Pamela Ravasio runs through the legal tools and voluntary compliance that fashion companies can use to prove their ethical credentials to cynical consumers.
A recently published consumer study found that 52% of UK, US and Canadian consumers believe that businesses’ alignments with social or charitable causes is half hearted; 88% are concerned that the money isn’t actually going where promised; and over 75% state that companies do not disclose enough information about how consumers’ and corporations’ funds are allocated to charitable or social causes.
In other words: consumers take it for granted that green-washing is the rule. Many have become outspoken cynics with regards to CSR and sustainability initiatives from business. As far as the fashion industry is concerned, this does not come as a surprise, fashion companies have been the subjects of a series of scandals from organic cotton mislabelling, toxic “organic” cosmetics and repeated labour malpractices to name just a few.
Consumers expect sustainability efforts to be integral to how companies do business. Commitment to sustainability for mere public goodwill is condemned. But how to distinguish one from the other? The key is not simply adhering to regulations and standards, but also talking about compliance in a transparent and verifiable way.
But what is “compliance”?
The term is at present primarily applied to the adherence to legal regulations and in the second instance to the adherence to voluntary standards.
In the case of the fashion industry, legal compliance is of considerable complexity due to the industry’s globalised supply chains. Depending on where a fashion company operates, regulatory compliance may include:
• The Bribery Act 2010 (UK), which enacts penalties to all commercial companies with links to the UK for active bribery, passive bribery, the bribery of foreign public officials as well as the failure to prevent bribery by staff or contractors.
• Alien Tort Act (28 U.S.C. §1350) (US) allows courts to hear human-rights cases brought by foreign citizens for conduct outside the U.S.
• Transparency in Supply Chain Act (California, US) requires companies with any kind of business in California – including those who simply sell goods in the state – to disclose their efforts to ensure that their supply chains are free from slavery and human trafficking.
• Grenelle II regulation (France) requires detailed carbon footprint labelling of consumer goods.
• REACH regulation (EU) makes industry responsible for assessing and managing the risks posed by chemicals and providing appropriate safety information to their users. For the fashion industry this is importantly related to dyes, finishes and potentially even to pesticides and herbicides used in growing natural fibres.
• 551/2009 regulation (EU) forbids the use of phosphors in most detergents and washing processes.
Ironically, legal compliance is hardly ever at the forefront of the sustainability discussion within the fashion industry. There is indeed no reliable research that would indicate that fashion companies actually do adhere to the legal framework in every country they are doing business in.
In the case of the fashion industry in the UK for instance, keeping up with compliance to legal regulations alone has proven so challenging the Joint Fashion Industry Teams (JoFITs) has been created. JoFIT’s principle aim is to facilitate greater cooperation across central government departments at the operational level to provide a service to business, reduce fraud and improve regulatory understanding and compliance in the fashion industry through a multi-agency approach.
In contrast, voluntary standards are a key component and integral part of current efforts. The range of sustainability related voluntary standards, certifications and consumer labels, can largely be divided into three loose categories: labour rights (example of which would be: ILO labour standards and SA8000); environment/health (eg Global Textile Organic Standards (GOTS), EU Eco Flower and Cradle to Cradle), and different management systems (eg ISO 14000, China’s CSC 9000 T or also ISO 9001).
In the past, voluntary standards have been signed up to without much conviction and commitment by fashion companies. Sometimes purely for PR purposes. In the fashion industry calls for more transparency are old news, but are now increasingly backed up by a number of consumers willing to pay more for their products if, and only if, they are guaranteed that their money is used how companies say it is.
The question is of course: what tools other than legislation, certifications and consumer labels does the fashion industry have?
Up until recently just two approaches were widely considered, with a third approach being launched: Standardised reporting (such as ISO 26000); IT supported supply chain tracing (successfully used in Walmart’s fully traced jewellery line Love, Earth, the IOU project, or at Rapanui) and, very recently, a comprehensive questionnaire, Profit through Ethics, where all answers and supporting documentation will be made available in the public domain for critical stakeholder review.
The primary goal common to all three approaches is to bridge the gap between the company and consumers willing to pay more. To implement any one of above mentioned schemes, a company will need to research its own internal core business processes in depth. By doing so, operational risks (e.g. undeclared supplier sub-contracting or inaccurate design team communication processes) can be unearthed and then remedied. This reduces costs in the short-term, and prevents financial losses in the mid and long-run. More importantly though, it is a convenient and effective opportunity to understand, improve and optimise internal processes. Businesses, in short, will then truly know the state of their internal process, and also where they lack compliance. Based on this knowledge, the company then is in a good position to be fully accountable to lawmakers, society and the public at large.
Dr Pamela Ravasio is an independent researcher, journalist and consultant specialising in sustainable fashion businesses processes. Experienced in cross-continental strategic project management, she is a consultant for the Ethical Fashion Consultancy. Her blog Shirahime won a 2011 Observer Ethical award