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The 2018 Ethical Fashion Report - THE TRUTH BEHIND THE BARCODE - Tearfund
The 2018
Ethical Fashion
Report
THE TRUTH BEHIND THE BARCODE
The 2018 Ethical Fashion Report - THE TRUTH BEHIND THE BARCODE - Tearfund
THE 2018 ETHICAL FASHION REPORT
THE TRUTH BEHIND THE BARCODE

Date: April 2018
Authors: Gershon Nimbalker, Jasmin Mawson, Claire Harris,
Meredith Rynan, Libby Sanders, Claire Hart, Megan Shove.
Behind the Barcode is a project of Baptist World Aid Australia.
New Zealand headquartered companies researched in partnership
with TearFund New Zealand.
www.behindthebarcode.org.au

Sponsored by Baptist Insurance Services.

Report Design
Susanne Geppert

Front cover photo: © Baptist World Aid Australia.

                                                                  2
The 2018 Ethical Fashion Report - THE TRUTH BEHIND THE BARCODE - Tearfund
CONTENTS

   1. Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
 2. Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
  3. Five Years since the Rana Plaza Disaster. . . . . 24
  4. Interwoven Stories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
         Consumer Advocacy 28, Governments 29,
         Companies 30, Workers 32
  5. Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
  6. Transparency and Traceability. . . . . . . . . . . . . . . . . . . . . 36
  7. Auditing and Supplier Relationships. . . . . . . . . . . . 40
  8. Worker Empowerment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
  9. Living Wage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48            Appendices
                                                                                                                                 Statements from non-responsive brands 93
10. Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
                                                                                                                                 Sources 96
 11. Brand Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55            About Baptist World Aid Australia 98
12. Survey Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71             Acknowledgements 99

                                                                                                                                                                            3
The 2018 Ethical Fashion Report - THE TRUTH BEHIND THE BARCODE - Tearfund
1
Executive Summary
     This section outlines the research aims
     and scope, data collection and findings
     and overall results of all companies.

                                               4
The 2018 Ethical Fashion Report - THE TRUTH BEHIND THE BARCODE - Tearfund
*=
                           empowerment
                                Worker
                                         relationships
                                              supplier
                                         Auditing and
                                                               traceability
                                                                                                                           OVERALL GRADE

                                                         Transparency and
                                                                              Policies
                            F               D              D+                 B+         Abercrombie & Fitch*              D
                                                                                                                                                                                                                                                                                                                                                          OVERVIEW

                            C+              B              A+                 A+         adidas                            A–
                            F               C              C+                 B+         ALDI Stores                       C–
                            F               F              F                  F          Ally Fashion*                     F

non-responsive companies
                            C–              C–             D+                 A–         Anthea Crawford*                  C

                                                                                                                                           Overall Grades: A– N
                            B–              A–             A+                 A+         APG & Co                          A–
                            D–              C–             B–                 A+         Arcadia Group                     C+
                            D               B              C+                 A–         AS Colour                         C+
                            D–              C              B                  A          ASICS                             C+
                            C–              B–             A–                 A+         ASOS                              B+
                            F               D              D+                 C          Bardot                            D
                            D               C+             C+                 A+         Barkers Clothing                  C+
                                                                                                                                                                                            exploitation in their supply chains.
                                                                                                                                                                                                                                                                                                                                                          EXECUTIVE SUMMARY

                            D–              C–             D+                 B+         Ben Sherman Australia             C–
                            D–              C–             C                  A          Best & Less                       C
                            F               F              F                  B          Betts Group                       D–
                            D–              D+             C                  A          Big W                             C
                                                                                                                                                                                            This is the fifth report produced by Baptist

                            D               C              C–                 A–         Billabong                         C
                                                                                                                                                                                            the risks of forced labour, child labour and

                            F               F              F                  F          Bloch*                            F
                                                                                                                                                                                            It grades 114 companies, from A to F, on the
                                                                                                                                                                                            World Aid Australia examining labour rights

                                                                                                                                                                                            strength of their systems to mitigate against

                            F               D–             C–                 C          Blue Illusion                     D
                                                                                                                                                                                            management systems in the fashion industry.

                            D–              C–             C                  A          Boden                             C
                            F               D+             D                  C+         Boohoo                            D
                            D–              D+             C+                 A          Brand Collective (Apparel)        C
                            D               C–             B                  A          Brand Collective (Footwear)       C+
                            F               F              F                  D+         Bras N Things*                    F
                            F               D+             B–                 A+         Coles                             C
                            A+              A              A+                 A+         Common Good                       A+
                            B               A              A+                 A+         Cotton On Group                   A
                            B–              A–             A                  A+         Country Road Group                A–
                            D+              C              D                  A          Cue                               C
                            D–              B–             B–                 A+         David Jones                       B–
                            F               D–             D+                 A+         De Vere Textiles (RUBY Apparel)   D+
                            F               F              F                  C          Decjuba*                          F
                            D–              C+             C                  A+         Designworks                       C
                            C–              B–             A                  A+         Esprit                            B+
                            A+              A–             A                  A+         Etiko                             A+
                            F               D              D+                 A–         Ezibuy                            D+
                            D               D+             B                  A+         Factory X                         C+
                            F               F              F                  B+         Farmers*                          D–
                            F               D–             D                  A–         Fast Future Brands                D
                            F               F              D+                 A–         Forever 21                        D
                            D+              C+             A–                 A          Forever New                       B–
                            A               A+             A+                 A+         Freeset                           A+
                            D–              F              C                  A–         Fruit of the Loom*                D+
                            D–              C              A–                 A+         Gap Inc.                          B–
                                                                                                                                                                            investors, and governments everywhere.

                            F               F              F                  A–         Gazal*                            D–
                                                                                                                                                                            On April 24, 2013, the Rana Plaza building

                            D               C              C+                 A+         General Pants Group               C+
                                                                                                                                                                            shocked the world, catapulting the plight of

                            D+              A–             A–                 A+         Gildan Activewear                 B+
                                                                                                                                                                            collapsed just outside of Dhaka, Bangladesh,
                                                                                                                                                                                                                                                                                                        the worst garment-factory disaster in history.

                                                                                                                                                                            injuring thousands more. It was a disaster that

                            D               C–             B+                 A+         Gorman                            C+
                                                                                                                                                                            claiming the lives of 1,134 garment workers and
                                                                                                                                                                                                                                                                                                        It has been five years since the world witnessed

                            D+              B–             A–                 A+         H&M                               B+
                                                                                                                                                                            workers into the minds of consumers, companies,

                            C+              B              A–                 A+         Hallenstein Glasson Holdings      B+
                            B–              A–             A–                 A+         Hanesbrands                       A–
                            F               F              F                  F          House of Quirky*                  F
                            D               D+             B+                 A+         Hugo Boss Group                   C+
                            A–              A              A+                 A+         Icebreaker                        A+
                            B–              A              A                  A+         Inditex                           A–
                            B+              B–             B+                 A+         Industrie                         B+
                            D+              B+             A–                 A+         Jeanswest                         B+
                            F               C              C+                 A+         JETS                              C
                            D+              C+             C+                 A+         Just Group                        C+
                                                                                                                                                                                                                                                                        to be made.

