partnership for sustainable textiles: “child labor ... · resentatives of 27 organizations...

Case Study “Partnership for Sustainable Textiles” | Case 1/15

WittenbergCenterforGlobalEthics

CASE STUDY April 2016

Partnership for Sustainable Textiles: “Child labor, slavery, and death by chemicals—this is not negotiable” … Or is it?

Katharina de Biasi, Julia Grimm, and Simon Piest

1. INTRODUCTION

It must have been a rude shock for Minister Dr. Gerd Müller, when he realized that he was exposed

and left out in the rain by the German fashion companies on October 16, 2014. About six months ear-

lier, Minister Müller had started a multi-stakeholder initiative, comprising textile and clothing industry,

retailers, trade and labor unions, politics, civil society, and certifiers. The idea of his Partnership for

Sustainable Textiles was to collectively tackle the poor working conditions in the ready made garment

(RMG) industry in developing countries. These conditions were exemplified in 2013, when the collapse

of the Rana Plaza garment factory building in Bangladesh claimed the lives of more than 1,100 work-

ers. Müller wanted German fashion companies to take responsibility, and he wanted sustainably pro-

duced fashion to become mainstream in Germany. It took five months and endless meetings and ne-

gotiations of expert groups to come up with an action plan that would form the basis of the partnership.

Media and politicians were anxious to learn about Müller’s results and the minister himself was confi-

dent that the partnership would be successfully inaugurated that Thursday, October 16, 2014. Instead,

Müller faced disaster—the retraction of commerce and industry took him by complete surprise. How

can companies be so ruthless, refusing cooperation even when human lives are at stake? “Child labor,

slavery, and death by chemicals—this is not negotiable,” Müller disappointedly said.

2. THE PARTNERSHIP FOR SUSTAINABLE TEXTILES

After taking over the German Federal Ministry for Economic Development and Cooperation in Decem-

ber 2013, Dr. Gerd Müller was full of ideas. He imagined the cities’ shopping centers full of sustainably

produced clothing. Fair fashion should no longer be a niche market, but instead be the dominant part

of conventional mass production. On April 30, 2014, he hosted the first Roundtable Textiles, with rep-

resentatives of 27 organizations discussing the idea of forming a partnership for sustainable textiles

(Textiles Partnership)—twenty-seven managers, having in common a stake in the RMG sector in de-

veloping countries. Most of the largest fashion brands and retailers in Germany were present at the

round table—including Adidas, Aldi, C&A, H&M, Kik, Otto, and Tchibo. Moreover, a wider range of



retailers was represented by trade and commerce associations, such as the Confederation of the

German Textile and Fashion Industry (Textile+Fashion). Non-governmental organizations (NGOs),

such as the Clean Clothes Campaign, as well as trade unions, such as the German Trade Union Con-

federation (DGB), were there to defend interests of workers in developing countries. The roundtable

was complemented by certifiers, such as Fairtrade International and TÜV SÜD, as well as the host—

the Ministry for Economic Cooperation and Development. That Tuesday, April 30, 2014, the managers

agreed to further collaborate on the matter, thereby laying foundations for the Partnership for Sustain-

able Textiles—a voluntary commitment of fashion brands and other stakeholders to improve the condi-

tions along the entire textile supply chain.

In the following five months, more than 60 different stakeholders from business, government,

and civil society worked on the details of the Textiles Partnership. Participants met in various expert

groups and drafted a plan of action, which served as the foundation of the partnership. This plan of

action specified social, environmental, and economic issues associated with the different production

stages of ready made garments—from cotton growing to the spinning, weaving, and dying of fabrics,

to manufacturing the garments. For each of these production stages, the plan of action set specific

partnership standards, which were aligned with important existing international agreements and

standards, such as the ILO Core Labor Standards or the UN Guiding Principles on Business and Hu-

man Rights, but also more precise standards such as the Better Cotton Initiative (BCI) or the Global

Organic Textile Standard (GOTS). Importantly, the action plan also specified targets with specific time

frames. For instance, partnership members committed “to increase the proportion of cotton that they

use which has been produced according to partnership standards to 50%” by the end of 2020.

