BUSSINESS + POLTICS
A Recipe for Poverty: Fast Fashion, Global Supply Chains and COVID-19
18th June 2020
Fast fashion has long been criticized. The Covid-19 pandemic is exposing the fragility of the economic system in which fast fashion operates.
Before I write this, I look at my clothes. I go through them and read the tags. I have clothes produced in Kenya, Malaysia, India and Bangladesh. My shoes have probably travelled the world before they came to be upon my feet. Why?
The rise in globalization and the technology boom coincided and created huge opportunities for corporations. Trade liberalisation has created the global supply chain that we know of today. This global supply chain includes fashion corporations who outsource most of their production to countries which have lower wages and typically longer working hours. This corporate structure protects parent companies as the supplier is a separate legal entity. This allows the parent company to distance themselves from legal liability. At the time these principles were set up, there was not a strong global discussion on human rights. It is clear from the Covid-19 crisis that some fashion corporations still believe that they are immune to human rights concerns.
Recent discussions surrounding business and human rights were sparked by the Rana Plaza tragedy. Rana Plaza was a garment factory in Bangladesh which collapsed on April 24, 2013. Over 1100 people died and some 2500 were injured. The tragedy highlighted the problems associated with the global supply chain and the lack of regard for human rights in its operations. It showed the issues which are present when corporations operate globally without a global regulator.
These problems are coming to light once more with Covid-19. This is clear from brands which have been cancelling orders already produced, leaving garment workers in their supply chains not only without a job, but also without a salary. Salaries are more than likely depended upon as savings are not commonly available to these workers.
One asks – is there a legal framework for business and human rights? The UN guiding principles are the guiding light in business and human rights and place due diligence at their core. Due diligence requires a corporation to identify, prevent, mitigate and account for how they address their impacts on human rights. The principles are a soft law instrument meaning that they are not legally binding. This, however, does not mean they are not powerful- they are the most authoritative text on the issue of business and human rights.
Although these issues should be taken into account by businesses, many are using the force majeure clause in their contracts in order to cancel orders, with no liability occurring for payment. A force majeure means events which are outside the control of two parties that prevents one or both parties from fulfilling the contract. Usually the contract states what these circumstances are. This clause has been used extensively by fashion corporations in the Covid-19 crisis in order to cancel, postpone or refuse to pay for orders already produced. The clause is being abused by corporations as many do not specifically state pandemics as a reason for the clause to be invoked.
“Covid-19 kills but so does abject poverty. As of March 22 2020, buyers had cancelled $1.44 billion worth of Bangladeshi garment exports. This strategy comes at a high cost, with those at the bottom of the supply chain left destitute“
Urban Outfitters have used this clause. In doing this, they have cancelled all undelivered orders and did not accept the delivery of goods on already purchased orders. This is done in the interest of protecting the business during the crisis. Urban Outfitters is not alone in this act. New Look has delayed supplier payments indefinitely, leaving people at the bottom of their supply chain without payment during a global crisis. The Arcadia group who own Topshop, Miss Selfridge and Dorothy Perkins has also cancelled orders which had not been shipped, citing a contractual right to do so. Extended time of unemployment due to these cancellations may mean hunger, disease and even death for those workers in the supply chain. Covid-19 kills but so does abject poverty. As of March 22 2020, buyers had cancelled $1.44 billion worth of Bangladesh garment exports. This strategy comes at a high cost, with those at the bottom of the supply chain left destitute.
H&M has been an outlier in this conversation. The corporation has pledged to pay for the goods already manufactured, as well as the goods currently in production. H&M have acknowledged the vulnerability of these employers and their suppliers if these orders are cancelled without proper notice. H&M have also stated that they will use their networks to try and foster a recovery, and are focusing on efforts which need to be made in countries such as Bangladesh which are highly dependent on the textile industry. Here H&M will be able to use their leverage to the workers’ advantage and to focus on the specific areas in which human rights are most at risk. These actions align with the UN’s guiding principles.
H&M have stood beside their suppliers rather than distance themselves immediately for corporate gain in the short term. It should be a signal to other garment corporations that just because they have a legal licence, does not mean that they have a social licence. With the rise of the conscious customer taking human rights into account this may also affect profits, thus there is also a financial incentive for this model- perhaps not in the short term but definitely in the long term.
One initiative which is trying to help is Lost Stock. This initiative, set up by the fashion shopping app Mallzee, allows people to buy cancelled clothing stock directly from manufacturers in Bangladesh. The initiative supports these garment workers through a partnership with the NGO SAJIDA Foundation, which has as its mission “health happiness and dignity for all”. One box supports a garment worker for a week.
Lost Stock is a box of clothing chosen for you, that supports workers and prevents waste.
I got in touch with the CEO Cally Russell of Lost Stock to find out more. He tells me that the response to the initiative has been “overwhelming” with 10,000 boxes sold in May and almost 90,000 boxes sold in June; meaning that they can support families in Bangladesh for 90,000 weeks. Russell informed me that they choose Bangladesh because it is heavily focused on garment production and the garment industry. A quote read by Russell stated, “if my workers don’t die of Coronavirus then they will die of starvation”. It was this quote which spurred him to act. On the long term impact this pandemic will have, Russell believes that consumers will think twice about the supply chain, and that corporations offering transparency in supply chains and a direct line between consumers and workers will become prevalent in a post-Covid world.
These initiatives are needed in a time like this and I admire what Russell has done in such a short space of time. At the same time, my underlying feeling is that they should not need to exist. The garment industry should be taking responsibility for the stock it has created, however it is clear that this is not the case.
In these times it is easy to see the absolute power imbalance which exists between the corporate parent company and the suppliers at the bottom of this chain. Of course, we as consumers can make an impact by boycotting certain brands. However, I do not believe this is enough. There needs to be a complete re-wiring of the system which we are operating under. This re-wiring needs to have human rights at its core otherwise we are in danger of leaving the most vulnerable behind.
Featured photo by ILO Asia-Pacific