transparency pledgeMuch has been made in recent months over the garment and footwear industries’ embrace of a more visible supply chain in the form of a “Transparency Pledge” developed among industry, corporate social responsibility bodies, and workers’ rights advocates. Central to the Transparency Pledge is a commitment to openness as to:

  • authorized  production units and processing facilities;
  • site addresses;
  • parent companies of site operators;
  • products made; and worker numbers at each site.

The Transparency Pledge arose, in large part, in the aftermath of the 2013 Rana Plaza disaster in Dhaka Bangladesh. The eight-story Rana Plaza building collapsed, killing more than 1,100 mainly garment workers, and injuring thousands of others. At the time, the unsafe building housed five garment factories that supplied goods to major retail companies headquartered in Europe and North America.

Increasingly, openness about a company’s supply chain activities has become the expected standard. The Transparency Pledge arises from existing best practices of global apparel retailers and sets a basic standard for supply chain transparency. Signatories are expected to publish important information about supplier factories and their authorized subcontractors. This is intended to help advance workers’ human rights, improve ethical corporate conduct and social impact due diligence in supply chains, and, ultimately, build stakeholder trust, in line with the United Nations Guiding Principles on Business and Human Rights.

“Patchwork” CSR Transparency For Garments?

Parallel with the commitments companies are making on supply chain and human rights issues are the comparable product sustainability obligations (both regulatory and voluntary) regarding product substance content and responsible sourcing.  For instance, the recent industry commitments regarding responsible rayon sourcing have similar CSR goals.   In fact, many of the companies taking the Transparency Pledge have made international commitments on chemical content and environmental sourcing.

These assumed obligations, when viewed in aggregate, encourage a single CSR strategy for which international worker standards and sustainability are necessary but not sufficient elements.   The garment and footwear industry is already finding that a piecemeal CSR commitment is too difficult to manage where overlap doesn’t allow for compartmentalized strategies.

Joint Production and Product Standards Disclosures

An obvious intersection between product content and workers standards is the use of hazardous materials in the operational process.  Inadequate worker protections for injurious product ingredients has long been among the ills sought to be remedied through transparency.

With the growing scope of product content restrictions and related voluntary commitments, the investment community has been clamouring for the means to manage the risks posed by undeclared or misstated product ingredients.  Garment and footwear brand owners may well find that supply chain product transparency serves a similar role in maximizing company value as served by production transparency.

Transparency Begets Transparency

In fact, it would be difficult to imagine that such product content does not become known or knowable in the course of any verification of supplier operations.  Many of the third parties with interest in worker standards are either directly or through affiliations, interested in broader transparency goals.  As such, companies will want to define the terms of such transparency proactively and not wait for the inevitable questions on product content arising from workers standards verification efforts.

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In short, the Transparency Pledge (and similar issue-specific disclosures) will necessarily lead to more transparency. Industry must be ready to ensure it can engage third parties and manage its commitments and obligations.