Head and Founder, Ethical Fashion Initiative at the International Trade Centre
Simone, you work with artisans, craftspeople and handwork producers. Through trade, you help reduce poverty in Africa, Afghanistan and India. How are the suppliers you work with being affected by the COVID-19 pandemic? How has the relationship between brands and suppliers changed in the last few weeks?
If the lockdowns last more than 2 months (as it seems to be the case) the industry will undertake tough copying measures: pressure will be put on producers, often based in the weaker countries of the Global South. Initially, they will have to play catch-up. Product development and production lead times will be shorter than ever. There is a danger that vulnerable employees will work even if sick, leading to a second wave of infections. The second step will be cancellations of orders and people all along the chain will lose their jobs.
Lay-offs and lack of appropriate public health facilities will lead to a sharp increase in sickness and mortality in developing countries and will push people to find other strategies to survive. First of all, there will be a push for irregular migration. More developed countries, with public health care systems and functional societies (also in terms of labour and its regulation) will be more attractive than ever.
At the same time, the scarcity of formal employment will give new rise to the informal economy, already huge, which is not taxable and thus not linked to overall development: simply a survival mechanism.
Finally, the number of people who make extreme choices will also increase. Some of them will be convinced by those who preach a return to better times, to a different and supposedly better world of the past. Among those preachers, we have the plethora of recruiters for the international state of terrorism. They reject many of the features of contemporary social life and use any crisis to support their wrong and criminal narrative. Situations like the one described above are fertile grounds for extremists (drug and illicit trades will also benefit and grow, gaining both a larger work force and more consumers).
So there is not only a moral case (which should already be more than enough) to keep working with suppliers in the global South, but also a very direct and practical interest for international brands and retailers. For us all.
Fashion and luxury businesses have been putting sustainability and corporate responsibility at the top of the agenda for a while – do you think there is more that can be done?
I think the real problem is an agency problem: must CEOs and boards maximise shareholders’ wealth at any cost or should they try including stakeholders’ wealth in the equation? Stakeholders are suppliers, workers in supply chains and inside the company’s direct outreach, communities where production takes place and the environment, consumers. It is the paradigm of conscious capitalism vs that of traditional capitalism. The CEO of Black Rock who spoke about ESG (Environment, Society, Governance) was addressing exactly this point. It is time for the industry to address this problem in terms of revision of its business model.
Do you feel consumers are becoming more conscious or “responsible” when they purchase items? How will the current situation change the way consumers think about what they buy? Do you think there may be more focus on unique items made by hand?
Yes I do, although they are confused by the incredible cacophony of single initiatives in the area of corporate social responsibility. CSR has become (in sociological terms) a “broad organisational field” for the industry. All companies engage in it. All companies have a specific social responsibility plan of action and reporting system. The problem seems to be the fact that all single initiatives are aimed also at minimizing the economic impact of CSR on regular business operations. So we have a lot of communication (hence the cacophony) and no clear response. A person who works in major contemporary art museum in the USA, and who is highly interested in fashion as a cultural factor, just wrote to me asking for a map of all initiatives, to understand who does what and what is what. Imagine consumers.
How can the industry support your suppliers? How do you think the industry needs to change the way it works? Do suppliers need to have closer and deeper relationships with brands?
Indeed. We have been speaking about open costing for a long while. This could be a tool. Of course, open costing must be meant about a tool and based on clear living wage and fair labour (ILO) standards, otherwise it becomes a tool for exploitation.
I elaborated a few points on how the industry should behave during this emergency but they are general points that should apply to how the industry should behave in general. They are:
- Negotiate changes in lead times with suppliers and check the impact of the pandemic on their work force.
- Agree on payment terms that enable suppliers have the cash flow to pay their people.
- Offer advice and if needed support (including financial, also the charity mentioned in the article) so that suppliers can implement mitigating measures in factories and communities.
- Plan changes in orders with suppliers so as to minimise the impact on their structures and define forecasts to restore production levels once the pandemic is over.