Exploitation is rampant in the global fashion industry, whether it be of young models, unpaid interns or photographers expected to work for free. Additionally, according to countless investigations, studies and reports, the supply chains of a huge number of fashion companies thrive on the exploitation of laborers. The question is: Why haven’t fashion brands cleaned up their acts?
Even if brands want to be part of the solution (and both consumers and laborers consistently ask them to be), they are hindered by the current legal system. One of the biggest problems is that if brands are to eradicate labor exploitation, they must take more control of their supply chains. But if they take more control over their supply chains, they open themselves up to the risk of tremendous legal liability.
To effect real change in the global fashion industry, the countries where brands are headquartered – whether it be Spain, home to Zara’s parent company Inditex, Sweden for H&M, or France for most of the brands owned by LVMH and Kering – need to reconsider their legal policies. To be specific, the existing liability rules need to be amended to incentivize brands’ direct involvement in labor issues within their supply chains.
Earlier this month, shoppers at a Zara store in Istanbul allegedly found messages in the clothing that garment workers had hidden in protest of unfair wages. The messages read “I made this item you are going to buy, but I didn’t get paid for it.” The reports come just four years after Rana Plaza, a building housing numerus garment factories, collapsed in Bangladesh, causing the deaths of 1,134 people. These are just two examples from a long list of horrors.
The problems that run rampant in the supply chains of fast fashion and high-end brands, alike, have not been fixed.
Global Value Chains
Over the past few decades, the production process for garments (and other things) has evolved, becoming very complicated. These “global value chains” include all the activities that are necessary to a product’s life-cycle – designing, manufacturing, selling, and sometimes, even recycling.
When it comes to the relationship between these vast networks of suppliers and the law, there is a connection between responsibility and liability. Generally, a brand is only legally responsible for the actions of suppliers if the brand directly employs and controls that supplier. In a global value chain, most suppliers are typically outside of the brand’s direct control, operating, instead, as contractors and in many cases, even subcontractors, the latter of which are more often than not completely undocumented, as they tend to work from their homes.
Like many activist organizations, Oxfam places the onus on fashion brands to improve the labor practices of their subsidiaries and suppliers in developing countries. For instance, Oxfam calls for brands to implement a “living wage,” a wage that is sufficient for workers to meet their basic needs. A recent report from international confederation of charitable organizations focused on the alleviation of global poverty estimates that enforcing a living wage will only increase the final product price by 1%. This, Oxfam suggests, could be absorbed by the chain in order to keep prices from rising.
The key is this: To ensure individual garment workers receive a living wage, brands would need to exert additional oversight and coordination of their suppliers and subsidiaries. In other words, brands would have to take stronger control not only of their suppliers but also of their suppliers’ suppliers, and their suppliers’ suppliers’ suppliers, and so on. This is known as chain integration.
And in fact, in certain respects, brands themselves are also eager to integrate their supply chains, but for different reasons. From the brands’ perspective, integration can help ensure production efficiency, product quality control and effective management of brand reputation. This is one of the reasons why, for example, Chanel and other luxury brands have been actively acquiring an array of their supplier factories.
In many ways, it turns out, activists and brands actually want the same thing: Greater chain integration. What then is stopping the brands from doing so, you ask? The legal reality that if brands were to take greater oversight efforts, from that follows the risk of colossal liability. It is impossible to put an exact figure on how much such liability might cost a fashion brand, but it is clear that if brands opt to more thoroughly oversee their suppliers, they will no longer be able to disclaim liability or knowledge of misconduct – either legally or in the court of public opinion amongst their consumers.
What will it take to create change?
In this regard, brands are in something of a Catch-22 situation. As the law currently stands (and because brands consequently limit integration), brands are rarely liable when a supplier or subsidiary in their chain runs afoul of the law. The problem from the brands’ perspective is that they are likely to lose any of their legal defenses if they proactively take control of their supply chains. This is true whether the control is for purposes of what they selfishly want (more efficient supply chains) or what activists want (better labor practices).
This dilemma played out following the 2013 Rana Plaza tragedy, when many European brands signed a safety accord that seeks to protect Bangladeshi workers from unsafe working conditions. Some American and Australian fashion brands refused to sign the accord precisely because of the fear of future liability.
To get brands on board with improving their supply chains and stopping worker exploitation, we must first recognize the complex landscape in which brands operate. In the current environment, it is often safer – legally and financially – for brands to limit their involvement in labor issues, and hide behind third-party “monitoring” and “audits.”
To truly affect change, though, we must find ways to transform what are now risks of action into incentives for change.