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Fashion
CEO Agenda
5 priorities for
a prosperous industry
Fashion
CEO Agenda
5 priorities for
a prosperous industry
Fashion CEO Agenda
Vision

Why does it matter?

The fashion value chain employs 65 million people,2 many of whom are exposed to occupational hazards, ranging from exposure to dangerous work conditions to discrimination.3 Human rights violations occur at various value chain stages and, if addressed, are tackled differently depending on brand impact and local context. The increased risk of the occurrence of forced labour across several countries in the value chain demands the worldwide attention of both governments and private-sector actors. While the industry has come a long way in recent years, more is required of brands and their value chains.

A majority of the global garment workforce is female4 and many of these women are subject to discrimination.5 Improved work conditions and investment in skill building and promoting topics, such as health, physical and psychological safety, financial inclusion, diversity and gender equality, can increase the EBIT margin by up to 1–2 percentage points by 2030, as compared to the 2015 baseline.6 Secure and respectful work environments can bring numerous economic benefits: higher productivity, fewer sick days, less errors and shorter turnaround times. Respectful and secure work environments are also a key factor in end-to-end employee attraction and retention, whereby a stable income for female garment workers in particular is vital for their communities and their countries’ economies.7

Despite existing legislation on chemicals at European level, such as REACH, as well as at local level,8 many workers, especially in the early stages of the value chain, continue to be exposed to dangers such as factory fires and the use of hazardous chemicals. Technology can rid workers of repetitive and dangerous tasks, allowing them to focus on more creative and rewarding activities.9 Artificial intelligence, automation and robotics will create new jobs, but those who lose their jobs in this transition may be the least equipped to seize new opportunities10 that such innovation creates. Shifting to a circular fashion system, for instance, could provide the opportunity to retain and create jobs along the value chain with concentrated efforts from industry players to re- and upskill displaced workers.

Where are we today ?

In the past year, COVID-19 exposed the importance of social safety nets, protection schemes as well as robust governance and infrastructures in line with the need for fast government action on both local and global level. Some European Union Member States have already legislated on sustainable corporate governance, while others are considering action. In April 2020, the EU announced with the European Commission the introduction of a legislative initiative in 2021 based on two pillars: mandatory due diligence for companies and an initiative meant to clarify directors’ duties. This is not only of significant relevance to the protection of millions of workers and their livelihoods, but also for manufacturers to remain viable as they face increasing financial pressure. Countless manufacturers are not resilient enough to overcome the pandemic, resulting in factories closing and workers being furloughed or laid off.11

Additional health risks of attending work and being exposed to COVID-19 increased employment insecurity. Currently, the key manufacturing regions that are affected by the pandemic are India, Cambodia, Bangladesh and Indonesia, with negative outlooks on logistics, cash flow and labour12 – whereby lockdowns are most frequently cited as the reason for supply constraints.13 Governments in these regions have taken measures to support the industry with fiscal and monetary policies, but despite those interventions, the medium-term outlook is pessimistic.14

Respect and protection of universal human rights are a state duty to which companies are required to adhere.15 Ongoing online discussions, mainstream media coverage and consumer expectations continue to raise public awareness on this topic. Up to 87% of Millennials and a staggering 94% of Gen Z expect companies to address a plethora of pressing social and environmental issues, including poverty and hunger, economic development and an array of human rights issues, such as racial equality and women’s and LGBTQ+ rights.16

How to take action?

As a first move, brands have to double-down on measures already being implemented to reduce distress for suppliers. The baseline for companies is to act as fair business partners that live up to existing commitments and to track garment workers along the value chain are paid while supporting suppliers in keeping businesses afloat as much as possible: 20-30% of industry players are supporting the financial positions of suppliers by providing payments for raw materials and fabrics as well as prepaying orders.17 By joining ongoing industry efforts to mitigate the economic and social consequences in manufacturing countries, they can support the security and survival of a functional value chain and its workers.

As part of accelerated digitalisation processes, we encourage frontrunners to help drive investment in training, re-skilling and up-skilling and to engage in contingency planning. Considering the prospective magnitude of the change, executives are asked to reach out to their manufacturers and local governments to gauge the possible ramifications of technology-driven production methods and to prepare to support workforce transitions at scale.

Frontrunners can work with brands, manufacturers, employee representatives, local governments and associations to collaboratively raise standards and track the progress of human and labour rights. This will allow voices of workers to be heard and to raise industry compliance standards adhering to the OECD’s mandatory due diligence guidelines18 and the UN Guiding Principles on Business and Human Rights.19

The forthcoming EU legislation on due diligence is expected to include requirement20 for companies to demonstrate, document and communicate policies and processes of their purchasing practices and to safeguard universal human rights.21 This includes safe working conditions, no discrimination and no forced labour for all people employed, directly or indirectly, in the production and marketing of products. Transparency plays a crucial role in this process for a foundation that is built on trust and that enables information sharing.

Fashion
CEO Agenda
5 priorities for
a prosperous industry
Fashion CEO Agenda
Respectful and secure work environments