Creating an ethical supply chain
Ethical Clothing Australia's Sigrid McCarthy advises brands on creating an ethical supply chain.
The Australian textile, clothing and footwear (TCF) industry is seeing a strong shift towards understanding the importance of greater transparency and ethical business practices.
Many consumers are beginning to demand greater traceability and with this brings the need for businesses to re-evaluate the way they operate.
The dialogue around ethics in fashion can often be negatively framed and somewhat vague.
Amid this however, we can find positive stories of local TCF companies valuing transparency and simply viewing supply chain management as good business.
Many brands don’t intentionally set out to do the ‘wrong thing’; however it’s important brands are aware of their obligations when manufacturing locally.
We are fortunate here in Australia to have the legal framework in place that protects vulnerable workers in the TCF industry. These are outlined in the Textile, Clothing, Footwear and Associated Industries (TCFAI) Award, specifically Schedule F which relates to giving out work and outworkers, the National Employment Standards, and other legislation.
Companies need to understand that even if they outsource their work, they are still ultimately responsible for all workers they employ directly or indirectly in their supply chain, including outworkers.
It is important to have an open dialogue with suppliers and gauge how willing they are to be transparent. This will help navigate any red flags that may arise when certain questions are asked. There are a few questions businesses need to ask themselves in order to gauge potential warning signs in their local supply chain:
*Production costs - Have you thought about the time it takes to make each garment and how much you are paying your maker? Is this enough to cover all their costs?
*Employee pay & conditions - Are you comfortable with the conditions the people making your clothing/footwear are working in? Do you know whether they are receiving the correct wages and entitlements? Is there paperwork to prove this?
*Workplace conditions - Is the factory or workplace Occupational Health and Safety compliant? Do you know whether the supplier you work with has Workers Compensation Insurance?
*Know your supply chain – Depending on your circumstances – i.e. whether you give work out, produce in-house or a combination of the two – supply chains can be complex. Consider the possibility that some of your work is being outsourced further without your knowledge. If you suspect this is the case, it is important that you acknowledge this, know the facts and take the necessary steps to ensure these workers are protected and your obligations are met.
Below are three key things you need to ensure you are doing if you are manufacturing in Australia:
*Businesses giving work out need to register with the Fair Work Commission (FWC)’S Board of Reference and provide lists regularly to the FWC and Textile, Clothing and Footwear Union of Australia (TCFUA); this acts as a mechanism for the industry to be open about supply chains from the top level down.
*You must maintain and keep records of any work that is given out and to whom. Keeping this information is not only the law but good business practice. Make sure the amount paid per garment is enough to cover all costs involved including workers receiving their legal entitlements.
*Ensure a written agreement or contract is in place with every supplier.
Note that these are examples only and companies must meet all legal obligations.
There are resources available and bodies working to assist businesses in navigating their obligations. Ethical Clothing Australia (ECA) is a local accreditation body working alongside Australian TCF companies, with the ultimate aim of creating an industry standard that sees accreditation recognised as best practice. ECA accreditation is essentially the process of mapping a company’s Australian supply chain.
To ensure all workers are accounted for, including outworkers, ECA contracts the TCFUA to conduct annual compliance audits.
A key benefit of businesses understanding their supply chain obligations, via third-party compliance, is being able to manage risks and guarantee that there are no hidden issues. It also gives businesses the opportunity to appeal to a growing ethical consumer market.