch* D OVERVIEW C+ B A+ A+ adidas A– F C C+ B+ ALDI Stores C– F F F F Ally Fashion* F non-responsive companies C– C– D+ A– Anthea Crawford* C Overall Grades: A– N B– A– A+ A+ APG & Co A– D– C– B– A+ Arcadia Group C+ D B C+ A– AS Colour C+ D– C B A ASICS C+ C– B– A– A+ ASOS B+ F D D+ C Bardot D D C+ C+ A+ Barkers Clothing C+ exploitation in their supply chains. EXECUTIVE SUMMARY D– C– D+ B+ Ben Sherman Australia C– D– C– C A Best & Less C F F F B Betts Group D– D– D+ C A Big W C This is the fifth report produced by Baptist D C C– A– Billabong C the risks of forced labour, child labour and F F F F Bloch* F It grades 114 companies, from A to F, on the World Aid Australia examining labour rights strength of their systems to mitigate against F D– C– C Blue Illusion D management systems in the fashion industry. D– C– C A Boden C F D+ D C+ Boohoo D D– D+ C+ A Brand Collective (Apparel) C D C– B A Brand Collective (Footwear) C+ F F F D+ Bras N Things* F F D+ B– A+ Coles C A+ A A+ A+ Common Good A+ B A A+ A+ Cotton On Group A B– A– A A+ Country Road Group A– D+ C D A Cue C D– B– B– A+ David Jones B– F D– D+ A+ De Vere Textiles (RUBY Apparel) D+ F F F C Decjuba* F D– C+ C A+ Designworks C C– B– A A+ Esprit B+ A+ A– A A+ Etiko A+ F D D+ A– Ezibuy D+ D D+ B A+ Factory X C+ F F F B+ Farmers* D– F D– D A– Fast Future Brands D F F D+ A– Forever 21 D D+ C+ A– A Forever New B– A A+ A+ A+ Freeset A+ D– F C A– Fruit of the Loom* D+ D– C A– A+ Gap Inc. B– investors, and governments everywhere. F F F A– Gazal* D– On April 24, 2013, the Rana Plaza building D C C+ A+ General Pants Group C+ shocked the world, catapulting the plight of D+ A– A– A+ Gildan Activewear B+ collapsed just outside of Dhaka, Bangladesh, the worst garment-factory disaster in history. injuring thousands more. It was a disaster that D C– B+ A+ Gorman C+ claiming the lives of 1,134 garment workers and It has been five years since the world witnessed D+ B– A– A+ H&M B+ workers into the minds of consumers, companies, C+ B A– A+ Hallenstein Glasson Holdings B+ B– A– A– A+ Hanesbrands A– F F F F House of Quirky* F D D+ B+ A+ Hugo Boss Group C+ A– A A+ A+ Icebreaker A+ B– A A A+ Inditex A– B+ B– B+ A+ Industrie B+ D+ B+ A– A+ Jeanswest B+ F C C+ A+ JETS C D+ C+ C+ A+ Just Group C+ to be made. F F F F K&K* F D– C+ C A– Karen Walker* C B+ B+ A+ A+ Kathmandu A D+ B A– A+ Kmart B+ D+ B B– A+ Kookai B– A+ A A– A+ Kowtow A F D+ C– B+ L Brands* D+ F D– D A Lacoste D+ D– C+ A– A+ Levi Strauss & Co* B– D+ B– C– B Lorna Jane C F F F B Lowes* D– C+ A+ A– A+ Lululemon Athletica A– D B– B A+ Macpac B D C A– A+ Marks & Spencer B F D C– A Max* D+ A+ A– A+ A+ Mighty Good Group A+ F F D B+ Munro Footwear Group D D C B– A Myer C+ responded by improving its systems, forming D C+ A– A+ New Balance B new alliances, and becoming more transparent. D– C+ B+ A+ Next B– The 2018 Ethical Fashion Report (The Report) is For five years, The Report has been tracking the systems that companies have in place to uphold the fifth released by Baptist World Aid Australia. D– C B+ A+ Nike B– Since then, the global fashion industry has largely However, there is still a great deal of improvement F D D+ A– Noni B Group D+ B– B– A A+ Nudie Jeans A– 5
EXECUTIVE SUMMARY OVERVIEW the rights of workers. These rights include the of child labour, forced labour, and exploitation. right to a safe work place, a living wage, and the Excitingly, in addition to its traditional focus on These 114 companies represent 407 brands. freedom from forced and child labour. labour rights, The 2018 Report also includes To check brand grades, go to the brand Since its first edition in 2013, The Report has preliminary data on the global fashion industry’s index on page 55 or the online fast finder environmental performance. 77% of assessed continued to grow in scope. This year, it grades the at www.behindthebarcode.org.au practices of 114 companies (from A–F), assessing companies actively engaged in the research the strength of those systems to mitigate the risk process. Overall Grades: O– Z A+ D+ D+ D+ D+ C+ C+ C+ C+ B+ D– C– C– B– B– OVERALL GRADE A A D D C C C B B B B B F F F F F Pavement United Brands* Voyager Distributing Co* Specialty Fashion Group Simon de Winter Group The Warehouse Group* Retail Apparel Group Target Australia The PAS Group Trelise Cooper* Outland Denim Wish Designs* Seed Heritage Ralph Lauren* Sussan Group Rodd & Gunn Zimmermann R.M. Williams THE ICONIC* Roger David © ILO/Nguyen Viet Thanh, via: https://flic.kr/p/TEP7SN Tree of Life PVH Corp* Patagonia UNIQLO* Tigerlily* VF Corp Rip Curl Seafolly Postie+ RREPP Oxford Puma T&T* A+ A+ A+ A+ A+ A+ A+ A+ A+ A+ A+ A+ A+ B+ A– A– Policies A A A A A A A A A B F F F F F F Transparency and A+ A+ A+ D+ D+ D+ D+ C+ C+ B+ D– D– A– A– A– A– C– B– B– B– B– A D D C C C C traceability F F F F Auditing and A+ D+ D+ D+ D+ D+ C+ B+ B+ B+ D– D– D– A– B– supplier A D D D C C C C B B B F F F F F F relationships Worker A+ D+ D+ D+ D+ B+ D– D– D– C– C– C– B– D D D D C empowerment F F F F F F F F F F F F F F Workers at a Hung Yen-based garment factory in Vietnam. *= non-responsive companies 6
EXECUTIVE SUMMARY INDUSTRY OVERVIEW C+ 18 A 11 F companies assessed median grade companies received companies received A range grades F grades 2017 2018 For the first time, we have assessed companies on their 26% 34% gender policies and strategies. Only 22% of companies had both a policy and strategy to While transparency remains a challenge in the industry, address gender we celebrate the continued improvements here. The inequality and percentage of companies publishing full direct supplier discrimination in their lists has increased from 26% to 34% in the last year alone. supply chain. © ILO/Aaron Santos, via: https://flic.kr/p/hJVRDu Worker Empowerment remains Tracing of raw materials remains a significant D- the area where the most work challenge, with just 7% of companies knowing where all their raw materials, such as cotton, are coming from. 7% still needs to be done. The median grade for that section of our assessment is D–. 7
EXECUTIVE SUMMARY INDUSTRY PROGRESS Baptist World Aid Australia’s first report on The scope of our research has expanded significantly: the fashion industry was published in 2013; since then, we have seen the 2013 41 companies industry make significant progress in the 2018 114 companies quality of their labour rights management 2013 128 brands systems. 2018 407 brands We’ve seen a significant increase in company responsiveness to the Ethical Fashion Report’s research since 2013: Traceability reaching deeper into the supply chain of companies has increased over the last five years: 2018 2018 2018 2013 Companies 2013 Companies 2013 working to 78% working to trace trace where where their raw 17% 77% their fabrics come from: materials come from: 54% 49% 42% In 2013, just one sixth of companies that were The percentage of companies tracking the presence of democratically elected unions and collective 2013 24% assessed were publishing supplier lists – in the bargaining agreements in their final stage factories 2018 Report, the proportion is one third. has had significant improvement since 2013. 2018 44% 8
