too fast to sustain2
TRANSCRIPT
Throwaway fashion: too fast to sustain, too cheap to stopAn enquiry into the fast fashion phenomenon and the sustainability debate
Irina Donciu
Royal Docks Business SchoolVT 3045: Thesis Module – Fine Art, Fashion and Textiles06th of December 2011
University of East London
Table of Contents
Introduction......................................................................................................................................3
About sustainability in the contemporary business environment....................................................4Corporate Social Responsibility and “The triple bottom line”.............................................................................4
The “one size fits all” global social responsibility norm......................................................................................5
Social responsibility and fashion consumption...............................................................................6Awareness levels among consumers.....................................................................................................................6
The concept of throwaway fashion.......................................................................................................................8
Corporate social responsibility in the fashion industry – a global perspective...............................9The importance of reputation: Dior and Wal-Mart...............................................................................................9
Who is responsible?............................................................................................................................................10
Fast Fashion and its effects on social responsibility......................................................................11Fast Fashion and Supply Chain Management.....................................................................................................11
Vertical Integration and Corporate Social Responsibility...................................................................................12
The fashion retailer-supplier relationship: a vicious circle.................................................................................15
A duty of care......................................................................................................................................................17
Environmental concerns................................................................................................................18
The Stakeholder Theory and its practicality..................................................................................19
Conclusion – Organising business for social responsibility..........................................................22
Appendices....................................................................................................................................23
Bibliography................................................................................................................................ 24
Introduction
The purpose of this thesis is to attempt to provide an examination to a present-day on-
going debate that many business owners competing within the fashion industry ought
to be concerned with. The issue of sweatshop labour and environmental sustainability
in the textile industry has become if not over-talked about, than at least generally
acknowledged, due to either frequent outbursts in the media or simply because, as
business owners, or maybe as simple customers, many of us might have come to a
crossroads where a ‘make or break’ decision had to be made in terms of positioning
ethics against the pursuit of economical profitability. This thesis will examine whether
a blend of ethical, social and profit-making values can endure an organisation’s thrive
to successfully compete on the ever-changing fashion market. Moreover, the paper
will examine the extent to which fashion retailers can efficiently respond to
customers’ demands by producing and selling “fast fashion” and be sustainable from a
social, environmental and economic point of view.
The topic is of particular interest to me on a personal basis, as for the past twenty
years, my parents have ran a garment-producing factory Romania, which has
maintained its long-term business relationships with various retailers and brands in the
Western Europe. My exposure to the operational affairs within the retailer-supplier
relationship development together with the production process, has given me useful
insight in terms of identifying possible failure points when matching corporate social
responsibility requirements to realistic endeavours. Moreover, when doing a
retrospective analysis by looking at the way in which fashion production has changed
over the past fifteen years, it can be noticed that together with a rise in turnover
generated by a larger segment of the market exerting their purchasing power, one of
the things that have raised my attention and I will attempt to develop throughout this
paper, is that with the increase in production and the speed to market with which
nowadays consumers have been accustomed, the likelihood that clothing suppliers
may develop manufacturing routines which are inconsistent with socio-ethical
accepted behaviour will, undoubtedly, increase. In addition, the question of ethics
related to the very act of speeding up the clothing production which would
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consequently result in breach of working regulations - frequently brought to the
public’s attention by the media - will be placed against the idea that fashion retailers
are not the only party to be held accountable, due to the nature of the supply chain
which must be managed in response to consumers’ demand. Customer behaviour is
therefore another issue this thesis is addressing, by placing an emphasis on how a
series of factors i.e. social media, cultural trends etc. have an invariable effect on the
amount of pressure consumers exert over fashion retailers in terms of cost, quality and
delivery, to which the social, ethical and environmental dimensions fail to be
measured in terms of performance compliance or simply fail to keep up or.
About sustainability in the contemporary business environment
Corporate Social Responsibility and “The triple bottom line”
Many of us recognise the importance of the capitalist model, which implies that
businesses are mainly driven by the making of profit and return on investment, the
constant push towards achieving greater profit margins being the sole precursor to
global capitalism (Kristensen and Zeitlin, 2005). However, social and environmental
responsibility is critically important to the success of a business, especially due to the
current economic trends that have a tendency to define the business formula as not
simply having to integrate social corporate responsibility but focus the entire business
activity around the idea that by respecting the society and the environment, the
outcomes achieved in the long term would facilitate economic sustainability (Dickson
and Eckam, 2006). The “triple bottom line” debate – “people, planet, profit” - has
become an unwritten law prevailing every business operation (Elkington, 1998) and
whilst customers are becoming more aware and informed, it would most likely
develop to be the very core function any business may have to undertake in the future.
