Inside the Fashion Pact: In search of social sustainability targets
While the fashion industry’s biggest companies are focusing on biodiversity, oceans and climate, a crucial step in fully addressing sustainability is including socio-political metrics.
The Fashion Pact has been lauded as the largest consortium on sustainability and climate change-makers in the industry. It was presented at the G7 Summit by Kering Chairman and CEO, François-Henri Pinault and French President, Emmanuel Macron in 2019 and its signatories now account for 33% of the whole industry. However, it has mainly been composed of fashion brands (not manufacturers or suppliers throughout the supply chain). The most recent signatories to The Pact are Asics, the first Japanese company to sign, as well as traditional Swiss leather goods brand Bally. Created by IMAGINE, a company founded by ex-Unilever CEO Paul Polman, The Pact aims to help businesses take decisive action towards achieving the UN Sustainable Development Goals through setting and meeting science-based targets. In an interview with Mongabay, Polman said that he wants to shift the industry norms by “bringing together 25-30% of a sector with representation across the entire value chain to create the needed tipping points.” As a CEO-led initiative, The Fashion Pact is unique in the way that it functions to create value through sustainable business strategies. Currently, the apparel value chain appears centred around the product rather than the people helping to create it, as shown through examples like the national football kit for England in the 2018 World Cup that was sold for £180, with only £2 per day going to the workers in Bangladesh who made them. It is this focus on workers that will be instrumental in creating a fairer, sustainability-focused world. While the sustainability focus of the Fashion Pact should not go unnoticed, there is a glaring gap in the Pact’s focus which does not address worker’s rights specifically.
What steps need to be taken?
The fashion industry employs 40-60 million people worldwide, with 60% of that number living in the Asian-Pacific region, according to the International Labour Organisation (ILO). While large scale problems like climate change, ocean pollution and biodiversity (that the Pact focuses heavily on) are vital to showing the long-term business incentives for top-level executives, they do not address the effect of the years of worker neglect. An example is a decrease in worker wages during the pandemic, with workers in Bangladesh (the leading country in clothing production) reporting a 50% drop in wages. This has had a significant impact on the human element of the supply chain, especially in line with the humanitarian crisis caused by the pandemic. The Pact appears to avoid the legislative and political regulations and complications that would ultimately need to be addressed to ensure the workers’ safety and fair pay. To truly showcase a dynamic and sustainable industry, the signatories of the Fashion Pact need to put workers first by keeping to bold commitments in sustainability through governmental reform and unification of workers standards, rights and protections across products in the industry. Momentum is building in the European Parliament to implement global supply chain regulation, calling for new binding legislation to safeguard workers’ rights. In the US, the new CA SB62 bill is being brought forward in Los Angeles, a key hub for US production that relies on migrant workers. The abuse of workers rights recently highlighted in the Clean Clothes campaign report into the state-supported Technical Intern Training Program (TITP) in Japan shows that workers’ issues are reported worldwide. The need for this is clear in human rights due diligence analysis of the world’s top apparel companies. Analysis of 53 of the largest apparel companies revealed that only seven (Adidas, Marks & Spencer Group, Inditex, The Gap Inc, VF, Hanesbrands and Hennes & Mauritz(H&M)) scored above 50% against the Corporate Human Rights Benchmark (CHRB) Apparel Methodology. The methodology grades companies across six areas – covering everything from governance and policies to human rights due diligence. Although the scores are tallied across the six areas, there are individual averages split by area. The average score for embedding respect and human rights due diligence is only 6.3 out of a possible 25 rating, showing that even among the companies surveyed, many are still not even a quarter of the way to achieving a full rating by the CHRB.
The economic doughnut model: A new standard for the industry?
From a theoretical perspective, sustainable development is traditionally based on three core components: environmental sustainability, economic sustainability and socio-political sustainability. The first two are evident in the fight against climate change – environmental sustainability is aligned with the ideas set out by the Fashion Pact with an enhanced look at biodiversity and the planet. Economic sustainability can be seen as a support pillar (as referred to by the UN 2005 World Summit) to both, diverting funding to either and creating a measurable way of supporting society financially. The third, socio-political sustainability, is more difficult to achieve but primarily revolves around social development. The difficulty with manoeuvring the three sustainability systems is that in a pro-growth society, the third pillar of socio-political sustainability isn’t seen as an overall asset. So far, tackling this has been difficult to achieve. Pei Yun Teng, Global Director of Social Impact at Kearney has said in a previous interview with Lampoon Magazine that brands are seeing the potential in sustainability-led business practices. “It's coming from a few drivers. One of those is more aware, better-educated consumers who have a greater emphasis on sustainability. On the public sector side, greater regulation (is a key factor). With COVID-19, for example, some financial rescue packages come with the expectation that if you want public money to rebuild your business, you can’t just go right back to the way things were before. Instead, you should rebuild with a more resilient business model for the future.”