EXECUTIVE SUMMARY WHO MAKES OUR CLOTHES? Who Makes our Clothes? Increasingly, the world’s population is clothed by SHARE OF GLOBAL CLOTHING EXPORTS workers in the Asia-Pacific. Across the region, in low and middle-income countries, 43 million China – 36.4% Turkey – 3.4% people work in factories to produce garments, textiles, and footwear.1 India constitutes the biggest European Union – 26.4% Indonesia – 1.7% share of these workers at 16.7 million, followed by China (6.2 million), and Bangladesh (4.9 million).2 Bangladesh – 6.4% Cambodia – 1.4% However, despite the quantity of workers in India, Vietnam – 5.5% USA – 1.3% it is still China (with 37.2% of the market) that commands the largest share of global clothing India – 4% Other – 13.5% exports. Bangladesh, Vietnam, and India are the next largest exporters in the region, with 6.3%, 6.4%, and 5.5% of global market share respectively.4 China’s lower quantity of workers, relative to its volume of exports, is partly explained by the low availability of data outside urban production hubs and partly explained by the country’s higher rates of productivity. The pattern of production has also been shifting in recent years. Promisingly, in China, wage growth has been averaging about 9.1% a year. This has had beneficial impacts for workers; but at the same time, has caused many companies to relocate production to lower-cost markets. Bangladesh, Vietnam, and Cambodia have seen the largest increase in garment exports as a result (each growing by between 5% and 6% per year). Source: World Trade Organisation 9
EXECUTIVE SUMMARY WHO MAKES OUR CLOTHES? EMPLOYMENT IN THE GARMENT, TEXTILES AND FOOTWEAR INDUSTRY * NUMBER OF WORKERS 18 000 16 000 14 000 12 000 10 000 8000 6000 4000 2000 0 ) ) ) ) ) ) ) ) 5) ) ) 2) 10 16 13 15 12 15 16 16 13 15 /1 /1 0 0 0 0 0 0 0 0 0 0 14 11 (2 (2 (2 (2 (2 (2 (2 (2 (2 (2 MALE FEMALE 0 0 (2 a ka h ar nd na es am a R (2 di es si PD m in an hi la a ne bo tn an ad di n pp C ai * = latest year available 3 iL ya o ie do st am In gl Th La ili V Sr ki M an In Ph C Pa B Source: International Labor Organisation 10
EXECUTIVE SUMMARY INDUSTRY CONCERNS Concerns for Worker Rights The risk occurs at multiple points of the supply The risk of child labour in manufacturing is also For the 43 million workers of the Asia-Pacific, chain — with manufacturing accounting for about significant, with the ILO estimating 18 million and for millions of others across the world, the 15% of forced labourers, while agriculture accounts victims may exist.10 global fashion industry is a significant provider for a further 11%.6 Women, who make up the The United States Department of Labor reports of jobs. It also spurs economic growth, generates largest proportion of garment producers, are also that child labour is used in garment, textile, and tax revenue, provides valuable skills and training, more vulnerable, accounting for 57.6% of all forced footwear manufacturing in countries across and delivers crucial foreign exchange. All of labourers. the Asia-Pacific. These include China, India, these factors can, and often do, contribute According to risk analytics released by Verisk Bangladesh, Malaysia, Vietnam, Indonesia, to improving the lives of these workers and Maplecroft, most of the world’s largest garment Cambodia, and Pakistan.11 their communities. exporters — such as China, Bangladesh, India, At the same time however, the global fashion Vietnam, and Cambodia — are all rated “high” or industry can be a place of exploitation for millions. “extreme” on the risk of forced labour.7 For the majority of workers in the global fashion industry, wages are so low that they leave them, Child Labour in the Fashion Industry and their families, trapped in poverty. Beyond this, Child labour, particularly in the production of raw fashion production throughout the Asia-Pacific is materials like cotton, is prevalent in fashion supply marred by the presence of slavery, and problems chains. of child labour remain persistent. The ILO reports that there are 152 million child Though safety standards are improving labourers in the world. The majority, 71% (particularly in Bangladesh), fire safety, structural (108 million), can be found in the agricultural sector. defects in factories, and unsafe working conditions Cotton production carries an especially high risk have not yet been adequately addressed. of child labour, with almost every major cotton- producing country being impacted. These include Forced Labour in the Fashion Industry China, India, Brazil, Pakistan, Turkey, Uzbekistan, © ILO, via https://flic.kr/p/BSap2L Fashion is a high-risk industry for forced labour. Turkmenistan, and the United States.8 Cotton The International Labour Organisation (ILO) and from Turkmenistan is of particular concern, with Walk Free estimate that there are 24.9 million child labour and forced labour being widespread forced labourers in the world, with 60% of them and state sponsored.9 Among the large cotton being exploited by private enterprise. Two thirds of producing nations, Australia is one of only a few forced labour victims are in the same region where exceptions to this trend. the majority of the world’s garment production takes place: the Asia-Pacific.5 11
EXECUTIVE SUMMARY KEY FINDINGS Key Findings final stage of manufacturing. Beyond this, Outland materials) and, like APG and Co, has invested in Effective labour rights management systems are Denim, Common Good, and Etiko were able to developing long-term supplier relationships. Both critical to addressing the risks outlined above. It is demonstrate that living wages are also being paid companies receive an A– grade. now widely accepted that a significant share of the at their input suppliers. Outdoor fashion companies, as a subset of the responsibility rests with companies themselves. In Cotton On Group has demonstrated continuous broader global fashion industry, continue to shine. many instances, companies have pursued lower improvement since the first edition of The Report. Icebreaker, being the best graded amongst its costs by moving production to regions with poorer It is now the best rated, large multinational peers, receives an A+ grade. Both Patagonia and industrial relations systems and lower institutional headquartered in Australia. This year, Cotton On Kathmandu receive A grades. capacity. Group receives an A grade, with its progress driven Conversely, several companies have received F Since the first campaigns against sweatshops by several factors. grades in consecutive editions of The Report. in the mid-90s, companies have increasingly For the past three years, Cotton On Group has These are Ally