3 steps to a more ethical supply chain
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In July, the fashion industry was rocked by news that Loro Piana, a 100-year-old luxury Italian fashion brand, had been placed under a one-year court administration due to alleged worker exploitation.
Reportedly, Loro Piana had outsourced some production to an external supplier who subcontracted the work to companies that allegedly exploited workers.
While the brand is not under criminal investigation and the order will be lifted if it complies with legal requirements before the 12-month court deadline, the incident made Loro Piana the fifth luxury fashion company to be placed under court administration in Italy due to labour issues since 2023.
Naturally, this has sparked numerous conversations about sourcing and supply chains in the fashion industry. And if it’s making you wonder whether your own supply chain is responsible and sustainable, here are three steps you can take towards more ethical sourcing practices.
1. Use data to monitor your supply chain and reduce risk
These recent public cases highlighting concerns in fashion supply chains demonstrate the need for brands to tighten up their supply chain control. Monitoring has to be a priority with regular checks and audits of subcontractors and suppliers.
Accurate and frequently updated data is vital, alongside the management of this information. Specialist technology platforms like SEDEX can help with this, including enabling the exchange of information between businesses.
SEDEX is a supply chain management solution that helps improve supply chain practices through data-led insights and tools like the SMETA audit procedure. Companies can map their supplier data on the platform to get visibility about how sustainable their supply chains are and identify areas of risk.
What’s useful about a platform like this is that all of the data is in one place with tools that help you assess it. Where information isn’t already available about a supplier, self-assessment tools make it possible to gather and audit data.
Information provided by suppliers is shared across SEDEX’s customers, which saves you time in getting an accurate picture of your supply chain. And crucially, where suppliers aren’t up-to-scratch or operating in high risk areas, recommendations are provided for making improvements.
2. Adopt industry-leading standards
Developing an ethical sourcing policy doesn’t have to be a solo task. In fact, winging it is a good way to overlook crucial elements or to not push deeply enough.
Robust, industry-leading standards exist for a reason and adopting them means you can be confident that you’re on the right path when it comes to an ethical supply chain.
For example, the Ethical Trading Initiative (ETI) is an alliance of trade unions, non-governmental-organisations (NGOs) and businesses who work to end human rights abuse in global supply chains. It has created a Base Code, which businesses can implement to ensure that they are acting responsibly in terms of the human rights of workers in their supply chain.
The Base Code is an internationally recognised code of labour practice, founded on the conventions of the International Labour Organisation (ILO). It is supported by useful guidance and resources to help businesses understand each clause in the Code.
Members of the ETI also benefit from collective action around systemic issues and attempts to resolve them, as well as contributing to regulatory and policy discussions at a government level.
By adopting industry standards, businesses can get past feelings of overwhelm or barriers when it comes to understanding what to look for in responsible sourcing partners. Too many companies don’t make changes for fear of not doing it right, so working collectively as an industry to make improvements is a great way to make practical – and meaningful – progress.
3. Share information about your supply chain in a transparent way
As the recent reports around alleged worker exploitation in luxury fashion supply chains show, the sourcing element of the industry is increasingly coming under the microscope. Consumers are more switched on and interested in the practices of the companies that they buy from and mis-steps are made much more public than before.
It’s not enough to be gathering data on your supply chain and doing due diligence behind-the-scenes anymore. From regulators and investors to final consumers, there’s a real need to share the information about your supply chain in a transparent way.
This means making sure that the information is provided with adequate detail and in a way that is easy to understand. Once again, one of the best ways to do this is to follow a widely regarded set of reporting standards.
The Global Reporting Initiative (GRI) is an independent, non-profit organisation that has defined global best practice for sustainability reporting. Its GRI Standards can be used as a framework for businesses to understand and report on their impact on the economy, environment and people.
Using the Standards to prepare sustainability reports means that those reports are more credible, which is vital in today’s green-washed business environment. They also make it easy to compare the impact of different businesses, whether those companies are large or small.
Most important of all, by taking the time to assess the impact of your business in line with global best practices, you can identify areas where improvements can – and should – be made.
This allows you to get ahead of any problems before they become a headline-making reputational issue.