The thing about sustainability in the apparel industry is that brands and retailers are either embracing it of their own accord, finding themselves backed into a corner with little other option, or faking it until they make it.
The latter, of course, is where the problem of compliance arises.
“I’m kind of pessimistic when it comes to sustainability, compliance, traceability,” Sourcing Journal president Edward Hertzman said speaking on a Texworld USA supply chain panel Monday.
Having spent years in sourcing prior to publishing, Hertzman said he’s had brands ask him to manufacture organic product for them, and he’s gone to factories to source it, only to find that the suppliers are selling the brands goods labeled as organic when they’re in fact no such thing.
“It’s very complex to trace this. There isn’t necessarily one set of standards that everyone follows,” Hertzman said. “I think we are a long way from this being part of every single company’s culture.”
The problem, according to Dr. Leonardo Bonanni, founder and CEO of Sourcemap, a supply chain-mapping software company, is that the apparel industry has faced structural issues that haven’t exactly served to fuel transparency and traceability.
Until recently, Bonanni said, “You actually couldn’t map a supply chain for an apparel product,” largely because brands themselves couldn’t see past their Tier 1 suppliers—a problem which still remains for some companies.
Even for women’s clothing brand Eileen Fisher, which has built its name on being a brand with a more eco-friendly approach to everything it does, traceability has been a challenge.
“One of the issues I see in our industry is that we’re still relying on a lot of antiquated schemes,” Megan Meiklejohn, sustainable materials and transparency manager for Eileen Fisher, said. With a transaction certificate, she said, receiving one hardly guarantees that things have really been done as claimed.
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Adding to that, Bonanni said, “Certifications are basically outdated. They’re a stand in for the fact that we couldn’t get real information. So you’re either certified or not,” and faking certificates is a practice unethical players have had ample time to improve upon. “I think it’s on its way out and we’re going to deal with real time and it’s going to happen in the next five to 10 years.”
Companies like Inspectorio, Hertzman said, are already revolutionizing the inspections process, bringing it into real time, via a digital platform that allows factory inspections to be executed via a mobile app and within a set time frame—which eliminates the ability to prepare the factory for the auditor, for one.
“It’s going to reduce bribery and cheating and it’s going to make everything much more transparent,” Hertzman said.
When asked whether blockchain will alleviate some of the apparel industry’s transparency and traceability ills, panelists agreed it wouldn’t be a panacea.
“It’s a really promising technology, but it’s a bit the cart before the horse,” Bonanni said. “If you don’t know your supply chain then you can’t use blockchain.”
More than just the problem of proving sustainable and ethical claims to be true, is the problem of who foots the bill for all of these better practices anyway.
“You have this major margin compression happening because where is the money supposed to come from? And then the retailers play coy and say ‘if factory X doesn’t upgrade this or add that, then we’re not going to do business with them,’ but they’re not paying any more for that,” Hertzman explained. “If a factory is 10, 12, 14 percent margin, how can they afford to take a loan from a bank for 10 percent? They can’t. If retailers are trying to lower the price each season and it costs money to be sustainable, how do you make money?”
“Brands are just demanding these cheaper and cheaper goods, and if they did understand what goes into these garments, they might pay more,” Meiklejohn added.
One solution to this predicament, according to Bonanni, is for brands to incentivize their suppliers with something they need: money.
“For all the talk and all the money we see being spent on sustainability, so little of it is actually spent on the incentivizing of suppliers to do better,” Bonanni said. “The idea that we’re going to improve a supply chain without investing in our suppliers is a little bit of a pipe dream.”