Governments and consumers are increasingly demanding transparency into the fashion supply chain. This can be a challenge for businesses with long and complex supply chains.
Six years on from the Rana Plaza building collapse in 2013 that killed over 1,100 garment workers in Bangladesh, global fashion brands including H&M, Primark and Tesco, have won a Bangladesh Supreme Court case against factory owners permitting international factory safety monitors to continue operating in the country.
Other top fashion brands including Levi's and Gap have just backed a ruling that restricts the use of short-term contracts for garment workers in Cambodia. The headlines demonstrate how fashion retailers are responding to modern slavery in their supply chains, but can we be sure?
Following the fashion industry's deadly disaster, over 200 fashion brands took action to clean up their supply chains by signing a legally binding agreement to make garment factories a safe place to work.
Known as the Bangladesh Accord, it has granted workers greater protections, improved working conditions and increased accountability by setting up an international arbitration mechanism and shutting down factories that fail to address safety concerns. It has been able to clean up some of fashion's supply chains on an unprecedented scale due to the volume of brands and trade unions involved.
The action taken by fashion brands has highlighted their power to bring about change, but the elimination of modern slavery remains a work in progress bringing great responsibility and complexities for retailers at the top of the supply chain.
They are using technological tools to tackle the problem at a time when they are coming under increasing scrutiny from consumers, organisations and the government to clean up their supply chains.
To compel those doing business in the UK to improve and account for supplier practices around the world, the UK introduced the Modern Slavery Act 2015 (MSA), pressurising retailers to take account of modern slavery in their supply chains.
What is modern slavery?
Broadly speaking, modern slavery centres on exploitation and control, but takes many forms and encompasses the offences of 'slavery', 'servitude' and 'forced labour' for the purposes of the MSA. In today's globalised fashion industry, modern slavery usually translates to unfair or unsafe working conditions.
Typically, fashion items pass through a long international supply chain before purchase, making it very difficult to trace a particular component and almost impossible to work out whether a garment has or has not been produced using slavery.
The rise of fast fashion and persistent profit drive has led to intense price and production competition between fashion brands, putting suppliers under pressure to accept declining prices and tighter deadlines. In reaction to this, suppliers will be more likely to impose poorer working conditions on their own workers or outsource the work to cheaper unaudited factories, reducing transparency in the fashion supply chain even further.
What must businesses do under the MSA?
The MSA requires commercial organisations engaged in the provision of goods or services which do business in the UK with an annual turnover of £36 million or more to produce an annual transparency statement.
Each statement must be published within six months of the financial year end and annually thereafter. It must set out the steps the organisations have taken in the previous financial year to tackle modern slavery in their supply chains. It must be approved by the company board, signed by a director and made available on the company's website.
Non-compliance: the consequences
While the MSA is progressive, its lack of strict legal penalties does not encourage compliance by businesses and casts doubt as to whether businesses are effecting real change underneath the statements.
In March 2019, the government published an independent review of how to ensure compliance and drive up the quality of statements. The Home Office has written to all businesses it believes may be caught by the requirements (whether or not they have published a statement), to notify them of its intention to carry out a compliance audit with an underlying threat of naming and shaming those who fail to comply.
According to the Modern Slavery Registry, over 9,500 businesses in the UK have now published a statement. By complying, businesses demonstrate that they are well run organisations with moral responsibility. In comparison, non-compliance with the MSA poses an increasing threat to businesses' brand, customer and regulatory reputation as consumers increasingly demand higher ethical standards from their brands.
In an ideal world, fashion retailers would visit and closely monitor all stages of their production lines to identify and eliminate modern slavery in their supply chains. However, the globalisation of the fashion industry makes it practically difficult for fashion brands to retain control. So what can businesses do to ensure best practice? Is there a solution?
Artificial intelligence presents revolutionary opportunities to fashion brands struggling to manage and audit their complicated supply chains, by providing an accessible and effective means of assessment.
Its mass data collection, processing and analysing capabilities could finally provide businesses with a transparent understanding of their supply chains, allowing them to easily identify and address any risks of modern slavery in the manufacturing process.
Blockchain's tracking and tracing capabilities offer further opportunity to increase transparency and 3D printing could shorten the supply chain altogether. Technology is becoming indispensable to the future of fashion and embracing it to tackle modern slavery will keep businesses ahead of the trend (see our article for more).