                            F               F              F                  F          K&K*                              F
                            D–              C+             C                  A–         Karen Walker*                     C
                            B+              B+             A+                 A+         Kathmandu                         A
                            D+              B              A–                 A+         Kmart                             B+
                            D+              B              B–                 A+         Kookai                            B–
                            A+              A              A–                 A+         Kowtow                            A
                            F               D+             C–                 B+         L Brands*                         D+
                            F               D–             D                  A          Lacoste                           D+
                            D–              C+             A–                 A+         Levi Strauss & Co*                B–
                            D+              B–             C–                 B          Lorna Jane                        C
                            F               F              F                  B          Lowes*                            D–
                            C+              A+             A–                 A+         Lululemon Athletica               A–
                            D               B–             B                  A+         Macpac                            B
                            D               C              A–                 A+         Marks & Spencer                   B
                            F               D              C–                 A          Max*                              D+
                            A+              A–             A+                 A+         Mighty Good Group                 A+
                            F               F              D                  B+         Munro Footwear Group              D
                            D               C              B–                 A          Myer                              C+
                                                                                                                                                                                                                                                                        responded by improving its systems, forming

                            D               C+             A–                 A+         New Balance                       B
                                                                                                                                                                                                                                                                        new alliances, and becoming more transparent.

                            D–              C+             B+                 A+         Next                              B–
                                                                                                                                                                                                                    The 2018 Ethical Fashion Report (The Report) is

                                                                                                                                                                  For five years, The Report has been tracking the
                                                                                                                                                                  systems that companies have in place to uphold
                                                                                                                                                                                                                    the fifth released by Baptist World Aid Australia.

                            D–              C              B+                 A+         Nike                              B–
                                                                                                                                                                                                                                                                        Since then, the global fashion industry has largely

                                                                                                                                                                                                                                                                        However, there is still a great deal of improvement

                            F               D              D+                 A–         Noni B Group                      D+
                            B–              B–             A                  A+         Nudie Jeans                       A–
5
The 2018 Ethical Fashion Report - THE TRUTH BEHIND THE BARCODE - Tearfund
EXECUTIVE SUMMARY
OVERVIEW

the rights of workers. These rights include the        of child labour, forced labour, and exploitation.
right to a safe work place, a living wage, and the     Excitingly, in addition to its traditional focus on
                                                                                                                   These 114 companies represent 407 brands.
freedom from forced and child labour.                  labour rights, The 2018 Report also includes                To check brand grades, go to the brand
Since its first edition in 2013, The Report has         preliminary data on the global fashion industry’s           index on page 55 or the online fast finder
                                                       environmental performance. 77% of assessed
continued to grow in scope. This year, it grades the                                                               at www.behindthebarcode.org.au
practices of 114 companies (from A–F), assessing       companies actively engaged in the research
the strength of those systems to mitigate the risk     process.

Overall Grades: O– Z
                      A+

                      D+

                      D+

                      D+

                      D+
                      C+

                      C+
                      C+

                      C+
                      B+

                      D–

                      C–

                      C–
                      B–

                      B–

OVERALL GRADE
                      A

                      A
                      D

                      D
                      C

                      C

                      C
                      B

                      B

                      B

                      B

                      B
                      F

                      F

                      F

                      F
                      F
                      Pavement United Brands*

                      Voyager Distributing Co*
                      Specialty Fashion Group
                      Simon de Winter Group

                      The Warehouse Group*
                      Retail Apparel Group

                      Target Australia

                      The PAS Group

                      Trelise Cooper*
                      Outland Denim

                      Wish Designs*
                      Seed Heritage
                      Ralph Lauren*

                      Sussan Group
                      Rodd & Gunn

                      Zimmermann
                      R.M. Williams

                      THE ICONIC*
                      Roger David

                                                                                                                                                               © ILO/Nguyen Viet Thanh, via: https://flic.kr/p/TEP7SN
                      Tree of Life
                      PVH Corp*
                      Patagonia

                      UNIQLO*
                      Tigerlily*

                      VF Corp
                      Rip Curl

                      Seafolly
                      Postie+

                      RREPP
                      Oxford

                      Puma

                      T&T*
                      A+

                      A+

                      A+
                      A+
                      A+
                      A+

                      A+
                      A+

                      A+
                      A+
                      A+

                      A+

                      A+
                      B+
                      A–

                      A–

           Policies
                      A

                      A

                      A
                      A
                      A

                      A
                      A

                      A

                      A
                      B
                      F

                      F

                      F

                      F

                      F
                      F

Transparency and
                      A+

                      A+

                      A+
                      D+

                      D+
                      D+

                      D+
                      C+

                      C+
                      B+
                      D–

                      D–

                      A–

                      A–

                      A–

                      A–
                      C–
                      B–

                      B–

                      B–

                      B–
                      A

                      D

                      D
                      C

                      C

                      C

                      C

      traceability
                      F

                      F

                      F
                      F

      Auditing and
                      A+

                      D+
                      D+

                      D+
                      D+

                      D+
                      C+
                      B+

                      B+

                      B+
                      D–

                      D–

                      D–
                      A–

                      B–

           supplier
                      A

                      D

                      D

                      D
                      C

                      C

                      C

                      C
                      B

                      B

                      B
                      F

                      F

                      F

                      F

                      F
                      F

      relationships

          Worker
                      A+

                      D+

                      D+

                      D+

                      D+
                      B+
                      D–

                      D–

                      D–
                      C–

                      C–

                      C–
                      B–

                      D
                      D

                      D

                      D

                      C

     empowerment
                      F

                      F

                      F

                      F

                      F
                      F

                      F

                      F
                      F

                      F

                      F
                      F

                      F
                      F

                                                                                    Workers at a Hung Yen-based garment factory in Vietnam.
*=    non-responsive companies

                                                                                                                                                                                                                       6
The 2018 Ethical Fashion Report - THE TRUTH BEHIND THE BARCODE - Tearfund
EXECUTIVE SUMMARY
INDUSTRY OVERVIEW

                                          C+                                           18                    A              11         F

  companies assessed                    median grade                        companies received                        companies received
                                                                              A range grades                              F grades

          2017                  2018                                                                                            For the first time, we
                                                                                                                                have assessed
                                                                                                                                companies on their

           26%                    34%                                                                                           gender policies and
                                                                                                                                strategies. Only 22% of
                                                                                                                                companies had both a
                                                                                                                                policy and strategy to
While transparency remains a challenge in the industry,                                                                         address gender
we celebrate the continued improvements here. The                                                                               inequality and
percentage of companies publishing full direct supplier                                                                         discrimination in their
lists has increased from 26% to 34% in the last year alone.                                                                     supply chain.
                                                              © ILO/Aaron Santos, via: https://flic.kr/p/hJVRDu

                                                                                                                          Worker Empowerment remains
Tracing of raw materials remains a significant

                                                                                                                 D-
                                                                                                                          the area where the most work
challenge, with just 7% of companies knowing
where all their raw materials, such as cotton,
are coming from.
                                                        7%                                                                still needs to be done. The
                                                                                                                          median grade for that section
                                                                                                                          of our assessment is D–.

