FASHION TRANSPARENCY INDEX 2023 EXECUTIVE SUMMARY FASHION REVOLUTION 10
fashion brand compliance Major fashion brands Traditional efforts consisted of offloading the continue to shirk direct responsibility for human responsibilities like rights and the environment onto their suppliers, who absorbed this tax and purchasing burden as a cost of securing the brand’s business. This status quo practices which has resulted in (1) brands distancing drive inequalities themselves from supply chain issues within the industry. and shirking responsibility in cases abuse, and (2) obscuring the direct The pay gap between of role that brands themselves play in driving supply chain abuses. fashion CEOs and garment workers Since the Covid-19 pandemic, exploitative brand purchasing continues to widen, when practices (such as cancelling meanwhile, only and refusing to pay for orders and demanding retrospective 18% of brands discounts, among others) resulted are disclosing in unprecedented levels of worker hardship, there has been a greater the percentage spotlight on brands to take of executive responsibility for the impacts they are driving. However, as evidence pay tied to their to mount that major sustainability target continues fashion brands engage in practices which are volatile and abusive toward their suppliers, our findings similarly show that few major fashion brands disclose evidence of working with their suppliers under fair terms. Just 12% of brands publish a responsible purchasing code of conduct, and only one brand, Zeeman, publishes a standard, due-diligence-aligned supplier agreement template, setting out typical order and payment terms and conditions. Only 4% of brands share the number of orders that
they impose retrospective changes to their previously agreed payment terms, and only 11% of brands disclose a policy to pay suppliers within 60 days.
Just 12% of brands publish a responsible purchasing code of conduct To make matters worse, brands are increasingly adopting direct-toconsumer (D2C) on-demand models in the way they order their clothes, typically ordering very small order quantities upfront, and if they are selling well, orders are ramped up. Purchasing in this way may reduce unsold goods, but it places suppliers under risk and workers under immense pressure. Sudden and unpredictable surges in order volumes with tight deadlines make it impossible for suppliers to plan. Purchasing unpredictably can drive up excessive overtime, as well as stress and anxiety for workers to meet production targets. D2C models also make the customer the importer, not the retailer. Shipping directly to consumers from China helps major brands reap tax advantages where, in the US, de minimis customs rule allow Chinese producers to ship products below
$800 directly to consumers to avoid U.S. tariffs, taxes, and oversight. This means that brands operating with D2C models can avoid tax and fly under the radar of forced labour regulations. Using tax loopholes and tax havens to maximise and hoard even more profits, and avoid contributions to the communities in which they operate, is common among major fashion brands. This is especially stark given that the people who make these clothes struggle to provide for themselves and their families and while consumers and citizens around the world are facing a cost of living crisis. Less than half (45%) of brands publish their responsible tax strategy, yet it is crucial for governments to implement a tax system to address current loopholes and ensure that multinational companies pay their share in the countries where they operate to address the growing inequalities between and within countries. Parallel to this, CEO pay is skyrocketing and the wage gap between fashion CEOs and the people who make our clothes is reaching stratospheric heights. Fashion executives are some of the richest individuals on the planet and should be held accountable for the human rights and environmental impacts of the brands. Despite this, while 26% of brands disclose if executive pay is tied to human rights
and environmental targets, only 18% of brands disclose the percentage of executive bonus or pay tied to these targets. Sustainability targets tend to represent a small proportion of executive bonuses which begs the question, are executives truly incentivised to meet sustainability targets when their base pay is already so significant?