Fashion, Bloch, Decjuba, Wish and recognised that they cannot outsource been committed to tracing deeper into the supply Voyager Distributing (brands include Ping Pong responsibility to third parties; that they themselves chain, all the way to raw materials. It can now and Kachel). must exercise adequate due diligence to address trace between 50% and 70% of its raw materials, risk. Global frameworks, such as the United In most instances, the F grade has been awarded sourcing much of its cotton through a combination because companies have little or no publicly Nations Guiding Principles on Business and Human of the Better Cotton Initiative and its in-house Rights, and the Sustainable Development Goals available information to assess their systems “Kwale Cotton Program” (this program is further and, additionally, chose not to engage with The support this understanding. highlighted on page 43 of The Report). Cotton On Report’s research process. has also become increasingly transparent about its Company Performance suppliers and has invested substantial resource in Without transparency, it is almost impossible for A small cohort of companies in The Report supplier training. consumers to trust that these companies have were found to have exceptional labour rights sufficient systems to ensure that the rights of Similarly, APG and Co and Country Road workers are being upheld. The F Grade is not an management systems — including Outland Denim, Group have each invested substantially in their Common Good, Icebreaker, Freeset, Etiko, and the assertion that these brands necessarily have poor systems. They too can demonstrate year on year labour rights management systems, but merely Mighty Good Group. Each of these companies improvement. receive an A+. They knew their supply chains from that their labour rights management systems are farm to factory and had intentionally invested APG and Co’s work towards developing long- not sufficiently visible for assessment. in developing quality relationships with their lasting and quality relationships with suppliers, suppliers. In most instances, these companies were along with its efforts to ensure that workers can Supplier Knowledge transparent about who their suppliers are. They unionise, cooperate, and bargain collectively is Supplier knowledge is a key pillar of a strong were also able to demonstrate that workers had commendable. labour rights management system. If companies an avenue to collectively agitate for their rights Country Road Group has demonstrated increasing don’t know (or don’t care) who their suppliers and that living wages are being paid in at least the knowledge of its suppliers (back to its raw are, then there’s virtually no way of ensuring 12
EXECUTIVE SUMMARY KEY FINDINGS that the workers who make their products aren’t raw materials tracing was largely restricted to being exploited. It is encouraging then, that this Fairtrade companies. Now 42% of companies are Companies that have begun continues to be one of the most significant areas seeking to trace their cotton suppliers, with many of improvement for the industry. collaborating through the Better Cotton Initiative publishing their supplier lists This year, The Report found that more than 82% (BCI) to do so. • ASOS • Icebreaker of companies knew more than three quarters of BCI is a multi-stakeholder initiative that works • Barkers Clothing • Jeanswest their final stage manufacturing suppliers (first tier). with brands, NGOs, farms, and cotton-traders to (Published after our • Common Good For the majority of companies, it is at this stage improve social and environmental protections and research cut-off) of the supply chain that they have the strongest increase farm yields. • Etiko • JETS relationships and most control. Thanks to this • Factory X All Fairtrade companies excel at cotton-tracing • Kathmandu strong visibility, the worst forms of exploitation, • Gorman and ensuring that robust systems are in place forced labour and child labour, are now far less • Next to protect workers in their cotton fields. This • Hallenstein prevalent in the actual manufacturing of garments • The Warehouse cohort includes RREPP, Etiko, Mighty Good Group, Glasson Holdings (though are still present in many cases). Group Freeset, Common Good, and Kowtow Clothing. However, deeper into the supply chain, where Amongst non-Fairtrade companies, Cotton On there is far less visibility, the risks remain Group, adidas, and Country Road Group show substantial. Encouragingly, more and more yearly increases in their use of traceable cotton. willingness to be accountable to consumers, civil companies are identifying their suppliers beyond adidas is currently using 60% BCI cotton and has society, and workers; and makes it easier for these the first tier. In fact, The Report found that 78% planned to increase this amount to 100% by the groups to collaborate to ensure the rights of of companies are now actively tracing their fabric end of the year. workers are upheld. suppliers (second tier); this is up from 49% in 2013. 37% of companies now know more than 75% of Kathmandu remains a stand out performer One significant element of transparency is the their second-tier suppliers, up from 24% in 2013. when it comes to tracing raw materials. By using publication of a list of suppliers that includes their a combination of BCI and Fairtrade cotton, business names and addresses. Since the first But one of the most exciting areas of improvement Kathmandu has traced three quarters of its cotton edition of The Report, the proportion of companies is in supplier knowledge of raw materials (third tier, supply and, through The Responsible Down publishing supplier lists has substantially increased usually cotton farms). This improved knowledge Standard*, has traced 100% of its down supply. every year. In 2013, it was just 16% of companies has, in most cases, been coupled with improved publishing supplier lists. This year, the proportion systems to address exploitation. Transparency is 34%. In the last twelve months alone, at least 13 When Baptist World Aid Australia began this One of the most notable positive trends for the companies have begun publishing their supplier research in 2013, most companies argued that global fashion industry has been the improved lists, including those highlighted on this page. tracing back to the farm was outside their corporate transparency around supply chain In this year’s edition of The Report, in line with the scope of control and responsibility. At the time, practices. Transparency demonstrates a company’s Transparency Pledge, an initiative put forward by * The Responsible Down Standard ensures that all down and feathers comes from ducks and geese that have been well treated. See more at http://responsibledown.org/ (accurate at 3rd April 2018). 13