Just before the inaugural act of the Partnership for Sustainable Textiles on October 16, 2014,

all major textile companies refused to join the alliance. Of the more than 60 parties that were involved

in developing the partnership, only 29 signed the plan of action that day. Most of these signatories

were NGOs and governmental institutions. The very few companies among the signatories included

Vaude and hessnatur—companies that had always been particularly dedicated to sustainable textiles.

3. THE READY-MADE GARMENT INDUSTRY

The textile industry is one of the most important branches in trade and commerce (see Exhibit 1 for

basic industry data). Its beginnings date back to the Middle Ages and its prominent ascent happened

in the midst of the 18th century. An increasing population led to a rise in demand for garments and in

turn, with the Industrial Revolution emanating from England, to a replacement of manual labor with

machine work. At that time not only the first steam engine but also the Spinning Jenny had been in-

vented, increasing productivity and efficiency of labor since the application of this machinery made the

spinning process a lot faster and allowed for mass production.



Since then, technology became increasingly sophisticated, and in the 21st century, cotton gin-

ning, spinning, and weaving were usually entirely automated processes. But manufacturing the fabric

into a piece of clothing was still done by hand. Since this was a very labor-intensive process, labor

costs were the critical factor when choosing production sites. As labor costs in Europe were compara-

bly high and rising, production moved more and more to low-cost countries in Far East where there

was an abundance of workers available at very low cost (see Exhibit 2 and 3 for minimum and living

wages). For Western fashion companies, the most important Asian countries for RGM export were

China, Bangladesh, India, and Vietnam. Of all textile-exporting countries, Bangladesh was by far the

cheapest. In the 1980s the Korean enterprise Daewoo built the first textile factory in Bangladesh.

Since then, a large part of textile production was relocated from what today are relatively wealthy East

Asian states to Bangladesh. According to a 2013 report by the Clean Clothes Campaign, Bangla-

desh’s garment industry accounted for 78% of the country’s exports and contributed 17% of its gross

domestic product (GDP). Many Western companies have chosen to move their production to the de-

veloping world in an attempt to save costs by avoiding higher regulatory standards. Such standards

were barely an issue in Bangladesh: Pervaded by corruption, the fairly weak state could not enforce

laws effectively. In addition to that, factory owners usually prevented formation of trade unions, so that

workers’ opposition to working conditions was unlikely to have any impact.

The problems were aggravated by further advances in productivity and ever more globalized

markets. The multi fiber arrangement, which restricted developed countries’ import of textiles and

garments from developing countries since 1974, phased out in 2005. As a consequence, strong econ-

omies such as China massively increased their exports, resulting in more cost pressure for Bangla-

deshi factories. In 2014, the Bangladeshi minimum wage in the garment industry was 5,300 taka ($68)

per month (see Exhibit 3 for comparison to Western countries). Moreover, it was not unusual for the

mostly female workers in Bangladesh not to receive their wages, just to ensure they would return to

work the next day. But a lack of education made the approximately four million workers dependent on

jobs in one of the estimated 5,500 textile factories.

Meanwhile in Western countries, fashion had become a commodity. Clothing became so

cheap that people could afford buying pieces for one occasion and never wear them again. Research

by the Waste and Resources Action Programme from 2012 suggests that UK consumers bought 1.14

million tons of new clothing each year. That corresponded to 22 kilograms per person. About the same

amount of textiles was disposed. Half of the disposed clothing was reused in the UK or oversees, and

the other half was recycled, incinerated, or went to landfill. Fifty-eight percent of 16-24 year olds re-

ported to own unworn items that were no longer their style or taste.

In line with the new pace of the market and consumer demands, fashion retailers accelerated

the transfer of fashion trends from the catwalks to the stores—a concept coined fast fashion. Instead

of launching a few lines of fashion a year, fast fashion meant quickly reacting to new trends and con-

stantly bringing these new trends into the shops. This change of procurement pattern significantly



affected garment factories in Far East. The fast fashion concept was incompatible with long-term busi-

ness relations between Asian garment factories and Western fashion companies. Instead, the fashion

companies placed orders with agents, who passed them on to sub-contractors, i.e., garment factories.

