Our Indicators

Ethical code?

Does this company have an ethical code of conduct based on International Labour Organisation (ILO) standards?

First things first: has the company at least put together a set of principles when it comes to ethics? 

The ILO is ‘the international organization responsible for drawing up and overseeing international labour standards’.  It is a United Nations agency and has developed a set of labour standards covering key issues for workers such as wages, health and safety at work and child labour.  You can find out more on the ILO’s website, although the information provided there is very detailed and can be hard to navigate.  A simple summary of the ILO’s standards can be found in the Base Code on the UK’s Ethical Trading Initiative’s website.  The Ethical Trading Initiative Base Code is a good example of the type of code of conduct we would expect a company to have in order to meet our first indicator. 

A code of conduct is a list of rules that a company expects each of the clothing factories it uses to abide by.  Just having a code of conduct doesn’t mean that a company always sticks to these standards, but it is a start.  At least it means the company has started to think about ethical issues and has made some basic commitments.

Many companies have an ethical code of conduct which is based International Labour Organisation (ILO) standards but unfortunately excludes the commitment to pay living wages.  However, since we have covered living wages separately under indicator 2 we thought it was a bit unfair to penalise a company twice for this.  So if a company has not committed to living wages but, apart from that, has an ILO-based code of conduct which it applies to its supply chain, then we have given it a tick in response to this indicator. 

Living wages?

Does the company have evidence that suppliers are paid enough for workers to be given a living wage? 

Within their ethical code commitments on wages, many companies include a commitment to pay living wages.  This is a start, but unfortunately too many companies make this pledge without actually providing any evidence that they are doing anything to make it a reality.  To meet this indicator we expect companies to go beyond words and provide evidence of action. 

A living wage is usually defined as enough to meet basic needs and to provide some discretionary income.   This is, for example, how the UK’s Ethical Trading Initiative defines it.  You might have heard that certain companies have suggested that they can’t commit to a living wage, because no-one’s sure what a living wage actually is in different countries.  We recognise that there are still problems around calculating living wages.  But, at the same time, there are internationally agreed calculation methods which provide a good starting point.  The Fair Trade Initiative is one example. The Asia Floor Wage Campaign is another.  So we don’t think companies should be able to hide behind this argument to avoid making commitments to pay living wages.  Enough for basic needs and some discretionary income is not a particularly high standard after all.  

Some companies are now facing up to the reality that, although they might like to think their workers are being paid a living wage, they do not have any evidence or data to back up this claim.  Although they have a code of conduct which commits to paying living wages, some companies have not been ashamed to admit that their workers may not currently be receiving a living wage.  As a result, they are starting to conduct studies to work out what a living wage is in the countries were they produce and to work towards a goal of ensuring that their suppliers are paid enough for this wage to be paid to workers.  This is a really positive step and – if companies are doing it – we’ve said they are ‘making progress’ on this indicator.  They are no longer hiding behind the argument that defining a living wage is too difficult.  Nor are they pretending things are fine when they are not.  We hope this indicator will encourage more companies to implement similar programmes. 

We have deliberately said that we want the evidence for this indicator to be around whether suppliers are paid enough for workers to be given a living wage, because this focuses on the part of the process which is initially within the company’s control.  The next step is for them to work out whether their suppliers are actually passing the wage on to workers – something we will come on to in later indicators when we look at auditing. 

Meeting this third indicator requires two things of a clothing company.  Firstly, it requires them to know how much a living wage is in the countries concerned.  Secondly, it requires that they pay their supplier factories enough to cover their costs and pass this wage on to workers.  If they are paying their factories less than even the living wage in the first place, there is no way the factory will be able to do this.

Factory address list?

Is a full list of the locations of the company’s supplier factories publicly available?

One of the best things clothing companies could do to help us learn more about conditions for their workers is to be more open about where their clothes are produced.  If a company provides the locations of all its supplier factories it means that journalists, NGOs or anyone else with an interest in the issues can make connections to the companies involved when they hear about poor conditions in these factories.  It also makes it easier for such people to visit the factories and see for themselves. 

Many companies say they cannot provide this information because it is commercially confidential.  We’re not convinced by this!  We have examples of both large and small companies disclosing all their factory locations.  Nike, for example, has published a complete list on its website since 2005.  And small, fair trade company, People Tree also provides a complete list of the producers they work with.  If these companies can do it, then anyone can.