The shift is already slowly taking place. Every global corporation is aware of the risk
of literally being wiped out, should their customers act as one and chose not to put
their money with them. We are looking at more informed and committed customers
who tend to choose accountable businesses when exerting their purchasing power.
And as a result, financial investors would follow.
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The “one size fits all” global social responsibility norm
Whilst in recent years the issue of corporate social responsibility has been supported
by various initiatives undertaken by stakeholders and had some positive outcomes in
terms of developing international non-exploitative trade methods of manufacturing
and outsourcing resulting in products labelled as being “fair-trade” or “organic”, an
inconsistency in terms of worldwide efforts to put an end to the on-going breach of
socio-ethical values can be noted. According to Dickson, Locker and Eckman, 2009,
this variation is due to the impossibility of setting an analogous moral standard to a
wide range of different “cultures, languages, political and economical systems, basic
human rights, labour rights and freedoms granted – or not granted – to citizens,
business models, rule of law, infrastructure setup, security and safety concerns,
climate and natural resources”. On the other hand, when looking at the idea of
measuring performance related to the way in which manufacturers and retailers
organise for social responsibility, it can be stated that a one-size fits all code of
conduct may be adopted internally, collaboratively and strategically.
From an economic perspective, globalisation comes in the aid of retailers as it
provides the opportunity for cheap outsourcing in terms of raw materials, labour and
facilities. Moreover, it provides global market entry opportunities, from which the
notion of a “global brand” has derived (Keller and Lane, 2003). Once businesses
decide to go global, the amount of production and commerce they are going to
conduct overseas is directly connected with the idea that they must seek to increase
their positive influence on society and surrounding communities. Whilst many
business owners might attempt justify possible limitations by looking at the burden of
allocating extensive capital together with the implementing of time consuming
projects executed by extensive human resources departments, research shows that in
fact, the completion of such costly corporate social responsibility endeavours would
generate great return on investment by repositioning and consolidating the brand
within the global market, thus enhancing its reputation.
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Social responsibility and fashion consumption
Awareness levels among consumers
Social responsibility does not refer solely to the need for companies to pursue specific
policies and make decisions that are desirable in terms of honouring ethical values and
respecting the society as a whole (Caroll, 1999), but includes the contribution of
socially responsible consumers who have a direct influence on the way in which
businesses chose to conduct their activities. Our decision making process for what
type of apparel to buy and when to dispose of it, is motivated by a series of factors
(Hill, 2006) and plays a crucial role in the way in which we exert our function as
socially responsible buyers.
Social media, together with recent academic debates over the issues of ethical
consumption have increased consumers’ interest towards issues related to production,
outsourcing strategies and the power of supply and demand. According to research,
consumers’ interest in choosing ethical businesses has significantly grown and has a
direct influence on their choice of purchase in the decision-making process (Strong,
1996). In a recent study, 1,554 American university students have been surveyed and
41 per cent of both undergraduates and graduates confirmed that they would rather
buy clothes produced by socially responsible companies, in an attempt to support the
correct implementation of corporate social responsibility (Bush, 2009). When asked to
give a definition of social responsibility, the students correctly identified “issues
surrounding the relationship between workers and small and large businesses, the
health and safety of workers, environmental sustainability, communities and
economic growth” (Dickson, Loker and Echman, 2009).
However correct from a theoretical point of view the participants might have been,
further research indicated difficulties they encountered when attempting to actually
name and distinguish ethically operating businesses on the market.
A second survey, this time carried out in 2006 in England and Germany by Joergens
revealed that participants were unable to identify a single fashion company they
believed was running by successfully implementing corporate social responsibility
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policies. Moreover, keeping in mind that, as opposed to the consumers surveyed in the
US, these participants had never researched or studied the CSR level of any fashion
brand they enjoyed purchasing, it can be stated that education plays an important role
in making people aware of the consequences of unethical practices.
