The models applied: eight sectors in transition

The textile and garment sector in transition

Co-authors: Marjolein Bakker, Danielle Schouten, Esther Verburg, JefWintermans and Norma Wouters-Snell

Introduction

In April 2012, the deadliest tragedy in the history of the textile industry occurred when the Rana Plaza building in Bangladesh collapsed. This eight- story building was occupied mainly by textile factories with about 5,000

employees. The building was designed for shops and offices, and was not intended to house factories with heavy equipment that made the building shake. A day before the disaster, cracks were observed in the building. The banks and shops on the ground floor were dosed as a precaution, but the textile factories ignored the warnings and summoned their employees to work. More than i,ioo of them died in the subsequent collapse of the Rana Plaza building, and over 2,500 were severely and permanently injured.

The textile and garment sector is one of the most far-reaching: virtually every person on this planet is a consumer of these products. When we are born, one of our first experiences is being clothed. At first perhaps only with a diaper, but from this point forward we all wear clothes that change depending on our age, the weather and the need to reflect our identity. Fashion is a fundamental part of our existence, as it covers our basic need for protection and defines our cultures as humans. Unfortunately, our current process of manufacturing, using and disposing of these garments is resulting in a less livable planet for future generations.

Although awareness of poor working conditions in textile factories was already on the rise, the collapse of the Rana Plaza building was a major wake-up call for the sector. However, as this chapter shows, it has proven difficult to change a sector that is infamous for its ruthless cost-cutting that has led to a “race to the bottom”. Textiles can be manufactured almost anywhere in the world, resulting in a continuous global search for the lowest costs and fastest delivery of new fashion collections. Consequently, it is no surprise that the textile industry is facing a wide variety of social and environmental issues. This chapter focuses specifically on two of them: the impact of chemicals used in the production of garments and textiles, and the significant gender inequality and poor working conditions of female laborers.

This chapter shows that all conditions for change are present in the sector, but this change has been slow. This leads to a crucial question: what will it take for market actors to seriously join forces to make this change happen?

Economic importance of the sector

The textile industry is a major source of employment and economic growth worldwide. Between 2000 and 2014, the number of textile industry workers increased from 20 million to between 60 and 70 million — of which about 75% are women.1

Women’s wear also represents the largest market share, with an annual worth of $621 billion in 2014, followed by men’s wear at $402 billion and children's wear at $186 billion.2 The textile industry has several subsectors, with differentiations such as ready-made/tailor-made garments, woven textiles/knitwear and sports/leisure clothing.

Globally, the textile industry is the second largest in the world and accounts for 7% of total exports. The world's top three textiles exporters are China, India and the EU, which together accounted for two-thirds of the world’s textile exports in 2017. ’ With respect to garments, China, the EU, Bangladesh and Vietnam are the global export leaders, sharing 75% of the market between them. This shows that most of the world’s textile and garment production is concentrated in Asia.

This has not always been the case. The globalization and outsourcing of garment production to Asia is a relatively recent phenomenon. For example, although the USA is currently the largest importer of readymade garment merchandise worldwide,4 until the late 1950s, almost all of this merchandise (96%) was produced domestically. It was not until the 1960s that globalization began on a large scale, and textile brands moved their production abroad. The competitive price advantage of this relocation of production has since developed into a race to the bottom6 between brands everywhere.

Globalization has facilitated ever-decreasing sourcing prices for brands, which has made fashionable clothes accessible for all socioeconomic classes. A fast and complete overhaul of one’s entire wardrobe became possible for a growing number of consumers. As a result, clothing production has doubled during the past 15 years. More and more consumers are demanding increasingly cheaper clothes in the latest styles for every season. This trend is known as fast fashion: trendy designs move quickly from catwalk to stores to closets.

Due to the increasing world population, the increasing income of middle classes worldwide and a shift towards shorter clothing usage by consumers (mainly in the west), production is projected to increase even more. This means that modern garments have a very short life- cycle and are quickly discarded to make room for new clothes every season.

Production and value chain

Although the garment industry and the related textile production sector manufacture a wide range of products, they rely on the same value chain for most of their production. This is shown in Figure 4.1.

Let’s go through these various steps in the value chain.

Inputs: Fiber and yarn production

The raw materials can be of natural or synthetic origin. Natural materials are generally divided into cellulosic fibers from plants and protein fibers from animals.8 Examples include cotton, jute and linen (from plants), and wool, cashmere, mohair and silk (from animals). Synthetic fibers include polyester, nylon and acrylic. Natural and synthetic materials can also be blended. Fibers are manufactured into yarns through the spinning process.

