Top 12 Compliance Shifts in 2017

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Whereas some years have been years of realization when it came to what was lacking or problematic in compliance, this year was one of more action—specifically around driving more compliance in transparency and cracking down on non-compliant behavior.

Here’s a look at the biggest moves in compliance in 2017, and an indication of how things will shape up in the sector for the year to come.

1. China Shutters 80,000 Factories in Pollution Crackdown

Once dubbed the world’s factory, China has been suffering from sweeping pollution issues for decades, but now the country seems to be cracking down to remedy the problem. That crackdown has led to more than 80,000 factories being shut down at one point or another over the course of this year. Apparel factories, including a denim dye house in Yiwu in China’s Zhejiang province, have been shut down throughout the last year by China’s environmental bureau, which has been cutting electricity and gas supply to determine who’s been following China’s environmental laws and who hasn’t. In the past year, reports estimate that China has dispatched inspectors in as many as 30 provinces around the country and 80,000 factories—roughly 40 percent of the factories in China—have been fined, charged or closed because of their emissions.

2. Accord and Alliance Will Leave Bangladesh Next Year

After setting up shop in Bangladesh in 2013 following the tragic Rana Plaza building collapse that thrust the country’s ready-made garment sector into the public eye for subpar safety standards, the Accord on Fire and Building Safety in Bangladesh and the Alliance for Bangladesh Worker Safety will both work their way out of the country and the safety and remediation efforts they had put in place. The U.S.-led Alliance, which counts Macy’s, Target and Walmart among its signatories, said over the summer that it would not renew its tenure. The EU-backed Accord, however, which brands like Inditex, H&M and Primark had signed on to, said in March that it would renew the agreement and continue its efforts to improve conditions in Bangladesh’s ready-made garment industry. A Bangladesh government-led agency, called Shonman, will take over where the Accord and Alliance left off.

3. LA-Long Beach Port Approves Clean Air Action Plan Calling for Emission-Reducing Technologies

Compliance made further inroads into the logistics sector this year, with more initiatives aimed at that portion of the supply chain. The twin ports of Los Angeles-Long Beach, the country’s largest port complex, approved a plan on Thursday to slash air pollution by encouraging the phase-out of diesel trucks in favor of natural gas, and eventually zero-emissions trucks and cargo-handling equipment, over the next 20 years. The Clean Air Action Plan, unanimously adopted at a joint meeting of Los Angeles and Long Beach harbor commissioners, provides a framework for transforming the massive hub for freight-moving trucks, trains and ships to cleaner technologies through 2035.

4. Investors Urge Leather Working Group to Add Labor Compliance to Audits

While child labor and unsafe working conditions remain prevalent in the leather industry, a group of investors is demanding additional labor compliance for tannery audits. A group of Interfaith Center on Corporate Responsibility (ICCR) investor members wrote to the Leather Working Group (LWG), requesting that it broaden its scope beyond environmental concerns to include labor compliance. “Investors don’t have the information they need to fully assess how companies are measuring and managing salient human rights risks in their leather supply chains, especially at the tannery level,” said Lauren Compere of Boston Common Asset Management. “We need look no further than the Rana Plaza tragedy or abuses in seafood supply chains to understand how a lack of human rights due diligence can impact an entire industry.”

5. Report: New York’s Hudson River Dumps 300 Million Clothing Fibers Into the Ocean Daily

Microplastic pollution into the world’s oceans became a major topic of concern in 2017 and companies and consumers alike became more aware of the severity of the problem. A recent study in the Marine Pollution Bulletin found that New York’s Hudson River could be contributing 300 million microfibers into the Atlantic Ocean every day. After surveying the entire 315 miles of the Hudson in search of microfibers, researchers found them throughout the length of the river and uncovered 233 microfibers in 142 samples, or about one microfiber per liter of water. Fifty percent of the found fibers were plastic and the other half were fibers spun from things like cotton or wool. Most of the dumped fibers are coming from laundry runoff dumped into the waterway. This polluted laundry water becomes even more polluted when clothing starts to age.

6. Mumbai Factory Shut Down After Untreated Wastewater Turns Dogs Blue

A Mumbai factory was called out in August this year for contaminating a nearby water source and potentially harming animals in the area. Officials from the Maharashtra Pollution Control Board (MPCB) issued a closure notice to Ducol Organics Pvt Ltd., a Mumbai-based dye plant, for releasing untreated industrial wastewater and residual dye powder into the Kasadi River at Taloja, the Hindustan Times reported. Not long before the closure notice, residents spotted blue dogs in the area, prompting the Hindustan Times to report on the mysterious sightings. After local animal activists complained to the MPCB, the board found that a nearby company was releasing blue dyestuffs into the air and water, causing the dogs’ coats to change color.