Frameworks for sustainable business operations have evolved since 1992, when the Three Pillars Model, triangulating ecology, economy and social affairs was devised. However, this model did not address the interactivity between these three pillars. The subsequent Triple Bottom Line (TBL) framework demands a fiscal accounting approach that presents not only profit and loss but quantifies the environmental and social impact of conducting the business generating the profit or loss. This model does not, however, recognise the systemic relationship between the environment, society and economics, and does not account for the non-linear reality of how biological systems operate, for example. In 2012, Economist Kate Raworth devised the Economic Doughnut model to present a systematic view of sustainability, with defined ecological boundaries. The fashion industry has yet to engage and market the doughnut model as a significant way for re-framing business activities in the sustainable long-term, however, the potential for this to be a useful framework for future action is considered significant by experts within the circular fashion space like academic Holly McQuillan, co-founder of Zero Waste Design Online, a platform providing online resources for zero waste design.
As with all industries, fashion is engaged in trade deals that involve enquiries into workers rights. The moral obligation to elevate global working standards should be a natural priority for all trade parties, however, enforceable labour standards have previously alienated countries with a history of not keeping to stringent workers conditions and rights from trading with countries that do, leading to missed business opportunities as with the stalled Mercosur trade deal between Europe and the South American bloc. While the main problem with the fashion industry’s approach towards workers rights appears to be the lack of focus and direction from brands keen to engage in other social topics, other problems also exist – even with those who do this well. Much of this comes down to the opaqueness of third party contracts and outsourcing across the whole product line that makes worker rights and laws unenforceable across the world as few labour rights laws are universal. Even if workers are given full rights, crisis situations like the pandemic mean that trust between employers and workers can break down, especially when contracts for textile or garment goods are not paid for, like with Bangladesh alone down $3.1 billion in cancelled orders.
Workers rights must be considered a business imperative
For brands, stakeholders and manufacturers involved in selling low-priced clothing, the improvement of workers’ conditions is not necessarily a top priority and could, in fact, increase product prices, potentially making their products less competitive. Conversely, companies like Kering SA, which scores highly on the Corporate Knights Sustainability Ranking (which incorporates environmental, social and economic data) can develop initiatives like the ‘Italy Project’. This project was helmed by Kering and the Apparel Impact Institute (along with Burberry and Stella McCartney) and aimed at getting brands to collaborate across a shared supply chain. Manufacturers with stronger and more public brand alliances may be more encouraged to adhere to labour laws because it is in their interest to do so, especially as supply chain tracking using blockchain increasingly allows the customer to see how, where and by whom their product has been made - adding a separate value to the garment.
The International Labour Association (ILO) has identified eight areas that are key in preserving workers rights, like forced labour, collective bargaining and the right to form trade unions. The ILO standards are not universally kept to, meaning that there are large disparities between countries and their commitment to universal labour laws across all eight sections. For example, although China is a member of the ILO, it has not agreed to two key parts of the ILO’s areas – granting workers the right to freedom of association and protecting their rights to organise. Bangladesh, the second-largest global producer of textiles and clothing has the lowest minimum statutory wage according to the ILO. India, 2nd in the world for textile export with 6% of global share and 5th in apparel export with 4% of the global share has also recently come into problems with the ILO. Its Tamil Nadu region is under scrutiny for not providing the workers with a living wage, while the country has also come under fire in a recent report by the ILO for also having the highest number of working hours. Over the last ten years, progress by the ILO and other organisations like the Worker Rights Consortium has made it harder and harder for companies and stakeholders to not account for workers rights in their plans, but the absence of universal regulation and legislation has made this unenforceable.