Processing: Fabric production and finishing

In this stage, the materials are transformed into fabrics by weaving, knitting or a non-woven process. During finishing, the raw yarns or finished fabrics are given properties like color, grip or shrink characteristics through dyeing, printing or other processes. Most of these processes require large amounts of energy, chemicals and water;9 this is addressed later in this chapter.

Manufacturing

In this stage, the fabrics are manufactured into familiar garments such as jeans, shirts, shoes, socks and coats.

Apparel-buying houses

Due to the geographical and cultural distance between producers and retail companies, an apparel buying house often operates as a middleman. Retailers order a certain number of garments, and the buying houses have local presence near manufactures to assess them and close the deal.

Retail selling

The brands in the garments industry often have their own retail stores or sell their products via independent retail channels. Traditionally, this step took place in stores, but retail is now frequently happening online (e-commerce).

Value chain of the garment and textile sector

Figure 4.1 Value chain of the garment and textile sector.

In this part we focus on ready-made garments like T-shirts, dresses, jeans and shorts, since these are the most common textile clothing types. For ready-made garments worn in the USA and in Europe, the biggest volumes are produced in countries with low production costs, such as China, Bangladesh and Turkey.

The social and environmental issues that characterize the textile industry are mostly concentrated in the processing and manufacturing stages. This is discussed in the next section.

Sustainability issues

Although the textile industry is one of the most important manufacturing industries globally and has the potential to contribute to local economic and social development, it is still confronted with a wide range of severe sustainability challenges that must be addressed.

Environmental issues

The continuous drive for cheaper and faster fashion comes at the expense of environmental health. Regarding the use of chemicals, many issues are related to both environmental health and human health.10 Chemicals are used at various stages in the production process, and the textile industry is responsible for about 20% of industrial water pollution worldwide.

Chemicals are also used in the production of the input materials: 25% of all pesticides sold in the USA are used to grow cotton,12 and on a global scale cotton production accounts for 11% of pesticide use to Fight fungus and bacteria and 24% of insecticide use to fight against harmful insects.13

Synthetic fabrics, made from synthetic Fibers, are another input. The production of these Fibers requires around 70 million barrels of oil annually, which is almost twice the annual oil consumption of Bangladesh. On top of that, the production of these fibers also results in the release of the much more potent greenhouse gas nitrous oxide (N20).14 Last but not least, during laundering at home, these synthetic fabrics release microplastics into the environment, with potentially adverse effects for animal and human life.

The dyeing of garments also contributes considerably to water pollution.b The impacts range from marine life being affected by the chemicals, a loss of soil productivity within the oceans, as well as impaired quality of drinking water.16 Only a small percentage of the chemical dye can attach itself to the fabric, and the rest flows quite literally down the drain.17 In an average dyeing mill, 150,000 liters of water are used for every ton of garment produced.18 Additional chemicals are leached out of garments when they are laundered by the consumer and at the end of its lifecycle.1'7

Despite technological advances in the garment production process over the years, resource consumption and pollution is still increasing.20 The garment industry alone accounts for 10% of global carbon emissions and is often classified as the world’s second largest industrial polluter (after oil).21 All links in the value chain of a garment can have an environmental impact: from growing and sourcing inputs and manufacturing, to the end of its lifecycle when it becomes waste. For instance, around 80% of textiles will end up either in a landfill or being incinerated.22 Consequently, most textiles have a linear lifespan that takes them almost straight from the factory to the landfill, with a short useful life in between, as opposed to a circular lifespan where a product is recycled or even up-cycled.

Socioeconomic issues

The fast fashion trend has a considerable impact on factory workers. With the pressure on the industry to meet the rising demand for cheaper garments together with their ever-shorter lifespans, the lives of millions of people all over the world are severely affected. The developments and decisions made within the garment industry have an enormous influence on its vast working population.

The social circumstances in this industry are characterized by an array of problems, including the following: below-living wage incomes, excessive (and uncompensated) overtime, child labor, human rights violence, workers’ safety, lack of freedom of association, sexual harassment, lack of transparency about working conditions in factories and third-party contracting, precarious employment, discrimination and abuse and gender inequality.23

Gender inequality is a particularly important issue; women comprise three-fourths of garment workers worldwide,24 but even more in countries such as Bangladesh, where 85% of garment workers are women. Most commonly, women work on the sewing line (as sewing machine operators) in the garment factories, whereas men can more often be found in positions such as assistants, clerks or line managers.

In addition to this formal labor, women also juggle their informal work, housework and care for their family. The lack of an effective management structure in many factories exacerbates gender inequality, while good management often improves care, workers’ rights and opportunities for both men and women.