7. Fire Safety Isn’t a Bangladesh Problem, It’s a Global Problem

The apparel industry and global rights groups tend to beat Bangladesh up for its subpar fire safety standards, but when 75 out of 75 buildings in London fail fire safety tests, it begs the question: is fire safety deficient in more places than we think?

In June, at least 79 people were killed in a tragic fire that felled Grenfell Tower residences in London. But what’s cause for more alarm is that this could be the first of many more fires like it in London. Grenfell’s exterior cladding, a material typically wrapped around a building to improve appearance and energy efficiency (a kind that’s forbidden in the U.S. and other parts of Europe) was flammable. Meaning that when fires start, the cladding helps spread them. Cheaper than fire-resistant cladding materials, the Reybond PE found in Grenfell has a flammable plastic core surrounded by sheets of aluminum. Arconic, the U.S. manufacturer that supplied the cladding, stopped all sales of the product entirely.

8. Trump, Congress Slash Regulations on Businesses

Trump took steps to fulfill a campaign promise shortly after taking office. The president moved to reduce what he sees as a regulatory burden by mandating via executive order that for every one regulation an agency adds, two must be removed. That’s only if it’s approved in the first place, which Trump made clear that it probably won’t given the redundancies he says that are already weighing down businesses. Environment groups responded with a raft of questions and doubt about the new plan, saying the government should be weighing impact not the quantity of regulations.

9. J.C. Penney First US Retailer to Receive Oeko-Tex Made in Green Certification

On a more upbeat note for compliance, Oeko-Tex announced in June that J.C. Penney became the first U.S. retailer to receive a Made in Green by Oeko-Tex label for one of its textile products, the J.C. Penney Home Quick-Dri bath towel. Created by Oeko-Tex, the prestigious label ensures consumers that products are made in eco-friendly facilities and tested efficiently for harmful substances. Available at J.C. Penney locations nationwide, the bath towels are made with 100 percent cotton, highly absorbent and minimize the industry’s carbon footprint through a sustainable production process.

10. VF Corp. Prohibits Fur Use Under New Materials Policy

This year was one that definitely saw more and more brands and retailers opting to eliminate fur from their product ranges. In May, VF Corp. published its first-ever Animal Derived Materials Policy and said its brands will no longer incorporate angora, fur or exotic leather in their products. Developed in partnership with The Humane Society of the United States and Humane Society International, the progressive new policy outlines prohibited animal materials and features formal guidelines for the procurement and use of approved materials by VF Corp.’s brands—which include Lee, Wrangler, The North Face, Timberland and Vans—and its global supply chain partners. At present, down, leather and wool are the animal-derived materials most used by VF Corp. and its brands. Under the policy, VF Corp. will enforce humane practices throughout its supply chain and require animal-derived material suppliers to submit signed agreements and proof of origin for all materials.

11. Defect Calibration: A Key Tool for Reducing Errors and Chargebacks

Improving product quality was higher on the agenda for brands in 2017 as consumers to be more discerning and—for some—less interested in throw-away clothing. In the fast-paced, competitive apparel and footwear industries, quality has always been important. However, with rising material and labor costs combined with the growing pressure for faster deliveries and the proliferation of styles, minimizing defects is no longer just important—it’s essential. That’s why, as part of their efforts to ensure short- and long-term growth, forward-thinking brands are investing in defect calibration, the practice of minimizing quality discrepancies that exist when a product is manufactured. To achieve effective defect calibration, brands have to methodically outline quality standards and expectations with their factories regarding what’s classified as a defect.

12. Trump’s Paris Agreement Exit Could Incite Trade War—What it Might Mean for Sourcing

Trump announced he would pull the U.S. from the Paris Accord, which aims to curb global warming, saying it would cost $3 trillion and more than 3 million manufacturing jobs. In response, talk turned to how the decision might impact trade if other countries decided to put tariffs on American products in retaliation. The move also raised the ire of some brands like Levi’s, which have been championing a more ethical treatment of the plant. As is his wont, the president said he’d be open to negotiating a new deal that’s more fair to the U.S.

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