Importance of Transparency in the Supply Chain

When global supply chains are opaque, consumers often lack meaningful information about where their apparel was made. Transparency can ensure identification of global apparel companies whose branded products are made in factories where bosses abuse workers’ rights. Garment workers, unions, and nongovernmental organizations can call on these apparel companies to take steps to ensure that abuses stop and workers get remedies.

Publishing supply chain information builds the trust of workers, consumers, labor advocates, and investors, and sends a strong message that the apparel company does not fear being held accountable when labor rights abuses are found in its supply chain. It makes a company’s assertion that it is concerned about labor practices in its supplier factories more credible.

An apparel company that does not publish its supplier factory information contributes to possible delays in workers or other stakeholders being able to access the company’s complaint mechanisms or other remedies.

Disclosing names, addresses, and other relevant information about supplier factories helps make it possible to determine whether a brand has sufficient leverage or influence in a particular factory or country to achieve remediation of worker rights abuses. Publishing supplier factory information can also help apparel companies avoid reputational harm.

Supply chain transparency can also help check unauthorized subcontracting, in which factories that contract with apparel companies meet production demands by farming out some of the work, often to smaller, less regulated factories where labor rights abuses are common.

Factory disclosure makes it possible for apparel companies to receive credible information from workers and worker rights advocates between periodic factory audits.

Publishing supply chain information is consistent with a company’s responsibilities under the UN Guiding Principles on Business and Human Rights (UN Guiding Principles). In some jurisdictions, companies that publish supplier factory information can also help facilitate compliance with legal obligations under laws like the California Transparency in Supply Chains Act of 2010; “sweat-free” procurement laws adopted in dozens of US cities and a few states; the UK Modern Slavery Act 2015; and the French law on the corporate duty of vigilance, 2017.

The transparency of global supply chains is also increasingly recognized by investors as a metric for evaluating the robustness of business human rights practices. The Corporate Human Rights Benchmark (CHRB), a collaborative effort by business and human rights organizations and investors, developed a public scorecard for the human rights practices of apparel, agricultural, and extractive companies. The benchmark has been endorsed by 85 investors representing US$5.3 trillion in assets. CHRB’s indicators include whether the company publishes supply chain information.

Why Now?

Dhaka_Savar_Building_Collapse
The need for information about factories involved in production for global brands has become painfully clear in recent years through deadly incidents that have plagued the garment industry.

The Rana Plaza building collapse in Bangladesh on April 24, 2013 killed over 1,100 garment workers and injured more than 2,000. In the year before the collapse, two factory fires —one in Pakistan’s Ali Enterprises factory and another in Bangladesh’s Tazreen Fashions factory— killed more than 350 workers and left many others with serious disabilities. These were the deadliest garment factory fires in nearly a century.

Until these tragedies occurred, virtually no public information was available concerning apparel companies that were sourcing from the factories involved. The only way to identify these apparel companies and advocate for accountability was to interview survivors and rummage through the rubble afterward to find brand labels.

A system of corporate accountability that requires people to scramble on the ground for brand labels is the antithesis of “transparency.”

As more companies adopt supply chain transparency, it is becoming a cornerstone of responsible business conduct in the garment sector. Increasingly, brands and retail chains are beginning to understand that being an ethical business requires them to publish where their own-brand clothes or footwear are being made.

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