Image: Everlane

Everlane’s go-to is transparency. Pricing transparency – in particular – has garnered the San Francisco-based brand a lot of attention since its launch in 2011, from a spot on Fast Co.’s 2013 “50 Most Innovative Companies” list to famous fans like Angelina Jolie and Jessica Alba. That premise also earned Everlane “$12 million in revenue in 2013, and double that in 2014,” according to Bloomberg. Buzzy company slogans, like “Radical Transparency” and easy-to-read infographics that chart the production cycle of its popular garments have made the e-commerce startup a go-to for hip millennials with money and a conscience when it comes to their clothes.

In an industry famous for shrouding the connection between what it costs (and what it actually looks like) to manufacture garments and accessories, and the price that consumers pay for those items, Everlane seemingly fills a void; hence, its success. Price transparency aside, on the heels an array of garment manufacturing-related tragedies in recent years and in the midst of a larger call particularly from millennials for more ethically-sound garments, Everlane founder and CEO, Michael Preysman, a former investment associate at private equity firm Elevation Partners, saw a business opportunity in ethically-made clothing.

In addition to offering appealing basics, such as cashmere turtlenecks, cotton crewneck sweaters, striped t-shirts, and modern oxfords, Everlane enticed consumers with its alleged openness. It has appealed to them with its much-touted model, one that sees it “disrupt” the fashion industry by way of supply chain transparency. From the design phase to transportation, Everlane aims – according to its marketing materials – to shine a light on the costs of retail, thereby highlighting the differences between the way it makes clothing and the way that the “traditional retail” model works, the latter of which includes middlemen and brick-and-mortar stores that serve to drive up the numbers that appear on price tags. Unlike those traditional retailers, Everlane cuts out the middleman.

Still yet, Everlane boasts a network of world-class factories, “the best factories around the world,” “the very same ones” – the company claims – “that produce your favorite designer labels.”

If Everlane seems to like it is simply too good to be true, it might be. Despite such seemingly straightforward dealings, Everlane appears to be cloaked in some of the very mystery it claims to want to rid the apparel market of. As retail-focused website Racked noted in an article last year, “For all its talk of transparency, Everlane is extremely tightlipped about internal goings-on. Preysman was the only Everlane employee offered up for this story, and no one from the design or creative teams was made available to be interviewed. Repeated requests to visit the brand’s New York office were declined.”

So, just how transparent is Everlane really?

Trade Secrets or Just Secrets?

A closer look at Everlane’s website and marketing materials, which are heavy on vague language in lieu of definitive facts to support its claims of transparency and ethical production, reveals that there is almost certainly more at play in the Everlane model than meets the eye. In accordance with the company’s motto – “Know your factories. Know your costs. Always ask why.” – one of its core missions is enabling consumers to know the factories in which their clothes are being made. With this in mind, there is a sizable red flag at issue when it comes to Everlane: Its factory list.

Everlane does a nice job of listing the location cities of its factories, how many individuals each factory formally employs, the year that each factory was established, what garments are produced there, and the weather in each of the given cities where these factories are located. All of this information is contained in a concise little summary for each of Everlane’s supplier factories. The layout is simple. The information is easy to digest. The factory descriptions even include lovely photos of the factories’ interiors and their smiling laborers.

However, what Everlane fails to do is list the names of its factories. Instead, it opts to label them according to the products they produce for the brand, such as “The Specialty Knits Factory,” “The Travel Bag Factory,” and “The Casual Wovens Factory.” In this way, it seems that even H&M is more transparent than Everlane. Unlike Everlane, the Swedish fast fashion giant identifies 98.5 percent of its first tier factories/suppliers by name and address, and even lists some of those factories’ suppliers.

With Everyone’s highly-publicized motto in mind, it is worth pondering why would a brand based on transparency has not list the actual identities of its factories. Preysman has a seemingly rational answer, of course: he told the Wall Street Journal in 2013 that the company withholds the names of its factories for trade secret purposes. To be more specific, he says that Everlane does not name names in order to prevent competitors from utilizing the factories that he and his team have “spent months finding.” The company’s founder says he simply “doesn’t want competitors moving in on his turf.”

On its face, Preysman’s reasoning seems rather judicious, particularly because supplier lists – just like customer lists, sales and distribution methods, advertising strategies, and manufacturing processes, for example – are a textbook type of asset for which businesses rely on trade secret law to protect.

Generally speaking, a trade secret is any information that derives economic value (actual or potential) from being a secret. The information to be protected as a trade secret must meet two requirements: (1) the information must be a secret (i.e. not public knowledge or general knowledge within an industry); and (2) reasonable efforts must be made to keep the information secret. As such, in order for an individual or company to successfully claim trade secret protection in court, they must show that they have met a number of recognized measures to ensure that such information was, in fact, properly managed and kept secret. For instance, courts have held that in order to prove that a trade secret holder has met its burden, it must establish that it has made sure that only those necessary were privy to the secret info, among other things.

Secondarily, the party/company claiming trade secret protection must show that all of those who did have access to the secret information were made aware that it was confidential information, and that they utilized confidentiality agreements with employees and with business partners whenever disclosing confidential information to them in order to prevent the spread of the information. For Everlane, this would mean requiring that its factory partners – among others – not disclose their manufacturing relationships, and it would be Everlane’s duty to monitor that such information is not made public.

