Best and worst performers on ethical fashion revealed: Why company ethics policies alone aren’t enough

Australian and New Zealand fashion brands have been praised for increasing transparency around the ethics of their supply chains, but there’s a big divide between the intentions of retailers and their ability to walk the walk on worker empowerment, according to a report into the state of play for ethical fashion.

The most recent Baptist World Aid (BWA) report into labour rights in the fashion industry has found companies are more willing to open up about the ethics of their processes than when the organisation first started reviewing ethical fashion after the Rana Plaza factory collapse in Bangladesh in 2013, yet a number of the 106 companies surveyed for 2017 didn’t provide responses on their processes or origin of their products.

The report gives companies a grade according to their performance on workplace policies, knowledge of suppliers, auditing and supplier relationships and worker empowerment. This year only 12% of the companies surveyed received overall A grades, with the median score a C+.

However, the research reveals a big gap between retailers’ policies and their overall performance; 76 out of the 106 businesses were given A+ marks for their workplace policies on ethics, but only three of the businesses, Australian ethical clothing imprints KowTow and Etiko and New Zealand online retailer Max, were able to receive the top score of A- for worker welfare.

“A grades” dominated by smaller, eco brands

Niche retailers have been the best performers in the study since its inception, says BWA, and many of the companies receiving an overall A mark for their performance are small businesses positioning themselves as exclusive retailers for those concerned about where their clothing is sourced from.

“Etiko, Mighty Good Undies, and RREPP all scored the top grade, A+. These companies knew their suppliers from farm to factory and were willing to publicly disclose where they were producing. Etiko and Mighty Good Undies also demonstrated that many of their suppliers were paying a living wage,” the report explains.

One exception to the niche retailer rule is Cotton On Group, which has secured an A- grade for 2017, making it one of the best performing big Australian companies, alongside Pacific Brands and APG & Co.

Cotton On Group’s general manager of risk and sustainability, Jacqui Hennessy, said in a statement provided to SmartCompany the recognition has come about because of the company’s ongoing work with BWA, which includes mapping its supply chain in more detail.

“Over the last five years, our partnership with BWA has allowed us to build on the strength of our existing Ethical Sourcing Program, to sense check and continually enhance our programs with a focus on end-to-end mapping of our supply chain,” Hennessey said.

Cotton On says it has new projects on the go to ensure transparency of its practices and supplier base, and ethical fashion practices are part of a long term strategy.

“2016 saw us continue the public disclosure of our supplier base, become a proud member of the Better Cotton Initiative and provide support to hundreds of farmers living in Kwale through our Kenya Cotton Program. We’re incredibly proud of what we’ve achieved to date but know this is a journey of continuous improvement and one that we are committed to for the long haul,” Hennessey said.

Non-responsive companies and living wage big issues, but consumer expectations are changing

While the number of retailers willing to publish full supplier lists have improved this year, up to 26% from 16%, 14 of the companies featured in this year’s report did not respond to requests for information about their practices, which makes it very difficult for consumers to make informed choices, say the researchers.

“Several companies have chosen not to disclose or make any information publicly available. Without this information, it becomes nearly impossible for the public to make informed decisions about whether companies are investing sufficiently to ensure that workers are not being exploited,” the report explains.

These companies include listed clothing business and Calvin Klein distributor Gazal, menswear brand Roger David and dancewear retailer Bloch. These businesses did not respond to SmartCompany’s requests for comment prior to publication.

However, expectations from customers and managers across the globe about a company’s responsibility to invest in solving problems like workers being paid below living wages are changing, says BWA.

“Cultural and consumer expectations have shifted and, as they’ve changed, so too has the political and regulatory environment,” the report says.

Hourly rates in production houses remain below the “living wage” in most cases, the report suggests, but businesses do seem to be taking steps to improve this.

“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%,” the research highlights.