Supply Chain

New Benchmarks, Empowerment Program Aim to Eradicate Worker Exploitation in Apparel Supply Chains

Growing concerns over the environmental and social impacts of the footwear and apparel industry have kickstarted efforts to create more transparent and ethical supply chains and practices, but there is still a significant amount of work to be done, according to a new benchmarking system launched today by KnowTheChain (KTC), a resource for businesses and investors who need to understand and address forced labor abuse

By Libby MacCarthy | Published 7 years ago | About a 8 minute read

Growing concerns over the environmental and social impacts of the footwear and apparel industry have kickstarted efforts to create more transparent and ethical supply chains and practices, but there is still a significant amount of work to be done, according to a new benchmarking system launched today by KnowTheChain (KTC), a resource for businesses and investors who need to understand and address forced labor abuses within their supply chains.

KnowTheChain’s new Apparel and Footwear Benchmark ranks 20 large apparel and footwear companies - including Nike, H&M, Hanesbrands, Kering, Primark and Inditex - on their efforts to eradicate forced labor and human trafficking from their supply chains, and the findings illuminate considerable performance gaps. Only a small group of companies seriously addresses exploitation. While most have systems in place to monitor and react to forced labor and human trafficking, few address the systematic causes.

“Despite international and brand attention on worker issues for more than twenty years, many retailers haven’t addressed the deep seeded causes of worker abuse in their supply chains. Hopefully this benchmark will help them recognize that they need to do better by the people making their clothes and shoes,” Kilian Moote, director of KnowTheChain, said in a statement.

KnowTheChain assessed information available on each company’s own website, as well as additional public disclosure that companies provided in response to engagement questions. Sustainalytics, a leading global provider of environmental, social and governance (ESG) research and ratings, supported the development of the Benchmark methodology, conducted the company research and contributed to the key findings report.

Companies were ranked across seven measurement areas (commitment and governance, purchasing practices, worker voice, remedy, traceability and risk assessment, recruitment and monitoring) and averaged a score of 46 out of a possible 100. Top performers — adidas, Gap, Lululemon and H&M — achieved scores above 60 out of 100 possible points. Among the worst-performing companies are Hong Kong-based Belle International Holdings, which ranked 0 out of 100; Chinese clothing manufacturer Shenzhou International Group Holdings (1/100); and luxury Italian fashion house, Prada (9/100). Overall, luxury brands, notably Hugo Boss, Kering (holding company of Alexander McQueen, Gucci, Stella McCartney and others) and Ralph Lauren score much lower than High Street apparel retailers (such as H&M, Inditex or Primark). This last point comes as somewhat of a shock, given that fast fashion brands are typically the ones who come under fire as far as supply chains, sustainability and ethics are concerned, while Kering — whose Environmental Profit & Loss methodology has made it a significant player in the sustainable fashion movement — is often touted as a leader in these areas.

As Moote told Sustainable Brands via email, the benchmark leaders are those taking action across all aspects of the benchmark. “The leading companies understand and are trying to mitigate the risks posed to recruited workers by ensuring that workers do not have to pay to acquire a job and/or are committing to reimbursing workers for any fees charged that violate their recruitment policies,” he stated.

A prime example includes efforts undertaken by adidas to train sub-suppliers on the risks of forced labor and by publishing a robust policy on how to address the risks faced by migrant workers within the supply chain.

The KTC benchmark points to worker voice, recruitment, remedy and traceability/risk assessment as areas requiring the greatest improvements, with companies scoring lowest in these themes across the board.

“These areas are particularly important as worker exploitation through forced labor may not be uncovered through an auditing or monitoring program,” Moote pointed out. “In particular, when it comes to worker recruitment, often times if a worker is exploited through the recruitment process, that exploitation occurs prior to the working arriving on the worksite.”

In regards to worker voice, a theme that received a score of a mere 29 out of 100, only four brands proactively communicate the existence of a grievance mechanism to their suppliers’ workers, and only five companies engage workers outside of the context of their workplace in a manner that may give more voice to workers. Worker engagement is essential in helping identify, resolve and prevent labor abuses in the supply chain that traditional system do not catch, but the industry needs to significantly ramp up efforts in this area.

Recruitment practices also proved to be an issue for the industry, with companies averaging a score of 22 out of 100. Only six companies benchmarked require that no fees be charged during any recruitment process conducted throughout the supply chain, and only two companies encourage direct hiring of workers in their supply chains. Poor recruitment practices, including excessive fees, leave workers vulnerable and open to exploitation, particularly through debt bondage.

Longstanding public awareness and pressure, spurred by incidents of child labor in the footwear sector in the 1990s and grave health and safety incidents in Bangladeshi factories in recent years, has resulted in companies putting supply chain monitoring systems in place. However, these have a strong focus on first-tier suppliers, while workers tend to be at the greatest risk further down the supply chain. adidas, which ranked highest in the benchmark with 81 out of 100 points, works in partnership with its first-tier suppliers to support training for second-tier suppliers and subcontractors, as well as develops models to address risks of forced labor in its third-tier supply chain.

“The fast-growing garment sector can create important opportunities for its 60 million workers worldwide — many of whom are women. Yet far too many remain exploited, including in situations of forced labor. This benchmark highlights urgent steps that the industry must take to eradicate the worst working conditions, such as changing their purchasing practices, so that risks are not passed down the supply chain, and ensuring workers have access to effective grievance mechanisms,” said Annabel Short, Deputy Director of the Business & Human Rights Resource Center.

Among the solutions suggested for companies to improve their approach: provide workers throughout the supply chain access to grievance mechanisms, require and monitor that no fees be charged during any recruitment process conducted throughout the supply chain, and require first-tier suppliers to ensure that their own suppliers implement the same standards as they relate to forced labor. But adopting new programs and approaches won’t happen overnight.

“Moving beyond an approach that focuses predominately on policies and monitoring programs requires an understanding and commitment to the ongoing risks of forced labor within the sector,” Moote said. “Developing robust programs that take into consideration a company’s supply chain risks requires continuous engagement. It may not be a standardized process, such as the development of a policy or deployment of a monitoring program.

“In addition, moving beyond the first tier to sub-contractors or input suppliers can be very challenging for many companies,” he added. “Adequately addressing these stages of production may require working across the company and with departments that have not traditionally engaged on social issues. This is not as straightforward and therefore may require real buy-in and support from the company's leadership."

Meanwhile, a new initiative announced by the Global Fund for Women, the C&A Foundation and Gender at Work aimed at eradicating gender-based violence and empowering female garment workers in Asia marks a step in the right direction, and could set a new industry standard.

The Global Fund for Women announced this week that the C&A Foundation will invest €1.5 million for a multi-year learning collaborative with women’s rights organizations to advance gender justice in the apparel industry. The initiative takes a worker-centered, rights-based approach, and will enable female garment workers to learn about their rights, realize their own power to secure these rights and become leaders to create systemic change, which is critical to preventing violence.

“We believe in the power of women to change their own lives and to drive sustainable change in the garment industry. Together, we can end gender-based violence, ensure safe and equal working conditions, and empower women workers. We’re thrilled to have found such strong partners in C&A Foundation and Gender at Work, and we are excited to work together to carry this initiative forward,” Musimbi Kanyoro, President and CEO of Global Fund for Women, said in a statement. “By amplifying the voices of women workers and bolstering their leadership skills, this initiative seeks to ensure every woman can feel safe and free from violence — not only in the workplace, but also in the communities in which they live.”