If a garment factory received an order from an agent and did not have capacities to fulfill the order

itself, it still accepted the order but passed it on to another garment factory—a “sub-sub-contractor”.

Factory owners did not decline orders out of fear to lose potential future orders. For Western fashion

companies, this meant faster procurement, but at the same time a significant loss of transparency into

the supply chain (see Exhibit 4.1 and 5 for breakdown of cost and manufacturing stages). In addition

to that, it became almost impossible for Western companies to influence working conditions or wages

at their suppliers: Without long-term business relations, each order may have been placed at a differ-

ent factory. Moreover, all (or most) clients of the respective factory would have had to agree to pay

higher wages (see Exhibit 4.2 for comparison of labor cost of fast and slow fashion).

4. THE RANA PLAZA COLLAPSE

Fire and building safety was often problematic in South Asian garment factories, and there have been

serious accidents: In September 2012, Pakistan had to report over 250 casualties when missing

emergency exits and metal-grilled windows turned two textile factories that caught fire into deathtraps.

Two months later, in November 2012, more than 100 workers died in a fire in the Tazreen fashion

factory close to Dhaka, Bangladesh. But the accident series’ climax was reached in April 2014, when

the Rana Plaza building collapsed. Rana Plaza was an 8-floor building in the industrial town of Savar,

close to Dhaka. At the time of collapse, the two upper floors were still under construction. However,

the owner of the building had not consulted engineers to assess structural integrity of the building, nor

had he requested official building permits for the extension. Even though Rana Plaza was originally

built for commercial use, floors 2–6 were occupied by several garment factories. Again, there was no

permit for transforming Rana Plaza into industrial use. Ground and first floor were rented to a bank

and various shops. It was April 23, 2013, when growing cracks were discovered in the building’s walls.

The building was promptly evacuated and after an examination, an engineer declared it unsafe. Police

lent weight to the experts’ opinion by prohibiting entrance to the building. However, later that day a

civil service officer approved safety of the building. Some of the factory owners forced their employees

to come to work the next morning, and threatened to withhold their salaries if they wouldn’t show up.

The next morning, when over 3,000 people were ready to start their shift and the big generators were

running up, the building collapsed. More than 1,100 workers lost their lives that day. About 2,500 sur-

vived the accident, many of them severely injured.

The accident clearly illustrated the catastrophic fire and building safety conditions in Bangla-

desh. But it also served as a wake-up call to Western societies. The images of the collapsed building

were on TV stations and in newspapers around the globe, sparking debates about corporate respon-



sibility—particularly along the supply chains. A few companies (e.g., Primark) accepted responsibility

and paid into a compensation fund for the families of the deceased victims, but many refused to pay or

paid only after heavy public protests (e.g., Benetton). A remarkable case of collective action was set

up immediately after Rana Plaza collapsed: Only three weeks past the accident, numerous companies

signed the Accord for Fire and Building Safety in Bangladesh—a legally binding agreement of Western

companies to work towards a safer Bangladeshi RMG industry. The signatories committed to inspect-

ing the supplying factories with regard to safety standards and maintaining sourcing relationships for

at least five years. Compared to the rather specific Bangladesh Accord, Minister Müller planned a

more general case of collective action in Germany one year after Rana Plaza’s collapse. The Textiles

Partnership should not only promote a safe work environment in Bangladesh, but also ensure im-

provement in the social, ecological, and economic domains along the entire supply chain, from cotton

growing to manufacturing the actual piece of clothing.

5. THE TEXTILES PARTNERSHIP’S FAILURE

Against the backdrop of Rana Plaza, it seemed almost cynical of the industry to retract their commit-

ment to the carefully planned Textiles Partnership in the last nick of time. Many companies had given

a lot of input into the action plan, and many had assured until the end that they were willing to sign the

action plan. What had prompted companies to withdraw from the partnership?

