At a time when fashion brands are under increasing pressure on so many fronts, any problems they may encounter in their manufacturing and distribution systems can result in uncomfortable adverse publicity. This article looks at some of the hidden costs of doing business when, as is often the case in the fashion sector, supply chains are operating.

One of the biggest challenges for the sector is the ramifications of production, throughout the supply chain, on children. The use of child labour is just one aspect of this. Enormous efforts have been made to eliminate the practice. However, a supply chain may a number of other negative impacts on children, both direct and indirect, which are not always fully appreciated. These include parents' working hours, the availability of childcare facilities, family health care, parental leave, educational opportunities and the needs of migrant workers who have been separated from their families.

Most major retailers already have or are working on the development and implementation of appropriate policies and procedures to address child labour, but it is rare for these policies to consider more intangible hidden costs, such as those set out above, or factor them into auditing frameworks.

A more disturbing issue is the continuing problem of modern slavery. In 2014, it was estimated that 36 million men, women and children were still enslaved around the world – a sobering statistic no company operating in the global market would wish to ignore.

Perhaps even more shocking is that over 60 million children have been left parentless in rural China due to mass urbanisation and their parents’ migration to the cities to get work and to meet the growing demand for Chinese manufacturing output. It is estimated that one in three children in rural China (the same population as all the children in the United States) have come to be known as the “left behind children,” who likely only see their parents twice a year (during the Spring Festival and Chinese New Year). They are the unseen and sad legacy of the country's impressive economic development.

Consumer awareness on the rise

Left behind children are not a phenomenon unique to China. They can also be found in the Philippines, India and other parts of Asia where the low cost of production is attractive to manufacturers. Consumer awareness about broader concerns for children's interests in fashion and other product supply chains is, however, on the rise. Consequently, the risk of reputational damage to brands remains high.

What can companies do to assist in upholding children's rights?

Ideally, companies should identify and understand the direct and indirect impacts that their supply chains have on children, which will in turn enable them to implement better informed mitigation measures. Some global fashion retailers and local factories are, for example, working with UNICEF to improve working conditions for parents and thus benefit their children. This might include providing means by which migrant workers can keep in touch with their children or set up childcare centres for them at work sites.

So far, 120 brands have signed up to The Fair Wear Foundation code of labour practices, whose standards often extend beyond most in-house policies. UNICEF notes that the Children's Rights and Business Principles, developed by UNICEF, Save the Children and the United Nations Global Compact, “set out business action to respect and support children's rights.” Key to the principles are suggested tools and approaches that companies can adopt to progress children's rights.

It will take time for any new measure to be implemented and start having a positive effect on the welfare of children and their families. Companies in the fashion sector have the chance to take the lead, and consumers will no doubt expect them to do so.