International principals and declarations including ILO have existed for decades to guide ethical manufacturing in global in supply chains, as businesses increasingly moved operations overseas, due largely to economic factors. Long have such principals been overlooked and treated as an afterthought by globalized companies, largely because legislation around both human rights and environmental issues has historically been weak, or non-existent.
The Act on Corporate Due Diligence in Supply Chains (LkSG) passed by the German government in mid-June has been touted as a game changer. It obliges companies with headquarters in Germany to ensure that risks to human rights and the environment are monitored and reported on throughout their global supply chains, with harsh penalties for those failing to comply.
The Fashion Transparency Index 2021 released from multistakeholder activist and education platform Fashion Revolution exposed the need for the implementation of serious legislation such as the LkSG. Fashion Revolution have worked for over 6 years to collect and release data from some of the world’s largest and most popular brands, highlighting the need for more transparency around supply chains.
Source: Fashion Revolution Transparency Index 2021
Data from Fashion Transparency Index 2021 showed that although brands are increasingly releasing data on their supply chains – Tier 1 supplier data increasing by 15% from 2017 to 2021 to a total of 47% disclosure, we are still far from 100%. Supply chain data from Tier 1 suppliers, such as assembly factories is arguably the easiest data to collect, as it is the last line of manufacturing before products are sent to their final destination. Further down the supply chain at processing facilities (27% disclosure) and raw material suppliers (11% disclosure) progress is gruellingly slow.
Unless brands acknowledge and disclose the names of factories throughout their supply chains, monitoring human rights abuses and environmental compliance throughout global supply chains will remain prevalent. Legislating transparency may be the key to unlocking better accountability and awareness of the impact of our global supply chains.