Before taking over the Ministry for Economic Development and Cooperation, Müller was state

secretary in the Federal Ministry of Food and Agriculture. In food and agriculture, there were very suc-

cessful labels that indicated to the customer that a product was made according to EU-guidelines for

organic food. Inspired by such labels, the minister had the idea of establishing a green button as an

indicator guaranteeing that the garment was manufactured in compliance with high labor standards.

The Textiles Partnership was to lay the foundations for that label. Critics ridiculed the idea of the green

button, pointing to the abundance of existing labels and standards. Moreover, it was argued that en-

suring organic and fairly traded fashion was much more complex than ensuring organic and fairly

traded food: According to the trade association Textile+Fashion, a shirt passed about 140 production

stages before it was ready to be sold to the customer. Big brands asserted that it was not possible for

them to guarantee perfect conditions of all involved contractors and (unauthorized) sub-contractors in

the supply chain. However, this was precisely the original idea of Minister Müller: To offer a standard

that ultimately holds German fashion companies liable for social, environmental, and economic factors

along their supply chains—clearly an ambitious scheme. But was it too ambitious?

At the roundtable in April 2014, the minister had successfully advanced the idea of the Textiles

Partnership—many stakeholders participated in working out the details of the action plan. Of course,

this was everything but an easy process. And in difficult times, such a project needs a dedicated lead-

er who can spark and motivate the people. Müller, however, was not that person to everyone. Some



representatives of NGOs as well as textile industry praised Müller for his achievement to bring every-

one together to discuss the issues. But others raised criticism that the partnership did not sufficiently

connect to the many other initiatives for more sustainable textiles. To them, the Textiles Partnership

appeared more and more like a precipitate, hasty reaction of the minister rather than a serious and

well-conceived plan. This discontent was fueled even more by the tight schedule the ministry had set

in the beginning of the formation process. As a reaction to these deficiencies, some parties casted

doubt on whether Müller was genuinely dedicated to the cause, or if his goal was rather to distinguish

himself as an influential politician.

The minister was sometimes described as a condescending person, and some of the stake-

holders even bore personal insults by Müller. In September 2014, newspapers documented discrep-

ancies between the minister and Adidas. Müller had publicly accused the company of selling the Ger-

man football jersey for 84 EUR, while the worker in Bangladesh received only 0.15 EUR for manufac-

turing the shirt. Adidas was puzzled by Müller’s reproach and explained that the shirts were produced

in China. A spokesperson told the newspaper that the minister had not informed himself thoroughly

enough about Adidas’ procurement activities nor had he visited any of their suppliers. This incident

points out that the relation between the minister and some industry representatives was rather difficult,

to say the least.

The Textiles Partnership’s formation process was managed by the German Association for In-

ternational Cooperation (GIZ), a government-owned company that had specialized in development

aid. Some perceived the negotiations as chaotic and disorganized. For instance, it was criticized that

there had not been proper invitations to the expert group meetings, and everybody who wanted could

join. On top of that, some participants lacked a clear understanding of the precise goals of the Textiles

Partnership and where it was heading. Thus, several stakeholders asserted that the mistake lay in

having the GIZ manage the multi-stakeholder process. It was argued that the GIZ delegates had sig-

nificant and valuable expertise with respect to the cause, but that they were not prepared to manage a

complex multi-stakeholder process like the Textiles Partnership.

In particular, there were two factors that accounted for the high complexity of the formation

process. Firstly, the partnership involved a highly diverse set of stakeholders. And despite the shared

goal of improving fairness in textile production, the involved parties had different perspectives and

motives. The negotiations were often characterized by the formation of two parties: On one side the

ministry, NGOs, and labor unions, and on the other side companies and associations. But even the

companies were a heterogeneous set of actors. There were large companies who had lots of experi-

ence and expertise with respect to discussed responsibility issues. Compared to these “big players”,

many smaller companies had fewer possibilities to invest resources into the partnership’s goals. Last-

ly, there were fashion companies that specialized in fair textiles. Hence, there was a heterogeneous

set of stakeholders with diverse possibilities and expectations. The second factor that made the pro-

cess so complex was the wide scope of the Textiles Partnership. The action plan was intended to



include all steps of the supply chain, from cotton growing or production of synthetic fiber to the final

manufacturing. Social, ecological, and economical factors were to be taken into account. This included

issues such as chemicals, industrial effluent, or living wages. Quickly, expert groups emerged to work

on chemical management and living wages. But despite these expert groups, the manifold issues

treated in the action plan remained enormous.

