Industry context

 

With its complex global supply chains and large numbers of workers in vulnerable contexts, the fashion industry wasn’t made to take the turmoil that has come with Covid-19. An industry that relies on people buying what they want when they want it, the fashion industry has felt the impact of people tightening their purse strings in the wake of what has been predicted to be the worst economic crisis in our lifetimes. Fashion companies in New Zealand and around the world have been literally fighting for their economic survival in 2020.

We’ve seen disruption take place at both ends of the fashion industry supply chains. Both producing and consuming countries have experienced lockdowns. This has meant that clothing hasn’t been able to be produced, sold or purchased in the way that it has been in the past.

As we know all too well, New Zealand went into Level 4 lockdown on March 25, 2020. This lockdown brought the country to a grinding halt. Nothing apart from essential services operated. Things stayed that way until late April. By early April, sales of clothing and shoes had fallen by 31%, or a drop of $98 million. Statistics New Zealand reported that retail sales fell by 15% in the June 2020 quarter. This is the biggest drop since records started 25 years ago.

Consumer behaviour and preferences have also changed in light of the pandemic. Economic impacts and uncertainty have meant that consumers have cut back on overall spending. Interestingly, lockdowns have even changed the clothes we wear! Preferences have moved away from office and formal wear and towards more casual, athletic and sleepwear. This negatively affects some fashion companies while bolstering others. We’ve also made a rapid shift from preferring the mall to online shopping which has been a safer option and, during the higher alert levels, the only option available.

To stay afloat during the crisis, many of the fashion companies included in the Covid Fashion Report research furloughed large portions of their staff for periods of time between March and July. Many others made the decision to re-open a smaller number of stores than were operating before the crisis. As a means of maintaining some sort of cashflow during lockdowns, companies have slowed or stopped production, which has negative effects further down the supply chain. In March, more than half of surveyed suppliers in Bangladesh reported that the majority of their production had been cancelled by fashion companies.

Amidst this crisis, the imperative of survival has pulled many companies back to a focus on core fundamentals. We believe that the wellbeing of the workers who produce the garments that fashion companies sell must be considered a priority for these companies. Survival is critical, but it should not be achieved on the backs of the most vulnerable workers. This was our motivating factor in forming the Covid Fashion Commitments.

Read more about what we’ve done differently in 2020.

Methodology

The regular Ethical Fashion Report research process is about assessing the systems a company has in place to protect workers and the environment throughout its entire supply chain.  It assumes business as usual – that things are stable in the supply chain, and that companies are able to engage deeply with their ethical practice.

This year, that just hasn’t been the case. Supply chains haven’t been stable. Some companies haven’t had the capacity to have the same meaningful conversations with suppliers about caring for workers. And while many of them are absolutely committed to caring for the most vulnerable people in the industry, the space and time required to really work with us on our usual research just hasn’t existed. On top of this, the Covid-19 pandemic has created new risks for garment workers and exacerbated already existing weaknesses in the system. Workers were suffering. This was not the time for us to stop our work with companies to improve their supply chains. This was a time to redouble our efforts to protect workers.

The Covid Fashion Commitments

So, we came up with something new. It became very clear that the short-term risks faced by workers demanded a more agile approach, so we redesigned our research specifically to protect workers during the pandemic. In changing focus, we urged companies to take action right now by targeting six key areas to meet the immediate needs of workers and to reduce the risks they faced. Each Commitment is designed to address and combat a specific risk, with the six Commitments together forming a holistic response. 

  1. Support workers’ wages by honouring supplier commitments   
  2. Identify and support the workers at greatest risk   
  3. Listen to the voices and experience of workers   
  4. Ensure workers’ rights and safety are respected   
  5. Collaborate with others to protect vulnerable workers   
  6. Build back better for workers and the world   

The Covid Fashion Report contains an in-depth analysis of each Commitment, outlining the challenges our research uncovered. We also pull out some case studies from our research to highlight some pretty amazing things companies and organisations have been doing to support the workers in their supply chain. 

The grading system

We’ve intentionally graded companies’ efforts towards the Covid Fashion Commitments differently from the regular (A-F) grading approach. The report identifies the companies that have made credible commitments to their workers – and those that haven’t – in a simple three-category grading system.

Our grading categories are as follows: 

  • Evidence of actions that cover ALL areas of the Covid Fashion Commitments   
    • Companies which landed in this category were able to show they had made an effort to meet all six Commitments
  • Evidence of actions that cover SOME areas of the Covid Fashion Commitments   
    • Companies who landed in this category were able to show they had made an effort to meet some of the six Commitments
  • NO evidence provided/identified covering COVID-specific actions 
    • Companies who landed in this category did not show that they had made an effort to meet any commitments

Company selection

96 companies covering 417 brands were included within the scope of this research. You can find the full lists in the Report. This year, we haven’t added any new companies to our research; in fact, you may notice that there are actually a few less companies included. This is because we’ve changed our company selection criteria.

All previously assessed companies that were estimated to have an annual revenue in excess of NZD $30 million have been automatically included. Companies below this threshold were given the option to participate. This selection process ensures the largest companies with the greatest consumer reach and therefore impact on workers are included, while smaller companies that have prioritized ethical sourcing are also able to participate and have their efforts recognized.


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