The opaque purchasing practices of global apparel brands seem to be posing problems for various RMG-exporting countries, limiting the scope of not only fair trading but also of smooth management of apparel factories. Bangladesh, like some other major suppliers of apparel products, has been facing the problems for long, which according to industry insiders are, in effect, exploitative practices.
A FE report last week has highlighted the issue quoting information from the latest Fashion Transparency Index. The Index is based on 258 indicators in five key areas, including policies and commitments, governance, supply chain traceability, and spotlight issues like decent work, forced labour, purchasing practices, unionism, collective bargaining etc.
The current edition of the Fashion Transparency Index report has found that only 12 per cent of the global apparel brands publish their purchasing conduct. That is to say, the majority of the brands do not disclose information about their supply chain, the payments they make to overseas suppliers and other matters relating to business conduct. The report has pinpointed a few issues that among others include late payment to suppliers, shorter manufacturing time as common practices followed by most brands. "Late payments are a part of a bundle of purchasing practices which directly impact on a supplier's operations, potentially creating the very issues due diligence tries to mitigate," says Fashion Transparency Index 2023.
There is a strong similarity of the fashion transparency report with the Human Rights Watch (HRW) report on the issue, released sometime ago. The HRW report had categorically said that business practices of global apparel brands such as offering low prices, shorter manufacturing time, late payment are fuelling abuse of garment workers in Bangladesh and other supplying countries. The various cost-cutting methods adopted by factories in these countries harm the workers and those are actually driven by the reckless profit motive of the global brands, the report said. Low prices and shorter times for manufacturing, associated with poor forecasting, unfair penalties, and poor payment terms have been identified as the main behind factors exacerbating the risks for labour abuse.
The HRW report also said that many global brands flaunt their commitment to ensuring rights-respecting workplaces that produce their goods, but undercut their efforts by pressurising the suppliers to drive down prices. The report said that sourcing policies of the buyers are not merely a threat to a factory's financial bottom line, it also forces factories to engage in abusive labour practices and in risky contracting with unauthorised suppliers as a way of cutting costs. It said brands should adopt and publish policies on responsible sourcing and integrate them across all departments and they should publish lists of their factories in accordance with the Transparency Pledge, a minimum standard developed in 2016, by a coalition of labour and human rights organisations.
It is ironic that while global garment retailers insist on massive renovation and upgrading of workplace environment of supplying factories at substantial costs, there is no sign of even a marginal hike in the prices. Since the incidents of Tazreen fire and Rana Plaza building collapse that shook the entire garment industry with potential threats for the future, the country's garment factories have undergone large-scale renovation works to ensure safety of workers. The two representative agencies of international buyers - the EU-based Accord and North America-based Alliance, along with local inspection agencies have successfully accomplished the task of factory remediation in respect of, reportedly, more than 80 per cent of the garment factories. Along with the factory remediation works, there have been a lot of proactive moves by a good number of factory owners in that they advanced far ahead turning their factories into green factories. This involved a major shift in energy and environmental designs of the factories and significant investment in eco-friendly production processes. In a short time, the country topped the list of garment producing countries in the number of full-fledged green factories.
It is well known that at the beginning when Bangladesh started exporting apparel to North America and the European Union in the early eighties, prices offered were the bare minimum. This, understandably, was because of low wage and relatively low cost in installing factories, many of which were not in harmony with international standards. Besides, the country -- a new entrant to the competitive global apparel market -- was not in a position to bargain for reasonably higher prices. On the other hand, retailers aware of the weaknesses of the factories, often exposed to risks including life threatening ones in many cases, were not much concerned in so far as their procurement went hassle-free -- at meagre prices. The situation is entirely different now. While initially, the factories were mostly engaged in low-end bulk products, over time many of them have moved to the high-end segments.
With the factories better placed now, it was expected that international buyers now free from the indictment of procuring from unsafe and hazardous production places, would pay a little extra while placing orders to these state-of-the-art factories. Unfortunately, this is not happening.
Observers including industry experts believe that for fair play to be the driving force of global apparel trading, business practices — particularly procurement conduct of the fashion brands — should be transparent and made public as required in line with the transparency pledge. The fact that various unscrupulous purchasing practices of global brands are responsible for undesirable belt-tightening of the supplying factories cannot be denied and calls for an end to those.
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