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Report

26 May 2021

Author:
KnowTheChain

KnowTheChain: Ranking of 37 apparel and footwear companies on efforts to address forced labour in supply chains

Workers in apparel supply chains are among the hardest hit by the Covid-19 pandemic. Even before the pandemic, workers had to survive on poverty wages; in the first three months of the pandemic alone, workers lost at least US$3 billion in income. Poverty, discrimination, a lack of labor protections, and restrictions on movement form the breeding ground for exploitation and forced labor risks— and the Covid-19 pandemic has dramatically worsened these factors. Workers’ already meager livelihoods were taken away and many lack the support of social and labor protections, which do not extend to (undocumented) migrant workers.

KnowTheChain’s third apparel and footwear sector ranking found that the 37 largest global companies fail to stand up for workers who face exploitation and are struggling to survive. On average, companies fail even to hit the 50% mark in the benchmark when it comes to addressing the worst forms of exploitation in their supply chains.

The results show that:

  • Luxury apparel companies score particularly poorly, averaging 31/100. Italian luxury fashion house Prada’s score has worsened over time, at just 5/100, while peers such as the French luxury goods company Kering (41/100) and the German upper premium brand Hugo Boss (49/100) have improved significantly since the first benchmark in 2016. Also among the bottom five companies is US-based Tapestry (16/100), the owner of Coach and Kate Spade.
  • The largest investors in the lowest-scoring five companies were all ESG investors. While this might be expected against the backdrop of a rise in ESG investing (investing that includes considerations for environmental, social, and governance factors) that has reached mainstream investing, it indicates that ESG investors are failing to use their leverage on supply chain matters.
  • Despite some positive signs, the sector sorely lacks the substantive improvements in areas critical during the pandemic and to achieve a just recovery: responsible purchasing practices and remedy. The pandemic showed yet again that when companies do not pay suppliers for the orders they place, it is the workers who suffer. At a time when millions of apparel workers across the world are waiting for their wages to be paid, only four out of 37 companies (11%) could demonstrate several remedy outcomes for workers, such as repayment of unpaid wages or recruitment fees.
  • Allegations of abuse were identified in the supply chains of more than half the benchmarked companies (54%), with some companies facing up to four allegations. More often than not, companies failed to ensure concrete remedy outcomes for workers, such as returning passports or reimbursing recruitment fees that may equal several months’ wages.

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