Behind the Barcode is a series of industry reports which seek to empower consumers to purchase ethically and, by doing so, encourage companies to ensure workers and the environment are protected and not harmed; that workers are rewarded and not exploited; and that they can work free from the tyranny of modern slavery.
One of these industry reports is the Ethical Fashion Report. It is released with an accompanying Ethical Fashion Guide. The research published in the 2019 Ethical Fashion Report grades 130 fashion companies and 480 brands operating in Australia and around the world, and assesses the systems they have in place to protect the workers in their supply chain from exploitation and protect the environment from the harmful impacts of the fashion industry.
The grades awarded in the report are a measure of the efforts undertaken by each company to mitigate the risks of forced labour, child labour, and worker exploitation throughout their supply chains, as well an mitigate environmental damage. Higher grades correspond to companies with a ethical sourcing system that, if implemented well, should reduce the risk and extent of exploitation in the production of that company’s products. That is, companies with the best grades (A and A+) are those companies that have a strong code of conduct, are investing substantially in knowing who their suppliers are, and are actively monitoring and building relationships with those suppliers to ensure adherence to their code of conduct. These companies are also actively seeking to empower workers and taking active measures to ensure that their workers are receiving a living wage. In combination, these steps substantially reduce the risks of slavery and exploitation. Low graded companies are those that are not taking these initiatives or, if they are, have chosen not to disclose it.
It is important to note that a high grade does not mean that a company has a supply chain which is free from exploitation. Rather, it is an indicator of the efforts the company is undertaking and the strength of its systems to reduce the risk of exploitation. Furthermore, The Report’s grading methodology is designed to spread companies out along an A-F continuum based on the relative strength of their efforts, similar to awarding grades on a bell curve (i.e. best performers receiving A’s, worst receiving F’s and many in the middle). It is also worth noting that we do not do site inspections of suppliers and production facilities and, in some instances, we have relied on audit data provided to us by companies to verify conditions and benefits that workers receive.
The grades awarded in this report are a measure of the efforts undertaken by each company to mitigate the risks of forced labour, child labour and worker exploitation throughout their supply chains, as well as implement environmental management systems. Higher grades correspond to companies with a ethical sourcing system that, if implemented well, should reduce the risk and extent of worker and environmental exploitation through the production of that company’s products.
These grades are derived from research undertaken by Baptist World Aid Australia and Tearfund New Zealand and published in The Ethical Fashion Report.
Our research team assesses 44 specific criteria about each company’s labour rights management system. These assessments look at three critical stages of the supply chain as a proxy for the entire supply chain: raw materials, inputs production and final manufacturing. The questions are divided into five sections:
Each company assessed in our Report is provided with an Assessment Support Document. The Assessment Support Document acts as a helpful guide for companies, including a rationale for each survey question and several examples of what constitutes a strong labour rights system. The Assessment Support Document also details the validation requirements necessary for demonstrating that systems or policies asserted by companies to be in place, are, indeed, in place.
To verify the data provided by companies, company responses are reviewed and clarification and supporting documentation are sought where necessary. In some instances, the audit data provided by companies is relied upon to verify conditions and benefits that workers receive. Wherever possible, our researchers and company representatives work through the survey questions together, allowing both parties to be satisfied that the data presented is an accurate representation of the company’s policies and processes. So, all self-assessment by companies, must be verified by the strict criteria we set against each of the 44 questions.
To ensure consistency in the assessment of companies after completing the survey, company responses are cross-checked by another member of our research team.
As previously stated, it is important to remember that a high grade does not mean that a company has a supply chain which is free from exploitation. Rather, it is an indicator of the efforts the company is undertaking and the strength of its systems to reduce the risk of exploitation. It is also worth noting that we do not do site inspections of suppliers and production facilities and, in some instances, we have relied on audit data provided to us by companies to verify conditions and benefits that workers receive.
The grades awarded in the Report are a measure of the efforts undertaken by each company to mitigate the risks of forced labour, child labour, worker exploitation and environmental harm throughout their supply chains. Higher grades correspond to companies with a labour rights management and environmental management systems that, if implemented well, should reduce the risk and extent of worker exploitation and environmental harm in the production of that company’s products. Low graded companies are those that are not taking these initiatives, or those choosing not to disclose if they are taking such initiatives.
It is important to note that a high grade does not mean that a company has a supply chain which is free from exploitation or environmental harm. Rather, it is an indicator of the efforts the company is undertaking and the strength of its systems to reduce risk. Furthermore, the Report’s grading methodology is designed to spread companies out along an A–F continuum, based on the relative strength of their efforts – awarding grades on an adjusted bell curve (i.e. the best performers receive A-range grades, the worst receive F grades, with the remaining in the middle).
