Managing Supply Chains in Global Apparel Companies: An Overview in Safeguarding Workers’ Rights and Safe Labor Practices

By: Elisabeth Schiffbauer

Increasing foreign investment and international production by major corporations have created complex, multi-layered supply chains with networks of contractors, subcontractors, and suppliers. While rapid globalization has contributed to a dynamic international economy, it has simultaneously enabled human rights violations including forced labor and human trafficking.

In light of the tragedies that have occurred in Pakistan and Bangladesh – the fire in Karachi killed over 300 workers in 2012, the Tazreen factory fire, which killed over 100 garment workers in 2012, and the Rana Plaza collapse, which caused over 1,100 deaths in 2013, global apparel companies have been forced to take a closer look at managing their supply chains.

Below outlines several mechanisms global apparel companies may use to better assess, implement, and verify compliance with labor standards in their supply chains.

Codes of Conduct

A company should adopt a code of conduct. This code should apply to all workers and labor practices over which a company has some degree of responsibility, including not only workers that are directly employed by a company, but also those that work within a company’s supply chain.

The code of conduct, especially for a company with global operations, should be comprehensive and take into account all local labor laws and international standards where applicable including, but not limited to, the International Labour Organization’s Core Labor Standards, the Universal Declaration of Human Rights, the U.N. Guiding Principles on Business and Human Rights, and the OECD Guidelines for Multinational Enterprises.

A company’s code of conduct should be readily available, posted prominently in the workplace, and circulated among its employees in the first language(s) of the workers in their respective countries. The code should be available to the public and accessible on a company’s website.

Given the legal implications of such codes, legal counsel for global apparel companies should play an integral role in drafting these documents.

Implementation and Monitoring

A company code of conduct is only the first step in supply chain transparency, the next and more difficult steps are implementing and continued monitoring of the code that will ultimately improve a company’s working conditions.

Management personnel should be responsible for the implementation of a company’s code of conduct. This requires that management personnel be adequately trained to conduct monitoring of the compliance of a company’s code with local laws.  In addition to keeping adequate and accurate records monitors should also have access to suppliers’ records, management personnel and records.  Interviews of employees should be conducted off-site, and employees should be randomly selected to prevent any interference from management.  Employee anonymity should be safeguarded throughout the process.

Verification and Partnerships

A company’s compliance program should include external verification, which involves “establishing the credibility of claims that concern actual labour practices, the observance of code provisions, and the observance of code implementation.” See Jeroen Merk, Full Package Approach to Labour Codes of Conduct, Clean Clothes Campaign, 7 (2008). Verification should be carried out by an independent body of an entity seeking to have its claim verified.

Over the past few years, there has been an emergence of partnerships and multi-stakeholder initiatives (MSIs) which include businesses, NGOs, investor activists, religious-based groups, law enforcement, and government that come together with unique insights and tools towards a common objective.  Partnerships and MSIs have formed across different sectors including technology, pharmaceuticals, and agriculture. An example of such an initiative in the fashion and apparel industry is the Accord on Fire and Building Safety in Bangladesh, which developed following the Rana Plaza collapse.

Remediation

Because no supply chain or factory is free of violations, an effective monitoring program will reveal violations of a company’s code and/or local laws.  Suppliers and factories found to have violations should not be subject to the typical “cut-and-run” approach, which “only encourages suppliers to hide their abuses.” Id. Companies should turn to remediation when confronted with worker rights violations, giving suppliers and factories sufficient time and reasonable deadlines to remedy violations. Suppliers may be terminated when they are unwilling to correct violations.

Additional Concerns and Measures

In addition to the instruments discussed above, companies should examine their purchase practices, which often conflict with pursuing compliance with labor standards. Shifting of orders, voluminous orders, and short lead times undermine the ability of suppliers and factories to remain compliant with labor standards.

Companies should also endorse and implement a living wage standard and adopt positive approaches to freedom of association and collective bargaining, as they give workers tools to monitor their own workplaces.

Because a majority of the workers in the global apparel industry are women, companies may also consider addressing gender-related workplace issues such as differences in pay, training, promotions, and sexual harassment.

Conclusion

Labor violations in the supply chain are a systematic problem; no company is completely clean. Any company that operates on a global scale faces issues that need to be addressed, and there are no quick-fixes.

Companies should not approach the need for more transparent supply chains solely from a preventative public relations nightmare perspective, but should invest in developing long-term solutions that will promote more sustainable business practices that value workers and their rights at every step of the process.