Sustainability has become the most co-opted term in fashion. Brands have gone to great lengths to promote their sustainability efforts in order to attract ethically-conscious consumers while maximizing their profits. Visit any brand’s sustainability section on their site and you will find claims about their sourcing, supply chain and environmental impact. But for all the sustainability promises brands make, their commercial practices reflect a far different reality.
WHAT DO WE MEAN BY COMMERCIAL PRACTICES?
Remake defines commercial practices as the contracts or agreements that brands and retailers make with suppliers when they purchase apparel. Also referred to as manufacturer’s agreements, current agreements almost always favor the brands through specific Supplier Codes of Conduct:
“Nearly all fashion companies have Supplier Codes of Conduct that stipulate that their suppliers need to uphold, and be in accordance with, specific labor and environmental standards. However, very few companies are taking accountability for the role that their commercial practices play in their suppliers’ ability to do so. The power and wealth imbalance in fashion supply chains means that brands are essentially able to dictate (self-serving) prices and contractual terms to their suppliers, who are then left with minimal funds and wiggle room to implement social and environmental improvements.” — Becca Coughlan, Transparency Manager, Remake
Remake is calling on brands to adopt a Buyer Code of Conduct that specifies their obligations to suppliers, including higher prices, human rights standards and fair contract terms that support sustainability and worker wellbeing.
HOW DID WE GET HERE?
When I began working in fashion in 1990, garment pricing was done very differently than it’s done today. I worked for private label companies, the kind that design and manufacture private label for big retailers like JC Penney and Target. At that time we would price a garment from the bottom up, meaning that we would actually physically measure the cost of the materials used and obtain labor prices from local cut and sew facilities. If we had to trim our costs, we found ways to reduce material costs, almost never labor. We also had healthier profit margins and room to negotiate, so that if push came to shove, we could reduce our margin by a few percentage points and still be ok. We were also still doing a lot of our manufacturing locally: “As recently as 1997, more than 40% of all apparel bought in the US had been produced domestically.” But as the decade progressed, I began to observe shifts in brands’ and retailers’ manufacturing strategies that severely impacted how we did business, and specifically, how garments were priced. This was also the time when fast fashion was beginning its takeover with Forever 21s at every mall (remember those?) and H&M’s expansion into the US, making the rest of the industry take notice.
By the early 2000’s, brands were squeezing manufacturers on price, and we were pricing garments from the top down, because retailers were setting their maximum price and we were expected to beat, not just meet, that price. Although volume may have increased, our margins shrank from dollars to cents per unit! In order to win a bid, our production teams were forced to go offshore to countries like Vietnam, Sri Lanka, and Bangladesh where they could subcontract for the cheapest labor. This is now the economic development model of fashion: infinite exponential profits and linear growth at the expense of people and any true sustainability efforts. As Remake’s recent Accountability Report attests, none of the big brands evaluated in the report could prove that they are reducing environmental impact while increasing social benefit, because companies’ sustainability goals are incompatible with infinite growth.
PRIORITIZING PROFIT OVER PEOPLE
Because of lack of regulation and the asymmetrical power structure created by subcontracting, brands have no obligations to the suppliers to support sustainable practices by paying fair or higher prices, nor by honoring contracts or by having fair contract terms. Brands’ priority is maintaining the highest profit possible, at a devastating cost to the (mostly) women garment makers who work in the supply chain.
“Commercial practices push all the risk to manufacturers and factories who then push the risk to the workers, who bear the financial brunt of the burden.” — Ayesha Barenblat, Founder, Remake
For example, despite their professed pledges to champion human rights, including fair wages and dignity of work, brands like H&M and Zara (Inditex) regularly exempt themselves from accountability by foisting responsibility on the suppliers through deliberate contractual loopholes, whereby orders can be canceled without payment for any reason, or no reason at all, at any time. This occurred during the first wave of the COVID pandemic beginning March 2020, when brands were exposed for canceling orders without notice and failing to pay their garment workers for apparel that had already been sewn. Because of pressure from the #PayUp movement, some brands agreed to honor their contracts. Yet, according to the most recent Remake Accountability Report, of the 60 brands scored, 14 never agreed to #PayUp for their orders through the pandemic. One year later, in April 2021, brands again canceled orders and failed to pay workers, as a deadly second wave of Covid hit manufacturer countries. Many of the brands withholding wages in this second wave were the same brands that previously had committed to #PayUp, clearly indicating that this exploitative strategy is the norm and these companies have no real long-term commitment to ethical and social responsibility.