                                                                                                                                                          7
The 2018 Ethical Fashion Report - THE TRUTH BEHIND THE BARCODE - Tearfund
EXECUTIVE SUMMARY
INDUSTRY PROGRESS

Baptist World Aid Australia’s first report on       The scope of our research has expanded significantly:
the fashion industry was published in
2013; since then, we have seen the                 2013            41 companies
industry make significant progress in the           2018                            114 companies
quality of their labour rights management
                                                   2013                              128 brands
systems.
                                                   2018                                                                                407 brands
  We’ve seen a significant increase in
company responsiveness to the Ethical
 Fashion Report’s research since 2013:                                  Traceability reaching deeper into the supply chain of
                                                                          companies has increased over the last five years:
                               2018
                                                                                   2018                                        2018
     2013
                                                             Companies             2013                     Companies
                                                                                                                               2013
                                                             working to      78%                            working to trace
                                                             trace where                                    where their raw
                                                                                                                                            17%
                                         77%                 their fabrics
                                                             come from:
                                                                                                            materials come
                                                                                                            from:
              54%                                                                     49%

                                                                                                                                      42%

In 2013, just one sixth of companies that were            The percentage of companies tracking the presence
                                                          of democratically elected unions and collective        2013                 24%
assessed were publishing supplier lists – in the
                                                          bargaining agreements in their final stage factories
2018 Report, the proportion is one third.                 has had significant improvement since 2013.             2018                             44%

                                                                                                                                                    8
The 2018 Ethical Fashion Report - THE TRUTH BEHIND THE BARCODE - Tearfund
EXECUTIVE SUMMARY
WHO MAKES OUR CLOTHES?

Who Makes our Clothes?
Increasingly, the world’s population is clothed by
                                                         SHARE OF GLOBAL CLOTHING EXPORTS
workers in the Asia-Pacific. Across the region,
in low and middle-income countries, 43 million            China – 36.4%            Turkey – 3.4%
people work in factories to produce garments,
textiles, and footwear.1 India constitutes the biggest    European Union – 26.4%   Indonesia – 1.7%
share of these workers at 16.7 million, followed by
China (6.2 million), and Bangladesh (4.9 million).2       Bangladesh – 6.4%        Cambodia – 1.4%
However, despite the quantity of workers in India,
                                                          Vietnam – 5.5%           USA – 1.3%
it is still China (with 37.2% of the market) that
commands the largest share of global clothing             India – 4%               Other – 13.5%
exports. Bangladesh, Vietnam, and India are
the next largest exporters in the region, with
6.3%, 6.4%, and 5.5% of global market share
respectively.4 China’s lower quantity of workers,
relative to its volume of exports, is partly explained
by the low availability of data outside urban
production hubs and partly explained by the
country’s higher rates of productivity.
The pattern of production has also been shifting in
recent years. Promisingly, in China, wage growth
has been averaging about 9.1% a year. This has had
beneficial impacts for workers; but at the same
time, has caused many companies to relocate
production to lower-cost markets. Bangladesh,
Vietnam, and Cambodia have seen the largest
increase in garment exports as a result (each
growing by between 5% and 6% per year).
                                                                                                Source: World Trade Organisation

                                                                                                                                   9
The 2018 Ethical Fashion Report - THE TRUTH BEHIND THE BARCODE - Tearfund
EXECUTIVE SUMMARY
WHO MAKES OUR CLOTHES?

                                             EMPLOYMENT IN THE GARMENT, TEXTILES AND FOOTWEAR INDUSTRY *
NUMBER OF
 WORKERS

    18 000

    16 000

    14 000

    12 000

    10 000

      8000

      6000

      4000

      2000

            0
                             )

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                                                                                                                                                                                               )

                                                                                                                                                                                                              2)
                            10

                                             16

                                                             13

                                                                           15

                                                                                          12

                                                                                                            15

                                                                                                                            16

                                                                                                                                           16

                                                                                                                                                                             13

                                                                                                                                                                                            15

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                                                                                                                                                          /1
                                                                                         0
                                                         0

                                                                                                                                                                         0
                                                                          0

                                                                                                        0

                                                                                                                                                                                           0
                                           0

                                                                                                                        0

                                                                                                                                          0
                         0

                                                                                                                                                         14

                                                                                                                                                                                                         11
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                                                        (2

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                       (2

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                                                                                                                                                                                                                   * = latest year available 3
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Source: International Labor Organisation

                                                                                                                                                                                                                                                 10
EXECUTIVE SUMMARY
INDUSTRY CONCERNS

Concerns for Worker Rights                              The risk occurs at multiple points of the supply          The risk of child labour in manufacturing is also
For the 43 million workers of the Asia-Pacific,          chain — with manufacturing accounting for about           significant, with the ILO estimating 18 million
and for millions of others across the world, the        15% of forced labourers, while agriculture accounts       victims may exist.10
global fashion industry is a significant provider        for a further 11%.6 Women, who make up the                The United States Department of Labor reports
of jobs. It also spurs economic growth, generates       largest proportion of garment producers, are also         that child labour is used in garment, textile, and
tax revenue, provides valuable skills and training,     more vulnerable, accounting for 57.6% of all forced       footwear manufacturing in countries across
and delivers crucial foreign exchange. All of           labourers.                                                the Asia-Pacific. These include China, India,
these factors can, and often do, contribute             According to risk analytics released by Verisk            Bangladesh, Malaysia, Vietnam, Indonesia,
to improving the lives of these workers and             Maplecroft, most of the world’s largest garment           Cambodia, and Pakistan.11
their communities.                                      exporters — such as China, Bangladesh, India,
At the same time however, the global fashion            Vietnam, and Cambodia — are all rated “high” or
industry can be a place of exploitation for millions.   “extreme” on the risk of forced labour.7
For the majority of workers in the global fashion
industry, wages are so low that they leave them,        Child Labour in the Fashion Industry
and their families, trapped in poverty. Beyond this,    Child labour, particularly in the production of raw
fashion production throughout the Asia-Pacific is        materials like cotton, is prevalent in fashion supply
marred by the presence of slavery, and problems         chains.
of child labour remain persistent.                      The ILO reports that there are 152 million child
Though safety standards are improving                   labourers in the world. The majority, 71%
(particularly in Bangladesh), fire safety, structural    (108 million), can be found in the agricultural sector.
defects in factories, and unsafe working conditions     Cotton production carries an especially high risk
have not yet been adequately addressed.                 of child labour, with almost every major cotton-
                                                        producing country being impacted. These include
Forced Labour in the Fashion Industry                   China, India, Brazil, Pakistan, Turkey, Uzbekistan,

                                                                                                                                                                       © ILO, via https://flic.kr/p/BSap2L
Fashion is a high-risk industry for forced labour.      Turkmenistan, and the United States.8 Cotton
The International Labour Organisation (ILO) and         from Turkmenistan is of particular concern, with
Walk Free estimate that there are 24.9 million          child labour and forced labour being widespread
forced labourers in the world, with 60% of them         and state sponsored.9 Among the large cotton
being exploited by private enterprise. Two thirds of    producing nations, Australia is one of only a few
forced labour victims are in the same region where      exceptions to this trend.
the majority of the world’s garment production
takes place: the Asia-Pacific.5

