pulling back the curtain

One store I have visited repeatedly over the years to buy my basics – socks, undies, plain ribbed cotton tanks – and the odd awesome item (linen shirts and knits) is Uniqlo, which prides itself on its affordability. With the Rana Plaza death toll tipping over 1,000, I felt compelled to check out Fast Retailing’s (FR) employment and CSR policies, and so I had a look at their latest CSR report for FY12.

Taking a leaf out of Jess’ book, here’s my review of the report – in particular, the section on its production partners and its monitoring efforts to ensure employment practices are adhered to and production standards are met (environmental issues were reported in a separate section).

There were summaries of FR’s monitoring efforts for FY12 -

“In fiscal 2012, 13 “Grade E” incidents (serious, highly unethical offences that are subject to immediate contract review) were reported. They included five false reporting incidents, three cases of child labor, and five instances in which required improvements were not completed within a specified period of time. The FR Group’s Business Ethics Committee (for further details, please refer to page 19) reviewed each incident and implemented response measures.

Follow-up monitoring efforts also led to one incident being dealt with appropriately. Four more resulted in the cancellation of business agreements. At the end of August 2012, the number of factories with “Grade E” evaluations had been reduced to eight production sites.”

Some details were provided on the nature of some of these incidents; here are three examples -

1) Child Labour (China)
"FR employees identified an incident of child labor at a factory in China in October 2011, when it was discovered that an underage girl, born in December 1995, was working at the site. Chinese law prohibits companies from hiring anyone under the age of 16. The employee was 15 years old at the time and had used her older sister’s ID card when she was hired. The factory’s General Accounting department verified the authenticity of the ID card at the hiring interview, but did not notice that the card was not the applicant’s, due to the similarity in the sister’s facial features. FR employees revisited the factory and confirmed that it had stopped employing the girl.

The FR Group ensured that she was paid for the hours that she had worked, as well as the regular wage that she would have earned at the factory (had she not been dismissed for her age) until she turns 16. Personnel files were then created for each of the factory’s employees. FR recognizes that this error occurred despite the factory’s efforts to follow proper hiring procedure, but due to the serious nature of the incident, it reduced the volume of business it did with the facility."

2) False Reporting (China)
"An interview with employees at one partner factory in China, conducted as part of FR’s regular monitoring activities, uncovered a discrepancy in the factory’s recorded working hours. The records and pay statements indicated that a number of employees had been paid for four hours of work on a Saturday, but four of those individuals told FR staff that they actually worked eight hours on that day. FR employees revisited the factory and discovered that during the monitoring period, the factory’s personnel administrator had provided records that only showed a portion of the total hours worked, so the reported hours would fall within the statutory limits for overtime work.

FR found evidence that the unreported hours had been recorded by hand and that the appropriate overtime compensation had been paid. This was a particularly serious incident, as it involved the extremely unethical falsification of data, so FR implemented measures to cease its business ties with the factory."

3) Wage Calculation Methods (Vietnam)
"Monitoring efforts at one partner factory in Vietnam revealed that the employees did not understand the method for calculating their wages. FR Group employees visited the factory and discovered that the policy on wage calculation methods had not been communicated properly to the local employees. FR proposed holding a staff meeting and publicising information on factory bulletin boards. Follow-up monitoring efforts confirmed that the required improvements had been implemented."

A table -

table

The report included features on two of its partners: Chenfeng Group in China, PT Pan Brothers in Indonesia (they also produce clothes in Bangladesh, Thailand and Vietnam). These are likely the “model” partners, and the focus was on their production process rather than employment practices.

It’s reassuring that FR actually monitors its factories, but it looks from the report that the company doesn’t monitor all of them. The company monitored 229 factories in FY12, up from 174 in FY2010, but I can’t tell from the report how many factories FR works with, and whether 229 is a significant proportion of that. So, in short, the report could be more comprehensive in terms of statistics, such as frequency of monitoring, proportion of factories monitored, just to name two.

I find the tone of the report less self-congratulatory than the much bally-hooed one from H&M about their eco efforts, although it is of course, still very upbeat and positive.

Overall, I find the report too “summarised”. Perhaps they thought no one would want to read a dictionary-length report about their production processes, but it’s probably because reports like these are likely also a PR exercise, and not intended to be a rigorous disclosure effort. FR mentioned that they work with NGOs and third party organisations to conduct reviews to improve the effectiveness of their monitoring efforts – how about sharing which groups they work with and publishing one of these reviews or evaluations?

Also, I didn’t read the other sections of the CSR report as closely, but briefly, the section on minimising environmental impact didn’t impress me much, at a glance.

I confess, the report did have the effect of assuaging my unease about shopping at Uniqlo (and by extension, other FR brands like Helmut Lang, Theory, Comptoir de Cotonniers), which is probably what FR intended. Still, I took a look at Inditex’s website and couldn’t find similar information, which I suppose puts FR one notch ahead of at least one major apparel company on the disclosure front.