The rules of the textile game

These problems regarding environmental and labor conditions are not just a result of bad decision-making or bad will. Instead, they are a natural outcome of the way the textile industry is organized on a global level. The problems result from the four feedback loops in combination with the dynamics in the global market, the lack of an enabling environment, the consequences not being felt by those who cause the problems, and a lack of alternatives or the absence of conditions for change. This is why these sustainability problems are so persistent and are a logical outcome of the collective behavior.

Let’s take a closer look at each of these loops and how they play out in the garment and textile sector.

Loop I: market dynamics

In the global garment market, fashion brands, manufacturers and processors are rewarded if they keep their prices low and accelerate turnaround. How did this come about? It all started with globalization, which has resulted in lower and lower consumer prices.23 This made fashion more accessible for more consumers, which resulted in a culture of fast fashion and a sense of “here today, gone tomorrow”. The rapidly changing fashion trends put pressure on fashion brands and retailers, which now have an average of five mid-season collections.26

Apparel-buying houses, as a result, need to respond quickly and flexibly to changing market trends. Consequently, they tend to maintain only short-lived relationships with their supply chain partners. Furthermore, their purchasing practices are driven by short lead times and high profit margins, while sustainability issues and the true cost of garments are easily downplayed.2 The outcome of these market dynamics is that the textile industry mostly competes on price and efficiency, and not on quality, sustainability or social impact.28

Loop II: enabling environment

Regarding the lack of an enabling environment, three main factors are involved.

First, it is not only companies that compete on the global textile market; the governments of producing countries are also forced to take positions and compete. In that sense local governments need to play the game as well. A growing textile industry and export market means more business, more jobs for its citizens and more tax revenue. A prominent example is Bangladesh, where textiles comprise 80% of export value.29

Because garments can be produced virtually anywhere and markets became increasingly liberalized towards the end of the 20th century, many countries, especially those seeking further economic development, have been compelled to compete by offering manufacturing companies and their clients the best possible environment to operate in: low wages, low taxes and other policies to increase profits. If a particular country becomes too expensive or difficult to do business with, the industry quickly moves to other, more willing and facilitating countries. And there are always countries who would love to become the next textile production haven. As these governments need to keep attracting industry, they are also compelled to follow trends such as fast fashion.

Second, due to this competition, laws on labor unions and working conditions in the textile and garment industry in many developing countries are often absent entirely or their enforcement is very weak.

A third factor concerns the high rates of informal employment. Local processing and manufacturing companies often do not follow labor laws (if they exist) and instead draw on the informal, “invisible” local labor pool in such a way as to reduce their costs even further and avoid taxes. This enables them to remain competitive and profitable in this market. Due to the lack of global governance on aspects such as transparency in the textile supply chain, these practices are still widespread and make it harder to trace the origin of end products.

Loop III: mismatch benefits and effects

Another aspect that adds to the sustainability problems in the textile sector is that the negative environmental and social consequences of actions are not felt by the parties who are responsible for these actions. Consider the actors who have been described in this chapter, such as governments, textile retailers, manufacturers and processors. Much of the negative impact of their policies and actions is externalized to local workers in the input, processing and manufacturing stages. At the same time, the profits of downstream companies and fashion brands are unaffected by chemical pollution and other types of environmental damage, and they have few concerns about gender inequality and poor working conditions in the upstream factories.

Finally, the governments of producing countries are often not impacted directly by these negative consequences. As an institution, governments struggle with global competition, but their main concerns are domestic employment and inflows of foreign currency. Negative consequences such as water pollution and poor working conditions are often not felt by these governments but are shifted to those who do not have any other alternative: the workers.

Loop IV: lack of alternatives

What is it that keeps all these players from addressing the environmental and social sustainability problems that afflict the textile industry?

First, the textile industry in production countries generally has a large need for labor, and most jobs require little education. Workers are thus easily replaced if they demand higher wages or fail to meet production quotas. This situation is exacerbated by the high unemployment rates and poorly educated workforces in these countries. These people have few alternatives for employment or personal development.

Second, due to inadequate enforcement of laws and regulations by local governments, poor working conditions can continue unabated, even when the laws themselves are in accordance with international human rights agreements.30 For example, in many production countries, the right of freedom of association and collective bargaining is not respected by manufacturers or enforced by governments. This is especially the case for women, who generally have lower bargaining power for wages and working conditions and are less unionized than men. Women are especially vulnerable to harassment when they fail to meet production targets, make a mistake, ask for leave, arrive late, are sick or need to travel to and from work. In many ways, women face more challenges than men, especially in combination with their lower education, poor literacy, younger age, sexual vulnerability and economic dependence in many societies. As a result, industries tend to take advantage of existing gender inequalities by denying women access to economic and labor rights.31

Finally, poor labor conditions and environmental damage are often not fully transparent within the sector.32 In many cases the origin of inputs and fabrics and the corresponding working and living conditions of the workers are unknown. The high levels of informal employment further exacerbate this situation.33 This lack of transparency also prevents effective implementation (by manufacturers) and the enforcement (by local government) of rules and regulations.