                                                                                                                                                                                                            11
EXECUTIVE SUMMARY
KEY FINDINGS

Key Findings                                             final stage of manufacturing. Beyond this, Outland     materials) and, like APG and Co, has invested in
Effective labour rights management systems are           Denim, Common Good, and Etiko were able to            developing long-term supplier relationships. Both
critical to addressing the risks outlined above. It is   demonstrate that living wages are also being paid     companies receive an A– grade.
now widely accepted that a significant share of the       at their input suppliers.                             Outdoor fashion companies, as a subset of the
responsibility rests with companies themselves. In       Cotton On Group has demonstrated continuous           broader global fashion industry, continue to shine.
many instances, companies have pursued lower             improvement since the first edition of The Report.     Icebreaker, being the best graded amongst its
costs by moving production to regions with poorer        It is now the best rated, large multinational         peers, receives an A+ grade. Both Patagonia and
industrial relations systems and lower institutional     headquartered in Australia. This year, Cotton On      Kathmandu receive A grades.
capacity.                                                Group receives an A grade, with its progress driven   Conversely, several companies have received F
Since the first campaigns against sweatshops              by several factors.                                   grades in consecutive editions of The Report.
in the mid-90s, companies have increasingly              For the past three years, Cotton On Group has         These are Ally Fashion, Bloch, Decjuba, Wish and
recognised that they cannot outsource                    been committed to tracing deeper into the supply      Voyager Distributing (brands include Ping Pong
responsibility to third parties; that they themselves    chain, all the way to raw materials. It can now       and Kachel).
must exercise adequate due diligence to address          trace between 50% and 70% of its raw materials,
risk. Global frameworks, such as the United                                                                    In most instances, the F grade has been awarded
                                                         sourcing much of its cotton through a combination     because companies have little or no publicly
Nations Guiding Principles on Business and Human         of the Better Cotton Initiative and its in-house
Rights, and the Sustainable Development Goals                                                                  available information to assess their systems
                                                         “Kwale Cotton Program” (this program is further       and, additionally, chose not to engage with The
support this understanding.                              highlighted on page 43 of The Report). Cotton On      Report’s research process.
                                                         has also become increasingly transparent about its
Company Performance                                      suppliers and has invested substantial resource in    Without transparency, it is almost impossible for
A small cohort of companies in The Report                supplier training.                                    consumers to trust that these companies have
were found to have exceptional labour rights                                                                   sufficient systems to ensure that the rights of
                                                         Similarly, APG and Co and Country Road                workers are being upheld. The F Grade is not an
management systems — including Outland Denim,            Group have each invested substantially in their
Common Good, Icebreaker, Freeset, Etiko, and the                                                               assertion that these brands necessarily have poor
                                                         systems. They too can demonstrate year on year        labour rights management systems, but merely
Mighty Good Group. Each of these companies               improvement.
receive an A+. They knew their supply chains from                                                              that their labour rights management systems are
farm to factory and had intentionally invested           APG and Co’s work towards developing long-            not sufficiently visible for assessment.
in developing quality relationships with their           lasting and quality relationships with suppliers,
suppliers. In most instances, these companies were       along with its efforts to ensure that workers can     Supplier Knowledge
transparent about who their suppliers are. They          unionise, cooperate, and bargain collectively is      Supplier knowledge is a key pillar of a strong
were also able to demonstrate that workers had           commendable.                                          labour rights management system. If companies
an avenue to collectively agitate for their rights       Country Road Group has demonstrated increasing        don’t know (or don’t care) who their suppliers
and that living wages are being paid in at least the     knowledge of its suppliers (back to its raw           are, then there’s virtually no way of ensuring

                                                                                                                                                                     12
EXECUTIVE SUMMARY
KEY FINDINGS

that the workers who make their products aren’t                               raw materials tracing was largely restricted to
being exploited. It is encouraging then, that this                            Fairtrade companies. Now 42% of companies are           Companies that have begun
continues to be one of the most significant areas                              seeking to trace their cotton suppliers, with many
of improvement for the industry.                                              collaborating through the Better Cotton Initiative
                                                                                                                                      publishing their supplier lists
This year, The Report found that more than 82%                                (BCI) to do so.                                         • ASOS                  • Icebreaker
of companies knew more than three quarters of                                 BCI is a multi-stakeholder initiative that works        • Barkers Clothing      • Jeanswest
their final stage manufacturing suppliers (first tier).                         with brands, NGOs, farms, and cotton-traders to                                   (Published after our
                                                                                                                                      • Common Good
For the majority of companies, it is at this stage                            improve social and environmental protections and                                  research cut-off)
of the supply chain that they have the strongest                              increase farm yields.                                   • Etiko
                                                                                                                                                              • JETS
relationships and most control. Thanks to this                                                                                        • Factory X
                                                                              All Fairtrade companies excel at cotton-tracing                                 • Kathmandu
strong visibility, the worst forms of exploitation,                                                                                   • Gorman
                                                                              and ensuring that robust systems are in place
forced labour and child labour, are now far less                                                                                                              • Next
                                                                              to protect workers in their cotton fields. This          • Hallenstein
prevalent in the actual manufacturing of garments                                                                                                             • The Warehouse
                                                                              cohort includes RREPP, Etiko, Mighty Good Group,          Glasson Holdings
(though are still present in many cases).                                                                                                                       Group
                                                                              Freeset, Common Good, and Kowtow Clothing.
However, deeper into the supply chain, where
                                                                              Amongst non-Fairtrade companies, Cotton On
there is far less visibility, the risks remain
                                                                              Group, adidas, and Country Road Group show
substantial. Encouragingly, more and more
                                                                              yearly increases in their use of traceable cotton.   willingness to be accountable to consumers, civil
companies are identifying their suppliers beyond
                                                                              adidas is currently using 60% BCI cotton and has     society, and workers; and makes it easier for these
the first tier. In fact, The Report found that 78%
                                                                              planned to increase this amount to 100% by the       groups to collaborate to ensure the rights of
of companies are now actively tracing their fabric
                                                                              end of the year.                                     workers are upheld.
suppliers (second tier); this is up from 49% in 2013.
37% of companies now know more than 75% of                                    Kathmandu remains a stand out performer              One significant element of transparency is the
their second-tier suppliers, up from 24% in 2013.                             when it comes to tracing raw materials. By using     publication of a list of suppliers that includes their
                                                                              a combination of BCI and Fairtrade cotton,           business names and addresses. Since the first
But one of the most exciting areas of improvement
                                                                              Kathmandu has traced three quarters of its cotton    edition of The Report, the proportion of companies
is in supplier knowledge of raw materials (third tier,
                                                                              supply and, through The Responsible Down             publishing supplier lists has substantially increased
usually cotton farms). This improved knowledge
                                                                              Standard*, has traced 100% of its down supply.       every year. In 2013, it was just 16% of companies
has, in most cases, been coupled with improved
                                                                                                                                   publishing supplier lists. This year, the proportion
systems to address exploitation.
                                                                              Transparency                                         is 34%. In the last twelve months alone, at least 13
When Baptist World Aid Australia began this                                   One of the most notable positive trends for the      companies have begun publishing their supplier
research in 2013, most companies argued that                                  global fashion industry has been the improved        lists, including those highlighted on this page.
tracing back to the farm was outside their                                    corporate transparency around supply chain           In this year’s edition of The Report, in line with the
scope of control and responsibility. At the time,                             practices. Transparency demonstrates a company’s     Transparency Pledge, an initiative put forward by

* The Responsible Down Standard ensures that all down and feathers comes from ducks and geese
  that have been well treated. See more at http://responsibledown.org/ (accurate at 3rd April 2018).
                                                                                                                                                                                            13
EXECUTIVE SUMMARY
KEY FINDINGS
                                                                                                                                                  © ILO/Nguyen A., via: https://flic.kr/p/nsuGiC

a coalition of civil society groups including Human     companies that did not engage. However, due
Rights Watch,12 Baptist World Aid Australia has         to their high levels of public transparency, both
begun to collect data to assess which companies         companies were graded relatively well, receiving
are going beyond minimum standards for                  a B- grade. Notably, non-responsive companies
transparency, by providing detailed information on      The Warehouse, Karen Walker, and Anthea
suppliers in line with industry best practice.          Crawford, all receive C grades, largely due to their
                                                        commitment to public transparency.
The Report identifies that 18% of companies are
providing significant detail on their suppliers          However, several companies have chosen not
— including such information as the number of           to disclose or make any information publicly
workers, a breakdown by gender, the types of            available. Without this information, it becomes
products being produced, and any corrective             almost impossible for the public to know whether
action plans on the facility.                           companies are investing sufficiently to ensure that
                                                        workers are not being exploited. For this reason,
This information makes it far easier for journalists,
                                                        these companies receive an F grade in The Report.
NGOs, workers, and unions to verify that the
claims companies make about their labour rights         For more information about the research
systems are accurate, and that a company’s labour       process and non-responsive companies, refer
rights systems are working as intended.                 to the methodology (page 18). Non-responsive
                                                        companies were also given the opportunity to
Non-Responsive Companies                                provide a statement about why they chose not
and Low Transparency                                    to engage with this research. These statements are
Low transparency is one of the biggest                  included on page 93.
determinants for the receipt of a low grade in The
Report, because companies are graded based on a         Living Wage
combination of publicly available information, and      The global fashion industry continues to grow each
any information they are willing to disclose to The     year and is among the most labour-intensive in the
Report’s researchers.                                   world. It is also a significant driver of employment
                                                        for groups that have been traditionally vulnerable
As mentioned previously, 77% of companies
                                                        — women, migrants, and young people. In
choose to engage with The Report’s research, with
                                                        some cases, the industry has been a source for
most companies seeing value in the process
                                                        empowerment and a stepping stone to a better
of being benchmarked and gaining feedback.
                                                        life for these individuals. However, too often, it has
Levi Straus and PVH Corp (producer of Tommy             become a facilitator of exploitation.                    A Worker in Dong Nai, Vietnam.
Hilfiger and Calvin Klein brands) are examples of