The impact of the coronavirus pandemic
The advancement of legislation and regulation may be pushed back as a result of the pandemic. Textile exports in 2020 from Bangladesh, the largest supplier for the fashion industry dropped by 17%. Shipments to Europe, which is the destination for 60% of the country’s garment exports also dropped by just under 19%. Worse still, according to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), there hasn't been an uptick in demand and exports up to the year ending 2020. With many companies eager to protect their brands from bankruptcy, the toll of unpaid orders as a result of Covid being classed as a ‘force Majeure' has meant that workers have not been paid and countries without worker rights protection are avoiding accountability for doing so. Supporting organisations like the Clean Clothes Campaign, Labour Behind the Label and Remake are one way to counter this from the ground up, as many of these organisations are helping workers in direct, more tangible ways. Despite these efforts, organisations like IMAGINE and initiatives like the Fashion Pact play a vital (and ideally active) role in influencing legislation as well as focusing on climate and biodiversity issues. In fact, IMAGINE outlines its actions with CEO’s as a way to bridge a gap with “youth movements, civil society and NGO’s”. To engage with the social sustainability discourse and make the fashion industry more centred around the doughnut model, it is essential to address the legal and political ways that brands can incentivise countries to change their outdated and ineffective worker regulations through collective action.
The legislation is changing
Crucially, some change is happening in developing specific laws for the industry that are in line with how fast the fashion market is moving. Last year before the pandemic hit, a Garment Worker Protection Act (SB1399) was put forward in the US by Californian Senator María Elena Durazo aimed at eradicating piece-rate pay and providing a minimum wage, as well as making brands accountable for their workers’ wages. While the US has some policies in place to protect the rights of workers, this type of legislation could have been instrumental in influencing similar proposals for the textile and garment countries in the Pacific South that depend on the fashion industry and have been hit hard by the lack of brand accountability for unpaid garment orders. The US bill was co-sponsored by the Garment Workers Center in LA, which could also be a useful addition to on-the-ground aid in countries where the right to organise is allowed as a part of their rights. Despite this, the bill died following strong opposition from leading trade associations, who were concerned about the impact it could have on local orders.
The steps toward addressing the human element of sustainable practice are not straightforward. The chain of support between demand countries (primarily in the West) and those that supply it and the chain between stakeholders means that there are a large number of moving parts that are difficult to monitor and trace. This model of the fashion industry has worked in this way since before the fast-fashion boom, and its effects are being felt most since the pandemic hit. In Germany, a similar proposal to the bill put forward in California was shut down last year by the Federal Ministry for Economic Affairs and Energy and only reached an agreement in February 2021. The regulation applies from 2023 to around 600 companies that employ 3,000 staff, and to around 2,900 additional companies with more than 1,000 staff from 2024. The law states that fines will be given, starting at several hundred Euros, if the contractors the brands are using are found to breach human or environmental rules, including workers rights. These fines go up to 2% of the annual revenues if they exceed 400 million euros, marking large companies a prime target. This law could set the blueprint for ‘whole product responsibility’ for companies that significantly influence how their products are made.
For those outside the Fashion Pact thinking about helping their workers and knowing that legislation is slow to change, the decision to help has been easier than waiting for legislative change. Rahul Mishra, a couture designer based in India has moved most of his workers back to their villages where the artisans can practice their craft without the uncertain conditions at factories in major cities. His efforts show that smaller brands can control their own supply chains and with the flexibility to advance their industry in a fairer direction. However, this model of work is a tough one to adopt for fast fashion companies as their workers depend on short-term contracts, and the sector relies on large-scale factory infrastructure for high-volume, mechanised production. This further demonstrates why legislation and regulation are needed to address the large-scale issues faced by these brands and manufacturers.
The global changes in legislation have so far been incremental, but there is progress. While the Fashion Pact has not addressed its human focus in the reports so far, perhaps the legislation brought forward in countries like Germany and California will spur it to recognise its role in helping change the minimum standards for workers. However, it cannot be the only coalition to rely on. For the ready-made garment (RMG) sector, the International Labour Organization (ILO) are collaborating with the German Development Cooperation (GIZ) as well as Bangladesh’s government and stakeholders native to the Southeast Asian nation on an employment injury insurance scheme. Other actions, like the ‘Wage Forward’ agreement, set out by the Asia Wage Floor Alliance, the Clean Clothes Campaign, and the Worker-Driven Social Responsibility Network are working on adding a living wage contribution to every order placed with their suppliers, which addresses the issue of wage disparity from the brand side. Textile producers have united across Bangladesh, Cambodia, China, Myanmar, Pakistan and Vietnam to form the STAR network to discuss sustainable production in the region, showing a way forward in regular reports from the region that focus on workers rights in this key area for clothing production. These developments show that the industry is taking some steps towards righting the difficult position workers are placed in while starting to develop their own initiatives. For the Fashion Pact, the next steps for the signatories should include working closely with communities and schemes on legislation and regulation, like that brought forward by the Californian and German garment worker bills. These could form the structural foundation of the next industry-wide legislation that would unify the legal rights of workers across the industry.