Apparel: Supply Chain Transparency
and Trends

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The apparel sector is often in the headlines as consumers, NGOs and other stakeholders push for further supply chain transparency. As the spotlight on fast fashion intensifies, newcomers and brand behemoths alike are working to strengthen disclosures across the entire supply chain, tackling new challenges and working on more sustainable solutions.

We see four areas that are critical for apparel companies to be focusing on as competitive and stakeholder sustainability pressures intensify:

  1. Traceability as important as transparency
  2. Brands to address the living wage
  3. Auditing takes center stage
  4. Rise of the circular economy poses challenges for transparency

Traceability as important as transparency

Eighty percent of the 5,000 European consumers surveyed in a 2018 study said fashion brands should disclose their manufacturers. A separate report found that 65% of consumers think that having better information on how products were made would encourage them to purchase sustainable fashion. Although some studies show that this passion does not yet translate into sales, brands are responding to this increased interest with innovative ways to communicate from where their products come.

A separate report found that 65% of consumers think that having better information on how products were made would encourage them to purchase sustainable fashion.

Patagonia’s Footprint Chronicles provide a map and description of locations in the company’s supply chain. Factory descriptions are shown directly on product pages to highlight where specific products are made and who the supplier is. Larger retailers are also getting on board; H&M is publishing where each of its products is manufactured on the product page. Levi’s is taking a unique approach with its laser-cut jeans, replacing a chemical process usually hidden in the supply chain with a safer solution. Newer brands such as Everlane, are pushing the traceability agenda providing details on the factory where each garment is made.

Paying a living wage

Brands are facing increasing pressure from customers, investors and workers in their supply chain to ensure a living wage. An alliance of 12 financial institutions with over €2.5 trillion of AUM launched the Platform Living Wage Financials in late 2018, which monitors and encourages the garment, food and agricultural sectors to address the non-payment of the living wage in global supply chains. IndustriALL, a global union representing 50 million workers across a range of sectors worldwide, continues to negotiate Global Framework Agreements on behalf of workers of multinational companies. Unions in Cambodia are calling on brands to sign onto fair wage commitments, which could help in local negotiations, and yet few companies have signed on. Adidas, Reebok, John Lewis and Marks & Spencer are the few large apparel brands that publish whether their first-tier supplier facilities have trade union or work committees in place.

Businesses are in the process of collecting wage data to better address wage gaps as NGO campaigns drive scrutiny of the sector. The Fair Wear Foundation continues to publish tools and studies to move the needle on living wages. Both the Fair Wear Foundation and the Fashion Transparency Index are calling on brands to be more transparent in their own purchasing practices and how they are working to provide a living wage. Able has embraced transparency by publishing their wages with an aim to help consumers make more informed decisions. Greater transparency (even small disclosures like the percent of payments made on time to suppliers) will pave the way to better wage practices in the garment industry and beyond.

Greater transparency (even small disclosures like the percent of payments made on time to suppliers) will pave the way to better wage practices in the garment industry and beyond.

Auditing takes center stage

Leading brands have, for years, published policies and actions around auditing, but few brands publish the results of those audits, and if they do it’s often in aggregate. Best practice is shifting as stakeholders want to know specifics in order to better hold brands accountable. 

Increasingly, brands are going through compliance procedure accreditation with the Fair Labor Association for external assurance. C&A is taking it one step further with detailed descriptions (down to the anonymized facility level) of how it is addressing its compliance issues as well as follow-up results. There are challenges, though, with reporting information that could be sensitive or proprietary, and brands will have to navigate those disclosures going forward.

Some public maps and tools are being developed to get information straight to the stakeholders, and a few companies are supporting those tools as opposed to publishing their own maps. These tools, and new technologies like blockchain, enable greater accountability of companies through more public auditing.

The rise of the circular economy

As the omnipresence of plastics in our ecosystems is realized and the detrimental effects studied, apparel companies may start to face regulatory pressure to disclose their sourcing textile waste disposal practices.

There are rising expectations for companies to set measurable, time-bound targets for the reduction of the use of virgin plastics — Adidas, Nike, Everlane, Prada and others have goals to reduce or phase out virgin plastics completely.

The disclosure of textile waste in production and unsold merchandise is a growing focus — Burberry came under fire for burning goods last year. Transparency and collaboration can lead to more innovative solutions such as Tonlé, which uses textile waste to create new products. VF Corporation is working to reduce the amount of waste it creates through digital sampling and design crowdsourcing, allowing customers to weigh in on Timberland designs thus giving the organization more insight into which new products they should roll out.

Companies are also beginning to create circular products, such as Adidas’ ocean plastic shoes, which have garnered positive media coverage and external help years before the shoes are even released.

These new circular supply chains do not yet face the same scrutiny as traditional supply chains and there needs to be greater attention paid to workers’ rights and safety in recycling factories. The technology industry is in the midst of tackling this issue; as the apparel industry becomes more circular, they can learn lessons from other sectors.

These new circular supply chains do not yet face the same scrutiny as traditional supply chains and there needs to be greater attention paid to workers’ rights and safety in recycling factories.

The apparel sector is rightly facing greater demands from stakeholders. Customers are expecting to be able to trace the origins of their purchases and want to know that those involved in the manufacturing were paid a fair wage. As sustainability is considered in purchasing decisions, companies need to make this information accessible and consider not only how a garment is made but how also it is recycled or disposed. However, all of these initiatives will add up to little if companies don’t address the problem of consumption — business models built on making and selling clothes as quickly and cheaply as possible are not fit for the future. The brands that help consumers buy less, buy better and make these changes last will be the ones that can lay claim to being truly sustainable.

About the author

Erika Petroy
Erika Petroy

Based in the San Francisco Area, Erika works on a diverse set of projects, leading research and analysis to help clients integrate sustainability into their business.

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