Fashion brands improve supply chains ahead of modern slavery reporting

Heather McIlvaine

11th Apr 2019

Cotton On, Country Road and Kookai are some of the most ethical fashion brands in Australia, according to the latest Ethical Fashion Report from Baptist World Aid Australia.

All three retailers received a score of A- for their efforts to prevent forced labour, child labour and exploitation in their supply chains, placing them among the 24 businesses that received a score of A+, A or A- in the annual report.

Other local high-scorers include Outland Denim (A+) and Kathmandu (A), while EziBuy (D+) and Munro Footwear Group, which owns Styletread, (D) were among the laggards.

The median grade in this year’s report, the sixth from Baptist World Aid Australia, was a C+, with 17 businesses earning an F. A total of 130 companies, representing 480 brands, were evaluated, and 38 per cent saw an improvement in their overall grade from the 2018 report.

Modern Slavery Act kick-starts action

Baptist World Aid Australia CEO John Hickey attributed this improvement in supply chain traceability to the Modern Slavery Act, which went into effect on January 1, 2019.

Under the Modern Slavery Act, companies with revenue of $100 million or more will need to report annually on the risks of modern slavery in their supply chain, what they’re doing to mitigate those risks and the effectiveness of their actions.

For now, there are no penalties associated with the Act, though that could change under future governments. In addition, NSW has its own Modern Slavery Act, which puts the threshold at $50 million in revenue, and includes fines for non-compliance.

But the mere threat of being “named and shamed” by the modern slavery reports, the first of which are due to be submitted in the 2019-20 financial year, has apparently been enough to kick many businesses into action.

“There is no doubt that this new legislation will be a catalyst for change in the business community,” the report stated.

“We look forward to seeing how the fashion industry responds, not only to these new legal requirements placed upon it, but also to public pressure, as consumers are presented with more detailed information about how their favourite brands produce their clothes.”

Transparency still an issue

Some areas still need improvement. For instance, only 5 per cent of the companies evaluated in the report could demonstrate they were paying a living wage to all workers, and even though 37 per cent of companies now publish a full direct supplier list, double the figure in 2013, transparency remains an ongoing challenge.

Several major fashion companies, including The Iconic and Showpo, declined to participate in the survey.

These companies were still scored based on publicly available information, though many received low scores as a result. Some of the businesses, including The Iconic, provided statements explaining their decision to not engage in the research process.

“[W]e believe reducing the complexities involved in supply chain management into a single score is potentially misleading. We also feel the significant time and resources required to respond to the Baptist World Aid questionnaire is better spent on our continued work with our supply chain,” The Iconic wrote.

Sustainability enters the fray

Baptist World Aid Australia scores companies across five key pillars, including policies, traceability and transparency, monitoring and supplier relationships, worker empowerment and, for the first time this year, environmental management.

“Baptist World Aid Australia acknowledges the extensive impact the fashion industry has on the environment; therefore, we have chosen to expand the report’s original focus from exclusively labour rights to address an issue we currently face on a global scale,” Hickey said.

“The new criterion evaluates a company’s ability to report and address a range of aspects in environmental management including emissions, materials, water use, wastewater and chemical use.”

This story first appeared on sister site, Inside Retail.