Transparent & Traceable Value Chains

Photo credit: Maurizio Cattelan and Pierpaolo Ferrari - NY Magazine

For almost ten years, the fashion industry focused on transparency and traceability as a tool for ensuring social progress in supply chains. Prior to this, the industry relied on social compliance to improve labor conditions. Unfortunately, the social compliance system is plagued with dysfunctions (corruption among them) and audit fatigue (an exorbitant amount of a facility’s resources, time, and money being exhausted by multiple audits from different clients throughout the year).

Responsible purchasing practices, most often codified in codes of conduct, are a new foundation for social and labor programs, but they’re just a start. On this episode of Unspun, Lauren, Catherine, and Danielle sit down to discuss the birth of social compliance, transparency, and traceability and what’s needed to create radical accountability: shifting our lens to the entire value chain.

Comply, lie, or die

In the late 80s, Social Accountability International and an advisory board of trade unions, NGOs, civil society organizations, and companies developed the SA80000 to create a common standard for social compliance. The result: an auditable certification that encourages organizations to develop, maintain, and apply socially acceptable practices in the workplace. Several years later, a number of child labor scandals in the 1990’s (Kathy Lee Gifford and Nike) highlighted supply chain dysfunction and the industry intensified its reliance on social compliance as a mechanism for improving labor conditions.

Unfortunately, the current social compliance industry with countless standards and assessments has led to dramatic audit fatigue and has failed to fully address the root causes of the issues that persist. While assessments have had a positive impact on understanding activities at the factory level, social compliance has become an activity that is more about administration and box-checking than driving real improvements. Yes, the social compliance industry has been evolving - look at efforts like the Social and Labor Convergence Program or GFA’s Impact Partnerships, both geared toward driving convergence and collaboration in the industry - but we’re not seeing the level of progress we wanted to see despite all of our movement. Part of this is because the current system creates limited options for manufacturers: comply with social compliance standards, lie about your performance, or lose customers.

“ALL OF THESE INITIATIVES ON THE PART OF BRANDS…ARE REALLY DOING LITTLE TO SAFEGUARD GARMENT WORKERS, AND ARE MORE PRIORITIZING BRANDS, THEIR REPUTATIONS AND THEIR PROFITS IN THE END.”

Is radical transparency the answer?

Devastating events like the Rana Plaza collapse and factory fires that collectively killed and injured thousands of garment workers highlighted the shortcomings of social compliance. In the wake of these disasters, the industry’s response has been the emergence of transparency (disclosing of information) and traceability (tracking provenance and journey) as tools to ensure social progress in supply chains. ‘Radical Transparency’ was pioneered by e-commerce retailer Everlane. Their website highlights a supply chain map with photos of workers at the company’s vendor facilities and cost breakdowns of each garment: who is paid what for the manufacturing, logistics, and retail margins. But while transparency to consumers is radical for the apparel industry, it does not necessarily mean brands have adequate visibility into their supply chains.

Apparel and textile supply chains are notoriously fragmented and complicated. Few apparel brands have tracked their inputs from raw materials through production. Even the most reputable brands with robust sustainability programs will admit to finding out factory partners subcontracted to lesser regulated facilities in order to meet a deadline or quota. According to the recent “Uniting Business in the Decade of Action Report” by the United Nations Global Compact, while 48% of respondent brands conduct corporate responsibility due diligence among first-tier suppliers, only 7% conduct second-tier due diligence. And only 17% of brand respondents conduct audits by a third party.

New developments in blockchain technology for mapping and traceability, as well as new worker grievance mechanisms and management systems, are all increasing visibility into supply chains. But despite all of the transparency and traceability efforts, brands publish more about their policies than how they actually implement them. It’s not just about understanding what’s going on in brand supply chains, but whether or not brands are being proactive about them.

More often than not, when there are photos of factory workers featured on a website we still don’t know whether that worker has collective bargaining power or is forced to work overtime to meet brand demands. And this won’t happen until we are working with vendors to achieve true transparency and partnership, bolstered by responsible purchasing practices.

Holding brands accountable

“THERE IS AN IMBALANCE IN TERMCS OF THE CRITICAL LENS WE TAKE WITH RESPONSIBLE PURCHASING PRACTICES AS IT RELATES TO BRANDS, COMPARED TO SOCIAL AND LABOR ASSESSMENTS AT THE FACTORY LEVEL.”

Responsible purchasing practices are beginning to hold brands accountable, making sure lead times, payments, and contracts are negotiated fairly and are setting factories up for success. The Fair Labor Association’s accreditation process looks specifically at these practices, but a lot of other associations and initiatives are voluntary, perpetuating the imbalance in who’s held accountable in the system.

Public policy is starting to regulate forced labor through the UK Modern Slavery Act as well as the California Transparency in Supply Chains Act (SB657), but the average consumer still doesn’t understand the extent of forced labor and workers’ rights abuses through the supply chain.

While responsible purchasing practices and legislation are a start, true systems change will only come about if brand professionals start to interrogate the power dynamics in their supply chains and challenge the relentless overexploitation of underdeveloped countries*. To learn more about how we can create radical accountability in the fashion value chain tune in to the latest episode of Unspun.

*We first heard the use of overexploited / underdeveloped countries from activist and educator Nikki Sanche on The Root podcast series on Conscious Chatter .