The survey concluded with showing that when there was a lack of information on the
matter and when subsequent instruction was not carried out, the participants were, as a
result, not concerned with issues involving socially responsible consumption, but
were mainly influenced by the pricing and the design of the garments, actively
admitting that they would more likely be inclined to purchase items produced in an
unethical way and by an unethical company as long as they satisfied the price and
aesthetics criteria.
Nevertheless, a third survey conducted by Shaw and Tomolillo (2004) on Scottish
consumers, revealed that their attitude towards ethical consumption was similar to the
American students’. Consumers in Scotland expressed their desire to purchase fair
trade, ethically outsourced garments, showing a particular interest in environmental
related issues such as chemical usage in textiles production and the use of animal fur.
These participants also agreed on the difficulties consumers need to undergo when
deciding to make ethical purchases due to the lack of information on the way in which
companies are, in fact, successfully implementing their CSR on a global basis. Issues
such as toxic waste reduction and the need for a “formal regulatory system that
oversees the fashion industry”(Yurchisin and Johnson, 2010) together with the high
price concern for ethical merchandise were also raised.
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The concept of throwaway fashion
When looking at what triggers the consumer behaviour from a fast fashion
perspective, the sole precursor to the success of the phenomenon is the consistency in
low pricing strategies, which generate the accessibility factor of the garments. In
addition, the fast paced product life cycle has a direct influence on the purchasing
routine: nowadays customers do not perceive fast fashion as a “fashion statement
investment”, but prefer to make frequent low price purchases that imply a
compromise on quality, thus leading to wearing the garments for a maximum of two
seasons.
The concept of throwaway fashion is a perception that varies among different
generations. For instance, Generation Y customers – which consist of the younger part
of the population – prefer to buy a large number of low-quality easily perishable
garments that only stay in fashion for a limited period of time. On the other hand, the
baby boomers generation, who traditionally regard fashion purchasing as a long term
investment, tend to purchase a smaller number of relatively high priced quality
garments (Crewe and Davenport 1992). Moreover, the baby boomers segment regard
fast fashion as practical “waste” due to the rapid disposal practices of the items which
may only satisfy a temporary wardrobe need (Sydney 2008). As a result, it can be
stated that fast fashion is, in fact, a consumer driven phenomenon as opposed to the
more traditional supplier driven method. Therefore, an effort into influencing
consumer-buying behaviour must be made, in an attempt to place an emphasis on the
active role consumerism plays in the way in which businesses conduct their
operations.
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Corporate social responsibility in the fashion industry – a global perspective
The importance of reputation: Dior and Wal-Mart
When referring to the apparel industry, reputation plays a crucial role in the success of
a brand: just have a look at the recent anti-Semitic scandal involving John Galliano
who, despite of being one of the most appreciated and talked about current designers,
managed to irremediably damage the image of Dior, one of the top players on the
fashion global market at the moment. Dior has immediately dismissed the designer in
order to protect their reputation. The 21st century technological revolution is allowing
easy access to communication channels and has subsequently revolutionised the
information circulation around the world. Therefore, such scandals can be
immediately made public and companies are no longer able to conceal them.
However, organisations seem to have found a way to fight back by leading extensive
PR campaigns and whilst this sort of scandals might not be kept hidden, they tend to
fade away, being replaced by clever marketing aimed to re-assure the public that
contingent measures are taken in order to avoid their emergence in the future.
For instance – and I would not pretend to evaluate and examine all the abuses that
have surfaced over the years – in 1995, 70 women of Thai origins have been found
being kept isolated and locked inside of a clothing manufacturing factory in
California, being held as guarantors for the repayment of their transportation to the
US. Whilst many of them claimed not to have left the factory in 7 years, thus
generating great attention from the public eye at the time, the whole scandal has
slowly faded away, after Wal-Mart, who reportedly was paying as little as 10 pence
per hour towards the production of the garments and was the global giant directly
responsible for the event, had issued a statement ensuring the public that measures
would be taken. The following tragedies that took place over the next 13 years, such
as the Choudry Knitwear Factory fire in Bangladesh in 2000, where 51 workers of
which 15 children aged 10 to 14 years old were killed, or the JMS Garments Factory
in Chittagong in Bangladesh in 2008, where activist groups have found that workers
were forced to take 19 hours shifts while being paid around $19 per month, came to
reassure that in fact Wal-Mart, who was again responsible, has not managed to
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develop and implement their highly promoted corporate social responsibility policy,
but has merely attempted to secure their public image by investing millions in PR
campaigns.