EXECUTIVE SUMMARY KEY FINDINGS © ILO/Nguyen A., via: https://flic.kr/p/nsuGiC a coalition of civil society groups including Human companies that did not engage. However, due Rights Watch,12 Baptist World Aid Australia has to their high levels of public transparency, both begun to collect data to assess which companies companies were graded relatively well, receiving are going beyond minimum standards for a B- grade. Notably, non-responsive companies transparency, by providing detailed information on The Warehouse, Karen Walker, and Anthea suppliers in line with industry best practice. Crawford, all receive C grades, largely due to their commitment to public transparency. The Report identifies that 18% of companies are providing significant detail on their suppliers However, several companies have chosen not — including such information as the number of to disclose or make any information publicly workers, a breakdown by gender, the types of available. Without this information, it becomes products being produced, and any corrective almost impossible for the public to know whether action plans on the facility. companies are investing sufficiently to ensure that workers are not being exploited. For this reason, This information makes it far easier for journalists, these companies receive an F grade in The Report. NGOs, workers, and unions to verify that the claims companies make about their labour rights For more information about the research systems are accurate, and that a company’s labour process and non-responsive companies, refer rights systems are working as intended. to the methodology (page 18). Non-responsive companies were also given the opportunity to Non-Responsive Companies provide a statement about why they chose not and Low Transparency to engage with this research. These statements are Low transparency is one of the biggest included on page 93. determinants for the receipt of a low grade in The Report, because companies are graded based on a Living Wage combination of publicly available information, and The global fashion industry continues to grow each any information they are willing to disclose to The year and is among the most labour-intensive in the Report’s researchers. world. It is also a significant driver of employment for groups that have been traditionally vulnerable As mentioned previously, 77% of companies — women, migrants, and young people. In choose to engage with The Report’s research, with some cases, the industry has been a source for most companies seeing value in the process empowerment and a stepping stone to a better of being benchmarked and gaining feedback. life for these individuals. However, too often, it has Levi Straus and PVH Corp (producer of Tommy become a facilitator of exploitation. A Worker in Dong Nai, Vietnam. Hilfiger and Calvin Klein brands) are examples of 14
EXECUTIVE SUMMARY KEY FINDINGS A wage that is sufficient for workers to be able to a corporate labour rights system is genuinely Among larger producers, Hanesbrands is one afford the basics (food, water, healthcare, clothing, responsive to the needs of workers. of the leading companies. More than 70% of its electricity, and education) for themselves and their It is encouraging that more companies are manufacturing, and a significant proportion of its dependants — a living wage — is recognised as increasingly taking the challenge of paying a living fabrics production, comes from company-owned a human right. Yet most garment sector workers wage seriously. 34% have adopted a methodology facilities. Hanesbrands has worked with economists receive wages well below this. It comes as no to calculate a living wage. Worryingly however, and conducted an extensive benchmark of its surprise, then, that low wages are among the chief only 17% of companies could demonstrate that workers in these facilities to estimate what level concerns for workers.13 workers, in any part of their final stage of the of household income is needed to cover the basic In Bangladesh, the minimum entry level wage for a supply chain were receiving a living wage. Only needs of workers. They have then ensured that all garment worker is US$63 per month. Calculations one in 20 companies demonstrated that all workers are paid more than this amount. by the Global Alliance for a living wage suggest workers at their final stage were being paid such Other commendable efforts include Kmart that a fair living wage would be approximately wages. Australia, which has benchmarked wages in a few US$214 per month for Dhaka and US$177 per Fairtrade brands and Outland Denim are of its Bangladeshi facilities and is now beginning month for satellite cities around Dhaka. However, the standouts in The Report when it comes to implement initiatives to raise wage levels. even in the satellite cities, this estimation of a to ensuring that a living wage is being paid. Companies that produce in Australia and are living wage is 2.8 times the current amount paid Outland Denim owns its factory at the first tier of accredited with Ethical Clothing Australia (ECA) to an entry level worker. In Vietnam, the minimum production. They have developed a living wage are also noteworthy. ECA ensures that wage levels wage is US$153 per month, nearly half that of the methodology, partnering with their workforce to and working conditions for Australian production estimated living wage at US$290 per month.14 understand what a fair living wage looks like in (at a minimum) meet with Australian standards. The benefits of a living wage are substantial. In the region where they operate. Outland Denim Companies accredited with ECA include Anthea fact, payment of a living wage could transform also ensure that this wage is paid, as a minimum, Crawford, Cue Clothing, and R.M Williams. the lives of millions by allowing people to lift to all workers and seek out fabric suppliers with themselves out of poverty; and, at the same time, a track record of promoting labour rights. For drive economic growth within communities and example, workers from their primary fabric supplier nations. Living wages also mean that parents earn receive wages arrived at by a collective bargaining enough to send their children to school, rather agreement. And Outland Denim has demonstrated than to factories. This would mean that, where that these wages are consistent with a living wage such wages are paid, the likelihood of other forms in the region. of exploitation, such as forced labour and child Common Good and Etiko could likewise labour, fall dramatically. It is also worth noting that, demonstrate that living wages are being paid to all given the importance of wages to workers, being workers for their final stage production, and in the able to demonstrate that workers are receiving a production of their fabrics. living wage, is one of the most telling signs that 15
