Addressing forced labour risks in fashion supply chains

The latest KnowTheChain report highlights an increase in forced labour risks in garment and footwear supply chains. Economic challenges, including poverty and income inequality are creating fertile ground for exploitation as individuals desperate for work are more susceptible to coercion and abuse.

As observed during our extensive experience working with the fashion industry at both policy and corporate levels, and despite several different strategies implemented to address forced labour risks, many companies still fail to use their leverage to reduce the factors contributing to forced labour.

In this Insight our Senior Consultant, Caroline Quirke, writes about the key gaps in current approaches and provides recommendations for fashion companies to address forced labour risks by:

  • building responsible sourcing management systems
  • implementing responsible purchasing practices
  • managing forced labour risks
  • committing to remediating adverse impacts if they are causing or contributing to them

What are the current limitations in approaches to forced labour risks by fashion companies?

An overreliance on audit programmes

Tick-box audit programmes are employed extensively by fashion companies. When integrated with management systems and if delivered by qualified individuals audits can be effective in monitoring supplier improvements and approaches. However, they cannot be solely relied upon to identify and manage forced labour risks as planned audits offer a snapshot in time and can present an image of a supplier that is not entirely representative. Further, identifying forced labour during an audit is extremely challenging and can often be missed. 

Good policies and procedures, poor implementation

Due to the fast-paced nature of the fashion industry, particularly around runway shows, fashion companies’ sourcing often needs to be expedited to prepare garments for their collections. Despite the pressure to showcase collections, fashion companies must implement their policies and adhere to proper procedures, ensuring they source only from suppliers whom they have engaged with and can trust to follow their expectations.

Lack of remedy

The KnowTheChain report notes that only 22% of companies disclosed remedy outcomes for supply chain workers. The report also highlights that in its review of companies almost 50% had reported accusations of forced labour in its supply chains. Only a small fraction (8%) involves workers or their representatives in designing or implementing these mechanisms.

What could fashion companies do to address these issues?

Kumi has developed a 5-point action plan for companies to address forced labour risks in their supply chains.

Invest in a diagnostic assessment of their due diligence management systems

For companies to address the gaps highlighted by Kumi and the KnowTheChain report effectively, they need to implement a management system that identifies, manages and mitigates risks in their supply chains. The OECD Guidance for Garment and Footwear (OECD Guidance) provides a framework that, if effectively implemented, facilitates ongoing due diligence and enables companies to prioritise engagement with suppliers.

Most companies will have some elements of what is required of a due diligence management system. Kumi has developed its Responsible Sourcing Diagnostic to benchmark our clients against market and regulatory requirements for responsible sourcing and diagnose the effectiveness of the implementation of existing policies and procedures for due diligence. We complement this with a clear roadmap with practical actions and realistic timelines to improve performance, and, as regulations become stricter, compliance.

Encourage larger overseas suppliers to do the same whilst providing more hands-on support to smaller ones

Capacity building of suppliers and understanding leverage are core requirements of the OECD Guidance. Companies need to determine which suppliers require the most support and who would stand to benefit from it. Within their management systems, companies can delineate supplier requirements and expectations.

Further, downstream brands should expect all suppliers in producing companies to take on their own responsibilities.

Of course, this responsibility may vary. For example, large and sophisticated factory groups should be using their own resources and expertise to implement management systems that align with OECD expectations, Conversely, smaller suppliers may require assistance and training to reach the required expectations.

Whatever the makeup of the supply chain, with appropriate support, all suppliers can attain the expected standards, enabling supply chains to exhibit the traceability and ethical conduct that is deemed necessary.

Talk about the results and the journey, the challenges, the gaps and the ways they are addressing them

To create a responsible sector, companies need to share knowledge of their processes, be honest about what works and what does not. Events like the OECD Garment Forum provide an excellent platform for companies to share information about their due diligence journey and encourage competitors to become partners to work together to address forced labour risks.

Companies need to establish grievance mechanisms and processes that ensure effective remediation.

A core component of a due diligence management system is remediation which can be supported effectively through having effective grievance mechanisms. It should be noted that workers and affected stakeholders need to be included in the design of grievance mechanisms to ensure that they are fit for purpose.

Kumi has recently partnered with Safecall, a leading provider of a case-managed ethics hotline and online reporting system that provides safe, confidential and accessible channels for reporting grievances. Our partnership combines Safecall’s reporting channels with Kumi’s expertise in building mechanisms for reporting and investigating grievances in global supply chains. Kumi’s Director James Lewry has written an Insight on the importance of grievance mechanisms.

Build responsible purchasing practices

The OECD Guidance emphasises purchasing practices as a significant risk factor in the fashion sector. Companies are urged to “prevent contribution to harm through responsible purchasing practices.” Inadequate purchasing practices worsen job conditions for workers, restrict factories’ ability to invest in the workplace, and fundamentally weaken responsible sourcing and sustainability initiatives.

Kumi has written an Insight on the importance of responsible purchasing practices and our Senior Consultant Jean-Baptiste Collovray has written a series of Insights on the link between responsible purchasing practices and migrant labour.

To conclude, the garment and footwear sector holds great potential for supporting development in some of the world’s poorest countries. Through prioritisation of responsible sourcing and investment in worker well-being, the garment and footwear sector can realise its potential as a force for positive economic and social development while mitigating its negative impacts on people and the planet.