Who is responsible?
Whilst we refuse to draw a line and conclude that Wal-Mart follows a hidden
destructive internal course of action aimed to practically exterminate their
subcontracted workers, a series of logical questions may arise, concerning the real
causes for these abuses. Where does the implementation of the corporate social
responsibility policies fail? Is Wal-Mart the sole responsible? Whilst social media
research shows uncertainty in terms of pointing out a sole organisation as being
accountable, the reality is that, in fact, these companies are undertaking some efforts
towards a more sustainable way of production and supply chain management.
The downside of globalisation from this perspective is that whilst corporate social
responsibility may not simply consist of a statement published on a website and may
be the underpinning of real implementation strategies that are operated and controlled,
the extent to which they could be easily measured, remains uncertain. The issue
remains whether an organisation can manage to measure performance in a global
context. The degree to which a company may be held responsible for the actions of a
7th tier supplier who has spread the production line across various countries seems
uncertain. Whilst conducting a PESTEL analysis is understandably the very first step
a company must take when deciding to go global, i.e. look at political, economical,
social, technological, legal and environmental factors influencing the accomplishment
of their already established corporate social responsibility, the issue of control over
the supply chain plays a major part in terms of failing to comply with the transparency
ideal.
For example when GAP, Next and M&S were implicated in a fairly recent sweatshop
scandal in 2010 involving their garment factories in India, they took a public stand
and emphasized that they were utterly unaware of these abuses and reassured their
stakeholders they were already conducting their own enquiries in the matter, which
resulted in a public apology given by the Indian chairman of the subcontracted
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companies involved. The issue, therefore, has become one of shifting responsibility
down the supply chain.
Fast Fashion and its effects on social responsibility
Fast Fashion and Supply Chain Management
As the manufacturing activity is in constant transformation in search for productivity
in terms of lower wages and lower production costs, global supply chains have
become complex multi layered systems strategically dispersed over various locations
around the world. Statistically, in 2005, the apparel industry in the US only was
upheld by imports made from 154 countries. In 2003, Nike was controlling a network
of 1100 suppliers located in 54 countries whilst GAP reported to outsource its
production to over 2000 suppliers located in 50 countries. Managing such extensive
supply chain networks can prove to be extremely difficult, especially because of the
recently developed concept of “fast fashion”, where responsiveness and speed-to-
market are crucial elements adding up to a company’s competitive stance, whilst the
way in which these are strategically managed has a direct influence on the company’s
level of success.
The effect of global trade in the fashion industry has resulted in the ability to produce
large quantities of garments at low cost, thus giving birth to a new era in the retail
world, where fashion has become “democratic” by being easily accessible to all, as
opposed to the past reality when fashion was practiced exclusively by the elite
segment of the society (Agins, 2007). With H&M and Zara pioneering the “fast-
fashion” phenomenon back in the 1990’s, nowadays consumers are used to fashion
stores continuously re-stocking their shelves, as opposed to the historical seasonal
approach.
From an operational perspective, “fast fashion” means that companies must produce
fashionable pieces of clothing on relatively large scales according to carefully
measured demand stimuli, within a maximum of four weeks after being released by
designers on the catwalk and at such low prices that a large segment of the market –
especially middle class and low class population – is targeted.
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Vertical Integration and Corporate Social Responsibility
Easy access to communication and technology and global free trade agreements have
led to a fierce market competition, retailers constantly trying to differentiate their
products through branding. Brand development and positioning is one of the issues
international marketing managers are taking into account when creating viable market
entry strategies. Subsequently, the degree to which a fashion retailer may be involved
in the production of the branded product is key.
If a company decides to have a “hands on” approach in terms of the design, the
manufacturing process and the distribution systems of a product – a method that is
also called “vertical integration” - the risk of encountering operational difficulties and
social sustainability misbehaviours would significantly decrease. For instance, Louis
Vuitton has such a proactive approach in terms of brand positioning that has decided
to vertically integrate its major leather producers so as to be able to monitor all stages
of the leather production.
Keeping in mind that the company’s research department has discovered that leather
is of the highest quality when the producing cows are brought up in a free-range
environment, being fed a particular nutritional package, Louis Vuitton started to
implement a normative standard according to which the cows are being looked after in
such a way that their skin - used in the manufacturing of the branded bags, belts and
garments - is of the highest quality.
