Worker well-being in the apparel and footwear sector
May 24, 2021
Our key takeaway: Apparel and footwear companies’ efforts to protect supply chain workers are still lacking, and focus needs to be on purchasing practices and remedy. Progress has been made on prohibiting recruitment fees and increasing disclosure and transparency.
KnowTheChain published findings from its 2020/2021 benchmark of 37 global apparel and footwear companies’ efforts to respect the human rights of workers across the value chain:
Poor purchasing practices and lack of remedy are undermining a just pandemic recovery. KnowTheChain found that the biggest gaps in company practice are responsible purchasing practices and remedy, both of which are “areas critical during the pandemic and to achieve a just recovery.” Remedy, in particular, has proven to be elusive for workers impacted by lost wages and forced labour: “Only four out of 37 companies (11%) could demonstrate several remedy outcomes for workers, such as repayment of unpaid wages or recruitment fees.” None of the companies evaluated were able to show that the remedy provided was considered satisfactory to the impacted workers. When it comes to forced labour, more than half of the benchmarked companies (54%) had allegations of abuse in their supply chains.
Since the 2018 benchmark, the most improvement is seen in responsible recruitment and traceability and risk assessment. Significantly, some companies are showing success in implementing their ethical recruitment policies on the ground: “Nine more companies now prohibit recruitment fees in their supply chains—an increase of 22%—with five of these companies incorporating the Employer Pays Principle into their policies.” Companies also made strides forward in disclosure and transparency about their supply chains, with more companies reporting new information beyond Tier 1 of the supply chain, information about suppliers of high-risk materials, and at least one company (VF Corp) disclosing third- and fourth-tier supplier information. KnowTheChain cites these examples as proof that “more robust practices are both possible and profitable”—and that there is a role for leading companies to play in raising expectations across the sector.
Investors need to apply their leverage to accelerate better company practice. Interestingly, KnowTheChain found that the largest investors in the five lowest-scoring companies are all considered ESG investors (“[m]embership in the Principles for Responsible Investment, the largest global responsible investment initiative, was used as a proxy for defining investors as ‘ESG investors.’”) While KnowTheChain acknowledges that this could be attributed to a rise in ESG considerations among mainstream investors—not just among the most progressive or activist—it also shows that investors are not acting in line with their stated values. KnowTheChain recommends that investors: (1) use leverage with investee companies to ensure that workers receive remedy; (2) support shareholder resolutions calling for human rights due diligence and vote against boards that fail to adequately respect human rights in supply chains; and (3) engage directly with workers and their representatives and advocate for “their perspectives, needs, and demands, especially in cases of severe human rights allegations such as forced labor, at portfolio companies.”