Legislation Shouldn’t Exacerbate Supply Chain Inequities, Garment Manufacturers Say
Garment suppliers, mostly in the global South, aren’t overreacting when they worry that Western brands and retailers will place due diligence legislation’s burdens on their shoulders. It’s already happening, they say.
Take the Uyghur Forced Labor Prevention Act, or UFLPA, in the United States. When the Biden administration began barring goods suspected of containing forced-labor-tainted materials from China’s Xinjiang Uyghur Autonomous Region in 2022, manufacturers were expected to have complete supply chain train traceability “almost overnight,” said Gauri Sharma, general manager of ESG and innovation at Shahi Exports, India’s largest apparel producer.
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Sharma spoke at a media briefing on Tuesday ahead of the release of an update of last year’s “An Apparel Supplier’s Guide: Key Sustainability Legislation in the EU, U.S. and U.K.” Compiled by a coalition of suppliers, including Crystal International Group, Diamond Fabrics, Lenzing, Pactics Group, Poeticgem Group, Shahi Exports, Simple Approach and Sourcery, with support from German developmental agency GIZ’s FABRIC initiative and the Transformers Foundation, version 2.0 includes revised factsheets for 12 legislative initiatives—the UFLPA and the New York Fashion Act, included—that could weigh disproportionately on manufacturers.
The guide also brandishes three new ones: the European Union’s Strategy for Sustainable and Circular Textiles, which though not a legislation itself propels much of the bloc’s merging regulatory framework; the German Supply Chain Due Diligence Act, one of the most rigorous of its kind yet, at least before the EU’s corporate sustainability due diligence directive, a.k.a. the CSDDD, kicks into gear; and the EU directive on unfair trading practices in the agricultural and food supply chain, which could furnish lessons for the garment industry regarding the equitable distribution of responsibility.
The last is especially close to the heart of Sourcery, which helps brands and retailers source sustainable cotton, said managing director Crispin Argento. Adopted in 2019 as EU directive 2019/633, the measure seeks to protect farmers and suppliers from economically stronger buyers’ unfair commercial practices, including unilateral contract changes by the buyer, short-notice cancelations of perishable agri-food products and commercial retaliation.
“It just creates high-level rules of the road to ensure that that the power structures that exist between buyer and seller are a little bit more balanced,” Argento said. “Maybe this legislation could be used to adopt a similar directive for textiles in the future, where there are better business practices that recognize the position that both buyers and sellers are in, so that we create a more healthy trade environment.”
There are a few signs of potential change, Sharma said. The CSDDD, for one, has introduced requirements for companies to review their purchasing practices, particularly when engaging with small and medium-sized enterprises. Such practices, including fair or unfair contracts, she said, can strongly sway a supplier’s sustainability efforts because they determine how much financial and resource wriggle room is left over.
Some brands are becoming more receptive to hearing what suppliers have to say, even asking them what their “blueprints” should be going forward, said Kavita Dass, head of sustainability and fabric at Poeticgem Group, which is part of the global manufacturing network PDS Limited.
“It’s a really good trend and I hope it continues,” she said.
At the same time, a veritable tsunami of measures—the coalition originally parsed through 60 legislative initiatives before creating its shortlist—could impose a patchwork of similar but slightly different regulatory demands on the supply chain. Even with the EU, there’s a risk that member states will interpret directives differently as they’re transposed into national laws. Brands, too, could incorporate new rules into their standards in discrepant and conflicting ways, amassing more work for suppliers.
“Already, suppliers are experiencing multiple audit standards,” Sharma said. “We’re seeing lots of traceability tools, pilot programs, multiple grievance redressal tools coming up, all of which have to be implemented by suppliers.”
What’s critical for suppliers, the manufacturers said, is engagement with brands and retailers before they start to create multiple, duplicative implementation methodologies. Aligning with the Organisation for Economic Co-operation and Development’s due diligence guidelines and United Nations Guiding Principles on Business and Human Rights, which underpin many of these legislations, could help minimize the risk that their existing efforts are seen as inadequate.
And insomuch as they’re able to, suppliers should allocate resources to map this new regulatory terrain so they can better comply with data requests with systems that can better measure water, chemicals and other impacts, the coalition said. They should also be wary of buyers trying to offload their legal liability through contractual documents.
Sharma said that suppliers are in favor of lawmakers’ ambition of creating a more level playing field that forces laggard companies to make changes. But the current top-down approach that doesn’t include manufacturers at the decision table is creating a “lot of hidden work” for those least able to take it on. Enacted poorly, regulation could also exacerbate the industry’s existing power imbalance, something that was thrown into focus during the Covid-19 pandemic.
“We urge legislators to involve production experts because involving suppliers could lead to legislation that is better informed, more equitable, more impactful,” she said. “A lot of what is written in these legislations is executed and limited by suppliers.”
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