Reliable factory checks?

Does the company ensure that reliable social audits are conducted at all of its supplier factories?

Social auditing has come to prominence in recent years as a way of helping companies check up on their supply chain in the wake of scandals over issues like child labour.  A social audit should be conducted against the company’s ethical code of conduct, described in indicator 1. 

Like financial auditors, social auditors spend time at a factory –usually a couple of days – and review the factory’s records and procedures.  They will then give the factory a score, identifying any failures against the code of conduct.  The same factory often makes clothes for a number of different companies so often companies will share audit results to avoid the factory having to undergo an excessive number of audits. 

Auditing systems are not perfect.  We have heard that in many countries it is not uncommon for auditors to accept bribes in return for a good score.  We have also heard of factories falsifying their records and coaching their staff to say the right things to auditors.  Despite these problems, at present, social auditing seems to be one of the most feasible ways for companies to monitor their supply chain.  Standards vary from company to company, but if social audits are done well then the pitfalls described above can be minimized and companies can gain a reliable picture of how factories are performing against their code of conduct.  

So to meet this indicator we expect companies to have a reliable audit programme that covers all of their immediate supplier factories.  (We will consider their full supply chain i.e. suppliers of suppliers under indicator 7).   The key question, of course, is how we define ‘reliable’.  There are several different organisations that exist to help companies develop a thorough social audit programme.  The largest is Sedex, a not-for-profit organisation which helps clothing companies conduct audits according to agreed standards and allows both clothing companies and supplier factories to share information.  Other organisations that assist clothing companies in developing reliable social auditing programmes include the Fair Labor Association and Made-By.  We have found that clothing companies with good social auditing programmes tend to by a member of one or another of these organisations. 

After looking at some of the guidance that these organisations produce as well as the current auditing programmes of different fashion brands, we have concluded that a ‘reliable’ programme of factory checks should at least include the following:

  • Visits to factories by the company’s own staff.  Not all companies have a regular, direct relationship with their suppliers.  Some only use external auditing companies to check up on factories and assess how things are going.  We were impressed, however, that some companies have their own ethical trading teams that regularly visit suppliers and maintain a relationship with them.  We think this is something that all companies should look to emulate – although the size of such a team will obviously depend on the size of the company.   Having staff who have been to factories and worked with them directly on ethical issues can give a company a much better understanding of the challenges and pitfalls that can arise in its supply chain.   It also helps to guard against the problem of auditors accepting bribes in return for good audit results.  A company should be able to have more confidence in the integrity of staff it has recruited itself.  And the fact that it would have to take responsibility for any corruption amongst its own staff should be a powerful incentive for it to crack down heavily on any such practices. 
  • Unannounced factory checks.  One of the main difficulties with social audits is the danger that factories simply make sure everything looks perfect on the day.  That might mean they get rid of any child workers, coach their staff on what to say to the auditors or hide their real records of working hours and replace them with false ones.  One of the ways these problems can be avoided is if factories are subjected to at least some unannounced checks or audits and are aware that an unannounced check could take place at any time.  This means they have no chance to prepare and it gives auditors a higher chance of seeing conditions in the factory as they really are. 
  • Confidential interviews with factory workers.   It is widely accepted that good social audits must include interviews with the people who actually work in the factory. Allowing the auditor rather than the factory management to select interviewees helps to get around the problem of workers being coached to give the ‘right’ answers.  We have also heard stories of workers being bullied by factory management after giving negative feedback to auditors.  Ensuring that any audit interviews are confidential and ideally take place off site helps to ensure that this does not happen.

Factory check results published?

Are the company’s social audit results publicly available?

One of the key things we want our indicators to do is encourage companies to improve.  We are really impressed that some companies are now publishing detailed information on their social audit results on their websites.  That means they are stating openly things like the number of cases of child labour they have found in their factories and the number of breaches of health and safety procedures.

Making this information public is a brave decision on their part.  It puts them at risk or criticism for admitting to such problems.  And it means they will take flak from journalists and NGOs if they can’t demonstrate that they are improving.  There are many companies who currently refuse to publish their audit results – presumably for just such reasons.  

