Industry Executives Focus on Ethics at Sourcing at MAGIC

Ever the talked about topic, ethics in sourcing dominated the conversation in many of the Sourcing at MAGIC conferences in Las Vegas last week.

After the recent tragedies in Bangladesh spotlighted dismal working conditions and spurred worker protests across low-wage nations, industry professionals have been increasingly factoring ethics into their business practices.

At a panel last Monday titled, “Ethical Sourcing 2.0: What’s Next,” Worldwide Responsible Accredited Production (WRAP) senior director of strategy and business development Clay Hickson and Sourcing Journal founder and publisher Edward Hertzman discussed the state of the industry with regard to ethics.

“The world today moves at warp speed and social compliance is changing rapidly, driven by technology and social media,” Hickson said. “What happens in Bangladesh will be broadcast around the world in a matter of minutes.” And no one wants to be part of an incident that will land them on the front page, he added, “So companies have to be more concerned about what they are doing and how that will be perceived.”

WRAP, a non-profit that certifies that manufacturers produce in a socially responsible way, has, over the last five months, been talking with brands and retailers about social sourcing to learn more about how they are thinking about social compliance and what they are doing to achieve it, Hickson said.

So far, WRAP has found that companies are going through more regular and speedier evaluations of their social compliance practices. But, Hickson said, “Companies have to be more aggressive in their programs. They can’t just rely on their factory or third-party supplier to be compliant.”

It’s going to take partnerships with a variety of stakeholders, Hickson said. When companies have sourcing and compliance people working on the same team, it works better for coming to a decision about best practices.

A continuous effort on training will also be key, and retailers have to realize that to have an efficient supply chain, they have to invest in that training, Hickson said.

“The longer you work with a factory, over more seasons, that builds trust and they are much more likely to be transparent,” Hickson said. “And that requires investment in training.”

Hickson said WRAP has seen increasing requests for training and the organization recently launched a three-phase fire safety training program in Bangladesh where the focus isn’t only on evacuation, but preventing fires in the first place.

At the end of the day, many companies realize they need invest in the companies they are sourcing from, Hickson said. “Your stakeholders ultimately hold you responsible for what goes on in those factories.”

Edward Hertzman started by saying, “When we talk about ethics in sourcing, we have to distinguish between ethics and compliance because they are two very different things.”

There are companies that do compliance for compliance’s sake, just to show a retailer a bunch of checked boxes to get an order, and there are companies that make compliance and ethics part of their DNA and corporate ethos.

“Before we talk about how we’re going to train a worker in a factory to use a fire extinguisher, we have to figure out what’s causing the problem in the first place.”

By telling a factory that can hardly afford to pay its workers that they are too late to meet a delivery and now must air the goods after design makes five changes to the product, retailers are actually encouraging behavior that’s not compliant, Hertzman said. Whether requiring excessive overtime or not fully paying wages, factories need to make up for the sometime unrealistic requirements of their clients.

“We need to educate the retailers and the brands and those who are requiring us to be more compliant, because someone is going to have to eat those costs,” Hertzman said.

In a country as corrupt as Bangladesh can be, where factory owners could pay off an auditor to keep mum about non-compliant practices, checking off boxes based on audit reports won’t suffice for proving compliance. Sourcing executives need to be traveling to these factories and seeing for themselves what is going on, Hertzman said. “We tend to put a lot of onus on the factories, but those making claims, suggestions and allegations often have never set foot in any of these factories.”

Hertzman said, “The problem is not solved by signing a piece of paper.” He added, “The only way we can grow as an industry is to educate ourselves and the only way to do that is to get on the ground. The communication really has to change.”

Another big problem is the consumer, Hertzman said. “We’ll buy a $6 latte, but there are buyers who ask wholesalers to make and sell a jean for $5 so the customer can pay $9.99 at retail. As long as a buyer is pushing the price, we’re going to have compliance issues.”

The consumer will have to lead the charge and be willing to pay for a product that’s sourced and made ethically.

But, according to Evie Evangelou who spoke on a panel Tuesday titled, “Inspiring Change: Fashion’s Global Impact,” consumers are increasingly becoming more aware of what they buy and wear. “The conscious consumer is here and they’re here to stay.”

The discussion on that panel centered around how fashion companies are raising awareness and taking action to improve worker conditions around the world, from providing sanitation facilities for women in India to producing fair trade, organic clothing for women using environmentally friendly dyes, which eco-brand INDIGENOUS does.

The fashion industry is one of the largest employers in the world, and, as Evangelou said, it’s an industry “that has such a loud voice” and it should be used to make others aware of the unethical conditions in the sector and take initiative to change it.


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