In the 1990s, Nike was outed for using sweatshops and child labour to make shoes. In April 2013, an eight-story commercial building collapsed on the outskirts of Dhaka, Bangladesh, killing more than 1,100 people, mostly garment workers.
Incidents like these were eye-openers for many western consumers and exposed some of the dangerous and exploitive labour practices in the developing world, where multinationals could be unaware of — or ignore — worker safety concerns among their suppliers and sub-suppliers.
But the drive to produce “fast fashion” at low prices doesn’t mean brands can afford to turn a blind eye to the well-being of workers, argues Carleton University international business researcher Jinsun Bae. Moreover, because of the risk of consumer backlashes, apparel companies and their suppliers are often early adopters of responsible practices.
As scrutiny from regulators, customers and investors becomes more sophisticated, Bae says that companies must implement more socially responsible business practices to remain commercially viable.
Their challenge involves navigating complex global supply chains and figuring out what — and how — to change.
Codes of Conduct
Many multinational companies now have internal codes of conducts. But because these standards are often focused on first-tier suppliers that assemble the final product, not second-tier suppliers that make the fabric or third-tier suppliers that harvest raw materials, they don’t always trickle down through the entire system.
Ensuring that suppliers comply with these codes is difficult. For instance, some suppliers are required to pay for their own third-party audits, undermining audit objectivity and transparency.
Bae’s research involves analyzing labour compliance audit data from apparel factories and talking to both managers and workers to better understand local pressure points and the on-the-ground impact of a brand’s internal regulations.
“External auditors can easily determine whether there are enough fire extinguishers in a factory,” she says.
“But can they tell whether there has been discrimination in hiring practices? Or if unions can operate without fear of reprisal from management? And how thorough are their reports?”
Multinationals need to raise the bar and enhance the quality of their audits, says Bae, and enforce their codes of conduct consistently. They should also look for ways to support suppliers that are willing but lack the necessary resources to improve their compliance.
Supporting Social and Economic Development
Despite the potential for exploitation, the apparel industry can support economic and social development in many countries, says Bae. Developing countries often see export-oriented production as a way to boost earnings and improve incomes for people, which exposes both workers and companies to risk.
“If something goes wrong in a factory and the media or an NGO find out, the product buyer will get blamed for working with that supplier and both could face huge consequences,” says Bae.
“This can encourage a commitment to address at least the most critical problem.”
Unpredictable production orders are one issue her research has uncovered. A single garment factory might be under contract to multiple buyers. If one of those buyers puts in a large rush order, managers might pressure workers to meet unreasonable deadlines or hire extra untrained workers who don’t understand safety protocols.
“More progressive buyers are starting to share their production plans with suppliers,” says Bae, “so factories can map out how to manage production and make sure they have enough trained workers on hand.”
Government regulations are also pushing companies to develop and adopt practices to prevent exploitation. More laws are being passed in North America and Europe that will compel companies to keep a closer eye on their lower-tier suppliers.
“The European Union recently passed the Corporate Sustainability Due Diligence Directive,” says Bae.
“Large companies operating in Europe — not just European companies — will have to demonstrate what they’re doing to identify, avoid and mitigate forced labour and other human rights violations in their supply chains.”
By visiting apparel manufacturers in Asia and including the voices of workers in her research, Bae is hoping to have an even greater impact. Traditionally, business school research has focused on corporate perspectives and financial data, while worker issues were the domain of labour relations or development studies.
“I’m trying make these different fields talk to each other,” she says, “so we have a deeper understanding of the whole situation and can come up with more effective solutions.”
Lead photo by poco_bw / iStock