Putting the loops together

As shown in Figure 4.2, when these four loops come together, they create a system in which the outcome is predictable and Fixed. The poor enabling environment strengthens the negative outcome of the market conditions. The lack of transparency, the informal labor market and lack of alternatives for employment makes interventions and change difficult or impossible. All the loops ensure that the textile and garment industries become a driver for insecure livelihoods, environmental pollution and value destruction through negative social and ecological impacts in producing countries rather than a source of local development and value creation.

Despite these negative feedback loops, the sector is trying to find ways to tackle the sustainability problems, bypass this inertia and initiate the early stages of a market transformation, as will be described in the next section.

The sector takes action

In recent decades, countless projects and numerous initiatives have been launched and multiple certification systems have been implemented to target sustainability issues in the production of raw materials, wet

The systemic loops that lead to unsustainable outcomes in the textile sector

Figure 4.2 The systemic loops that lead to unsustainable outcomes in the textile sector.

processing and various social aspects in the supply chain. What is the current situation in the textile and garment sector?

Phase r. inception - increasing urgency and move towards actionable alternatives through projects and pioneering

Since the emergence of the textile industry in Bangladesh, many deadly incidents have occurred. The Rana Plaza disaster of 2013 is perhaps the most well-known, but factory fires and collapsing buildings causing the deaths of hundreds of people are no rarity in this sector. For many years, these calamities were only answered with denial and dismissal by companies and governments.

By the 1990s, a group of people started drawing attention to the downside of the garment industry’s outsourcing to developing countries. Operating under the name of Clean Clothes Campaign (CCC), from 1989 onwards, an alliance of NGOs and trade unions forced attention to these issues from both the industry and society at large through targeted investigations and related media reports. Clean Clothes Campaign International and its related national campaign organizations gained influence in the textile industry. Around the same time, similar initiatives emerged in the USA, several of which involved universities: the Fair Labor Association (1999), which provides tools and training to companies in the manufacturing stage processing and conducts due diligence, and the Workers’ Rights Consortium (2000) that strives for better working conditions.

Through these initiatives, the “naming and shaming” of garment retailers and fashion brands increased. Gradually, these companies learned how to deal with this pressure from the public. One of their first strategies was to tackle the social and environmental problems as legal issues, forcing their suppliers to comply with their codes of conduct, thereby pushing the responsibility upstream in the supply chain.

Furthermore, major garment retailers launched their own initiatives and projects, often related to improving their image in the wake of growing consumer awareness. For instance, campaigns have been launched that allow consumers to return old clothes in return for discounts or vouchers. In practice, however, relatively few garments are recycled; the fast-fashion paradigm means that companies end up producing far more than could possibly be recycled.я

This situation fits Phase 1 of the market transition. Given the large variety of actors and the vast number of operators in the garment value chain globally, some companies are still in this phase, while others have moved on.

The Fashion for Good Centre has accelerated many Phase l initiatives and concepts.

In this part we have focused mainly on environmental issues and social labor conditions. But a number of initiatives on other challenges have also emerged. One example is circular fashion, in which inputs for new garments are sourced from recycled fiber, or jeans that are not sold but leased so they come back for recycling after use. Promising new technologies have also emerged that enable products to be dyed without causing water pollution or using harmful chemicals. One such initiative is the Fashion for Good Centre, which was launched in 2017 by its founding partner, the C&A Foundation. It is a global platform for sustainable fashion and enables the invention and widespread adoption of good materials, good economy, good energy, good water and good lives. Through collaborative efforts, they will reimagine the way fashion is designed, made, worn and reused. It was co-founded by William McDonough, co-author of the book Cradle to Cradle (2002).

Phase 2: competitive advantage - creating new business models through innovation and competition

From the early 2000s onwards, social and environmental standards have emerged in the textile and garment sector.

Regarding social standards, many initiatives have been taken by NGOs and the industry. In Europe, examples include the Business Social Compliance Initiative (now called “amfori BSCI”, founded in 2003), an initiative of retailers and garment brands to compile social-related supply chain information and thus increase their ability to comply with social standards. Another example is the Fair Wear Foundation. Founded in 1999, this NGO initiative works together with fashion brands to improve factory conditions by assessing how their purchasing decisions and business practices affect working conditions (Loop I in the market dynamics).

