Consumer Pressure Is Key to Fixing Dire Labor Conditions in the Clothing Supply Chain

Our goal is to make it possible for a consumer who is considering whether to buy a garment to scan a QR code that would take them to a simple, easy-to-understand summary of the ethical production performance of the factory that made the garment. This summary would let consumers know that they can trust that the brand is doing its best to improve its suppliers’ factory conditions. It is our belief that this type of “market pull” mechanism will be far more effective than regulatory compliance “push” mechanisms in driving change in apparel supply chains. In doing so, we seek to create an independent source of truth based on the best available information that already exists; it would simplify the data produced by a plethora of methods for assessing factories that manufacture garments sold in retail channels.

Our research team is guided by an advisory board that includes stakeholders from all parts of the apparel supply chain, including WRAP, one of the largest third-party apparel-factory-certifications programs in the world; the American Apparel and Footwear Association; and Shahi, one of the largest apparel-factory groups in India. The Templeton World Charity Foundation is funding the effort.

Simplifying a Complex System of Audits

To improve transparency for consumers, we employed two rules of thumb that guided our goal of connecting consumers with the complex world of factory social compliance.

1. Let’s agree that every there is no perfect standard.

There is no single standard that will meet the unique needs of brand audit. Audits are flawed by design — they are infrequent snapshots that can be gamed by suppliers and that rely on the judgment of auditors. However, the creation of a simplified score can provide evidence that a company is making a genuine effort and is following a set of established standards that most people would agree is sufficient.

2. Since supply chains are complex, let’s start with Tier 1 suppliers.

We should start by ensuring that brands are driving the right behaviors within their Tier 1 suppliers — that is, the suppliers over which they have direct influence. In apparel, this it typically the “cut and sew” supplier that assembles the garment from various components. Later, lower tiers of suppliers (spinning mills, dye mills, and cotton farms) can be included.

We then addressed three broad questions: 1) What content should be included? 2) How could this content be effectively communicated to consumers? 3) How could the credibility of EAI data be ensured?

In deciding what content to include, we recognized early on in our work that to communicate effectively to apparel consumers, the confusing array of different audit standards must be simplified. Our goal is not to replace the audit standards being used but instead to take advantage of the fact that there is significant overlap across standards to produce a simplified summary of ethical production performance of factories that can then be easily communicated to consumers.

Accordingly, we developed a taxonomy based on an analysis of 10 sets of labor standards developed by organizations such as the UN’s International Labor Board, governments, and NGOs and about 30 different audit systems used in third-party certification programs. We then synthesized it into eight common themes concerning essential working conditions in factories: non-discrimination, no harassment and abuse, no forced labor, no child labor, freedom of association, health and safety, humane working hours, and fair compensation (see the exhibit “Reducing the Eight Common Themes in Standards and Audits to Three Simple Questions”).

Based on our interviews with supply chain stakeholders, we reduced the eight categories to three key questions. The answers to those questions can provide consumers with enough information to understand the working conditions inside an apparel factory without overloading them:

1. Are the workers treated fairly in the workplace?
2. Are the workers working in a safe environment?
3. Are the workers paid fairly?

A Call to Action for Brands

The EAI will only be as good as the audit data upon which it is built, and there is much work ahead to improve the system of audits and assessments that form the basis for the EAI. Our research suggests that brands should consider using a recognized independent third-party such as WRAP or SA8000 to conduct audits and certify factories rather than relying on their own internal auditors. Third parties are moving to more standardized audit frameworks that can provide objective audit data that serves as an input to the EAI.

Employing unbiased third parties would not only make it possible for a single audit of a factory to be conducted for multiple brands but would also send a message to consumers that “the fox is not guarding the henhouse” — i.e., would be more credible than the results produced by brands’ own auditors. To enhance our database of supplier audits and further strengthen the EAI, we are working with partner companies to augment the EAI with crowd-sourced data such as texts and phone-app survey responses from factory workers.

Admittedly, our approach poses a risk to the thousands of parties: brands, factories, and distributors. What if a factory audit reveals a problem that is then exposed to consumers? But whether they like it or not, transparency is rapidly becoming an expectation in retail markets.  It may be time for brands to admit to consumers that their supply chain has some problems but that they are doing their best to make factories a safe and fair place for workers.