EXECUTIVE SUMMARY NEW AREAS OF RESEARCH New Areas of Research them a living wage; their work will also include This preliminary research is telling. It demonstrates efforts to address impacts on the environment. a significant correlation between the strongest Gender labour rights performers and strong environmental This year, Baptist World Aid Australia began an This year, for the first time, The Report’s grading initial assessment of companies’ efforts to mitigate systems; and, while large global firms (in most metric assesses companies on their gender their environmental impact. We asked 11 questions instances) had some environmental systems in policies and strategies. Women represent about that looked at impacts on the climate, at chemical place, firms headquartered in Australia and New 80% of global garment workers.15 Despite this, management practices, at water usage, the use of Zealand are largely trailing behind their international gender-based discrimination in recruitment, sustainable fibres, the provision of take back and counterparts. It the hope of the Baptist World Aid and sexual harassment, are widespread in the repair programs and finally, on whether companies Australia and Tearfund New Zealand research team workplace. All countries in the Asia-Pacific report have completed an environmental impact (The Research Team) that benchmarking efforts a gender pay gap. The gap is most significant in assessment. will spur progress on this critical issue. Pakistan, India, and Sri-Lanka at 66.5%, 35.3%, and See page 51 for further information about this 30.3% respectively.16 While assessments of environmental systems will not impact the grades awarded to companies in environmental benchmarking approach, including Given the importance of women in the garment this year’s report, it is anticipated that they will a full list of questions asked and who the strongest production workforce, and the widespread form a part of the grading system in future reports. performers were — according to preliminary evidence of discrimination, best practice for research. companies operating in the global fashion industry should include specific policies on gender, and strategies to mitigate discrimination and ill- treatment of women in the supply chain. The Report found that just over one fifth of companies (22%) had a robust gender policy and strategy, while a further 16% received partial credit. In most cases these companies had a policy but no clear strategy for implementation. © ILO, via https://flic.kr/p/FH57fk Benchmarking Environmental Performance The Report has been a driver for continuous improvement in labour rights management systems in the global fashion supply chains for five years. However, the authors acknowledge that an ethical company goes beyond empowering workers throughout their supply chain and paying Workers unions at an International Womens Day event organized by Pakistan Workers’ Federation in 2016. 16
EXECUTIVE SUMMARY CONCLUDING REMARKS Concluding Remarks The fashion industry employs 749,000 workers Around the world (in the state of California, the The global fashion industry has potential to be in Cambodia, representing 59.7% of the total United Kingdom, and the European Union), various a tremendous force for good. Its significance for manufacturing workforce and 5% of the government bodies have enacted legislation that the nation of Cambodia powerfully illustrates this population.17 In 2015, the industry made up 11% requires companies to disclose what they’re doing point. of the economy, contributed a full 2 percentage to address the risk of exploitation throughout points to the nation’s 7% growth rate, and made their supply chains. The French and the Dutch © ILO/Aaron Santos, via: https://flic.kr/p/hJWj2X up a full 80% of the country’s total merchandise governments have gone a step further, calling for exports.18 mandatory plans to address labour rights and Minimum wages for garment workers have also environmental risks. The Australian government, been increasing in Cambodia. From just US$62 inspired by the UK’s Modern Slavery Act, has per month in 2012, garment worker wages have announced that it will adopt legislation by the end increased to US$170 per month today.19 of 2018 (see more on page 29). This brief case study illustrates how the global While this shift in expectations is welcome — and fashion industry can fuel the growth of economies the progress made by the global fashion industry and, at the same time, facilitate a road out of is commendable — consumers, companies, and poverty for hundreds of thousands of people and governments can still do more to fight exploitation. their families. Consumers should continue to preference those However, Cambodia’s story also demonstrates companies doing the most to uphold the rights that the global fashion industry drives oppression of workers in their supply chains, and call on and exploitation. Achieving this wage increase those that aren’t to do better. Companies should has not been without its costs, culminating in continue to strengthen their labour rights systems deadly government crackdowns. On January 3, and ensure that workers — from farm to factory 2014, garment workers held a strike for improved — receive a living wage. And the Australian and pay, ultimately leading to violence which left New Zealand governments should introduce four people dead and dozens more injured and robust legislation requiring companies to publicly imprisoned.20 More recently, new laws introduced report on the measures taken to address the risk by the Cambodian Government have stifled union exploitation throughout their supply chains. activity.21 The intention of The Report is to assist these More and more across the global fashion efforts, and, in doing so, help the global fashion industry, consumers, investors, and, increasingly, industry realise its potential to contribute to a Ando International, a Vietnamese garment firm with 900 governments expect companies to ensure world free from poverty and exploitation. workers in Ho Chi Min City, has improved significantly in labour standards since joining Better Work Vietnam, a labour that they have systems in place to mitigate the rights improvement initiative. exploitation of workers and uphold their rights. 17
2 Methodology This section outlines the aims and scope of our research, the process of data collection and evaluation, and our company grading system. 18