The adjusted bell curve is a key element to support the Ethical Fashion Report’s advocacy purpose. It encourages companies to continue working on improving their supply chain management as the bell curve grades a company comparatively against industry peers. This is preferable to a fixed standard because it allows the benchmark of an ethically managed supply change to shift as the industry standard improves. Using an adjusted bell curve rather than a fixed standard means that industry practice sets the standard of ethical supply chain management rather than the research team, and companies are incentivised to continue improvements in order to align with the progression of the industry.
As part of our bi-annual review, we will be reviewing the effectiveness and appropriateness of this grading method and are open to adjusting it if there is a more appropriate mechanism to award grades or scores. We will also look to better educate our consumers on our methodology and why we do it this way so it will be clearer to consumers that we are comparing companies and that achieving an A as opposed to a C doesn’t mean that company has no risks in its supply chain or is slavery free but it does enable a consumer to compare how companies are progressing comparatively.
The Ethical Fashion Guide’s methodology and grading process is audited by Grant Thornton, a process we have engaged them with since 2017. Grant Thornton conducted an independent review of Baptist World Aid’s end-to-end process and methodology for the 2019 Ethical Fashion Report, the findings of which are published in the 2019 Ethical Fashion Report. The conclusion of this review states:
“We are pleased to state that the overall methodology is considered robust, primarily driven by the use of standard Research and Project Management tools (i.e. Survey, Grading and Master Data templates and Project Timeline (Plan), Survey Correspondence and Tracking spreadsheets). Our review also confirmed adequate stakeholder engagement and follow up processes, as well as rigour around the review and cross checking of data and validation of results.
We confirmed that BWAA maintains a consultative approach by offering feedback on brands’ submissions. Finally, no material errors were identified from the sample testing.”
Every two years the team behind the Ethical Fashion Report take time to review our research methodology to ensure the survey tool is in-line with prevailing best practice across the global fashion industry. These reviews involve in-depth consultation with a variety of stakeholders, including other civil society groups, government bodies, academics, brands and industry bodies that specialise in ethical supply chain practices in the fashion industry. In the past, this process has led to the revision of questions we ask brands as well as increased validation to earn credit for certain questions. In doing so, brands are encouraged to continuously improve their systems in order to maintain and improve upon their grades.
Baptist World Aid is always open to engage with other industry stakeholders in an effort to improve our reporting measures and therefore promote the welfare of garment workers throughout the supply chain. Our next full review, which will be are most comprehensive to date, will take place between June – September of 2019, the findings of which will be included in the 2020 Ethical Fashion Report.
Companies are selected for inclusion in the Report on three broad criteria:
Our initial selection of companies included a survey of the ASX 200, plus large multinationals that had traditional bricks and mortar operations in Australia. Each year the list has grown, applying a combination of the criteria above.
Baptist World Aid acknowledge that the Ethical Fashion Report has played a significant role in highlighting the ethical practices of brands in the Australian market. This has sparked interest from many small brands that believe they have ethical systems and desire to have their brand highlighted by the Report. The Report has favoured large, well known, mainstream brands as these, by definition, are the brands that most consumers buy from. The Report has then sought to include a handful of small brands, designed to demonstrate alternative business models that lead to positive environmental and social outcomes.
Companies that are non-responsive, along with those that do not provide any substantive information, are indicated in the Report and Guide with an asterisk (*) next to their name. These companies are also given the opportunity to provide a short statement as to why they chose not to respond, found on page 90 of this report.
We acknowledge that many of the nonresponsive brands may be doing more to improve their ethical sourcing that we have been able to assess them on. However, if brands do not disclose, or are unwilling to disclose, what they are doing to ensure that workers are not exploited in their supply chains, then it becomes almost impossible for consumers and the public to know if these brands are investing sufficiently to mitigate these risks.
Companies may prefer to disclose their supply chain management practices publicly, instead of responding to our survey (e.g. they might be surveyed by multiple research projects or they might prefer a single public disclosure, rather than disclosing through the survey). By assessing non- responsive companies on publicly available information we can give due credit to these efforts. In the history of our research, non-responsive companies have received a wide range of grades based on their publicly available information. In the 2019 Ethical Fashion Report non-responsive companies received grades ranging from a B to an F.
Companies are selected for inclusion in the Report on three broad criteria:
These criteria have resulted in a diverse range of brands included in our Report, from niche ethical brands like Outland Denim and Mighty Good Group, to multinational high street brands like Zara (Inditex) and Cotton On Group. While we believe that it is important to include smaller ethical brands that demonstrate best practice in labour rights management, often through alternative business models, the impact of including large brands can’t be underestimated. Our key objective is making the biggest impact in ending exploitation for garment workers, and this can only be done through changing the practices of the biggest fashion brands. By changing the practices of these brands, the lives of millions of garment workers around the world can be impacted for good.