                                                                                                                                                                                        14
EXECUTIVE SUMMARY
KEY FINDINGS

A wage that is sufficient for workers to be able to         a corporate labour rights system is genuinely          Among larger producers, Hanesbrands is one
afford the basics (food, water, healthcare, clothing,      responsive to the needs of workers.                    of the leading companies. More than 70% of its
electricity, and education) for themselves and their       It is encouraging that more companies are              manufacturing, and a significant proportion of its
dependants — a living wage — is recognised as              increasingly taking the challenge of paying a living   fabrics production, comes from company-owned
a human right. Yet most garment sector workers             wage seriously. 34% have adopted a methodology         facilities. Hanesbrands has worked with economists
receive wages well below this. It comes as no              to calculate a living wage. Worryingly however,        and conducted an extensive benchmark of its
surprise, then, that low wages are among the chief         only 17% of companies could demonstrate that           workers in these facilities to estimate what level
concerns for workers.13                                    workers, in any part of their final stage of the        of household income is needed to cover the basic
In Bangladesh, the minimum entry level wage for a          supply chain were receiving a living wage. Only        needs of workers. They have then ensured that all
garment worker is US$63 per month. Calculations            one in 20 companies demonstrated that all              workers are paid more than this amount.
by the Global Alliance for a living wage suggest           workers at their final stage were being paid such       Other commendable efforts include Kmart
that a fair living wage would be approximately             wages.                                                 Australia, which has benchmarked wages in a few
US$214 per month for Dhaka and US$177 per                  Fairtrade brands and Outland Denim are                 of its Bangladeshi facilities and is now beginning
month for satellite cities around Dhaka. However,          the standouts in The Report when it comes              to implement initiatives to raise wage levels.
even in the satellite cities, this estimation of a         to ensuring that a living wage is being paid.          Companies that produce in Australia and are
living wage is 2.8 times the current amount paid           Outland Denim owns its factory at the first tier of     accredited with Ethical Clothing Australia (ECA)
to an entry level worker. In Vietnam, the minimum          production. They have developed a living wage          are also noteworthy. ECA ensures that wage levels
wage is US$153 per month, nearly half that of the          methodology, partnering with their workforce to        and working conditions for Australian production
estimated living wage at US$290 per month.14               understand what a fair living wage looks like in       (at a minimum) meet with Australian standards.
The benefits of a living wage are substantial. In           the region where they operate. Outland Denim           Companies accredited with ECA include Anthea
fact, payment of a living wage could transform             also ensure that this wage is paid, as a minimum,      Crawford, Cue Clothing, and R.M Williams.
the lives of millions by allowing people to lift           to all workers and seek out fabric suppliers with
themselves out of poverty; and, at the same time,          a track record of promoting labour rights. For
drive economic growth within communities and               example, workers from their primary fabric supplier
nations. Living wages also mean that parents earn          receive wages arrived at by a collective bargaining
enough to send their children to school, rather            agreement. And Outland Denim has demonstrated
than to factories. This would mean that, where             that these wages are consistent with a living wage
such wages are paid, the likelihood of other forms         in the region.
of exploitation, such as forced labour and child           Common Good and Etiko could likewise
labour, fall dramatically. It is also worth noting that,   demonstrate that living wages are being paid to all
given the importance of wages to workers, being            workers for their final stage production, and in the
able to demonstrate that workers are receiving a           production of their fabrics.
living wage, is one of the most telling signs that

                                                                                                                                                                       15
EXECUTIVE SUMMARY
NEW AREAS OF RESEARCH

New Areas of Research                                    them a living wage; their work will also include               This preliminary research is telling. It demonstrates
                                                         efforts to address impacts on the environment.                 a significant correlation between the strongest
Gender                                                                                                                  labour rights performers and strong environmental
                                                         This year, Baptist World Aid Australia began an
This year, for the first time, The Report’s grading       initial assessment of companies’ efforts to mitigate           systems; and, while large global firms (in most
metric assesses companies on their gender                their environmental impact. We asked 11 questions              instances) had some environmental systems in
policies and strategies. Women represent about           that looked at impacts on the climate, at chemical             place, firms headquartered in Australia and New
80% of global garment workers.15 Despite this,           management practices, at water usage, the use of               Zealand are largely trailing behind their international
gender-based discrimination in recruitment,              sustainable fibres, the provision of take back and              counterparts. It the hope of the Baptist World Aid
and sexual harassment, are widespread in the             repair programs and finally, on whether companies               Australia and Tearfund New Zealand research team
workplace. All countries in the Asia-Pacific report       have completed an environmental impact                         (The Research Team) that benchmarking efforts
a gender pay gap. The gap is most significant in          assessment.                                                    will spur progress on this critical issue.
Pakistan, India, and Sri-Lanka at 66.5%, 35.3%, and                                                                     See page 51 for further information about this
30.3% respectively.16                                    While assessments of environmental systems will
                                                         not impact the grades awarded to companies in                  environmental benchmarking approach, including
Given the importance of women in the garment             this year’s report, it is anticipated that they will           a full list of questions asked and who the strongest
production workforce, and the widespread                 form a part of the grading system in future reports.           performers were — according to preliminary
evidence of discrimination, best practice for                                                                           research.
companies operating in the global fashion industry
should include specific policies on gender, and
strategies to mitigate discrimination and ill-
treatment of women in the supply chain.
The Report found that just over one fifth of
companies (22%) had a robust gender policy and
strategy, while a further 16% received partial credit.
In most cases these companies had a policy but
no clear strategy for implementation.

                                                                                                                                                                                  © ILO, via https://flic.kr/p/FH57fk
Benchmarking Environmental Performance
The Report has been a driver for continuous
improvement in labour rights management
systems in the global fashion supply chains for
five years. However, the authors acknowledge that
an ethical company goes beyond empowering
workers throughout their supply chain and paying
                                                         Workers unions at an International Womens Day event organized by Pakistan Workers’ Federation in 2016.