After thinking it over, I decided I was cautiously encouraged by FR’s efforts (because I am an optimist) and am hoping they are: a) honest in their reporting and b) improve on their efforts. But it doesn’t change my quest for retailers who fare better on the ethical scorecard, and also to buy less and make better use of things I already have.

Have a gander at the report here. What say you?

PS: A report from NYT that should please fans of Everlane.

Comments

Oh gosh, I remember the days I used to troll Inditex uncontrollably, as if my skepticism and curiosity alone would evoke change. I love that Jess' post inspired you to take a peek because here in New York shopping at Uniqlo for basics is now synonymous with grabbing Starbucks. Though their style is not my cup of tea, I know their celeb collaborations has only propelled them into eternal covetability (<--my own word) but I always do wonder where the optimism continuously springs from when previously reports like these leave you feeling a little dampened. Brand attachment? Like an addiction maybe.
Ammu said…
I am glad they are making some effort in this direction. To be honest, after a few weeks spent making calls to companies (Inditex, Mango and Benetton) on the Bangladesh situation, I am appalled at the lack of transparency. Every one of these companies insisted they had no connection to Rana Plaza or Tung Hai (which saw several die in a fire on Thursday). They only admitted their relationship when confronted with proof. First they lie, then finally they acknowledge a modicum of responsibility. I am not a Zara/Mango shopper, but after this, I won't be shopping at Massimo Dutti or Benetton either.
Jess said…
I feel like these reports need more independent, third-party input to hold them to adequate levels of transparency and informativeness. Like you say, they don't give you all of the information you need to make a judgement (like it sounds good that they monitor 229 factories, but as you pointed out, we really need to know the total number of factories they work with for that number to be more meaningful), and I assume sometimes that's purposeful and sometimes it's just because of cluelessness about how to report those sorts of stats in a useful way. It would be like a newspaper reporter writing an article reporting that some new breakthrough medical treatment reduces the risk of getting a particular cancer by 70%, and everyone would be like "wow, that's amazing, I want that treatment", but the important information is actually the relative reduction, not the absolute reduction: if your risk of getting the cancer in the first place was only 2%, then a reducing that risk by 70% is kind of insubstantial, and would be better reported as "new treatment reduces risk of particular cancer from 2% to 0.6%". I feel like a lot of that sort of cluelessness goes on in these reports, so even good intentions get twisted into something meaningless, and greater clarity probably requires incorporating independent input and suggestions.

This bit from the NYT article is very sad but true:

'She also found that consumers were concerned with labor practices — as long as they were not that interested in buying a product like shoes. But “if the shoes are cute — if they like the shoes — they actually think sweatshop labor is less wrong,” she said.'
Lindsay K said…
To be honest, I'm not a Uniqlo, Zara, H&M, Mango shopper. I've yet to purchase anything from any of these retailers for many reasons. Yet, this problem is not exclusive to Fast Fashion.

Uniqlo makes me uncomfortable. The intentions of their self reporting may be good, but the lack of transparency really bothers me. I've attended a few business conferences on the subject and senior Uniqlo talent refused to even entertain the idea that there might be issues within their supply chain. Even as comparable brands came prepared to discuss the issues and brainstorm with top talent.

Consumers need transparency and independent third party input to make informed decisions. It saddens me that it takes a Rana Plaza and Tung Hai and so many lives lost to draw attention to these problems. On a daily basis there is so much abuse and exploitation taking place. On a hopeful note, I have seen a number of examples of fashion being used to better lives while traveling in Africa.
@Ammu, wow I applaud your outreach efforts and sorry you didn't get anywhere. Not surprising. But I did work for Benetton as a teen and that in fact is where my awareness peeked.
Ammu said…
Hi Letitia, thank you but I am actually a reporter so the phone calls and emails were part of my job. Such a desperately sad story to work on. I still can't believe that more than 1100 people have died in the Rana Plaza collapse alone.
Kali said…
I agree with Jess on the fact that these reports would need to be issued by a third party.

All these reports are fine and all, and there is one good thing to take out of it: the companies are doing something. But this is PR talk, they manipulate words and figures to make the speech look exactly the way they want, and I remain skeptical regarding what actual actions they take after issuing that kind of report.

They are trying to look good by giving the impression of disclosure, but how much of it really is? In the end, I think that, as a consumer, it is great to have access to these documents, but it wouldn't become a major factor in choosing what store to buy clothes in...
Aïssa said…
This kind of report makes me feel even more suspicious. I just have a hard time trusting these groups.
Even the supposedly do-gooding Uniqlo recycling program leaves me with a bitter after taste. That's another subject but dumping old Western people clothes on African, South American people... Something makes me cringe here.
Yet, I still shop there. I'm willing to buy differently and less and I partially do but in the end, who can we trust?
I shop with caution. My concerns, the lack of transparency (company-generated reports don't comfort me), it makes shopping very difficult. Which is okay. Being mindful isn't a bad thing.

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