A frequent criticism of the Textiles Partnership was related to its lack of connection to existing

international programs and standards. “We don’t deem a German action plan useful; we are a global

company,” said Adidas’ spokesperson Katja Schreiber. It was argued that international initiatives, such

as the Business Social Compliance Initiative, Fair Labor Association, or the Fear Wear Foundation

could have been promoted instead of reinventing an all-German wheel. Promoters of the partnership

countered that many of these international certifiers were part of the formation process, like for in-

stance the globally applied Global Organic Textile Standard (GOTS).

Right from the beginning, the ministry had set a tight schedule for the formation process. An

acceptable action plan had to be adopted within five months, including the summer recess. Towards

the end of that period, some companies and associations cautioned against completing the action plan

prematurely. However, on September 29, 2014, the action plan came to vote. The associations re-

frained from voting and hence the plan of was adopted without nays to be the official foundation for the

Partnership for Sustainable Textiles. After adoption of the action plan, large companies and associa-

tions had their legal departments examine its content. And even though the action plan included spe-

cific time goals, there was still uncertainty in many aspects. These aspects would still need further

refinement after the signing of the agreement. On the company side, this uncertainty translated into

considerations of liability risks. In other words, at the time of signing the contract, it was not yet clear

for which matters the signatories would be held liable, and what would happen in the event of a breach

of contract or noncompliance. Dr. Markus Conrad, chairman of Tchibo’s executive board, wrote in a

statement that it would have been negligent to sign the action plan because it was too imprecise, so

that its feasibility could not be evaluated and it ran risk of being interpreted arbitrarily. The result was

that all legal departments recommended not signing the plan of action. Subsequently, the associations

recommended their members not to join the partnership. In a press statement (October 10, 2014),

Textile+Fashion stressed that they generally supported the goals of the partnership, but that some of

the targets were simply impossible to meet. One day before the inauguration (October 15, 2014),

Germany’s large fashion retailers and trade associations had published a declaration of intent, in

which they endorsed the partnership’s goals and assured that they would help the partnership to be-

come a project that would be acceptable for all stakeholders.



6. A SECOND CHANCE?

It was clear to everyone that the Partnership for Sustainable Textiles could not work effectively without

the support and membership of commerce and industry. With retraction of the companies just before

the founding act, the relations between textile industry and the ministry hit the bottom. Müller had been

exposed by the German textile industry. But the minister was not the only one at a loss after the part-

nerships inauguration. Managers, too, wondered how to proceed from there. “It would be easily possi-

ble to leave everything here,” some thought. After having been manhandled by the minister, some

industry delegates felt the temptation to give the minister the cold shoulder. On the other hand, many

companies pledged to support the Textiles Partnership in the future. Managers imagined what further

participation in the process would entail—additional endless meetings and negotiations with ministry,

unions, and NGOs. Would it be worth the while? What if no consensus would be found after all?

Would an initiative like the Partnership for Sustainable Textiles ever have the strength to effectively

change the situation of workers in Far Eastern garment factories?

Acknowledgements: We are indebted to the Karl Schlecht Foundation and the Wittenberg-Center for

Global Ethics for funding this project. We gratefully acknowledge the support and valuable insights

provided by Dr. Michael Arretz, Dr. Gisela Burckhardt, Nicole Espey, Dr. Sabine Ferenschild, Christian

Hagemann, Frank Henke, Prof. Dr. Nick Lin-Hi, Dr. Uwe Mazura, Dr. Anna-Maria Schneider, Dr. Jan

Sammeck, and Andreas Streubig. We appreciate the fruitful discussions with Prof. Dr. Philipp Schreck

and Christoph Rohde, as well as their comments on earlier versions of this case study. We would like

to thank Ulf Schäfer for getting us acquainted with the case method.



