Since the late ‘90s when media awareness began to be heightened in this area, many brands and retailers have invested in understanding and improving labour standards within their supply chain. Through developing ethical policies, closely monitoring supply chains, working with specialist stakeholders and lobbying national governments, many companies and retailers have been able to improve the conditions within their supply chains.
The foundation of the Ethical Trading Initiative is auditing. Whether this done by a separate company, internal staff or suppliers, many brands and retailers will have an programme that audits a factory or facility on social and labour standards according to international standards. Key standards which are followed by all are the ILO Labour Standards and for many European brands and retailers Ethical Trading Initiative Base Code.
ETI Base Code is often adopted into a brand or retailers sourcing policy. There are many third party social audit firms who use different audit methodologies in conducting audits. One major methodology is SMETA which follows the ETI Base Code.
Popular commercial firms are Intertek, SGS and BV each of these have large teams with offices based in many sourcing countries and use the SMETA methodology. There are also more specialist audit firms/consultancies that specialise in labour standards – for example Impactt and Elevate.
Many brands and retailers will accept other companies’ audits to help reduce audit duplication and a platform that enables companies to do this is SEDEX. This allows factories and suppliers to connect with a company and then share its audit and corrective plan history. SEDEX has further applications that can then help you risk manage your supply chain.
The purpose of an audit programme is that it drives improvement through corrective action plans. At the end of an audit, a corrective plan is agreed with the site which are a list of findings that need improving, according to international standards. The corrective action plan is timebound and agreed by a senior manager at the factory or facility. Audits are often conducted yearly, or as when required by a brand or retailer’s policy.
Key areas that often need improvement are health and safety, working hours and correct compensation for time worked, for example overtime not paid at the correct premium rate.
An audit is like an MOT, it is a snapshot of a factory on a particular day. It is not necessarily a true representation of everyday in the factory or facility. Therefore many brands and retailers will have complementary programmes that will support the factory, or facility, in improving its labour standards and working conditions, for example, worker committee training, health and safety training, productivity and efficiency training.
Fashion supply chains have come under scrutiny in recent years due to the Rana Plaza building collapse and Tazreen factory fire which killed 1,250 workers and resulted in over 2,500 people being injured. Both these incidents were a major wake-up call for the industry which saw brands and retailers strengthen sourcing practices and join multi-stakeholder initiatives.
Two such initiatives are the Bangladesh Accord on Fire and Building Safety and the Bangladesh Alliance for Worker Safety. Both of which are pioneering as they bring over 200 brands and retailers together with structure and fire safety engineers, trade unions and NGOs to improve the overall factory safety in the garment industry in Bangladesh.
What has been learnt over the years – and in the backdrop of Rana Plaza and Tazreen – is that there are systemic problems in many key sourcing countries which individual brands and retailers cannot tackle alone. Collaboration is seen as the key mechanism to improving working conditions and labour standards around the world. There are many collaborative groups such as; ETI, SAI, Fair Labour Association, Sustainable Apparel Coalition.
Some new agendas include the UN Guiding Principles on Human Rights (UNGP0, Sustainable Development Goals and the UN Framework Convention on Climate Change Conference of the Parties (COP21). Companies were a major voice in establishing these new agendas and are seen as key enablers in improving development needs and opportunities for developing and the most vulnerable countries.
From 2017, EU companies will need to produce non-financial reporting on; environment matters, social and employee aspects, respect for human rights, anti-corruption and bribery issues, and diversity in their board of directors. UNGPs and human rights reporting is focusing companies to look at their business activity and impact on an individual rather than a business risk perspective.
In March 2015, the UK Government passed the Modern Slavery Act, which means that all UK companies with a turnover greater than £36 million must make a statement about the measures they are taking to ensure there is no modern slavery in their operations or supply chains.
- Supply chain mapping and management – this is key to implementing an ethical trade programme. Knowing where a product is made and monitoring its standards.
- Going beyond audit – social auditing should be used as a foundation. Having other mechanisms such as improvement programmes and training can support facilities to improve further and find the root cause of issues.
- Ethical Trading to be a key business function – it should be viewed and treated the same as quality and chemical compliance. Factories and facilities need to work to a business’s code of conduct.
- Working stakeholders – this is key to understanding the systemic problems, or wider social issues, that can be present in the supply chain.
- Collaboration is key – tackling systemic problems such as implementing a living wage for workers. Creating industry standards for health and safety etc. cannot be done by individuals.
- Integration is best – integrating ethical trading both into business model and into the business’s wider sustainability strategy will enable brands to be more joined up and potentially have greater impact.
While labour standards and working conditions remain the foundation and core of many ethical trade programmes, more and more companies are looking at the wider social development programmes and human rights impact to help and support the lives of workers in the supply chain for example; women’s economic empowerment, skills, health and wellbeing. Consumers expect more from brands and retailers – they want companies to be doing the right thing so they can buy any product they like with confidence.
Social Media is changing what we know about supply chains, the disaster at Rana Plaza was on YouTube within seven minutes of it happening. Fashion Revolution is an online campaign and encourages consumers to instagram where their clothes were made and Clean Clothes Campaign and Labour Behind The Label stage online petitions through their networks demanding brands and retailers to become more transparent and responsible.
No matter how small or big a brand or retailer, ethical trading should be a key component of its business practice; taking responsibility to ensure that workers are treated fairly, to mitigate risk in the supply chain and protect a brand’s integrity.