We could, of course, take the information from companies that do publish their audit results and use it to tell you which ones appear to have the most breaches of their codes of conduct.   But that would penalise those firms who have chosen to be open and honest.   There are still many companies that do not publish any audit results at all so we think the first step is to encourage the openness and honesty that some firms are showing. 

If a firm makes its results public you can read them for yourself and make your own decision as to whether they are good enough.   Hopefully at some point it will become routine for all companies to publish their social audit results – then, at that point, we can use the results to start to differentiate between them.  

Worker complaint procedure?

Has the company put in place a mechanism by which factory workers can confidentially get in contact to raise issues of concern? 

We have heard that some companies have put in place mechanisms (usually a telephone hotline or internet mailbox) for workers in their supplier factories to contact them directly in their own language and in confidence if they are experiencing problems.   We think this is a really positive step.  It gives factory workers a way to make their voice heard if they are facing difficulties with their management or in their day-to-day working conditions.  It also helps to give the buying company greater insight into what really goes on in factories.  Although we realise that it is not a panacea and that (for example) workers may be actively discouraged from raising complaints, we do think a mechanism of this sort is a relatively easy thing for a company to put in place and it is something we would like to see all companies doing. 

Supply chain checks?

Has the company started to conduct social audits further down its supply chain?

Tracking the source of the clothes we wear is complicated.  A fashion company may have a direct relationship with its supplier factories where the clothes it sells are actually sewn together, but there are numerous steps in the chain before that.  For example, the supplier factory must buy the fabric and accessories it uses from somewhere.  It may also contract out some parts of the manufacturing process – such as intricate embroidery – to other factories or to home workers. 

It’s obviously very difficult for a clothing company to keep track of what’s going on during all these steps, but that doesn’t mean it shouldn’t try.  Some clothing companies are now starting to conduct ethical audits further down their supply chain, for example of the mills that supply that supply their factories with fabric.   We think this is a really positive step and something that will encourage companies to think more about how all the different components of our clothes are made. 

Other companies have not gone so far as to include these second-tier suppliers in their audit programme but they have at least taken an intermediate step.  They have asked their supplier factories to ensure that any suppliers they themselves use will also adhere to the same code of conduct described under Indicator 1.  That means that when the clothing company is performing audits of its factories – something we’ll come on to in later indicators – these checks will include an assessment of whether the factory is applying the same standards to its suppliers as it is expected to meet.  We have therefor said that clothing companies that have taken this intermediate step are ‘making progress’ against this indicator.   

Reuse or recycle scheme?

Does the company have a scheme to help customers reuse or recycle old clothing?

In recent years, clothing has got cheaper and cheaper as manufacturing has largely shifted to developing countries, mostly in Asia.  In parallel, many clothing companies have moved on from the traditional two collections a year (spring/summer and autumn/ winter).  Many now bring out new lines every couple of weeks in an attempt to gain the edge over their competitors.  This approach has become known as ‘fast fashion’ and is particularly prevalent at the ‘value’ end of the market.  All too often items of clothing have come to be seen as ‘disposable’.  We wear them once or twice and then we throw them away.  The result has been a massive increase in the volume of clothes being produced and sold.  A 2006 study noted that ‘over four years, the number of garments bought per person in the UK increased by over one third’ (University of Cambridge Institute for Manufacturing, ‘Well dressed? The present and future sustainability of clothing and textiles in the United Kingdom’).

This approach is not sustainable, both in terms of the waste created and the pressure placed on clothing manufacturers.  The charity, WRAP, noted in a recent report that around £140 million worth (350,000 tonnes) of used clothing goes to landfill in the UK every year (‘Valuing our clothes: the true cost of how we design, use and dispose of clothing in the UK’). And in clothing factories workers are given ever greater workloads to make cheap clothing to ever tighter deadlines.  A Sri Lankan factory owner interviewed by Oxfam reported: ‘Last year the deadlines were about 90 days… [This year] the deadlines for delivery are about 60 days. Sometimes even 45… They have drastically come down’ (cited in Ethical Fashion Forum, ‘Fast  fashion, “value” fashion’, 1 January 2010).

The good news is that some companies are now starting to look at ways to change how we think about the clothes we buy.  The best we have found is Patagonia’s ‘Worn Wear’ programme.  The company actively encourages its customers to buy fewer clothes through help with repairs, schemes to buy second hand Patagonia products and collection points to recycle clothing that is no longer needed.   In 2011, to discourage excessive consumption, the company even went so far as to take out an advert in the New York Times on Black Friday saying, ‘Don’t buy this jacket’.

