Is Fairness in Fashion?(A)

During the dot-com boom of the roaring 1990s, two very different San Francisco-based organizations battled for the imagination of the nation’s youth and the spotlight of media attention. At the time, clothing retail giant The Gap, Inc. could seemingly popularize swing dancing with a single commercial, and its billboards took on the confident tone of commands that would be followed unquestioningly, such as “Everybody in leather….” In size, the tiny advocacy group Global Exchange seemed the David to Gap’s Goliath, but it proved equally savvy at speaking to young people. Global Exchange helped turn anti-sweatshop activism into the biggest on-campus movement since the struggle against apartheid a decade before. It hounded Gap on the issue of sweatshops through protests at the retailer’s ubiquitous stores and with a class action lawsuit filed on behalf of workers making clothing for Gap and 17 other U.S. brands.
Five years later, companies and advocates continue to struggle over how workers around the world are treated as they make the clothes and shoes we wear every day and the toys our children play with. In many cases, those discussions have moved from shouted protests in the streets outside Gap and other retailers to discussions inside corporate boardrooms. Gap’s publication this month of an unprecedented public report on working conditions in its suppliers’ factories, a move praised by its old nemesis Global Exchange, provides the perfect opportunity to take stock of how far the anti-sweatshop movement has come over the past decade and the remaining challenges it faces.
The fight against sweatshops didn’t start in the 1990s. At the start of the 1900s, trade unions fought sweatshop working conditions facing millions of poor European immigrants (including my great grandmother) in the crowded garment factories of New York City and elsewhere. They won important protections for apparel and other factory workers in the U.S. over the years. However, as the Twentieth Century drew to a close, those protections applied to fewer and fewer workers making the clothes and toys found in U.S. stores, as trade agreements and globalization led to a dramatic shift in garment work to overseas factories. In the early 1960s, only 4% of clothes sold in the U.S. were manufactured overseas. By the middle of the 1990s, imports accounted for 60% of clothes sold here. Even Levi Strauss, which epitomized the “Made in the USA” label, began shuttering the factories it owned across America. In doing so, Levi followed the lead of Nike, Gap, and other major brands and transformed itself into a marketing and design company that owned no factories and instead had its products made by contract manufacturers located in countries with low wages and few worker protections.
Although Trillium Asset Management became the first SRI firm to file a resolution on sweatshop labor in 1992, the human costs of this new business model really rose to prominence in 1996. That year, Kathy Lee Gifford tearfully apologized on TV after the National Labor Committee found that some of her brand-name clothing line was made in sweatshops in Honduras that employed children as young as 12. The issue gained widespread public attention, and Nike, Gap, Disney and other prominent brands faced their own controversies about how their products were made.
In response, many companies adopted or strengthened their Vendor Codes of Conduct, which are policies guiding working conditions in the factories that these companies contracted with to produce their products. These Codes of Conduct generally prohibit the use of child labor, specify that factories obey local minimum wage and overtime laws, and require them to provide a safe working environment. To ensure factories followed these codes, apparel and toy companies hired employees to visit and inspect factories and also turned to outside auditing firms. In a few high-profile cases involving controversial factories, companies even reached agreements to have local church groups and other independent nongovernmental organizations conduct the inspections to boost their credibility. In the space of a few years, trade associations, advocacy groups, universities, and even the Clinton Administration sponsored competing external monitoring and certification systems. Factories from El Salvador to the Philippines suddenly were wallpapered with a dozen different codes of conduct hanging on the walls, and might host several different groups of auditors a week.
This brief sketch of a decade of effort glosses over a range of complex developments and important players, but highlights the key point that in the space of less than 10 years, an entire new field of global labor compliance developed. The Gap’s groundbreaking new social responsibility report offers a snapshot of what this new field has accomplished, and also its limitations and remaining challenges it faces. (Credit for Gap’s new report goes to many of our friends and allies in the field of socially responsible investing. The report grew out of dialogue Gap held with Domini Social Investments, the Calvert Group, the As You Sow Foundation, the Center for Reflection, Education, and Action [CREA], and the Interfaith Center on Corporate Responsibility [ICCR].)
In the report, Gap discloses that it has more than 90 full-time employees working on vendor compliance, and that the company audited 86% of the 3,010 factories making clothing for the company in 2003, spread across 50 countries. The report notes that “few factories, if any, are in full compliance [with Gap’s code] all of the time.” The company works to help factories understand and correct violations, but it terminated contracts with 136 factories last year for “serious or excessive breaches of our Vendor Code of Conduct,” including two cases involving child labor. The company also pre-screens new factories for compliance before it begins doing business with them, and in 2003 it rejected 16% of these as “unable or unwilling” to meet Gap’s code.
Despite Gap’s investment in efforts to monitor and enforce its code, the company’s report admits, “While factory monitoring is an important part of our program, we know it isn’t enough to support sustainable change.” For instance, the report notes that some provisions of its code are much harder to monitor and enforce than others. The provision ensuring workers’ freedom of association and right to organize unions is a particular challenge, especially in countries like China that don’t give workers the legal right to form independent unions. As a result, Gap is increasingly supporting innovative partnerships to educate and empower workers to assert their rights and even to build support for this among factory owners and managers. These initiatives range from bringing labor rights activists to give lunchtime talks in Chinese factories to supporting a labor law training program developed by the Cambodian government for factory workers and managers.
Trillium Asset Management will certainly encourage the apparel companies we hold to follow Gap’s footsteps in reporting on their progress implementing Codes of Conduct. Earlier this year, we talked with senior managers at both Target and Talbots about their own labor compliance programs, and will point to Gap’s report as a model we’d like to see them follow. This year we also began adding Timberland stock to many of our client’s portfolios. We applaud the company’s long leadership in the area of labor compliance program and its support for many innovative partnerships to educate and empower factory workers, similar to those described in the Gap’s report. With these efforts and others, we’ll keep pushing to bring basic fairness for workers back into fashion.