METHODOLOGY This research provides a picture of ethical The Report does not directly grade companies sourcing practices in the fashion industry on their environmental impact. The intent is that Comment on non-responsive environment impact will become a key metric for as a resource for consumers, corporations, companies grading in the future. investors, and policymakers. Companies which are non-responsive, In 2018, The Report covered 114 companies along with those that do not provide any of varying sizes, across men’s, women’s, and substantive information, are indicated in It seeks to empower consumers to make more children’s fashion and footwear. It is worth this report by an asterisk (*) next to their informed and ethical choices in purchasing fashion emphasising that The Research Team do not name. These companies were also given the and footwear, and provide insight into supply conduct site inspections of factories as part of opportunity to provide a short statement as chain governance for investors. Its aim is to help their grading. Therefore, company grades are not to why they chose not to respond, and these companies with benchmarking and learnings, as an assessment of actual conditions in factories and can be found on page 93. well as identify issues for policymakers to address. farms, but rather an analysis of the strength of a By presenting the performance of companies, We acknowledge that many of the non- company’s labour rights systems. This research relative to each other, via an A–F grading (updated responsive brands may be doing more to relies on data that is publicly available, alongside on an annual basis) the goal is to encourage improve their ethical sourcing than we have evidence of systems and practices provided by individual companies, and the industry as a whole, been able to assess them on. However, if companies themselves. to engage in constant improvement of their ethical brands do not disclose, or are unwilling to sourcing practices. disclose, what they are doing to ensure that Data collection and evaluation workers are not exploited in their supply At a system level, The Research Team recognise As a proxy for the entire fashion supply chain, The chains, then it becomes almost impossible the positive impact that the global fashion Report assesses a large selection of companies on for consumers and the public to know if industry can have around the world. The goal is 33 specific criteria, at three critical stages of the these brands are investing sufficiently to to contribute to ending worker exploitation and supply chain. mitigate these risks. alleviating poverty in the developing countries This tool has been developed with input from where fashion is manufactured. supply chain specialists, non-government organisations (NGOs) and company experts. on suppliers. The research tool (and The Report) Scope of the research Its criteria draws upon international standards, is now largely regarded as one of the leading The Report classifies the fashion manufacturing including those articulated by the ILO, the benchmarks for the global fashion industry. supply chain into three stages of production: final Sustainable Development Goals, and the United stage, inputs stage, and raw materials stage — as Nation’s Guiding Principles for Business and In conducting a company evaluation, The Research defined on on page 21. Across these three stages Human Rights. The tool evolves over time, as we Team assesses a company’s own publications of production, this research considers four broad incorporate new learnings and reflect industry alongside any relevant independent reports and themes of social responsibility: policies, knowing best practice. For example, this year included a data. The Research Team sends its findings — suppliers, auditing/supplier relationships and question about gender policy and strategy, and marked against the assessment criteria — to the worker voice — also defined on page 21. a question about publishing detailed information company for comment and further input, which 19
METHODOLOGY is reviewed in turn. The Research Team seeks to engage with companies, collect evidence, and understand their processes and systems; however, the research team does not conduct site inspections as part of the grading process. Beyond engaging brands, The Research Team also works with relevant certifiers to get a better understanding of what systems are covered by their certification. Where companies use these certifications, information from the certification body is considered in the process of the company’s assessment. Certification bodies that have been engaged with include Better Cotton Initiative (BCI), the Global Organic Textile Standard (GOTS), Fairtrade and Ethical Clothing Australia © ILO/Sarah-Jane Saltmarsh, via: https://flic.kr/p/e5FqXm (ECA). The Research Team actively seeks to engage companies (and pursue contact with non- responsive companies) using at least three different mediums: phone calls, emails, and letters. All non-responsive companies receive the findings twice by post. Letters are also mailed to the company’s Board Chair and CEO. This process seeks to ensure that in almost every instance where a brand has not responded, it is because it has intentionally chosen not to do so. In 2018, 77% of brands have engaged directly with this research process. Smiling graduates of a Ready Made Garment Course, as part of a program that works towards reforming technical and vocational education and training in Bangladesh. 20
METHODOLOGY What the research covers Policies Transparency Auditing and Supplier Worker Empowerment The research collects and evaluates data and Traceability Relationships (and living wage) from fashion companies using the following classification of the supply chain and across the Why it matters: Policies Why it matters: In Why it matters: Monitoring Why it matters: For a labour following themes of social responsibility. 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 to. They are the baseline know which facilities to and improvements in a voice, and have their most RAW MATERIALS by which a brand can are responsible for the working conditions are critical concerns addressed. • Cotton (farming) measure the effectiveness production of their being delivered. While no It is workers themselves who • Wool, etc (husbandry, of its overall efforts to product. monitoring process is perfect, have the best visibility of uphold worker rights. high quality monitoring working conditions. shearing etc) What we assess: How helps to provide a better • Crude Oil for synthetic What we assess: much of the supply What we assess: Whether understanding of the Provisions to prohibit chain a company has workers are able to unite fibres, plastics, etc forced labour and child traced; what it does to conditions of workers. A focus through democratic trade (extraction, refining) 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 the its supply chain; a brand’s What we assess: What mechanisms are in place; entire production process; transparency and how percentage of production whether workers are receiving INPUTS PRODUCTION whether the brand is willing they are to be facilities are audited; whether a living wage so they can undertaking important held accountable through unannounced and offsite support their families; a • Textiles production measures towards the information it shares worker interviews and brand’s efforts in moving (ginning, spinning, knitting, improving working about it’s supply chain. anonymous worker surveys towards paying a living wage. dying, embroidery) conditions in facilities. are used; whether checks are • Leather (tanning) done on high risk activities • Plastic (processing, moulding) like labour brokers and recruitment fees; whether the brand is willing to be transparent about its results and remedial actions; whether brands are actively involved in building supplier relationships through consolidation, FINAL STAGE PRODUCTION collaboration, supplier training • Cut-Make-Trim (CMT) and long term relationship manufacturing (cutting, sewing, building. printing) 21