In the USA, the Worldwide Responsible Accredited Production (now “WRAP”) was founded in 1999. The WRAP certification program aims to promote safe and fair labor conditions in producing countries. An earlier example of a certification standard is the Social Accountability International (SAI, founded in 1997), which is also dedicated to ensuring good labor conditions.

Building on and harmonizing existing codes of conduct of individual companies, these initiatives helped to raise awareness about the issues at hand. These benchmarking initiatives were also welcomed by suppliers, who were increasingly having difficulty meeting the various sustainability demands of their customers. The development of these business- driven initiatives was, from the outset, heavily criticized by NGOs such as Clean Clothes Campaign; they complained that responsibility for production and sustainability was being “outsourced” and pushed upstream in the value chain.

In 2004, the World Fair Trade Organization launched a verification scheme and hallmark to recognize companies with high standards on working conditions and the environment.

Various standards have also emerged on the environmental side. One example is the Global Organic Textile Standard (GOTS), a consortium of stakeholder organizations (established in 2002) that aims to harmonize the multiple existing social and ecological standards.

In 2005, the Better Cotton Initiative was founded: a multi-stakeholder organization that focuses mainly on the input and growing side of cotton, thus providing a standard for better and more sustainable growing practices.

Meanwhile, the fashion brands have started to compete on sustainability by gaining positive media attention for their sustainability initiatives. This shift in competition is continuing, as individual companies enjoy first mover advantages in their sustainability efforts. For example, in 2019, fashion brand Zara had announced that it will use 100% sustainable fabrics by 2025, describing themselves as “the opposite of a fast-fashion company”.35 A year earlier, H&M announced it would transition to 100% sustainable cotton by 2020. Moreover, luxury fashion brand Prada has pledged to phase out the use of virgin nylon (made from crude oil) by 2021 by switching to recycled nylon.36 Although these commitments are very different, and controversy remains around the exact effects of these efforts,37 pledges of this kind are vital Phase 2 actions. By generating worldwide media attention, they increase pressure on other fashion brands to make similar commitments.

Besides these initiatives, many small, “ethical fashion” brands are emerging in response to growing consumer awareness of social and environmental issues. Most of these initiatives focus on the stages in the textile value chain where problems are most persistent: the processing and manufacturing stages.

Phase 3: pre-competitive collaboration - enabling scaling through collaboration between multi stakeholder coalitions and platforms

The first developments in Phase 3 can now be seen emerging in relation to both environmental and social issues.

Critical mass has been gained through the various multi-stakeholder industry initiatives such as Sustainable Apparel Coalition (SAC). Launched in 2009 by Walmart and Patagonia and currently representing nearly 40% of the garment and footwear market, the SAC aims to collaboratively transform the textile industry by introducing a standardized measurement tool. Brands, retailers, manufacturers, governments and other members of the SAC can use this tool to measure the environmental and social impacts in the value chain.38 In the same period, another coalition was set up: the Zero Discharge of Hazardous Chemicals (ZDHC). Since its initiation in 2011, this coalition of textile brands, value chain affiliates and associates has aimed to address some of the most urgent environmental issues in the textile industry by replacing hazardous chemicals with safer ones. Both these initiatives show that actors in the textile industry have now moved from fierce competition to collaboration and are even attempting harmonization.

One of the most ambitious attempts to harmonize the initiatives that address social issues has been the Social and Labor Convergence Project (SLCP).39 Launched in 2016 as a collective of manufacturers, brands and other stakeholders, it is a response to vast number of separate audits that assess social and labor conditions. According to the SLCP, it is time to merge these audits by implementing the first industry-wide framework to assess social and labor conditions. The boom of labor condition audits that marked Phase 2 has now moved towards a more aligned, inter-connected framework as it enters Phase 3.

A similar harmonized rating system is the Better Buying initiative. Similar to the Fair Wear Foundation, the Better Buying initiative realized that poor factory conditions of manufacturers are often influenced by the purchasing practices of their buyers (retailers). Established in 2018, the initiative therefore provides a buyer rating system that helps manufacturers rate the purchasing practices (such as negotiation methods, contract terms, etc.) of their buyers. In this way, Better Buying hopes to make these purchasing practices more transparent, thus enabling relationships between retailers and manufacturers to improve, and to ultimately support these manufacturers in providing better labor conditions for their workers.40 Innovative initiatives like these help ensure that attention is also paid to the challenges and concerns of manufacturers.