A number of other companies are starting to introduce schemes to help their customers recycle or donate their old clothing.  We’d love to see more going as far as Patagonia have done to change the buying habits of their customers but for now we think the schemes they are introducing are a good start.  

Sustainable cotton?

Does the company use only sustainable cotton in its clothing? 

Cotton is the most widely used fabric in the clothing industry.  According to the World Wide Fund for Nature (WWF) around 20 million tons of cotton are produced each year.  However, cotton farming can take a terrible toll on the environment and those working on or living near to cotton farms.  The Environmental Justice Foundation (EJF) has extensively researched and documented some of the disturbing problems with conventional cotton farming. 

Firstly, cotton is one of the world’s thirstiest crops.  The EJF estimates that it takes around ‘2,720 litres of water to produce one cotton t-shirt, equivalent to what an average person might drink over three years’.  In many of the developing countries where cotton is grown the amount of water being used to irrigate cotton crops is unsustainable.  One of the most extreme examples is the Aral Sea in central Asia, which has shrunk to just ten per cent of its volume in a generation as a result of cotton farming.  The EJF notes that ‘more than 54,000km2 of the former sea floor – an area bigger than the whole of Denmark – is now exposed as dry mud flats, contaminated with salt and pesticide residues that are deposited over a 350km radius by toxic dust storms’. 

Secondly, conventional cotton farming uses vast quantities of toxic pesticides each year.  These pollute fresh water supplies and cause serious health problems for many cotton workers.  The EJF estimates that: ‘Across all agricultural sectors, an estimated 1 to 5 million cases of pesticide poisoning occur every year, resulting in 20,000 reported deaths among agricultural workers and at least 1 million requiring hospitalisation… No specific figures are available for pesticide poisoning in relation to cotton production per se, but in developing countries it has been estimated that approximately 50% of all pesticides are applied in cotton cultivation.’ 

Thirdly, the EJF has identified many instances of forced child labour on cotton farms across Asia and Africa.  They have found, for example, that ‘In the Indian state of Andhra Pradesh, an estimated 100,000 children below 18 have been reported to work 13 hours a day in cottonseed production for less than half a euro per day.  These children are often bonded by loans given to their parents, since many farmers are unable to pay the local minimum wage and advance money to parents who are then bound to send their children to the fields.’  

As these problems have been exposed, many companies are now starting to use cotton from sustainable sources such as organic cotton, fairtrade cotton or cotton sourced through the Better Cotton Initiative (BCI).  The Better Cotton Initiative works with cotton farmers to improve their farming practices.  The BCI standards cover water and pesticide use and fair working practices, including the elimination of child labour.  Organic cotton is produced to even higher environmental standards and fairtrade cotton to higher social standards.   To meet this indicator we expect companies to be using only cotton from these more sustainable sources. 

Eliminating toxic chemicals?

Is the company working to elimate the use and release of toxic chemicals in its supply chain?

As noted under indicator 9, manufacturing many of our clothes requires huge volumes of water, particularly in washing and dying processes.  Many of the chemicals used all too often in these processes can be toxic if released into the environment, generally through waste water that has not been adequately treated.  Clothing factories are often located in countries with inadequate controls on these chemicals or, where controls do exist, poorly functioning legal systems and lack of proper checks and regulation.   As a result, in many developing countries the situation has become critical.  In an article detailing some of the problems, Newsweek recently reported that ‘near critically polluted waters like Bangladesh’s River Buriganga and Cambodia’s Mekong River, life-sustaining farms are dying, potable water has become toxic and locals are now at great risk for serious illness, all as a result of industrial-scale clothing manufacturing’ (13 August, 2015).

Charities such as Greenpeace have been campaigning hard on this issue.  Greenpeace’s Detox Catwalk campaign identifies a list of chemicals that should be eliminated and looks at the commitments companies are making and how transparent they are around releasing data about waste water discharges in the factories they use.  

On the industry side, a number of clothing companies have got together to produce a Roadmap towards Zero Discharge of Hazardous Chemicals by 2020.  We think this is a good start.  The best companies, such as Fairtrade brand People Tree are already having their clothes made using safe, non-toxic dyes.