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Behind the Barcode
by Mabel Wong  mwong@csr-asia.com
14 Jun 2017

Following the footsteps of the United Kingdom, the Netherlands and France, the Australian government launched an inquiry earlier this year to establish a Modern Slavery Act in Australia. Individuals and organisations were invited to send their feedback for the inquiry, submissions recently closed with largely positive support from business and investors, to implement a Modern Slavery Act in Australia.

With rising government and consumer expectations of Australian companies for increased transparency and disclosure, and to take greater responsibility for their supply chains, how is Australia’s fashion industry faring? A recent report - The Ethical Fashion Guide, published by Baptist World Aid Australia as part of their Behind the Barcode project, scored 106 companies operating in Australia (representing 330 fashion brands), from A to F, on the strength of their systems to mitigate against the risks of forced labour, child labour, and exploitation in their supply chains. Now in its fourth year, the first Ethical Fashion Report was published in the wake of the 2013 Rana Plaza factory collapse in Bangladesh. Since then, the report has benchmarked and tracked the efforts of fashion companies to ensure that the rights of the workers who make their products are upheld. These rights including a safe work place, a living wage, and freedom from slavery. Some key findings from the 2017 report include:

  • Improved transparency with increased number of companies publishing their supplier lists. The 2017 report revealed a greater proportion of companies publishing supplier lists (increasing from 16% the year before to 26%). One measure of transparency in supply chain practices is the publication of a list of suppliers, including their business names and addresses. These lists make it easier for journalists, NGOs, workers and unions to verify that the claims companies make about their labour rights systems are accurate, and that they are working as intended. Workers and unions can also use these lists to communicate directly with brands about their grievances and concerns, and advocate for change.
  • Traceability deeper into the supply chains has increased steadily over the last four years. More than three quarters of assessed companies knew each of their final stage (first tier) manufacturing suppliers, however risks remain substantial deeper into the supply chain where visibility is lower. Encouragingly though companies are increasingly identifying their suppliers beyond the first tier. The 2017 Ethical Fashion Report found that 81% of companies are now actively tracing their fabric suppliers (second tier); this is up from 49% in 2013. And 39% of companies now know all, or almost all, their second-tier suppliers (up from 24% in 2013). A positive development is the improved knowledge of their raw material or third tier suppliers (usually cotton farms), where 45% of companies are reported to be seeking to trace their cotton suppliers, with many working collaboratively through the multi-stakeholder initiative - the Better Cotton Initiative (BCI). Gershon Nimbalker, Advocacy Manager of Baptist World Aid Australia – one of the authors of the report says that “... traceability is critical, if a company doesn’t know, or doesn’t care, who their suppliers are then there is no way to ensure that the rights of workers are being protected. The uptick in traceability since the report’s inception has been promising. It reflects an increasing acceptance by companies that they are responsible for upholding labour rights through throughout the entire supply chain, from farm to factory’”.
  • Living wage (wage that is sufficient for workers to afford the basics such as food, water, healthcare, clothing, electricity and education, for themselves and their dependants). The report shows that the proportion of companies seeking to improve wages has continued to rise. In 2013, the proportion of companies that could demonstrate improved wages for workers was 11%. It has risen each year and now stands at 42%. It is worth nothing however, that (in most cases) wages are still below a living wage level and only apply to a portion of workers in the supply chain. Gershon added that poverty level wages remain the greatest barrier for the industry in claiming that they have developed an ethical supply chain. Workers continue to report that wage levels are the biggest issue that they face, yet only a handful of companies could demonstrate that any workers were receiving a living wage. The ultimate goal is for all workers to be paid a living wage, but these efforts to pay above the legal minimum are also welcomed until that goal is reached.

The 2017 Ethical Fashion report painted an overall positive picture. Gershon commented that “company engagements with the report has increased every year. Just 19 companies (49% of those researched) were actively engaged in the research process in 2013, that’s up to 87 companies for the 2017 report (83% of those researched). Many companies find engagement with the research process helpful, describing the report as one of the best internal benchmarking tool available for the industry.”

With the majority of companies (59%) improving their grade from the year before, the report in particular praised multinationals such as Patagonia and Zara for their practices with both scoring an A grade, but where do Australian fashion companies stand? Of the 106 companies graded in the report (55 are headquartered in Australia), only three of the 15 brands that scored an A or higher were headquartered in Australia, and they were niche ethical producers. Some outfits such as Cotton On Group and Kmart have made progress, but nearly three-quarters of the companies that scored a D+ or worse are headquartered in Australia.  Gershon from Baptist World Aid commented that ‘Australian brands have shown rapid improvement since 2013, but the results show that there is still a long way for them to go, particularly as multinationals continue to expand their market-share in Australia. Leading global brands know that consumers are demanding that the clothing they buy is not tainted by exploitation, and they are making significant investments to respond to this expectation. With a potential upcoming Modern Slavery legislation in Australia, it would be interesting to see how this impacts the scores in next year’s Ethical Fashion report.

Modern slavery and human trafficking will be discussed at the CSR Asia Summit in Bangkok on 26-27 September. Visit the programme here for more details. ELEVATE and CSR Asia will also be organising a series of invite only events in Sydney and Melbourne in the course of this year. For more details, please contact Mabel Wong (mwong@csr-asia.com).

I would like to especially thank Gershon Nimbalker, Advocacy Manager of Baptist World Aid Australia for sharing the report and also for taking the time to give his inputs for this article. Please contact Gershon (Gershon.Nimbalker@baptistworldaid.org.au) for more information. A full copy of the report can be downloaded here. For those interested in further discussion on this topic, the annual Australian Fashion Forum on 27 July in Melbourne will focus on Transparency in the Garment Supply Chain, event details can be found here.

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