Another example of harmonization of social initiatives is Action, Collaboration, Transformation (ACT). This agreement between global brands, retailers, trade unions, civil society organizations (such as the Fair Labor Association) and international organizations (such as the International Labor Organization) was signed in 2016. It also focuses on purchasing practices by providing a collective bargaining platform to achieve living wages for workers in the textile industry.41

An example of an environmental initiative is the Bangladesh Water Partnership for Cleaner Textile (PaCT).42 Bangladesh not only experiences floods, but also dramatic annual falls in groundwater levels, so the purification and recycling of wastewater in the textile industry offers a sustainable alternative. The PaCT initiative works towards sharing and implementing good practices in the textile sector, with a focus on reducing resource consumption and wastewater pollution. PaCT was founded in 2013 by brands, NGOs, textile factories and governments and it is led by the International Finance Corporation (IFC). IFC also facilitates investments in new technologies after the main points for improvement are identified at the factory level. So far, about 200 factories have partnered with PACT, but due to the open source nature of the technologies developed, the impact is widespread.

Governments and non-governmental organizations have also opened the discussion to put further guidelines in place. Primarily based on the work done by the United Nations on the relationship between Business and Human Rights and the incorporation of that work in the OECD Guidelines for Multinational Enterprises (2011), governments of many countries are endeavoring to fulfil their own duty to protect workers and to promote corporate social responsibility. For example, in 2016 the government of the Netherlands signed the Agreement on Sustainable Garments and Textile (AGT) together with 55 businesses and 11 representative organizations. This was the first in a series of agreements on International Responsible Business Conduct (IRBC) that aim to improve the sustainability of international production and supply chains. The parties have agreed to collaborate when producing garments and textiles in countries such as Bangladesh, India, Pakistan and Turkey to prevent discrimination, child labor and forced labor, to promote the right to collective bargaining by independent trade unions, living wages, healthy and safe working conditions, to reduce the negative environmental impact of raw materials, to prevent animal suffering, to reduce water consumption, energy and chemicals and to produce less chemical waste and waste water. This initiative showed an unprecedented willingness of the sector to collaborate.

Despite all these developments, the market transition towards a fairer and environmentally friendlier textile sector is still at the beginning of Phase 3, with some initiatives still showing more characteristics of Phase 1 and 2. Although the amount of effort to harmonize social and environmental standards is growing, there are still multiple initiatives in place, and previous initiatives have not been integrated. This shows that a move towards true collaboration, knowledge sharing and convergence is still to be made.

Furthermore, much of the textile industry still lags behind. This group consists mainly of small and medium sized enterprises (SMEs) and many local brands. They have been unsuccessful in finding their way into the industry’s initiatives because they lack either capacity or bargaining power to effectively use the available tools. These organizations might be a constraint on moving to the next phase.

Phase 4: institutionalization - ensuring a level playing field through legislation and coercive self-regulation

Although the number of initiatives, collaborations and organizations that address the social and environmental issues have increased dramatically, the sector has not yet reached Phase 4 of the market transformation.

Debates on institutionalization of sustainability issues are nonetheless being held. One example is the discussion within the EU on making its Generalized System of Preferences (GSP) conditional on good labor and environmental practices. Under this system, the least-developed countries such as Bangladesh and Cambodia are exempt from import duties on textiles, which facilitates trade with the EU. But there is increasing pressure on the EU to exclude these countries from the GSP status if they do not improve their social and environmental conditions. An overview of the initiatives in the different phases is presented in Figure 4.3.

How to move the sector forward

As the textile industry is likely to continue its rapid growth in the near future, we need to act now to move this important sector forward.

In relation to better labor conditions, many initiatives in the sector are currently in Phase 3. Multiple options are available to industry, governments and civil society.

Governments of importing countries

As many of the initiatives are currently in Phase 3, it is time for governments of importing countries to step up and take their responsibility.

Various governments can work together to develop a strong vision of where the sector is heading. For example, this can be done at the EU level: governments can integrate social and environmental criteria into their trade policies — as shown by the current debate on conditional trade tariffs. In the future, import tariffs will be conditional on transparency concerning product origin and minimal compliance with sustainability standards.

Governments of importing countries can work together with those of exporting countries to enhance the local enabling environment, formalize the production base and enforce health, safety and labor laws and environmental regulations. They can also integrate the numerous social and environmental initiatives already in place. Developments such as the Agreement and Sustainable Garments and Textile (in the Netherlands) show that this type of action is possible. Finally, national governments can provide funding to companies that aim for more sustainable garment production — especially small-scale companies.

The garment and textile sector takes action

Figure 4.3 The garment and textile sector takes action.

