The 2018 Ethical Fashion report released by Baptist World Aid Australia is published annually in the lead up to the anniversary of the 2013 Rana Plaza collapse in Bangladesh, which claimed the lives of over a thousand garment workers. The report grades brands from A to F (see below), which reflects their policy, supplier information, supplier relationships, and worker empowerment initiatives.
The latest 2018 report graded 114 apparel companies (407 brands) operating in Australia, below are some of the key findings:
- Transparency and traceability (disclosing factory names and addresses): In 2013, just 16% of companies were publishing the names and addresses of all their direct manufacturing suppliers. This report shows an increase to 34% companies disclosing.
- Auditing and supplier relationships: Efforts to trace suppliers have improved substantially in the last five years. In 2013, only 49% of companies were tracing inputs (such as fabric suppliers) and 17% were tracing their raw materials suppliers (such as cotton farms). This year it has increased to 78% and 42%, respectively.
- Living wage is a major concern: The report reveals that only 5% of companies could demonstrate that all their manufacturing workers were being paid a living wage, and 70% of the industry is yet to take significant action to improve worker wages.
- Gender based discrimination: This year for the first time, the report’s grading metric assessed companies on their gender policies and strategies. All countries in the Asia-Pacific report a gender pay gap – with the gap most significant in Pakistan, India, and Sri-Lanka at 66.5%, 35.3%, and 30.3% respectively. In this context, the majority (78%) of companies surveyed were revealed to not have a clear strategy in place to address the range of discrimination faced by women in their supply chain.
- Tracking Fashion’s environmental footprint: Also for the first time, this year’s report began an initial assessment of companies’ efforts in environmental management. Preliminary results reveal a significant correlation between the strongest labour rights performers and strong environmental systems.
I had the opportunity to discuss further with one of the authors of the report - Gershon Nimbalker, Advocacy Manager of Baptist World Aid Australia on other implications of the report, below captures some of our discussion:
- Giving an A to fast fashion? This report has recently been criticised for “Giving an A” to fast fashion. Gershon as included in your recent blog, “fast fashion is frequently criticised for contributing to a culture that demands cheaper clothing, in more styles, which are then rotated through stores at breakneck velocities. This has led to an explosion in the amount of products people buy and, subsequently, the rate at which they dispose of them - more than 500,000 tonnes of textiles and leather are sent to landfill in Australia alone. Fast fashion has also negatively impacted workers. The fixation on cheaper prices puts significant downward pressure on wages. The speed of changing fashion, puts enormous pressure on factories and contributes to ongoing issues of excessive overtime and unauthorised sub-contracting.” Knowing all of this, how can the Ethical Fashion Report give fast fashion brands a high score?
Gershon shared that “… the creators of the Ethical Fashion report acknowledge that there are significant problems with fast fashion, but many of these problems are inherent to consumerism, rather than issues restricted to the fashion industry. Apple for example, the most successful tech company, plans obsolescence in its phones, and drives demand for people to continuously upgrade – despite the waste this engenders. The report does not seek to address the problems of consumerism has a whole, but rather breaks off a chunk of the problem, and seeks to address the question, “what are companies doing to mitigate the risk of exploitation in their supply chain”. On this question, many fast-fashion companies are doing well. Their size and scale give them resources to invest in tracing their suppliers, creating effective monitoring practices, demanding improvements, building relationships, and working with unions and governments. They’re far from perfect, but when we compare them to their peers, their systems rank amongst the best.”
- What have been the positive change(s) brought about by the report? What’s the impact? – We know that for this year’s report, more companies are captured in the benchmark and engaging with the process of the report than ever before, but what have been the tangible impact(s) of this report? Is it merely more disclosure, or are companies using this process to gain greater visibility of their supply chains and to improve practices? How are they using the report to improve? Can you give an example?
Gershon shared that “…the report has driven change in both transparency and systems. Many companies openly communicate that they have worked with Baptist World Aid Australia to improve the quality of their systems, including Cotton-On, APG & CO, David Jones, Specialty Fashion Group and Country Road. These improvements have ranged from improving traceability of their supply chain, refining auditing practices, implementing living wage benchmarks, and tracking union presence. The report has also helped drive an increase in visibility of supply chain practices. With companies openly acknowledging that the consumer and public pressure that the report generates has allowed them to rethink the way they communicate with their customers and the public.
In addition to brands, a number of ESG investors in Australia (such as Ausbil, Citi, AMP and Colonial) believe that the report generates some of the most robust data available to measure supply chain practices in the fashion industry. Investor interest comes from seeing the report as a tool to directly measure the ethics approach of companies they are interested in, but also as a proxy for the overall governance of companies.
More and more across the global fashion industry, not only investors and consumers but also increasingly governments expect companies to ensure that they have systems in place to mitigate the exploitation of workers and uphold their rights. The Australian government, inspired by the UK’s Modern Slavery Act, has also announced that it will adopt legislation by the end of 2018. While this shift in expectations is welcomed — and the progress made by the global fashion industry is commendable — consumers, companies, and governments can still do more to fight exploitation. The intention of the Ethical Fashion Report is to assist these efforts, and, in doing so, help the global fashion industry realise its potential to contribute to a world free from poverty and exploitation.”