Global fashion brands are failing on key metrics, including paying a living wage and sustainably sourcing materials. The 2022 Ethical Fashion Report, published by Baptist World Aid (BWA), assessed 120 companies representing 581 brands and found that 90 per cent of fashion brands are not paying a living wage at any of their factories at the final stage of their supply chain.

This year’s report, the ninth edition, was the largest and most transparent to date, shining a spotlight on six key issues in the supply chain: tracing materials beyond final-stage, remediation of labour exploitation, payment of living wages, support for worker voice and empowerment, use of sustainable fibres, and commitment to climate action.

It found just 15 per cent of companies surveyed have a climate target covering their full supply chain, and 17.5 per cent are not using sustainable fibres anywhere in their production.

And less than a quarter of companies — 23.3 per cent — have a process in place for remediating forced or child labour at the final stage of production.

Footwear brands were included in the report for the first time this year and performed below the industry average of 23/100.

None of the footwear companies included in this year’s report pay a living wage at any stage of their supply chain, and none had traced all inputs in their chain, compared to 11.4 per cent of clothing brands that do.

The report notes that the complexity of supply chains can impede traceability.

Only eight per cent of footwear brands examined had a process at their final stage factories to respond to child and forced labour.

Labour exploitation also continues in the fashion industry, with only one in seven companies having a plan to address exploitation, the report found. The pandemic had a negative impact on auditing and direct supplier relationships, the report notes, which has exacerbated this issue.

Sustainable fibre use remains low, and only 15 per cent of companies in the report could demonstrate sufficient commitment to emissions reductions in line with the United Nations Fashion Industry Charter for Climate Action.

Where sustainable fibres are used, they aren’t enough to counter the increase in the use of faster, cheaper, virgin plastic-based fibres.

Why Isn’t Progress Being Made

Poor progress towards paying a living wage isn’t just due to the complexity of supply chains.

According to the report, “companies cite knowledge gaps and limited leverage to influence suppliers as key factors”, but as well as this, some companies don’t actually have any accountability at a senior level for payment of a living wage and may not have been proactive in finding ways to address the issue.

Additionally, even though there may be a legal minimum wage in a country in which fashion and footwear is produced, many countries set the minimum wage at an “extremely low level”, the report states, “fearing an increase in wages will drive higher production prices”.

Some Cause For Hope

The report includes a breakdown of companies’ scores and their ratings. This year, the report switched to a numeric score and colour coding system for evaluating brands, rather than using the previous A-F grading system.

Some brands that have participated in the report for multiple years have shown positive change, with the average score for brands included for the last two years increasing from 32.5 in 2021 to 34.85 in 2022.

In contrast, companies included in the report for the first time this year had an average score of 9.7.

“While it’s positive to see progress among some brands committed to improving their ethical supply chains in the last year, overall, this year’s Ethical Fashion Report is sobering reading for shoppers, investors and leaders in the fashion industry,” said Sarah Knop, corporate advocacy lead at BWA.

“It’s time for brands to prioritise action over rhetoric, to move from policies and commitments, to tangible outcomes that support vulnerable workers and our vulnerable planet.”

Fashion Fixes

In the wake of the report’s release, BWA has called on fashion brands to escalate action to address modern slavery, worker exploitation and unsustainable environmental practices throughout their supply chains.

The report identified three key actions that brands should take to improve business:

  • Prioritise the wellbeing of people and the planet as core domains of accountability for the business, with human rights and sustainability used as key performance indicators to create positive impact in social and environmental areas.
  • Leverage relationships and collaborate with workers, local civil society and industry experts to create change at all levels of the fashion industry.
  • Implement a holistic whole-of-value-chain approach to improvement, from raw materials to consumer use and disposal.

The report noted consumers could also play a role in creating a more ethical fashion industry, by speaking to brands and asking them to do better, spreading the word to friends and family about brands that do well, advocating to government to improve laws around environmental protection and human rights, and making more informed purchases.