  • • Develop a strong vision for a sustainable textile sector and work with other countries to integrate compliance criteria in their trade policies;
  • • Work with exporting governments to strengthen the local enabling environment and formalize the production base;
  • • Take the role of neutral convener;
  • • Reward initiatives taken by industry that promote sector sustainability.

Governments of exporting countries

In relation to social conditions, governments of exporting countries can do many things. But first of all, they need to create a stronger regulatory environment in which laws on labor conditions are in place and are enforced. Governments can also encourage their citizens to form local labor unions, especially labor unions for women. These measures can reduce the vulnerability of women in the supply chain and in society in general.

To address environmental issues, governments can also do much more to enforce their regulatory policies on chemical pollution and waste management. Environmental laws should be supported and monitored, thereby aiding transnational collaboration strategies to achieve better alignment between countries.

In summary:

  • • Strengthen the regulatory environment regarding labor conditions, the position of female workers and environmental circumstances;
  • • Be open to or promote the formation of labor unions and other joint initiatives by workers in the input, processing and manufacturing stages;
  • • Welcome transnational initiatives on social and environmental practices and integrate them in national policies.

Industry

Regarding the transition towards a more socially sustainable textile sector, actors downstream in the value chain have shown that they can commit to fairer labor conditions and purchasing practices. Initiatives such as Action, Collaboration, Transformation, or the Social and Labor

Convergence Project should therefore continue to develop their membership with the aim of reaching a critical mass on better social practices in the textile industry. This also means that companies in the industry, with the help of NGOs, can share more knowledge and enhance mutual transparency on their sourcing practices.

Individual buyers (apparel-buying houses and brands) can already take action and diminish the “fast-fashion” pressure on suppliers by adapting their sourcing criteria to the long-term social and environmental impacts — instead of focusing exclusively on price. In this way, better buying practices downstream in the value chain can result in better manufacturing practices upstream. They should pay particular attention to working conditions for female workers. They can focus on building durable business relationships to avoid a “country-hopping” environment. In all these business practices, downstream buyers should demand greater transparency from their upstream suppliers, such as manufacturers and processors.

To improve the environmental problems such as chemical pollution and a linear production process, garment brands, buying houses and suppliers must be open for non-competitive collaboration to strengthen new innovations and reduce environmental impact. For instance, collaboration is crucial for environmental and chemical training programs. Knowledge exchange and joint solutions can help reduce inefficiencies and create a holistic approach.

Initiatives such as the Zero Discharge of Hazardous Chemicals and the Bangladesh Water Partnership for Cleaner Textile are promising and should be expanded to include an ever-larger share of the textile industry.

In short, to safeguard the future of its own supply chains and workers’ health, the industry needs to consolidate its efforts and collaborate with civil society and governments with the aim of intensifying the drive for sustainable textiles beyond voluntary initiatives.

To address both social and environmental issues, governments of exporting countries should enhance their collaboration with the numerous multi-stakeholder initiatives and company policies that have emerged in the past decade. This is easier said than done, as governments tend to be trapped in an enabling environment that continuously puts them at risk of losing their textile business to competing countries. Nonetheless, these actions are necessary to safeguard the long-term vitality of their own industry.

  • • Expand membership of social and environmental initiatives to achieve critical mass;
  • • Take individual action by making purchasing practices conditional on social and environmental conditions;
  • • Encourage better producing practices upstream in the value chain;
  • • Focus on building long-term relationships with suppliers to enhance mutual trust;
  • • Demand greater transparency from value chain actors;
  • • Increase non-competitive collaboration and knowledge sharing.

For the textile industry, it is imperative to demand transparency and better production practices in its value chains

Civil society

Labor unions and NGO campaigns are still playing a key role in reducing the vulnerability of workers and exposing the unethical social and environmental externalization practices of companies.

For civil society, the greatest challenge lies in the further convergence and harmonization of existing social and environmental standards, certifications and monitoring systems. Although a great deal has been done in this regard recently, for example through the Social and Labor Convergence Project the variety of certifications has continued to grow, which is confusing to both consumers and garment brands. Therefore, collaboration should be sought with governments or transnational bodies who have the scope and resources to form neutral convening platforms.

At the same time, NGOs should continue to fulfill their watchdog function towards those companies that still operate with business-as- usual practices.

In summary:

  • • Harmonize the numerous certification and monitoring schemes on social and environmental issues;
  • • Urge governments to take up their role as neutral convener;
  • • Continue to punish business-as-usual players that do not join the movement towards sustainability.
Executive summary

Almost no part of our economy is as widespread as textiles: virtually everyone on this planet is a consumer of textiles or garments. Clothing is fundamental aspect of our existence: it fulfills our basic need for protection and defines our culture. However, our current process of manufacturing, using and disposing of these garments is resulting in a less livable planet for future generations. The textile industry is still facing a wide variety of both social and environmental issues.