Such monitoring should not be terribly difficult for Everlane considering that it lists only seventeen factories as within its supply chain – a very small number compared to H&M’s network, for instance, which consists of 342 first-tier suppliers in China, alone. Moreover, given Everlane’s claims that it maintains close relationships with its factory owners – according to its website, “We visit [our factories] often, and build strong personal relationships with the owners – such monitoring and any necessary modifications should be relatively easy.

However, there is at least one very glaring and critical missing link here: some of Everlane’s suppliers publicly identify their connection with the retailer, thereby destroying any potential protections afforded to the brand by trade secret law. One need not look further than the website of Nobland Vietnam – which is just one example of a supplier that publicly lists Everlane as a client on its website – to see this important discrepancy in action. By failing to rectify the fact that its name is listed on Nobland’s publicly-accessible website, Everlane is not properly relying on/ensuring trade secret protections at all. In fact, trade secret protection is likely not even an option for Everlane, as it does not appear to be monitoring such “secrets,” which, as previously indicated, is a vital pre-requisite for claiming trade secret protection.

Against this background, one might argue that Everlane’s supplier factories are not as ethical or sustainable as the company is portraying them to be, and that is why the brand relies on citing trade secret concerns as a means of avoiding disclosing them. This theory is bolstered by information available about another one of Everlane’s suppliers: Level Style, Inc.

According to U.S. import records, Level Style, Inc. provides Everlane with an array of shirt styles, including its Slim Fit Oxford and Slim Fit Denim shirt, and it has come under fire within the past year for labor-related issues. According to the allegations of the Hong Kong Confederation of Trade Unions, a pro-democracy labor and political group in the Hong Kong, Hong Kong-based Level Style, Inc. has engaged in a pattern of retaliating against garment workers who were seeking severance payments and the payment of social insurance in arrears following the abrupt and unannounced closure of at least one Level Style-owned factory in Hong Kong.

According to the Hong Kong Confederation of Trade Unions, Everlane was an existing client of Level Style-owned Shenzhen Artigas Clothing and Leather factory at the time of the factory closure and subsequent striking. Around 900 employees began striking in June 2015 at the company’s Shenzhen Artigas Clothing & Leather factory over severance pay and relocation of the factory. This follows a strike by almost 1,000 workers in 2014 over unpaid social insurance and housing contributions at the same factory.

Vague Claims, Not Facts

Speaking to Racked last year, Preysman said: “Retail isn’t a space where there’s a lot of information. It’s very obfuscated.” It is unclear how, exactly, though, Everlane is any different in this respect. While Everlane makes praising claims about its factory partners and the working conditions upon which they operate – which certainly sound impressive to a consumer quickly skimming its site – the company does not actually provide any substantive information in support of its claims … at all.

For instance, in discussing how it decided to partner with Level Style, Inc., Everlane claims it selected the Chinese company “[a]fter a rigorous vetting process to find the best tailored shirting vendor.” Yet, Everlane neglects to provide information for the consumer about what its “rigorous vetting process” consists of and how Lever Style, Inc. met it. Moreover, in providing information on its website about one of its suppliers, Everlane asserts: “We assess every potential factory through a stringent ‘compliance audit’ —which helps us evaluate the work environment.” It similarly does not elaborate on what its “stringent compliance audit” looks like.  

Making vague and unsubstantiated claims in lieu of providing verifiable facts appears to be a common trend that runs through the Everlane model. When asked about wages paid to laborers within its supply chain, Everlane told Project Just, a New York-based non-profit organization devoted to helping consumers shop in a more informed manner, “The workers at each of our factories are paid, on average, a higher wage than their peers. Having said that, we can’t explicitly state how much each worker is compensated due to confidentiality agreements with our manufacturing partners.”

An Everlane spokesman did, however, tell Project Just that the company maintains a “Vendor Code of Conduct” and that “each factory is subject to a yearly semi-announced audit by a third-party company, with this visit focusing in on our 13 compliancy standards.” Everlane failed to provide any specific information on its “13 compliancy standards” and its auditing system. In fact, it appears that Everlane does not actually publicize any detailed information about its “vetting process,” “Vendor Code of Conduct,” auditing system, or the results of such audits.

Finally, an Everlane spokesman told Project Just that the company “does not use any subcontractors,” which may not be entirely true. Unauthorized subcontracting to an unapproved factory is “very, very common,” according to Gary Peck, founder and managing director of the S Group, a design and sourcing company based in Portland, Oregon. Almost all retailers prohibit the practice in their contracts. Yet, a significant number of suppliers enlist the services of contractors and subcontractors (without a brand’s knowledge) in order to drive down costs, speed up production, and meet high-volume orders. While physical audits can help in determining the actual places and conditions of production, it is also notoriously difficult to get good data on the workings of multi-national brands’ supply chains, even in instances of audits due to the rate with which information given to auditors by factory owners and contractors has proven unreliable.

While Everlane may insist that it does not use subcontractors, such a statement may suggest that it “is unclear if the brand can trace its entire supply chain,” per Project Just.

With quite a few loose ends and an array of seemingly rather elusive and unverified claims, it may be reasonable to follow the advice of experts in the field of ethical sourcing and trade, who encourage skepticism, no matter how warm and fuzzy a website makes one feel. “There is a lot of consumer concern, and there is a tendency for smaller companies to want to exploit it,” says Scott Nova, Executive Director of the Worker Rights Consortium. “That can be a very positive motivation, but the concern is that there are people who, out of cynicism or lack of understanding, are not making verifiable claims.”