The world’s top fashion brands have failed to safeguard workers in their supply chains, the new KnowTheChain benchmark revealed today (26 May 2021). KnowTheChain ranked 37 of the world’s biggest apparel and footwear companies on their efforts to tackle forced labor. On average, companies did not score even 50% in their efforts to address some of the worst forms of exploitation in their supply chains—this includes the world’s two largest luxury goods companies, Kering (Alexander McQueen and Gucci) and LVMH (Christian Dior and Louis Vuitton), and retail giants Amazon and Walmart. Of serious concern are the low scores on the most worker-centric indicators.

Topline findings:

1. Supply chains are rife with allegations of abuse, worsened by the treatment of workers in the pandemic, and companies largely do not demonstrate how they work to ensure abuses against workers are remedied.
2. There is a substantial gap between policy and practice, suggesting company efforts to end forced labor are ineffective. This allows companies to take credit while disregarding the plight of workers.
3. Luxury brands are among the poorest performers, indicating a higher price tag doesn’t translate into stronger transparency and respect for workers’ rights.

Felicitas Weber, Project Director of KnowTheChain at the Business & Human Rights Resource Centre, said: “In this third KnowTheChain apparel and footwear benchmark companies have recorded better scores, but the findings also indicate that advances in company policies, alone, are not effective. Companies continue to create an environment in which abuse can thrive, revealing disregard for the workers upon whom their profits rely. Companies are unwilling to address root causes of exploitation and retain purchasing practices that often prevent decent work and living wages to be paid.

“To achieve a just recovery from the pandemic the immense power and wealth imbalances between workers and companies must be addressed, and, crucially, companies need to adopt a worker-centric approach to prevent abuse. Disappointingly, our findings indicate the apparel sector is far from achieving this.

“We uncovered a shocking lack of will to remedy human rights abuses. At a time when forced labor allegations are skyrocketing and when millions of workers in apparel supply chains are waiting for their legally owed wages to be paid, only four out of the 37 benchmarked companies (11%) could demonstrate several remedy outcomes for workers, such as repayment of recruitment fees or reimbursement of unpaid wages.”

Weber added: “KnowTheChain operates under the assumption that forced labor likely exists in all large global supply chains. Many companies in the sector still cannot demonstrate where they source from—let alone demonstrate an understanding of who the workers in their supply chains are. If they do not know, they cannot be sure they do not have forced labor within their supply chains, and therefore in the wardrobes of their customers. We expect companies to use these findings to make good on their policy pledges by stepping up and adopting purchasing practices that ensure decent work and living wages and investing in bottom-up approaches that support workers.”

Key findings from KnowTheChain’s 2021 Apparel and Footwear Benchmark:

Risk of forced labor and lack of remedy

• Allegations of forced labor were identified in the supply chains of 54% of companies benchmarked. Yet, only four out of 37 companies (11%) could demonstrate several remedy outcomes for workers, such as repayment of unpaid wages or recruitment fees. Half the companies (51%) scored zero on the remedy indicator, including online retailers such as Amazon and Zalando, which have profited significantly during the pandemic.
• Workers in the supply chains of companies such as H&M and Walmart, are waiting for legally mandated severance pay as high as five months’ wages. Both companies also faced several forced labor allegations yet did not disclose any remedy outcomes for workers.
• Half the companies (49%) scored zero on the most worker-centric indicators, which focus on worker participation and concrete outcomes for workers, including the three largest companies in the benchmark (Amazon, Walmart, and LVMH).

Gap between policy and practice

• Almost all companies (97%) disclose a supplier code of conduct that prohibits forced labor and a monitoring process of suppliers. Yet these policies and monitoring processes do not work for workers: they are neither effective in preventing forced labor nor in ensuring remedy outcomes for workers.
• While 28 companies (76%) disclosed migrant worker policies, only two companies (5%) disclosed several positive outcomes for migrant or other workers in vulnerable conditions.
• The benchmark demonstrates that, despite a rich body of evidence detailing cases in which audits and certifications have failed to detect labor rights abuses, companies focus heavily on policies and monitoring, yet they fall short when it comes to focusing on worker-centric processes and solutions.

Luxury brands among poorest performers

• Luxury apparel companies performed particularly poorly, with an average score of 31/100.
• Italian luxury fashion house Prada has worsened over time, scoring a mere 5/100 in the latest benchmark.
• This is not inevitable and raises very serious operational questions as peers such as the French luxury goods company Kering (41/100) and the German upper premium brand Hugo Boss (49/100) have significantly improved their scores since 2016, while still having many advances to make.

//ENDS

Note to editors

• KnowTheChain operates under the assumption that forced labor likely exist in all large global company’s supply chains. Therefore, a high score in the benchmark indicates that a company discloses strong efforts to address the forced labor risks in its supply chains; it does not mean that a company has “slavery-free” supply chains.
• KnowTheChain includes company responses to publicly available allegations of forced labor in the supply chains of benchmarked companies to provide accountability and press for concrete and satisfying remedy outcomes for workers.
• KnowTheChain benchmarks current corporate practices, develops insights, and provides practical resources that inform investor decisions and enable companies to comply with growing legal obligations while operating more transparently and responsibly. KnowTheChain is a partnership between Humanity United, the Business & Human Rights Resource Centre, Sustainalytics, and Verité.
• The Business & Human Rights Resource Centre is an international NGO that tracks the human rights impacts (positive and negative) of more than 10,000 companies across nearly 200 countries. We seek responses from companies when concerns are raised by civil society.

Media contact: Priyanka Mogul (London-based), Media Officer, Business and Human Rights Resource Centre, +44 (0) 7880 956239, [email protected]