The textile industry is a major source of employment and business globally. From 2000 and 2014, the number of textile industry workers increased from 20 million to between 60 and 70 million. Of these workers, around 75% were women. Globally, the textile industry is the second largest industry in the world, and it accounts for 7% of total exports. Globalization has facilitated ever-decreasing sourcing prices for brands. This price drop enabled the accessibility of fashionable clothes for all socioeconomic classes. A fast and complete overhaul of one’s entire wardrobe has become possible for more and more consumers. Consequently, during the past 15 years, clothing production has doubled.

While the textile industry is one of the most important manufacturing industries globally and has the potential to contribute to local economic and social development, it is still confronted with a wide range of severe sustainability challenges that must be addressed. The garment industry accounts for 10% of global carbon emissions and is often classified as the world’s second largest industrial polluter (after oil). Chemicals are used at various stages of the production process, and the textile industry is estimated to be responsible for 20% of industrial water pollution worldwide. Significant amounts of chemicals are used from the beginning of the chain: 25% of all pesticides used in the USA are applied to cotton crops, and on a global scale the crop accounts for 11% of pesticide use and 24% of insecticide use. The production of these natural and artificial fibers is estimated to consume around 70 million barrels of oil annually. The dyeing of garments also contributes considerably to water pollution.

On the social side, the circumstances in this industry are characterized by an array of problems, including sub-living wage incomes, excessive (and uncompensated) overtime, child labor, human rights violations, hazardous working conditions, lack of freedom of association, sexual harassment, lack of transparency on the working conditions in factories and for third-party contractors, precarious employment, discrimination and abuse, and gender inequality

The persistent sustainability challenges in this sector are explained by analyzing the four system loops:

Loop I: market dynamics

In the global garment market, fashion brands, manufacturers and processors are rewarded if they keep their prices low and turnaround times short. The ever-changing fashion trends put severe pressure on fashion brands and retailers, who now have five mid-season collections

Loop II: enabling environment

It is not only companies that compete on the global textile market; the governments of producing countries are also forced to take positions and compete. In that sense local governments need to play the game as well. A growing textile industry and export market means more business, more jobs for its citizens and more tax revenue. Another result of this competition is that in many developing countries where the textile and garment industry is based, laws regarding labor unions and working conditions are absent or are poorly enforced. This relates to the high levels of informal employment.

Loop III: mismatch between benefits and effects

Governments, textile retailers, manufacturers and processors all benefit from the growth we have seen in the textile industry. The effects are borne mostly by the local workforce in the input, processing and manufacturing stages. This group is also affected by the polluted environment.

Loop IV: lack of alternatives

The poor working conditions and environmental damage are often not fully disclosed due to the general lack of transparency within the sector. In many cases the origins of inputs and textiles are unknown, as are the working and living conditions of the workers. Moreover, most of them do not have alternative livelihoods and are compelled to work in this industry.

Examples of Phase 1 and Phase 2 actions include NGO campaigns and numerous projects, followed by the emergence of many standards and certification programs in the sector and the accompanying claims from individual companies trying to save their reputation and differentiate themselves from the others. There are also several important multistakeholder initiatives like the Sustainable Apparel Coalition, the Zero Discharge of Hazardous Chemicals, the Social and Labor Convergence Project, the Better Buying initiative, the Bangladesh Water Partnership for Cleaner Textile (PaCT) and the Agreement on Sustainable Garments and Textile (AGT). In relation to social issues in the textile sector, we have entered the Phase 3 of market transformation.

To take this sector forward, governments should develop a strong vision for a sustainable textile sector and work with other countries to integrate compliance criteria in their trade policies. Governments of importing and exporting countries also need to work together to strengthen the local enabling environment and formalize the production base. For local governments it is important to enforce the regulatory environment on labor conditions, the position of female workers and environmental conditions. For the textile industry, it is imperative to demand transparency and better production practices in their value chains and to join multi-stakeholder platforms. Also, the industry should commit to real change by building longer-term relationships with suppliers, improving buying practices and enhancing non-competitive collaboration between all actors. Civil society can play an important role by harmonizing the numerous certification/monitoring schemes on social and environmental issues and by lobbying and pressuring governments to implement stricter policies and laws. Finally, civil society actors can continue to name and shame the business-as-usual players that do not join the movement towards sustainability.

 
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