On January 12, 2023, a sculpture by Yayoi Kusama is displayed on the roof of Louis Vuitton’s Champs-Elysées store in Paris, France. This year, the French fashion house launched its second collaboration with Yayoi Kusama. The first collaboration was in 2012. The Yayoi Kusama x Louis Vuitton collection is now available at all Louis Vuitton stores worldwide. (Photo by Edward Berthelot/Getty Images)
Edward Berthelot | Getty Images
Many of the world’s biggest fashion brands are failing to address forced labor in their supply chains, according to a report by the French luxury brand. LVMH Among the worst performers.
A study by KnowTheChain, an organization focused on forced labor in supply chains, analyzed 65 companies to see if they were at risk of forced labor.
KnowTheChain said it uses a benchmarking methodology based on the United Nations Guiding Principles on Business and Human Rights, with companies scoring an average of 21/100.
this A report released by the group last month said it “shows that corporate policies and practices are inadequate in the face of economic instability that exacerbates the risks of conflict, the climate crisis and forced labor.”
“They remain largely reactive to human rights abuses, rather than demonstrating robust and embedded human rights and environmental due diligence practices designed to prevent human rights abuses,” it added.
KnowTheChain found that more than 20% of the companies evaluated received a score of 5/100 or lower, failing to provide and disclose redress for companies whose rights were violated, and that this result was described as a “disclosure of human rights violations that are consistently exposed.” “This is an accusation in a field that is currently in use.”
Lululemon, Puma and Adidas top performers
This benchmark is from Canada. lululemon It ranked top out of 65 companies with a score of 63/100, praising the company for disclosing “remarkably strong human rights due diligence to address forced labor risks in its supply chain”.
“The company has outperformed the SPDR S&P Retail ETF over the past three years, delivering double-digit growth in net revenue and gross profit in 2023 compared to the same period last year,” KnowTheChain noted.
“As such, this shows that corporate strategies that incorporate human rights due diligence need not come at the expense of long-term sustainable growth or investor returns.”
german sportswear brand puma (58/100) was second place and rival adidas (55/100) took 3rd place.
Veronique Rocher, Puma’s senior director of sustainability, told CNBC that the company has invested “tremendous time and resources” over the past 20 years to ensure high environmental, social and governance (ESG) standards. Told.
“For example, PUMA is a member of the Fair Labor Association, and PUMA’s compliance program is regularly audited and certified against the Fair Labor Association’s Code of Conduct, ensuring that fair labor standards are properly maintained and labor standards “We are ensuring that systems and procedures are in place to mitigate violations and correct violations,” she said.
“The score Puma obtained in the KnowTheChain report shows that we are on the right track, but we also see areas and opportunities for improvement going forward.”
An Adidas spokesperson told CNBC that the results “reinforce our commitment to ensuring fair and safe working conditions for workers throughout the Adidas supply chain, something we have actively promoted for more than 25 years.” “This is a recognition of our efforts.”
The company employs a team of approximately 50 experts around the world to ensure workplace standards are applied and met, and will provide suppliers with over 1,200 factory audits in 2022. We conducted an audit.
“The stock prices of the latter companies (Puma and Adidas) are lower than those of Nike (48/100) – 6th place in this year’s benchmark – Over the past three years, higher scores suggest stronger operating practices and business resilience, with forward-looking long-term growth and This could be beneficial to your bottom line,” the KnowTheChain report said.
At the bottom of the scale, five companies received a score of 0/100, and three companies received a score of 1/100: India, China, Taiwan, Indonesia, and Japan.
us retail store foot locker The score is 2/100, and LVMHthe world’s largest luxury goods company, scored a 6/100.
Amazon and walmart Both received a score of 32/100, placing them in the top 3 of all companies.
Walmart said it is working with suppliers, non-governmental organizations, experts and others to “address the root causes of these issues, foster innovative solutions and accelerate adoption at scale.” .
“Our business depends on sourcing responsibly manufactured products, and the well-being of our supply chain employees and customer trust are of paramount importance,” a company spokesperson said.
“Our commitment to responsible sourcing and human rights is non-negotiable and we expect our suppliers to share and adhere to our standards.”
Amazon has not yet responded to CNBC’s request for comment. Lululemon, Foot Locker and LVMH have also been contacted for comment.
Companies are “insufficiently prepared” for legislation
KnowTheChain notes that most companies appear to be “unprepared for existing and upcoming legislation” requiring them to understand and disclose risks in their supply chains, and that the number of companies that source high-risk raw materials is It warned that there was a “worrying disparity” between the number of businesses and businesses. Demonstrates efforts to identify and disclose risks.
“For example, 98% of companies produce cotton clothing, but only 15% disclose even partial details about their sourcing countries, and laws against forced labor such as the Uyghur Forced Labor Prevention Act, “Diligent legislation at risk of enforcement action, including due to new human rights issues,” the report added.
According to KnowTheChain, ‘bailouts’ was the lowest scoring theme in the benchmark, with companies scoring an average of 7/7 despite well-documented issues surrounding wage theft and freedom of association violations in this area. It is said that it was 100.
According to the study, Lululemon was the only company to disclose examples of remedies beyond the first tier of its supply chain, and the only company to report that it consulted with workers about whether they were satisfied with the remedies provided. It’s also a company.
“Purchasing practices” is the second lowest scoring theme across the benchmarks, with an average score of 12/100, with more than half of companies not disclosing their adoption of responsible purchasing practices. This includes planning, forecasting, or ring-fencing labor costs during price negotiations.
Companies that received zero points in this category include Amazon, Walmart, Hermès, and LVMH.
The survey found that companies averaged a score of 15 out of 100 in the ‘Worker Voice’ category, with only 22% of companies disclosing their involvement with trade unions to support freedom of association in their supply chains. was.
Meanwhile, 42% of benchmarked companies did not disclose relevant supplier or sourcing data, and only 20% disclosed details about sourcing countries or efforts to track high-risk materials such as cotton, leather, and rubber. .