Full control is therefore desired when a tendency to protect and value the brand is
enforced: the stronger the brand, the higher the control a company is exerting over the
way in which that brand is produced and presented to the public. In such cases, issues
such as ethics and social responsibility are not a concern but a way to positively
enhance the brand’s reputation – the risk of corporate social and environmental
misconduct is practically entirely eliminated.
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Nevertheless, the exerting of such high levels of control over the production
operations implies that an increased level of capital is needed together with a longer
amount of time spent to carry out the operational procedures. This may prove difficult
to overcome for fast fashion competitors, firstly because time is of essence in such a
fast paced competitive market and secondly, from a management perspective, getting
up to date with the most effective and high-tech logistical routines as opposed to
outsourcing them to specialized providers who possess a great amount of expertise,
would require an enormous amount of capital to be invested. As a direct result, the
allocation of a larger amount of capital in the production process would have a direct
influence on the price of the finished products – which would be significantly higher
and consequently lead to losing customer loyalty.
Therefore, the fully integrated outsourcing system would not prove to be effective on
the fast fashion market even though it seems to provide the best solution in terms of
lowering failure risks by having a “hands-on” management approach on corporate
social responsibility.
The fully outsourcing method: failure points
When a company addresses the make or buy question, it must primarily focus on the
specific areas it decides to compete on, leaving the rest of the operational segment to
be outsourced. This model was first introduced in the car industry when Toyota – who
is the representative of one of the oldest and most successful supply chains in the
world and the pioneer of the “just-in-time” logistical model – has decided to
strategically outsource 85 per cent of their car production after recognizing that they
lacked the high-end expertise together with the necessary skills and resources needed
to design and manufacture wide-ranging cars in-house. As a result, nowadays, Toyota
produces as little as 15 per cent of each car they sell, their competitive stance being
dictated by brand positioning and a constant thrive towards building a global
reputation for reliability and excellence in customer service and relationships.
Moreover, according to the recent marketing trends, the car industry is revolutionizing
their brand perception characteristics: car giants no longer aim to simply sell cars as
their tangible products, but pretend to offer customers entire experiences.
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As opposed to the car industry, where the purchasing behaviour is strongly brand
oriented and backed up by a rationalized decision-making process, fast fashion
purchasing seems to be rather impulsive and price oriented. Whilst a retailer such as
Primark, who competes on “style, quality and affordable prices all rolled into one”
together with a fantastic speed to market is following Toyota’s supply chain model
driven by economic stimuli such as cost, quality, delivery and flexibility, it must
direct its efforts towards thriving to improve efficiency and responsiveness to
consumers demand, rather than induce brand loyalty. When looking at how crucial
these attributes are in terms of improving speed to market, enhancing quality and
reducing cost, it can be said that fashion retailers such as Primark are not actually
competing on their brands but effectively on their supply chains. Should Primark’s
suppliers fail to comply with the required cost, quality, delivery and flexibility
attributes, the result would be devastating and strongly resented in terms of losing
customer loyalty.
The fully outsourced method involves working with subcontractors that possess the
necessary resources and expertise to produce high quality products. In addition, the
burden of outsourcing the prime material, procurement, operational procedures and
costs, human resource management, inventory, logistics etc. is placed on the
suppliers’ shoulders, whilst the retailer would usually make contact with the
outsourcer and not with the manufacturing plant. An outsourcer may further
subcontract the work to various factories around the world. Figure 1 illustrates an
example of how a global supply chain for a fashion retailer might look, with a
particular focus on the issue of control. By analysing the diagram, it can be stated that
the further away from the fashion retailer the production process takes place, the
lesser control over the operational and procurement methods together with the correct
implementation of the CSR policy the fashion retailer has. If we were to create a
distribution blueprint in order to identify possible failure points along the supply
chain, issues such as poor communication derived from the lack of a strong
relationship management would arise.
While the theory presents performance management as a way of measuring how
effective the implementation of a company’s corporate social strategy is by looking at
its economic activity and its influence on society, the reality may prove otherwise.
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What really happens, in terms of the establishment and maintenance of a business
relationship between the retailer and the subcontractor is that most of the times the
business relationship is focused on economic efficiency whilst the corporate social
responsibility policies tend to be filed up and added to the paperwork load.