Exhibit 1: Basic data of Germany's textile and fashion industry

in million € 2000

2011

2012 2013 2014

Sales 26,409.4 17,171.4 16,953.5 16,744.5 17,092.1

Production 16,375.2 11,809.3 11,121.6 11,074.5 11,442.9

Imports 31,730.1 37,627.2 35,764.8 36,571.3 38,670.4

Exports 18,943.2 24,577.3 23,986.7 24,217.1 25,409.3

Import Surplus 12,786.9 13.,049.9 11,778.1 12,354.2 13,261.1

Number of employees 185,195 81,683 81,565 79,934 77,832

Based on Federal Ministry for Economic Affairs and Energy (2016). Retrieved April 27, 2016, from

http://www.bmwi.de/DE/Themen/Wirtschaft/branchenfokus,did=196538.html



Exhibit 2: Minimum wages of selected countries

Country Annual (US$)1 Annual (Int$)2 Hourly (Int$)2

Bangladesh3 232 624 0.25

Bangladesh (Garment) 820 2205 0.88

China4 1661 2703 1.30

Germany 23750 21771 10.34

India4 767 2551 1.02

Pakistan 1543 5102 2.04

Turkey 9031 13794 5.89

USA 15080 15080 7.25

Vietnam 1362 3534 1.70

Based on List of minimum wages by country (2016). In Wikipedia. Retrieved April 18, 2016, from

https://en.wikipedia.org/wiki/List_of_minimum_wages_by_country

1 A US$ conversion rate from 2014 was used to convert the annual wage from national currency to US dollars. 2 A purchasing power parity (PPP) conversion rate from 2014 was used to convert the annual/hourly wage from national currency to

international dollars. 3 All economic sectors not covered by industry-specific wages. 4 The minimum wage varies locally.

Case Study “Partnership for Sustainable Textiles” | Teaching Note 11/15


Exhibit 3: Minimum vs. Living Wage

A living wage means that the wage a worker

earns in a standard working week (never ex-

ceeding 48 hours) is enough to provide for them

and their family's basic needs – including hous-

ing, education and healthcare as well as some

discretionary income for when the unexpected

happens.

The International Labour Organisation (ILO) has

defined a living wage as a basic human right

under their conventions and recommendations

to the Universal Declaration of Human Rights

Article 23. (ILO Conventions 95 and 131, ILO

Recommendations 131 and 135).

As of January 1, 2015 the minimum wage in

Germany is 1,473 € per month. The average net

income of a German household in 2014 was

approx. 3,150 € per month. A person earning

less than 60% of that amount is considered to be

living below poverty level. If that is to be referred

to as the German living wage that figure would

be 1,890 € per month.

Living wage = 1,890.00 €

Minimum wage = 1,473.00 € [78%]

Based on Clean Clothes Campaign (2013). Retrieved April 20, 2016, from http://www.cleanclothes.org/livingwage/living-wage-versus-minimum-wage



Exhibit 4.1: Breakdown of costs of a T-Shirt

Based on Clean Clothes Campaign (2013). Retrieved April 20, 2016, from http://www.cleanclothes.org/news/press-releases/2014/06/26/comment-labels-found-in-primark-clothes



Exhibit 4.2: Comparison breakdown of cost of a T-Shirts: Fast Fashion – Middle Price Range – Slow Fashion

Based on Infograph from exhibition, designed by Nils Reinke-Dieker, Larissa Starke, Friederike Wolf (2015). Retrieved April 27, 2016, from http://www.fastfashion-dieausstellung.de/de/oekonomie

Middle Price

Range

Profit Margin Retail

Marketing

Tax

Profit Margin Factory

Fabric

Shipping

Labor cost

Fast

Fashion Slow

Fashion



Exhibit 5: Ninety Cents Buys Factory Safety in Bangladesh on $22 Jeans

Based on Bloomberg Visual Data (2013). Retrieved April 27, 2016, from http://www.bloomberg.com/infographics/2013-06-05/90-cents-buys-factory-safety-in-bangladesh-on-22-jeans.html

partnership for sustainable textiles: “child labor ... · resentatives of 27 organizations...

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