METHODOLOGY Data Verification Take, for example, the criteria relating to supplier of protecting intellectual property but, rather, as a To verify the data provided by companies, lists and the criteria for living wage. In years past, protection measure for vulnerable workers. company responses are reviewed and clarification partial credit has been awarded for publishing a In this instance, publishing a factory list may do and supporting documentation are sought where supplier list, where a company has disclosed its more to undermine the welfare of workers, than to necessary. In some instances, the audit data factories through the Bangladesh Accord on Fire enhance it. While this did not impact the grading provided by companies is relied upon to verify and Building Safety. This year, however, in-line with process, in the interest of transparency, the conditions and benefits that workers receive. prevailing industry best practice, no credit was company has allowed Baptist Word Aid to visit its given unless the company made their supplier factory and to interview workers. Wherever possible, The Research Team and list publicly available, and suppliers were directly company representatives work through the survey traceable to the company (rather than to a group questions, allowing both parties to be satisfied that of companies, as is the case with the Bangladesh Grading the data presented is an accurate representation The grades awarded in this report are a measure Accord on Fire and Building Safety). of the company’s policies and processes. of the efforts undertaken by each company to Similarly, in past reports, a partial credit on mitigate the risks of forced labour, child labour, To ensure consistency in the assessment of living wage was given to companies that were and worker exploitation throughout their supply companies, after finalising company responses, paying wages substantially above the minimum chains. Higher grades correspond to companies survey responses are cross-checked. wage. This year, no credit was awarded without with a labour rights management system that, a company demonstrating that a supplier was if implemented well, should reduce the risk and Increased Validation Requirements paying a living wage to entry level workers, as extent of worker exploitation in the production of As part of this year’s research process, companies benchmarked against an adequate living wage that company’s products. Low graded companies were provided with an Assessment Support methodology. are those that are not taking these initiatives, or Document. The Assessment Support Document The result is more robust data and, importantly, those choosing not to disclose if they are taking acted as a helpful guide for companies, a survey tool that is in-line with prevailing best such initiatives. including a rationale for each survey question practice across the global fashion industry. It is important to note that a high grade does not and several examples of what constitutes a However, it has also meant that the rating of some mean that a company has a supply chain which strong labour rights system. The Assessment companies (that, in previous years, would have is free from exploitation. Rather, it is an indicator Support Documents also detailed the validation been awarded at least partial credit for these of the efforts the company is undertaking and requirements necessary for demonstrating that survey responses) has been impacted. the strength of its systems to reduce the risk of systems or policies asserted by companies to be in place, were, indeed, in place. In several Finally, there is one company graded by The exploitation. Furthermore, The Report’s grading instances, the level of supporting documentation Report which was not marked down for methodology is designed to spread companies or validation requested was greater than in withholding the address of its final stage factory. out along an A–F continuum, based on the relative previous reports. Additionally, in a few instances, Outland Denim intentionally employs former strength of their efforts — similar to awarding the threshold necessary to receive credit for a victims of abuse and trafficking. It chooses to keep grades on a bell curve (i.e. the best performers question was increased. the address of its factory secret, not as a means 22
METHODOLOGY receive A-range grades, the worst receive F grades, with many others in the middle). Some company structures own several brands with differing labour rights management systems. In these cases, The Report grades brands separately. Individual brands corresponding to a single company are listed, alongside their grade, in the Brand Index on page 55. Environmental Impact This year, we collected preliminary data on the industry’s efforts to manage environmental impact. A full description of how the environmental metrics were developed (including what questions were asked and why) can be found on page 51. While assessments of environmental systems will not impact grades awarded to companies in The © ILO/Aaron Santos, via https://flic.kr/p/hJVjSD Report this year, it is anticipated that they will form part of the grading system in future. It is the hope of The Research Team that this will spur companies to understand their impact on the environment and take the actions necessary to see their industry become sustainable. Workers at Ando International, a Vietnamese garment firm. 23
3 Five Years since the Rana Plaza Disaster In this section we remember and reflect on the fifth anniversary of the Rana Plaza Disaster – an event that shone a light on the darkest parts of the Fashion Industry. 24