The fashion retailer-supplier relationship: a vicious circle
The scenario bellow attempts to provide a reflective description of the business
relationship between fashion retailers and subcontractors and is based on primary
research conducted over years of experience as being involved in the ownership of a
clothing-manufacturing factory in Romania. The analysis is carried out with a focus
on corporate social responsibility and identifies real-world failure points attempting to
provide practical solutions at the end.
After the outsourcing decision has been made, the fashion retailer would select its
potential supplier based on their reputation within the industry together with their low
production cost offer. The retailer would then send a fashion buyer and a contracts
manager to meet with the outsourcer and the negotiation stage starts.
Upon the first meeting, the supplier is given a garment pattern to be materialized into
a garment sample so as to make sure the quality compliance measurement is met.
Even though clothing manufacturers adhere to quality agreed standards qualifications
i.e. ISO1400, BS7570 etc., the fashion buyer would most certainly require proof of
quality before starting negotiations.
The meeting is usually held at the subcontractor’s headquarters and it is highly
unlikely that the fashion retailer’s representative may be interested in visiting the
factory.
In terms of negotiations, the primary focus is on the supplier’s profit and not on the
manufacturing price of the actual product. The retailer knows exactly how much the
production of a particular piece of garment costs and as a result, the negotiation is not
made on a price basis but on a profit basis. In situations where a big retailer, such s
Atmosphere, who is a primary subcontractor for Primark, approaches a relatively
small outsourcer who might run its business in a developing county, the negotiation
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translates into an offer that the supplier cannot afford to turn down due to potentially
profitable prospects of future collaboration with such a renowned fashion retailer. As
a result, some degree of informal pressure exerted by the retailer is passed on and the
outsourcer must comply with the necessary requirements in order to secure business
continuity - in other words, the supplier must show flexibility attributes.
After the first meeting is completed, the retailer would subsequently place a tester
order by sending a small number of garment patterns for which a small quantity of
production restricted by a given time limit would be required. The better the supplier
manages to deliver that order and within the mentioned time frame, the more likely is
that the retailer would chose to continue their business relationship.
After the second stage is completed and the outsourcer is nominated as being the
official supplier to the fashion retailer, the business relationship is maintained through
constant cooperation from both sides, aimed to minimize the outsourcer’s production
costs and enhance productivity in the long term, thus developing an economically
sustainable bond. As a result, the retailer would assess the complete financial record
of the factory’s fixed costs and conduct its own independent research into finding low
cost alternatives. Solutions such as: finding a cheaper substitute to supply the factory
with electricity or water or an alternative cost effective prime material supplier are
usually accepted solutions and are implemented with immediate effect.
Additionally, giving that fashion retailers are usually large multinational corporations,
they would also seek to request governmental facilities in exchange for their choice to
conduct their business in specific countries. In most cases, the governments in these
countries would enthusiastically comply and subsequently offer facilities such as: low
corporate tax, low import-export tax, etc., especially because hosting such business
active MNC’s would have a positive impact on their countries’ economies.
Unfortunately, the process of production in the apparel industry may be described as a
vicious circle in the way that while retailers are constantly pushing towards cheap
costs and speed to market in order to satisfy the increasing consumer demand, the
suppliers find themselves in a situation where they must exert oppression against
workers and cut-corners in terms of investment and expenses in order to meet the
flexibility requirements. Moreover, the speed towards which the fast-fashion concept
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is heading, as the process can be regarding as continuously developing, will make it
difficult for suppliers to even consider corporate social responsibility. The initiative,
however, must start at a corporate level and must be initiated by the retailer.
A duty of care
When looking at the effort made by both parties in order to handle the business
relationship effectively, it can be noticed that even though the fashion retailer, by
subcontracting, has virtually no control over the production process, the reality as
depicted from the above scenario, proves that, in fact, the business relationship is
constantly monitored and a focus on social and environmental sustainability at every
negotiation stage is achievable, should the retailer push an effective CSR plan be
pushed as essential normative regulation.
When this is the case, situations such as the recent sweatshop scandal where retailers
such as GAP, M&S and Next took a defensive stand on reassuring the public that they
were unaware of any corporate social responsibility malpractices should not be
recognized and accepted as valid. Companies have a duty of care for their
stakeholders and shifting responsibility down the supply chain is, in fact, business
reality nonsense. A new method must emerge in terms of the way in which corporate
social responsibility is presented and insisted upon and fashion retailers must develop
and maintain outcome-focused relationships with their suppliers based on collateral
inputs. Such inputs might require the allocation of extra capital in order to provide
extra staff, technology, time and effort etc., however, they would not only result in a
positive outcome solely in terms of social responsibility, but would also improve the
information flow within the supply chain.