                                                                                                                                                                                                    16
EXECUTIVE SUMMARY
                                                   CONCLUDING REMARKS

                                                   Concluding Remarks                                             The fashion industry employs 749,000 workers         Around the world (in the state of California, the
                                                   The global fashion industry has potential to be                in Cambodia, representing 59.7% of the total         United Kingdom, and the European Union), various
                                                   a tremendous force for good. Its significance for               manufacturing workforce and 5% of the                government bodies have enacted legislation that
                                                   the nation of Cambodia powerfully illustrates this             population.17 In 2015, the industry made up 11%      requires companies to disclose what they’re doing
                                                   point.                                                         of the economy, contributed a full 2 percentage      to address the risk of exploitation throughout
                                                                                                                  points to the nation’s 7% growth rate, and made      their supply chains. The French and the Dutch
© ILO/Aaron Santos, via: https://flic.kr/p/hJWj2X

                                                                                                                  up a full 80% of the country’s total merchandise     governments have gone a step further, calling for
                                                                                                                  exports.18                                           mandatory plans to address labour rights and
                                                                                                                  Minimum wages for garment workers have also          environmental risks. The Australian government,
                                                                                                                  been increasing in Cambodia. From just US$62         inspired by the UK’s Modern Slavery Act, has
                                                                                                                  per month in 2012, garment worker wages have         announced that it will adopt legislation by the end
                                                                                                                  increased to US$170 per month today.19               of 2018 (see more on page 29).

                                                                                                                  This brief case study illustrates how the global     While this shift in expectations is welcome — and
                                                                                                                  fashion industry can fuel the growth of economies    the progress made by the global fashion industry
                                                                                                                  and, at the same time, facilitate a road out of      is commendable — consumers, companies, and
                                                                                                                  poverty for hundreds of thousands of people and      governments can still do more to fight exploitation.
                                                                                                                  their families.                                      Consumers should continue to preference those
                                                                                                                  However, Cambodia’s story also demonstrates          companies doing the most to uphold the rights
                                                                                                                  that the global fashion industry drives oppression   of workers in their supply chains, and call on
                                                                                                                  and exploitation. Achieving this wage increase       those that aren’t to do better. Companies should
                                                                                                                  has not been without its costs, culminating in       continue to strengthen their labour rights systems
                                                                                                                  deadly government crackdowns. On January 3,          and ensure that workers — from farm to factory
                                                                                                                  2014, garment workers held a strike for improved     — receive a living wage. And the Australian and
                                                                                                                  pay, ultimately leading to violence which left       New Zealand governments should introduce
                                                                                                                  four people dead and dozens more injured and         robust legislation requiring companies to publicly
                                                                                                                  imprisoned.20 More recently, new laws introduced     report on the measures taken to address the risk
                                                                                                                  by the Cambodian Government have stifled union        exploitation throughout their supply chains.
                                                                                                                  activity.21                                          The intention of The Report is to assist these
                                                                                                                  More and more across the global fashion              efforts, and, in doing so, help the global fashion
                                                                                                                  industry, consumers, investors, and, increasingly,   industry realise its potential to contribute to a
                                                   Ando International, a Vietnamese garment firm with 900
                                                                                                                  governments expect companies to ensure               world free from poverty and exploitation.
                                                   workers in Ho Chi Min City, has improved significantly in
                                                   labour standards since joining Better Work Vietnam, a labour   that they have systems in place to mitigate the
                                                   rights improvement initiative.                                 exploitation of workers and uphold their rights.

                                                                                                                                                                                                                             17
2
Methodology
        This section outlines the aims and scope of our
        research, the process of data collection and
        evaluation, and our company grading system.

                                                          18
METHODOLOGY

This research provides a picture of ethical            The Report does not directly grade companies
sourcing practices in the fashion industry             on their environmental impact. The intent is that
                                                                                                                Comment on non-responsive
                                                       environment impact will become a key metric for
as a resource for consumers, corporations,                                                                      companies
                                                       grading in the future.
investors, and policymakers.                                                                                    Companies which are non-responsive,
                                                       In 2018, The Report covered 114 companies                along with those that do not provide any
                                                       of varying sizes, across men’s, women’s, and             substantive information, are indicated in
It seeks to empower consumers to make more             children’s fashion and footwear. It is worth             this report by an asterisk (*) next to their
informed and ethical choices in purchasing fashion     emphasising that The Research Team do not                name. These companies were also given the
and footwear, and provide insight into supply          conduct site inspections of factories as part of         opportunity to provide a short statement as
chain governance for investors. Its aim is to help     their grading. Therefore, company grades are not         to why they chose not to respond, and these
companies with benchmarking and learnings, as          an assessment of actual conditions in factories and      can be found on page 93.
well as identify issues for policymakers to address.   farms, but rather an analysis of the strength of a
By presenting the performance of companies,                                                                     We acknowledge that many of the non-
                                                       company’s labour rights systems. This research
relative to each other, via an A–F grading (updated                                                             responsive brands may be doing more to
                                                       relies on data that is publicly available, alongside
on an annual basis) the goal is to encourage                                                                    improve their ethical sourcing than we have
                                                       evidence of systems and practices provided by
individual companies, and the industry as a whole,                                                              been able to assess them on. However, if
                                                       companies themselves.
to engage in constant improvement of their ethical                                                              brands do not disclose, or are unwilling to
sourcing practices.                                                                                             disclose, what they are doing to ensure that
                                                       Data collection and evaluation                           workers are not exploited in their supply
At a system level, The Research Team recognise         As a proxy for the entire fashion supply chain, The      chains, then it becomes almost impossible
the positive impact that the global fashion            Report assesses a large selection of companies on        for consumers and the public to know if
industry can have around the world. The goal is        33 specific criteria, at three critical stages of the     these brands are investing sufficiently to
to contribute to ending worker exploitation and        supply chain.                                            mitigate these risks.
alleviating poverty in the developing countries
                                                       This tool has been developed with input from
where fashion is manufactured.
                                                       supply chain specialists, non-government
                                                       organisations (NGOs) and company experts.              on suppliers. The research tool (and The Report)
Scope of the research                                  Its criteria draws upon international standards,       is now largely regarded as one of the leading
The Report classifies the fashion manufacturing         including those articulated by the ILO, the            benchmarks for the global fashion industry.
supply chain into three stages of production: final     Sustainable Development Goals, and the United
stage, inputs stage, and raw materials stage — as      Nation’s Guiding Principles for Business and           In conducting a company evaluation, The Research
defined on on page 21. Across these three stages        Human Rights. The tool evolves over time, as we        Team assesses a company’s own publications
of production, this research considers four broad      incorporate new learnings and reflect industry          alongside any relevant independent reports and
themes of social responsibility: policies, knowing     best practice. For example, this year included a       data. The Research Team sends its findings —
suppliers, auditing/supplier relationships and         question about gender policy and strategy, and         marked against the assessment criteria — to the
worker voice — also defined on page 21.                 a question about publishing detailed information       company for comment and further input, which

                                                                                                                                                                 19
METHODOLOGY

is reviewed in turn. The Research Team seeks
to engage with companies, collect evidence,
and understand their processes and systems;
however, the research team does not conduct site
inspections as part of the grading process.
Beyond engaging brands, The Research Team
also works with relevant certifiers to get a better
understanding of what systems are covered by
their certification. Where companies use these
certifications, information from the certification
body is considered in the process of the
company’s assessment. Certification bodies that
have been engaged with include Better Cotton
Initiative (BCI), the Global Organic Textile Standard
(GOTS), Fairtrade and Ethical Clothing Australia

                                                                                                                                                              © ILO/Sarah-Jane Saltmarsh, via: https://flic.kr/p/e5FqXm
(ECA).
The Research Team actively seeks to engage
companies (and pursue contact with non-
responsive companies) using at least three
different mediums: phone calls, emails, and letters.
All non-responsive companies receive the findings
twice by post. Letters are also mailed to the
company’s Board Chair and CEO. This process
seeks to ensure that in almost every instance
where a brand has not responded, it is because it
has intentionally chosen not to do so.
In 2018, 77% of brands have engaged directly with
this research process.
                                                        Smiling graduates of a Ready Made Garment Course, as part of a program that works towards reforming
                                                        technical and vocational education and training in Bangladesh.