FIVE YEARS SINCE THE RANA PLAZA DISASTER Five years ago, a disaster of such magnitude flooding TV screens, that it began to take notice such as the number of workers, the proportion of occurred that the course of the fashion industry and demand change. And through the combined male to female workers, or the types of products action of various stakeholders — including being made. was irreversibly changed. consumers, governments, garment workers, civil society groups like Baptist World Aid Australia, Government Initiatives On 24 April 2013, Rana Plaza collapsed in the and even fashion brands themselves — change In countries where worker protections are weak Savar district of Dhaka, Bangladesh, claiming the is occurring. or non-existent, abuses such as forced labour, lives of 1,134 people and injuring over 2,000 more. human-trafficking, and slavery are rife. Exploitation Five years on, we seek to honour the lives lost in The eight-storey building took just 90 seconds to exists at every stage of the global garment these three tragedies and reflect on the progress be reduced to rubble. industry supply chain. that has been made. Appallingly, this disaster followed the site’s Following the example set by California, the UK, evacuation only the day prior due to structural Greater supply chain transparency and France; Baptist World Aid Australia worked concerns — a result of dire overcrowding and Today’s supply chains are complex; and frequently, with others, including the Walk Free Foundation poor (and illegal) construction. Despite this fact, global in nature. Without transparency, the task and Stop the Traffik, to campaign the Australian garment workers were coerced into returning to of holding companies to account becomes Government for a law to fight slavery. work on the day of the collapse. problematic. The collapse of Rana Plaza threw the There is now bipartisan commitment to introduce Sadly, the Rana Plaza disaster was not an isolated need for increased transparency into the global modern slavery legislation into parliament by the incident, but rather, the latest in a spate of similar spotlight. end of 2018. Additionally, earlier this year, the New factory disasters. Exactly six months before, a fire According to Human Rights Watch, “supply chain South Wales State Parliament tabled Australia’s ripped through the Tarzeen Fashion factory (also transparency — starting with publishing names, first Modern Slavery Bill. in Bangladesh) killing 117 people. A month before addresses, and other important information that, the Ali Enterprises fire in Pakistan claimed the Read more on page 29. about factories producing for global apparel lives of 254 more. companies— is a powerful tool to assert workers’ These tragedies mark a crucial turning point in human rights, advance ethical business practices, Sector Initiatives global consciousness of the labour rights issues in and build stakeholder trust”.22 Sector initiatives continue to drive change in the fashion industry. the fashion industry, making it a safer and more The proportion of companies publishing supplier equitable place of employment for people across Until the Rana Plaza tragedy, few global fashion lists has doubled since the Rana Plaza disaster. the world. Some examples are: companies chose to make information about their In 2013, just one sixth of companies that were supply chains publicly available. Where clothes assessed were publishing supplier lists; in The 2018 • Asia Floor Wage Alliance (active since 2005) were made, and the conditions they were made in, Report, the proportion is one third. Furthermore, — an international alliance of trade unions and was, largely, invisible to the world. of those publishing information, almost half are labour rights activists who are working together going beyond providing names and addresses for to demand garment workers are paid a living But the global community was so horrified by wage.23 Given that 43 million garment workers factories and are publishing detailed information the news reported in papers and by the pictures 25
FIVE YEARS SINCE THE RANA PLAZA DISASTER are employed in the Asia-Pacific region,24 this is • a five year legally binding agreement between Earlier this year, a major settlement was reached an important initiative. brands and trade unions to ensure a safe resulting in a US$2.3million payout to fix issues at • Action, Collaboration, Transformation Initiative working environment in the Bangladeshi over 150 garment factories across Bangladesh.28 (ACT Initiative) — a collaboration between 17 garment industry; Unions responded positively to this settlement, fashion brands and retailers, manufacturers, • an independent inspection program supported saying that it was proof that the Accord was and trade unions to address the issue of living by brands incorporating workers and trade serving its purpose.29 wages in the textile and garment supply chain.25 unions; With the end of the Accord’s five-year term Participating brands include Kmart, Next, Inditex, • public disclosure of all factories, inspection approaching, it was announced in June 2017 that and H&M. reports, and corrective action plans (CAPs); the agreement would be extended for a further • Better Work — a partnership between the United three years. However, a report published by the • a commitment by signatory brands to ensure Bangladesh Investors Initiative found that only Nations, the International Finance Corporation, sufficient funds are available for remediation and and the ILO, which brings diverse groups 53 of the 220 current Accord signatories have to maintain sourcing relationships; signed on to the 2018 Accord, causing significant together — governments, global brands, factory owners, and unions and workers — to improve • democratically elected health and safety concerns about the effectiveness of the project working conditions in the garment industry.26 committees in all factories to identify and act on moving forward.30 This includes a number of A recent independent study on the effectiveness health and safety risks; and well-known Australian brands operating in of the program demonstrated that aggregate Bangladesh.31 • worker empowerment through an extensive non-compliance rates have decreased, indicating training program, complaints mechanism and improving working conditions in factories.27 right to refuse unsafe work. Since its establishment, 2096 factories have been Case Study: Bangladesh Fire and Safety inspected under the Accord program. 96 of these Accord – the Last Five Years. have been terminated for failure to comply with The Bangladesh Fire and Safety Accord was Accord standards, 1631 factories are currently established in May 2013 in response to the Rana covered under the Accord program with pending Plaza collapse. The Accord is an independent, CAPs, and the remaining 369 factories are either legally binding agreement between brands and closed, transferred, or still awaiting inspection. unions, designed to work towards a safe and While a substantial amount of remediation is healthy Bangladeshi Garment industry. It has been occurring under the Accord program, the most signed by over 200 companies from Europe, North recent data demonstrates that 72.9% of CAPs America, Asia, and Australia. remain behind schedule. Only 1.5% of factories The Accord Agreement consisted of six key have fully completed their CAP, 6% have completed components: their initial CAP, and a further 8.4% are proceeding on track. 26
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