Can A Company Be ‘Good’ If It Isn’t Transparent?
Our personal opinions of what makes a high-quality apparel company have changed dramatically in the past few decades. Today, consumers don’t just want high-end fashion products. They want sustainable practices sewn into the clothes they buy.
In fact, the percentage of consumers who consider transparency and good business practices to be essential to a company’s product line is growing. According to a report published by the marketing company Good Must Grow, 60 percent of consumers surveyed in 2013 said they felt it was important to purchase goods from companies that demonstrated social consciousness. By 2015, that number grew to 65 percent, says GMG, demonstrating a slow if not steady increase in consumers’ own social consciousness — and their expectation that the companies they support will mirror those values.
While corporate social responsibility (CSR) practices aren’t limited to supply chain transparency, those statistics highlight a few important questions: Can one have CSR without a transparent supply chain? In other words, can a company be considered to have social consciousness if it isn’t willing to make its supply chain visible to consumers?
Just as important: Can an apparel company call itself a good environmental or community steward if can’t demonstrate that the companies it does business with adhere to the same stringent practices?
Recent stories about forced labor practices in Turkmenistan and unsustainable wage conditions have pushed these questions to the fore. Consumers want to know that companies are not only making a commitment against labor and environmental abuses in their facilities, but setting standards that measure the ethical commitment of their business associates as well.
It’s an expected transition in today’s business arena, says Josette Marinez, the associate director of consumer sectors for the San Francisco-based organization Business for Social Responsibility. BSR focuses on sustainable business practices. Through collaboration with other organizations and entities like C&A Foundation, it explores and develops ways to enhance viable business models. One of its latest projects, the result of more than a year’s collaboration with C&A Foundation, the United Nations Global Compact and others, has focused on mechanisms that increase transparency in the organic cotton sector.
“Today’s access to information has allowed the social and environmental impacts and challenges of global manufacturing to take center stage,” Marinez told TriplePundit. “Manufacturers continue to be challenged by customers, NGOs, rating agencies and investors, retailers, and their own corporate values and colleagues around the sustainability of their products and operations.” There is increasing need, Marinez told us, to make sure that both products and the supply chains that support their manufacture match the ethical values of the consumer. Traceability — the ability to “identify and trace the history, distribution, location, and application of products, parts and materials” — ensures that transparency.
Boosting transparency in the organic cotton sector
Few apparel industries better illustrate this point than the organic cotton sector, which, despite its popularity, has for years faced challenges when it comes to pay equity and transparent sourcing of materials. More than 100,000 metric tons of organic cotton were sold to manufacturers in the 2013–2014 production year, and yet the industry continues to face challenges.
“Limited technical knowledge, access to organic seeds and inputs, and limited financial resources are all barriers to change,” Martinez explained. Farmers are often reluctant to commit to organic cotton farming, where pay incentives are less structured and less transparent. Start-up costs and limited access to education when it comes to cultivation methods add additional hurdles for farmers.
To address these problems, C&A, BSR and a broad spectrum of industry stakeholders developed the Organic Cotton Accelerator prototype. It identifies weaknesses, for example, in how and what farmers are paid, as well as inconsistencies in farming practices and production methods, and then develops mechanisms to challenge those weaknesses.
“The opportunity for the Organic Cotton Accelerator is to leverage the industry and stakeholders versus a handful of players that can only have incremental impact with key strategic partners,” Marinez told 3p.
Collaboration, and the use of traceability and tracking resources, are at the heart of the OCA’s efforts to build better business opportunities and a more robust organic cotton industry.
And as with so many conventional industries these days, improving cotton farming methods benefits another silent stakeholder: Mother Nature. According to OrganicCotton.org, conventional cotton accounts for 16 percent of all pesticides used globally every year. Strengthening the organic cotton market through better supply and incentives for farmers works against the environmental degradation that pesticides, many of which are manufactured from fossil fuel sources, cause. It also reduces blue water consumption by more than 90 percent and helps prevent soil erosion as well as global warming.
And it ensures better biodiversity by providing an environment that is hospitable to other crops. Textile Exchange points out the lack of pesticides means other valuable products can be grown alongside the cotton, increasing the farmer’s earning potential as well. Traceability and transparency of an organic supply chain is often valuable in more than one market.
Transparency vs. traceability
Still, traceability shouldn’t be confused with transparency, Marinez told us. Not all manufacturing companies and not all industries that endorse transparency trace their source materials or track their supply chains.
“Transparency refers to the will to communicate, whereas traceability refers to will to trace/track,” she explained. “Therefore, brands can be transparent without full traceability.”
For example, a nonprofit that supports a community-assistance program may offer transparency as part of its business model, while an industry that manufactures products from multiple sources may rely on traceability as one of the steps to providing that transparency. For industries that subcontract in multiple countries, C&A Foundation and its partners note,tracing source materials can be important.
But that doesn’t mean that all tracing mechanisms are the same, or may produce the same results, Marinez continued.
“The 2014 Traceability Guide presents three models of traceability: product segregation, mass/balance, and book and claim. Among these three models, the product segregation model is the only one to offer a full transparency. For the two others, traceability is partial but existing.”
If successful, the OCA project, which embarked on its two-year prototyping stage this year, may lead not only to better transparency in the organic cotton sector, but also to insight into a better ways to source raw materials for other products with complex, hard-to-read global supply chains.
For consumers, it means more assurance that the products they buy have been validated as organic. But companies and organizations, Marinez said, should remember that eco-consciousness isn’t the sole driving force for consumers’ product choices.
“Brands which want to develop products with recycled, [fair trade] or organic fibers, or want to use fibers or materials with sustainability principles in mind, have to remember that rare are the consumers who purchase a garment because the fiber is eco-friendly, or because the workers were treated fairly. It’s a pity, but this is the reality … The two key purchasing drivers are the desirability of the product and the price (and the quality for premium brands).”
Just the same, Marinez continued, “Consumers in general care about social issues and the environment.” Designing sustainable products, “where the story behind the project makes it more desirable,” is key to encouraging consumers to make good, ecological choices.