And now, as we enter a third year of Covid, the same brands are responsible for perpetuating an unprecedented wage theft of garment workers in Karnataka, India, where brands’ factories have been refusing to pay a minimum wage increase that was implemented in April 2020. As is highlighted in the Remake Accountability Report, “no fashion brand or retailer pays a majority of its workers a living wage,” and “in most cases, companies do not appear to pay any of the workers, even in their Tier 1 factories, a living wage.” In fact, the report found that out of the 60 brands scored, only five could demonstrate that at least some of their workers earn a living wage. This is a damning indictment of brands that continually claim to support “fair wages” yet consistently and deliberately underpay for goods and services from factories, while expecting those same factories to pay a living wage to their workers according to supplier codes of conduct.
“Living wage clothing is sustainable clothing. In fact, it might be the greenest clothing we own.” — Elizabeth Cline, Advocacy and Policy Director, Remake
And, for all the women’s empowerment and social wellbeing campaigns brands claim to support, they fail to keep workers safe. Women comprise roughly 80% of the global garment factory workforce, and they work in horrible conditions. In addition to wage abuse, they face gender-based violence and discriminatory employment practices. Most are in countries with weak labor laws, and this is deliberate because it keeps the labor cheap and compliant. Because brands do not own the factories, but rather, subcontract to manufacturing entities that then hire the factories, brands will often deny the sourcing relationship to the offending factory in an attempt to absolve themselves of any accountability for workplace violations and violence. Statements like “we can only address problems we can see” from VF’s Human Rights page demonstrate not only the urgent need for more visibility in the supply chain but also a failure by the brand to take the necessary steps to commit to human rights. While binding agreements such as the International Accord are important commitments to help hold brands accountable for keeping workers safe, unless it’s expanded to other countries, brands like H&M who have signed onto the Accord cannot guarantee that they will protect their workers elsewhere. Requiring a Buyer Code of Conduct regardless of manufacturing country would provide assurances to factories that brands are investing in sustainable practices by paying prices high enough to support these efforts.
BUYER CODE OF CONDUCT: A PATH TO TRUE SUSTAINABILITY
Prioritizing profit and growth over people and planet is unethical, and yet brands continue to claim that they can simultaneously maintain infinite growth and be “sustainable.” As the examples above demonstrate, the buyers’ behavior matters. Irresponsible purchasing practices can and do result in human rights abuses in the supply chain, and a sustainable supply chain must include ensuring the humanity, dignity, and well being of the workers who make our clothes.
The pandemic highlighted the asymmetry of power between buyer and supplier and the effect this has on garment workers, but even in “normal” times buyers put so much pressure on suppliers that human rights violations are inevitable. Sustainability without ethics is not sustainability at all, and self-governance absent of external regulation and accountability creates conflicts of interest. Binding agreements such as the International Accord and California’s SB62 are steps forward to holding brands accountable for actions and outcomes, but a Buyer Code of Conduct can go further.
“To level the playing field and set their suppliers up for success, fashion companies need to improve their purchasing practices and themselves uphold a Buyer Code of Conduct; negotiating contracts and prices fairly so as to ensure that all costs of production are covered and that all human rights and sustainability measures are guaranteed.” — Becca Coughlan, Transparency Manager, Remake
A Buyer Code of Conduct is not limited by region or country of manufacturer, and when inserted into a buying contract of a brand, it becomes enforceable. A Buyer Code outlines a set of principles and practices aimed at addressing the power imbalance between brands and suppliers by obligating brands to commit to improving their purchasing practices through responsible pricing, honoring contracts, and ensuring a humane pace of work in the following ways:
- Empowering suppliers such that they would have leverage for fair negotiation of contract and price, thereby being able to afford to support brands’ sustainability initiatives.
- Helping provide stability of work such that contracts could no longer be canceled without notice and without remediation.
- Holding brands accountable for who they hire, helping to ensure adherence to human rights standards.
While a Buyer Code of Conduct alone won’t eliminate unethical behavior, it is a key part of holding fashion companies accountable for their sustainability promises on human rights.