                                                                                                                                                              20
METHODOLOGY

What the research covers
                                                      Policies                     Transparency                  Auditing and Supplier              Worker Empowerment
The research collects and evaluates data
                                                                                   and Traceability              Relationships                      (and living wage)
from fashion companies using the following
classification of the supply chain and across the      Why it matters: Policies     Why it matters: In            Why it matters: Monitoring         Why it matters: For a labour
following themes of social responsibility.            form the standards           order to ensure that          facilities and building            rights system to improve
                                                      that brands want their       worker rights are being       relationships are critical to      working conditions, workers
                                                      production to adhere         upheld, brands need to        ensuring policies are adhered      must be empowered, allowed
                                                      to. They are the baseline    know which facilities         to and improvements in             a voice, and have their most
                  RAW MATERIALS
                                                      by which a brand can         are responsible for the       working conditions are             critical concerns addressed.
                  • Cotton (farming)                  measure the effectiveness    production of their           being delivered. While no          It is workers themselves who
                  • Wool, etc (husbandry,             of its overall efforts to    product.                      monitoring process is perfect,     have the best visibility of
                                                      uphold worker rights.                                      high quality monitoring            working conditions.
                    shearing etc)                                                  What we assess: How
                                                                                                                 helps to provide a better
                  • Crude Oil for synthetic           What we assess:              much of the supply                                               What we assess: Whether
                                                                                                                 understanding of the
                                                      Provisions to prohibit       chain a company has                                              workers are able to unite
                    fibres, plastics, etc              forced labour and child      traced; what it does to
                                                                                                                 conditions of workers. A focus
                                                                                                                                                    through democratic trade
                    (extraction, refining)                                                                        on strengthening relationships
                                                      labour, allow for freedom    monitor and address                                              unions; whether collective
                                                                                                                 allows trust building, and
                                                      of association and protect   subcontracting; what                                             bargaining agreements
                                                                                                                 increases a brand’s capacity
                                                      worker health and safety;    efforts it is undertaking                                        have been established;
                                                                                                                 to drive change.
                                                      whether a brand intends      to trace the remainder of                                        whether effective grievance
                                                      its policies to cover the    its supply chain; a brand’s   What we assess: What               mechanisms are in place;
                                                      entire production process;   transparency and how          percentage of production           whether workers are receiving
                  INPUTS PRODUCTION                   whether the brand is         willing they are to be        facilities are audited; whether    a living wage so they can
                                                      undertaking important        held accountable through      unannounced and offsite            support their families; a
                  • Textiles production
                                                      measures towards             the information it shares     worker interviews and              brand’s efforts in moving
                    (ginning, spinning, knitting,     improving working            about it’s supply chain.      anonymous worker surveys           towards paying a living wage.
                    dying, embroidery)                conditions in facilities.                                  are used; whether checks are
                  • Leather (tanning)                                                                            done on high risk activities
                  • Plastic (processing, moulding)                                                               like labour brokers and
                                                                                                                 recruitment fees; whether
                                                                                                                 the brand is willing to be
                                                                                                                 transparent about its results
                                                                                                                 and remedial actions; whether
                                                                                                                 brands are actively involved in
                                                                                                                 building supplier relationships
                                                                                                                 through consolidation,
                  FINAL STAGE PRODUCTION                                                                         collaboration, supplier training
                  • Cut-Make-Trim (CMT)                                                                          and long term relationship
                    manufacturing (cutting, sewing,                                                              building.
                    printing)

                                                                                                                                                                                    21
METHODOLOGY

Data Verification                                       Take, for example, the criteria relating to supplier     of protecting intellectual property but, rather, as a
To verify the data provided by companies,              lists and the criteria for living wage. In years past,   protection measure for vulnerable workers.
company responses are reviewed and clarification        partial credit has been awarded for publishing a         In this instance, publishing a factory list may do
and supporting documentation are sought where          supplier list, where a company has disclosed its         more to undermine the welfare of workers, than to
necessary. In some instances, the audit data           factories through the Bangladesh Accord on Fire          enhance it. While this did not impact the grading
provided by companies is relied upon to verify         and Building Safety. This year, however, in-line with    process, in the interest of transparency, the
conditions and benefits that workers receive.           prevailing industry best practice, no credit was         company has allowed Baptist Word Aid to visit its
                                                       given unless the company made their supplier             factory and to interview workers.
Wherever possible, The Research Team and
                                                       list publicly available, and suppliers were directly
company representatives work through the survey
                                                       traceable to the company (rather than to a group
questions, allowing both parties to be satisfied that
                                                       of companies, as is the case with the Bangladesh
                                                                                                                Grading
the data presented is an accurate representation                                                                The grades awarded in this report are a measure
                                                       Accord on Fire and Building Safety).
of the company’s policies and processes.                                                                        of the efforts undertaken by each company to
                                                       Similarly, in past reports, a partial credit on          mitigate the risks of forced labour, child labour,
To ensure consistency in the assessment of
                                                       living wage was given to companies that were             and worker exploitation throughout their supply
companies, after finalising company responses,
                                                       paying wages substantially above the minimum             chains. Higher grades correspond to companies
survey responses are cross-checked.
                                                       wage. This year, no credit was awarded without           with a labour rights management system that,
                                                       a company demonstrating that a supplier was              if implemented well, should reduce the risk and
Increased Validation Requirements                      paying a living wage to entry level workers, as          extent of worker exploitation in the production of
As part of this year’s research process, companies     benchmarked against an adequate living wage              that company’s products. Low graded companies
were provided with an Assessment Support               methodology.                                             are those that are not taking these initiatives, or
Document. The Assessment Support Document
                                                       The result is more robust data and, importantly,         those choosing not to disclose if they are taking
acted as a helpful guide for companies,
                                                       a survey tool that is in-line with prevailing best       such initiatives.
including a rationale for each survey question
                                                       practice across the global fashion industry.             It is important to note that a high grade does not
and several examples of what constitutes a
                                                       However, it has also meant that the rating of some       mean that a company has a supply chain which
strong labour rights system. The Assessment
                                                       companies (that, in previous years, would have           is free from exploitation. Rather, it is an indicator
Support Documents also detailed the validation
                                                       been awarded at least partial credit for these           of the efforts the company is undertaking and
requirements necessary for demonstrating that
                                                       survey responses) has been impacted.                     the strength of its systems to reduce the risk of
systems or policies asserted by companies to
be in place, were, indeed, in place. In several        Finally, there is one company graded by The              exploitation. Furthermore, The Report’s grading
instances, the level of supporting documentation       Report which was not marked down for                     methodology is designed to spread companies
or validation requested was greater than in            withholding the address of its final stage factory.       out along an A–F continuum, based on the relative
previous reports. Additionally, in a few instances,    Outland Denim intentionally employs former               strength of their efforts — similar to awarding
the threshold necessary to receive credit for a        victims of abuse and trafficking. It chooses to keep      grades on a bell curve (i.e. the best performers
question was increased.                                the address of its factory secret, not as a means

                                                                                                                                                                        22
METHODOLOGY

                                                                                                             receive A-range grades, the worst receive F
                                                                                                             grades, with many others in the middle).
                                                                                                             Some company structures own several brands
                                                                                                             with differing labour rights management systems.
                                                                                                             In these cases, The Report grades brands
                                                                                                             separately. Individual brands corresponding to a
                                                                                                             single company are listed, alongside their grade, in
                                                                                                             the Brand Index on page 55.