While our research does provide consumers with information about a diverse range of brands with different business models, we choose to focus on including larger brands as it is these companies that have the potential to impact the greatest number of workers, who’s welfare is at the core of our mission.
Many companies have a wide array of brands or, in some cases, separate corporate entities that are held by their company structure. Several department store companies (like David Jones) will have a variety of arrangements with the brands stocked by their stores – including private label, exclusive brands, and non-exclusive brands. In such circumstances, our grading process only considers those brands that are owned or exclusively distributed by these department stores. This can mean that, in the case of some department stores, our grading will only apply to a small portion of what they retail.
Where companies have separate corporate entities or brands that use differing labour rights systems, then we grade them separately (wherever this has been indicated to us). Kmart Australia, Coles, and Target Australia for instance, all have separate grades despite being part of the one parent company: Wesfarmers.
The term ‘ethical’ is one used in a number of context’s and can mean different things to different people, depending on their values. The values underpinning Baptist World Aid’s Ethical Fashion Report stem from our organisation’s mission to help Australians to tackle the injustice of global poverty.
Our mission in all that we do is for the poor and vulnerable and the environment that they inhabit. Our research stemmed out of desperate concern for those trapped in situations of exploitation and modern slavery. All aspects of our methodology have been decided in consultation with experts in this area and with the aim of making the biggest impact in ending exploitation for garment workers.Our measure of how ‘ethical’ a company is can be seen in the 44 specific criteria we assess companies against, which is across 5 key areas:
Each company’s individual assessment against each of these 44 criteria can be found in the ‘survey data;’ section of the 2019 Ethical Fashion Report.
Baptist World Aid was proud to include an environmental management section into its assessment criteria for the first time in 2019. This section has 11 questions, focusing on a variety of environmental concerns (see pages 22-24 of the 2019 Ethical Fashion Report for full details). Brands use of sustainable fibres is of chief concern to many consumers, which is why we grade companies on what percentage of their final product is made from sustainable fibres. We credit the following sustainable fibres:
The sustainable quality of the above fibres has been determined through consideration of their water use, wastewater discharge, chemical use, energy use and waste impact.
If a company wishes to seek credit for a fibre not listed above, they can provide a rationale according to the same criteria for our consideration. We recommend companies review the Made-By Environmental Benchmark for Fibres and the Sustainable Apparel Coalition Higg Materials Sustainability Index.
Our research team asks companies for evidence that they are paying workers a living wage. A living wage is defined as a wage sufficient to support all the basic needs of a worker and his or her dependents with some money left over for discretionary spending and saving for emergencies. This amount varies between country and city. The legal minimum wage in many countries is not sufficient for all basic needs and leaves many workers trapped in a cycle of poverty.
Companies are asked to provide audit reports demonstrating that the wages being paid to entry level workers are consistent with a living wage, as benchmarked against an adequate living wage methodology.
Since the first Ethical Fashion Report was published in 2013, we have seen the industry make remarkable progress in a number of significant areas when it comes to ensuring strong labour rights management across the supply chain. For example, when it comes to traceability, companies working to trace where their raw materials come from has increased from 17% in 2013, to 48% in 2019. Likewise, companies working to trace where their fabrics come from have increased from 49% in 2013, to 81% in 2019. A company’s ability to know where their product is being sourced from is vital in having visibility into the situation of workers throughout the supply chain.
The annual nature of the research enables us to track the progress made in ethical sourcing across the industry and also gives companies the opportunity to report on their progress regularly, encouraging continuous progress. Between 2018 and 2019, 38% of companies improved their overall grade.
Our research is transparent about the fact that our Research Team do not conduct site inspections of factories as part of their grading. Therefore, company grades are not an assessment of actual conditions in factories and farms, but rather an analysis of the strength of a company’s labour rights and environmental management systems, which, if implemented well, should reduce the risk and extent of worker exploitation and environmental harm.
We also encourage you to write to the companies included in the guide and directly inform them that you are a customer who would like to see them guarantee the workers in their supply chain a living wage. Use our letter writing templates to contact the brands you love. Encourage the report’s best performers and thank them for their efforts. Call on those who received a C grade or lower to do more to protect the workers in their supply chain. Your voice can be a catalyst for change!
You can help educate and empower your community to engage with ethical fashion by:
The latest edition of the Ethical Fashion Report grades 407 fashion brands on the systems they have in place to mitigate the risk of slavery in their supply chains.