When fast fashion comes to a halt
Within days of Covid-19 taking hold in the US and Europe, demand for fast fashion crashed. The production line was frozen. There were products in the design stage, fabric on order, fabric waiting to be cut, already cut, sewn, finished, ready for shipping, en route to stores, sitting in warehouses waiting for distribution, hanging in shops waiting to be bought. On any given day, these goods have a total value of billions of pounds. The question, when the crisis hit, was what to do with all the orders: some in progress, some finished and ready for shipping, some already shipped and awaiting sale.
The first brand to offer a commitment to its suppliers was H&M, which guaranteed payment for all finished goods and goods in production. In Bangladesh alone, their orders were worth $166 million. Smaller brands followed: VF, the parent company of Timberland, the North Face and Vans, with $56 million; and PVH, the parent company of Tommy Hilfiger and Calvin Klein, with $33 million. Dozens of other brands, however, took a different route and triggered the force majeure clause in their contracts, cancelling and refusing to pay for all orders – whether in process, complete or, in some cases, shipped and awaiting sale. In Bangladesh, Primark – citing indefinite store closure as an insurmountable obstacle – cancelled $273 million worth of goods; C&A, no longer on British high streets but still a dominant brand in Europe, cancelled $166 million; Walmart, $38 million.
Those still trading and taking orders are taking advantage of the situation to demand discounts and adjust payments terms. The George label at ASDA, owned by Walmart, decided to pay its suppliers only 50 per cent of the agreed price for finished garments and 30 per cent for unfinished garments, even though it is still open for trade. Dozens of other brands still placing orders are capitalising on the crisis to push prices even lower (they had already been squeezed by up to 15 per cent in the years since the Rana Plaza disaster killed 1134 people in 2013). Garment supply chains extend into dozens of countries, and the impact is not felt only in Bangladesh. But as the second biggest garment manufacturing nation in the world, dependent on the garment sector for 84 per cent of its exports, Bangladesh has found it hard to withstand the shocks. Almost overnight, the industry was thrown into chaos, and the livelihoods of millions of workers were put at risk.
Rubana Huq, the president of the Bangladesh Garment and Manufacturers’ Association, broadcast a message appealing to the ‘good sense’ of Bangladesh’s customers, imploring them to honour current orders and pay suppliers what they are owed. Some brands that failed to pay responded with half-hearted gestures. Primark committed to covering some wage costs. The newly formed Laudes Foundation, funded by the Brenninkmeijer family, who own (and acquired much of their wealth through) the C&A brand, opened an emergency fund for workers, but it seems likely to represent only a fraction of the $166 million they owe to their suppliers in Bangladesh alone. When I challenged the company’s approach on LinkedIn, my contract with the Foundation – I advised their labour rights team – was cancelled within 12 hours.
In response to protests, Primark released a further statement pledging to ‘extend its commitment to suppliers’. C&A eventually followed suit, claiming it was committed to seeking ‘mutually beneficial’ arrangements with its ‘supply chain partners’. Reports from C&A suppliers, however, suggest that ‘mutually beneficial’ means suppliers accept heavy discounting – up to 50 per cent – before the brand agrees to take the orders. Selected Primark suppliers, meanwhile, have been forced to accept significantly extended payment terms, meaning many factories will not see a penny until September. Other Primark suppliers say that hundreds of millions of dollars’ worth of orders remain unaccounted for. Still, many other brands and retailers – John Lewis, Gap, Arcadia (the parent company of Topshop) ASOS, Pentland, Sports Direct, Mothercare, Walmart – have not moved at all.
To anyone who works in the industry none of this comes as a surprise. Corporate governance is dominated by bogus claims, voluntary ‘commitments’ and ‘calls to action’. Semantic shifts stand in for structural change. There is one aim: to maintain a vacuum around regulation, obligation and legal responsibility.
Because the brands and retailers have no direct relationship with or responsibility to their workers, they are entirely unaccountable: only the supplier (the factory owner, for instance) can be held legally responsible for transgressions. Suppliers won’t speak openly about the pressures placed on them for fear of losing customers (and their contracts often include confidentiality clauses). For these ‘partners’, as for many workers, the only thing worse than being exploited by a global brand or retailer is not being exploited by one. And so they accept almost any terms offered. Sometimes information is relayed in furtive conversations and off the record chats. I get messages to my LinkedIn account from suppliers desperate for help. In the recent parliamentary inquiry into the sustainability of the fast fashion industry there was only one submission from a supplier, imploring MPs to recognise the impossibility of maintaining standards and abiding by the law given the extreme and aggressive price pressure from brands. It was made anonymously.
In its published report, the Environmental Audit Committee argued that the government ‘should change the law to require companies to perform due diligence checks across their supply chain’ as well as ‘make fashion retailers take responsibility for the waste they create’. Last June the government rejected all of the committee’s recommendations. Earlier this week, however, the EU commissioner for justice announced the Commission would introduce rules for ‘mandatory corporate environmental and human rights due diligence’ across all sectors. Perhaps the UK will have to follow suit.