The state of play in the fashion industry

Our key takeaway: The fashion industry is beset with human rights and environmental challenges from the way that our clothes are made to how they are disposed of after use. Examples of human rights and labour issues prevalent in the sector include low wages; the use of forced and child labour; and discrimination. The sector also has adverse impacts on the environment because it uses a significant amount of water and chemicals, and the extraction of raw materials such as cotton has led to deforestation at a large scale. While many of the brands and retailers reviewed in Fashion Revolution’s report have disclosed policies and commitments to tackle the human rights and environmental impacts in their operations and supply chains, very few disclose the outcomes and effectiveness of these efforts. This is especially true for certain issues such as living wages and freedom of association and collective bargaining. In addition, some groups of people will be disproportionately impacted by a circular fashion transition. A just transition will be key. What can companies do? They can start by mapping their upstream and downstream supply chains; implement robust human rights and environmental due diligence processes; publicly disclose the effectiveness of their efforts; and support a legislative environment that rewards transparency and openness. ‍

Fashion Revolution published 2023 Edition Fashion Transparency Index, which ranks 250 largest fashion brands and retailers based on their public disclosure of human rights and environmental policies and practices across their operations and supply chains (July 2023):

• “Global fashion industry makes unimpressive progress on transparency”: The report highlights how disclosures in certain human rights and environmental topics have increased. For instance, “more than half (52%) of major brands disclosed their first tier supplier lists” for the first time since the the Fashion Transparency Index (FTI) was published in 2017. More brands are also disclosing their human rights and environmental due diligence (HREDD) policies and processes, including “how affected stakeholders are consulted; salient risks identified; and which steps are taken to address these risks and the outcomes.” However, many brands do not disclose the outcomes and impacts of their policies and approaches. While 85% of brands have a policy outlining their commitment to freedom of association, the right to organise and collective bargaining in their supply chains, only 39% disclose how they are implementing this in practice. In addition, only 15% of brands disclose the number of “supplier facilities that have independent, democratically elected trade unions.” Similarly, brands “remain far stronger at describing their identified risks, socially and environmentally, than outcomes and impacts of due diligence.” In some areas, we have even seen a reduction in disclosures: “Just 12% of major fashion brands published a timebound, measurable commitment to zero deforestation this year, down 3% from last year.” In other areas, the number of companies disclosing is a small percentage of the sector: “Only 9% of major fashion brands disclose their investment in decarbonisation, such as investment in research and development, helping suppliers access finance to cover costs of a green transition, sustainability-linked loan and insetting back into the supply chain such as investment in renewables or regenerative farming.”
  

• Transparency around just transition and living wage is lacking: The report spotlights key issues that brands and retailers should look at given the polycrises of climate change, biodiversity loss and democracy decline to name a few. Two examples include the just transition and living wages. More specifically, it states that 95% of brands do not disclose how they are, if at all, enabling a just transition to a circular fashion industry. This leads to little oversight over certain groups of people in value chains that will be impacted by the circular transition: “[M]arginalised and disenfranchised groups, overrepresented in value chain segments likely to expand in a more circular system (e.g., recycling and logistics), will be disproportionately impacted by a circular fashion transition.” This will have severe impacts on their human rights unless a people-centred approach is taken: “These workers risk the perpetuation of insecure jobs that are characterised by low wages, excessive overtime and harassment, unless they are consulted and their needs centred in a transition to a circular fashion economy.” The report calls on brands to up-skill their supply chain workforce so that workers can secure decent work and livelihoods in the transition to a circular economy. Similarly, 99% of brands do not disclose how many workers in their supply chains are paid living wages, which is the amount needed to cover basic needs and some discretionary income. This has adverse impacts on workers’ human rights as they do not have the financial means to secure an adequate standard of living for themselves and their families.
  

• What can companies do? The report outlines several measures brands and retailers can put in place now to tackle the transparency issue in global fashion supply chains, which includes: 1) “Publish your supply chain right down to raw material level as soon as possible, doing so in alignment with the open data standard, and upload the list to the Open Supply Hub”; 2) “Be completely transparent on all the topics covered in the Fashion Transparency Index, continuously updating public disclosure in response to evolving risks”; 3) “Implement robust due diligence on human rights and environmental risks and publicly evidence the outcomes and impacts of your efforts”; 4) “Work collaboratively on due diligence with your peers, especially when they operate in the same facilities, and with rights holders, especially women workers and trade unions, and then share these efforts publicly”; and 5) “Support legislation that requires greater transparency and corporate accountability on environmental and human rights issues in the global fashion industry.”