Supplier development is increasingly focusing on measuring the performance and
responsiveness of the outsourcers. Defined as “any effort of a buying firm with a
supplier to increase its performance and / or long term needs” (Krausse 1999),
supplier development is crucial, especially to companies who compete on short lead
times in terms of product manufacturing and distribution. Moreover, fashion retailers
are actively intervening in their suppliers’ activities and whilst they would craft
specific policies and valid practices for social responsibility, the success of the
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business relationship should depend on how well the suppliers manage to accomplish
the implementation of these dimensions.
Transparency is the key element contributing to strategic alignment - the ability to
link the operational strategies with business and corporate level strategies must be a
priority. Strategy alignment can either be “top-down” i.e. implemented by the fashion
retailer’s corporate strategy and supported by the supply chain, or it can be “bottom-
up” i.e. acquired through feedback from the suppliers, the information flow running
from the supply chain and towards the retailer.
By looking at all the proactive actions both retailers and suppliers are undertaking in
maintaining their business relationship, it can be stated that the theoretical framework
of Total Responsibility Management, seen as the strategic means through which a
fashion retailer manages to comply with their obligations to society and the
environment, should not fail in practice. (Waddock and Bodwell, 2002) Total
Responsibility Management is underpinned by three commitment practices:
Inspiration – given by the management commitment to promote social and
environmental soundness in supply chains
Integration – consisting in actual changes made throughout the supply chain
Innovation – given by performance measurement and improvement processes
Environmental concerns
Environmentally speaking, the lengths to which retailers go when attempting to meet
their customers’ needs are raising immediate concerns. Toxic emissions into national
waters coming from manufacturing factories are the main cause for fish and animal
extinction. Moreover, toxic gas emissions have an effect on both humans and the
natural climate, causing various diseases and a disruption in the normal cycle of the
ecosystem. Little has been written on companies’ attempt to raise consumers’
proactive involvement into developing strategies that would involve the customers’
participation. Companies must focus their research on finding the total environmental
cost per manufactured item and examine the pricing strategy used in fast fashion in an
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attempt to create a link it to the willingness of the customer to pay more for
environmentally friendly fast fashion (Ethical Style, 2009). In other words, such a
strategy must be formulated in a way that would generate value in the eyes of the
customer.
The published environmental statistics in relation to the devastating effects of the fast
fashion production point to areas where sustainable solutions can be put in practice.
The UN Global Compact Principles is initiating standardized codes of conduct
together with strict monitoring strategies for compliance. Moreover, international
environmental standards such as ISO 14001 are patronized by the national
governments in 157 countries. However, issues such as landfill and packaging
disposal are yet to be tackled.
The life-cycle assessment in the textile industry must be initiated at the beginning of
the supply chain, starting with the raw materials supplier and ending after the product
has reached the customer. The on-going debate on whether fast fashion retailers
should be made responsible for the usage length together with the way in which
customers decide to dispose of the old items is still left at the theoretical stage.
However, forward-looking retailers must develop environmental strategies
incorporating the idea of garment recycling and active post consumer collection (this
may also have a positive effect on a social scale). Garments recycling can also prove
to be economical, through the implementation of cost saving practices, as the
transformation of the old fabrics into new fibre would not only diminish the
company’s carbon footprint, but would also reduce procurement costs. Retailers may
also consider adopting viable solutions such as offering their customers small
incentives in the form of discounts or promotions for returning their unwanted
merchandise to the stores.
The Stakeholder Theory and its practicality
Corporate social responsibility is directly reliant on the level of involvement of
various stakeholder groups, the stakeholder theory applying to the effects
organisations’ performances have on various social groups they are interacting with.
19
These groups may be defined as “persons who have, or claim ownership, rights or
interests in a corporation and its activities past, present or future” (Clarkson, 1995).