                                                                                                             Environmental Impact
                                                                                                             This year, we collected preliminary data on the
                                                                                                             industry’s efforts to manage environmental impact.
                                                                                                             A full description of how the environmental
                                                                                                             metrics were developed (including what questions
                                                                                                             were asked and why) can be found on page 51.
                                                                                                             While assessments of environmental systems will
                                                                                                             not impact grades awarded to companies in The
© ILO/Aaron Santos, via https://flic.kr/p/hJVjSD

                                                                                                             Report this year, it is anticipated that they will form
                                                                                                             part of the grading system in future.
                                                                                                             It is the hope of The Research Team that this will
                                                                                                             spur companies to understand their impact on the
                                                                                                             environment and take the actions necessary to see
                                                                                                             their industry become sustainable.

                                                  Workers at Ando International, a Vietnamese garment firm.

                                                                                                                                                                       23
3
Five Years since the
Rana Plaza Disaster
       In this section we remember and reflect on the fifth
       anniversary of the Rana Plaza Disaster – an event that
       shone a light on the darkest parts of the Fashion Industry.

                                                                     24
FIVE YEARS SINCE THE RANA PLAZA DISASTER

Five years ago, a disaster of such magnitude             flooding TV screens, that it began to take notice       such as the number of workers, the proportion of
occurred that the course of the fashion industry         and demand change. And through the combined            male to female workers, or the types of products
                                                         action of various stakeholders — including             being made.
was irreversibly changed.                                consumers, governments, garment workers, civil
                                                         society groups like Baptist World Aid Australia,       Government Initiatives
On 24 April 2013, Rana Plaza collapsed in the            and even fashion brands themselves — change            In countries where worker protections are weak
Savar district of Dhaka, Bangladesh, claiming the        is occurring.                                          or non-existent, abuses such as forced labour,
lives of 1,134 people and injuring over 2,000 more.                                                             human-trafficking, and slavery are rife. Exploitation
                                                         Five years on, we seek to honour the lives lost in
The eight-storey building took just 90 seconds to                                                               exists at every stage of the global garment
                                                         these three tragedies and reflect on the progress
be reduced to rubble.                                                                                           industry supply chain.
                                                         that has been made.
Appallingly, this disaster followed the site’s                                                                  Following the example set by California, the UK,
evacuation only the day prior due to structural          Greater supply chain transparency                      and France; Baptist World Aid Australia worked
concerns — a result of dire overcrowding and             Today’s supply chains are complex; and frequently,     with others, including the Walk Free Foundation
poor (and illegal) construction. Despite this fact,      global in nature. Without transparency, the task       and Stop the Traffik, to campaign the Australian
garment workers were coerced into returning to           of holding companies to account becomes                Government for a law to fight slavery.
work on the day of the collapse.                         problematic. The collapse of Rana Plaza threw the      There is now bipartisan commitment to introduce
Sadly, the Rana Plaza disaster was not an isolated       need for increased transparency into the global        modern slavery legislation into parliament by the
incident, but rather, the latest in a spate of similar   spotlight.                                             end of 2018. Additionally, earlier this year, the New
factory disasters. Exactly six months before, a fire      According to Human Rights Watch, “supply chain         South Wales State Parliament tabled Australia’s
ripped through the Tarzeen Fashion factory (also         transparency — starting with publishing names,         first Modern Slavery Bill.
in Bangladesh) killing 117 people. A month before        addresses, and other important information
that, the Ali Enterprises fire in Pakistan claimed the                                                           Read more on page 29.
                                                         about factories producing for global apparel
lives of 254 more.                                       companies— is a powerful tool to assert workers’
These tragedies mark a crucial turning point in          human rights, advance ethical business practices,
                                                                                                                Sector Initiatives
global consciousness of the labour rights issues in      and build stakeholder trust”.22                        Sector initiatives continue to drive change in
the fashion industry.                                                                                           the fashion industry, making it a safer and more
                                                         The proportion of companies publishing supplier        equitable place of employment for people across
Until the Rana Plaza tragedy, few global fashion         lists has doubled since the Rana Plaza disaster.       the world. Some examples are:
companies chose to make information about their          In 2013, just one sixth of companies that were
supply chains publicly available. Where clothes          assessed were publishing supplier lists; in The 2018   • Asia Floor Wage Alliance (active since 2005)
were made, and the conditions they were made in,         Report, the proportion is one third. Furthermore,        — an international alliance of trade unions and
was, largely, invisible to the world.                    of those publishing information, almost half are         labour rights activists who are working together
                                                         going beyond providing names and addresses for           to demand garment workers are paid a living
But the global community was so horrified by                                                                       wage.23 Given that 43 million garment workers
                                                         factories and are publishing detailed information
the news reported in papers and by the pictures

                                                                                                                                                                        25
FIVE YEARS SINCE THE RANA PLAZA DISASTER

 are employed in the Asia-Pacific region,24 this is     • a five year legally binding agreement between         Earlier this year, a major settlement was reached
 an important initiative.                                brands and trade unions to ensure a safe             resulting in a US$2.3million payout to fix issues at
• Action, Collaboration, Transformation Initiative       working environment in the Bangladeshi               over 150 garment factories across Bangladesh.28
  (ACT Initiative) — a collaboration between 17          garment industry;                                    Unions responded positively to this settlement,
  fashion brands and retailers, manufacturers,         • an independent inspection program supported          saying that it was proof that the Accord was
  and trade unions to address the issue of living        by brands incorporating workers and trade            serving its purpose.29
  wages in the textile and garment supply chain.25       unions;                                              With the end of the Accord’s five-year term
  Participating brands include Kmart, Next, Inditex,   • public disclosure of all factories, inspection       approaching, it was announced in June 2017 that
  and H&M.                                               reports, and corrective action plans (CAPs);         the agreement would be extended for a further
• Better Work — a partnership between the United                                                              three years. However, a report published by the
                                                       • a commitment by signatory brands to ensure           Bangladesh Investors Initiative found that only
  Nations, the International Finance Corporation,        sufficient funds are available for remediation and
  and the ILO, which brings diverse groups                                                                    53 of the 220 current Accord signatories have
                                                         to maintain sourcing relationships;                  signed on to the 2018 Accord, causing significant
  together — governments, global brands, factory
  owners, and unions and workers — to improve          • democratically elected health and safety             concerns about the effectiveness of the project
  working conditions in the garment industry.26          committees in all factories to identify and act on   moving forward.30 This includes a number of
  A recent independent study on the effectiveness        health and safety risks; and                         well-known Australian brands operating in
  of the program demonstrated that aggregate                                                                  Bangladesh.31
                                                       • worker empowerment through an extensive
  non-compliance rates have decreased, indicating        training program, complaints mechanism and
  improving working conditions in factories.27           right to refuse unsafe work.
                                                       Since its establishment, 2096 factories have been
Case Study: Bangladesh Fire and Safety                 inspected under the Accord program. 96 of these
Accord – the Last Five Years.                          have been terminated for failure to comply with
The Bangladesh Fire and Safety Accord was              Accord standards, 1631 factories are currently
established in May 2013 in response to the Rana        covered under the Accord program with pending
Plaza collapse. The Accord is an independent,          CAPs, and the remaining 369 factories are either
legally binding agreement between brands and           closed, transferred, or still awaiting inspection.
unions, designed to work towards a safe and            While a substantial amount of remediation is
healthy Bangladeshi Garment industry. It has been      occurring under the Accord program, the most
signed by over 200 companies from Europe, North        recent data demonstrates that 72.9% of CAPs
America, Asia, and Australia.                          remain behind schedule. Only 1.5% of factories
The Accord Agreement consisted of six key              have fully completed their CAP, 6% have completed
components:                                            their initial CAP, and a further 8.4% are proceeding
                                                       on track.

                                                                                                                                                                    26
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