As a result, it is important that when initiating and further applying corporate social
responsibility policies, companies take into account the influence these may have on a
wide range of people that, according to Dickson, Locker and Eckham, 2010, fall into
specific categories:
Workers
Labour unions
Governments and intergovernmental organisations
Advocacy organisations
Consumer and pressure groups
Colleges and universities
Financial markets and investors
Civil society organisations
Workers are the first section that must be considered a top priority when creating
particular codes of conducts and whilst monitoring of labour rights violations are
consistent priorities labour unions are concerned with, the extent to which these are in
fact correctly implemented and inclusive of standardized labour practices and working
conditions remains uncertain. This uncertainty results from the fact that companies
tend to justify the appearance of unethical conducts within the supply chains as areas
positioned outside their control area. However, it has been proved that retailers have
the capacity to exert a strong degree of control over their suppliers in areas such as
production cost and quality control and as a result, the practicality of proactively
enforcing corporate responsibility pressures over the suppliers is valid. Surely, when
the retailer initiates negotiations with the supplier, an initial check-up for compliance
with basic labour conditions can be undertaken. Moreover, regular visits to the
factories, where suppliers’ representatives can undertake protocol appointments and
actively interconnect with the workers in order to both communicate the
organization’s social responsibility policies and obtain feedback in terms of how well
official codes of conduct are included into the factory’s day-to-day activities, can be
made.
20
Considering that fashion retailers are large multinational corporations in constant
collaboration with governments and intergovernmental organizations, the adoption of
a “global code of conduct”, enforced on a global scale may not be difficult to achieve.
Issues such as health and safety, working wages, environmental soundness and
socially responsible accepted working standards can be identified as similar on a
global scale, the developing countries workforce being differentiated only by the
minimum wage level. The birth a global regulatory body working together with
governments and organizations to create an enforcing authority must come from
within the industry and be supported by stakeholders in order to function.
If we have a ‘global product’ manufactured in a ‘global supply chain’ and sold to a
‘global market’, why not think about creating a global standard in terms of labour and
manufacturing? Little has been written or debated on the idea of supporting and
regulating the ‘global worker’ and the proactive steps needed to be taken through
understanding the mix of cultural dimensions together with socio-political factors in
countries around the world, where the involvement of stakeholders such as
governments and intergovernmental organisations is crucial, must be translated into a
piece of international law. The global worker would be the next sensible step in
achieving responsible global capitalism and whilst this may not remain at a theoretical
stage, organisations need to consider reforming their managerial and operational
strategies and together with a raising awareness from local governments, civil society
and all the implicit participating institutions of which the social media plays a crucial
role, the ‘global worker’ can become reality.
The adoption of a “global code of conduct” should be stipulated as compulsory for
companies who make use of free trade agreements between countries and should be
materialized into an international piece of law that can be enforced on a global level.
The “global worker” notion may become reality, should the Fair Labour Association –
a non-profit organization dedicated to end sweatshop labour around the world –
decide to develop measurement benchmarks and proactively identify non-compliance
factors. Whilst many fashion retailers have adopted various codes of conducts since
the 1990’s, the actual enforcement of these regulations has proved not to be
successful.
21
Conclusion – Organising business for social responsibility
This thesis has only managed to exemplify some of the challenges both fashion retailers and suppliers must confront when striving to be both competitive and socially sustainable on a fast changing market. Whilst corporate social responsibility must be central to any business endeavor in order to be resented throughout its activities, the effect of globalisation has had far too many negative consequences in terms of socio-ethical conduct. Whereas, in general, social responsibility refers to the need for companies to pursue specific policies and make decisions that honor the society as a whole together with adjacent communities, it can be stated that consumers and other stakeholders play a crucial role in the way in which these businesses chose to operate and measure performance. Whilst a raising awareness from the consumers side towards issues related to sustainable production and ethics can be seen, the concept of throwaway fashion comes to overrule the idea that, in fact, nowadays customers are, indeed, actively involved to support socio-ethical production routines. From an environmental perspective, an effort into developing environmental strategies incorporating the idea of garment recycling must be made whilst a focus on the active pursuit of stakeholders’ involvement must be initiated. Should the production process in the fashion industry continue at the same pace, the results might, in fact, prove to be disastrous. The idea of creating and enforcing a “global code of conduct” may be one of the solutions pushed forwards. Whilst this paper is merely attempting to structure the issues that need to be tackled, further research must be undertaken in order to have a clear view on how possible solutions need to be tackled and put in practice.
22
Appendices
23
Social Corporate
Responsibility
CUSTOMER
Quality Control
Figure 1 - Created by myself to illustrate the issue of control within the supply chain
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