4.1. Enhancing Transparency
During the 2000’s, some of the brands of Group 1 were among several apparel companies accused of using child labor in their supply chains. Since then, the progress towards social sustainability and transparency has been made, which makes Group 1 one of the pioneers of sustainability. Nowadays, the group holds itself accountable for what goes into their products as well as for how these products are made. This is exactly what consumers want, and the group is more aware and wants to do business with manufacturers they can trust. They increasingly look at transparency and sustainability credentials of their suppliers before making a purchase. Group 1 is one of the brands trying to be more open with the customers by using their website to share data about corporate sustainability and by inviting people into the conversation. These data enable people to draw their own conclusions, supporting what is stressed earlier [56
], that is, transparency is beneficial because the public can monitor and see the real issues across supply chains. Group 1 believes that there is nothing to hide and therefore it adopts transparency as one of their guiding principles. To illustrate, Brand T was selected to report some of the information disclosed. Extensive quarterly sustainability reports are among the steps taken by Brand T towards progress on supply chain information disclosure.
By examining the information disclosed by Brand T, some patterns emerge and are categorized in accordance with transparency dimensions supported by Fashion Transparency Index.
Traceability: Brand T, as well as other Group 1 brands, provides visibility into the state of supply chain issues and risks, which are mainly concentrated at raw material stages. Indeed, the aim is to ensure the responsible material sourcing by tracing them back to the origin. For example, factory information is disclosed, and supply chain sourcing map is provided.
Purchasing practices: Brand T, as well as other Group 1 brands, gives information related to the various sustainable practices adopted during the sourcing phase. For example, further information is given about the fact that cotton grown in a sustainable manner is purchased and tanneries that are compliant with the leather working group’s assessment methodology are partnered with.
Commitment: Brand T, as well as other Group 1 brands, reports sustainability targets that is committed to achieve. For example, targets include VOC reduction targets, the increased use of ROR materials, PVC free production, and the increased use of renewable energy.
Actions: Brand T, as well as other Group 1 brands, not only discloses the targets to reach but also provides actions and best practices to be shared.
Effects: Brand T, as well as other Group 1 brands, ensures exhaustive awareness to their customers, therefore the brand describes the effects that disclosure decisions undertaken have on the environment and on the society.
By disclosing the supply chain information, in the form of supplier list and online traceability maps, Brand T has demonstrated that materials are sourced in a responsible manner, respecting global human rights and avoiding deforestation. Transparency also helps Brand T, and consecutively Group 1, to evidently address that substituting solvent-based adhesives with water-based alternatives lowers the environmental impact while improving working conditions in factories. Further, Brand T quantitatively shows how using organic cotton reduces the amount of water and chemical use, which is directly linked with farmers’ health and safety as well as ecological footprint. Through the use of certifications, Brand T also ensures that the leather purchased is processed by using environmental best practices and performance in all areas of production, from chemical, water and waste management to energy use and traceability. By analyzing the last release of the brand’s sustainability report, it has been possible to extrapolate some supply chain information disclosed, which is summarized in Table 2
Nevertheless, the greatest difficulty associated with transparency that Group 1 is facing is none other than the supply chain complexity, supporting the earlier argument [65
]. In particular, by moving upstream in the chain, the number of actors to consider exponentially increases without a clear and visible roadmap to pursue. “One day we made an analysis of one specific jacket and we traced the entire SC: we ended up seeing that we have more than 100 suppliers just for one jacket. Actually, the size and the complexity of how the textile industry has been set up are actually the biggest barrier. If your Supply Chain is made out of thousands of suppliers and each supplier has its own challenges, this is what makes difficult to be 100% transparent”
addresses the CSR Sustainability Coordinator for the EMEA market of Group 1.
What emerges is that supplier engagement is essential to address complexity and increase supply chain visibility. In line with that, Group 1 is working to transform supply chain relationships, moving from conventional transactional exchanges towards partnerships. Supply chain complexity is a common industrial problem in the fashion industry; yet, Group 1 is among the few companies aiming to fully address it. To illustrate, a dedicated team (the Responsible Sourcing team) is constantly in touch with the suppliers to support them through capacity development programs.
The relationships established have a long-term orientation, as Group 1 tends to avoid using a supplier just for a single season or for a limited period of time. “What we do with our suppliers is to create long term collaborations. Normally, we are not using a supplier only for one season. The idea is to keep our supplier for a longer period. How do we create this relationship? It requires long term thinking” adds the CSR Sustainability Coordinator for the EMEA market of Group 1.
This long-term collaboration follows a plan specifically developed to ensure continuous improvement. A prerequisite for a collaborative relationship lies in the supplier selection process [2
]; hence, Group 1 demands evidence in terms of a potential supplier’s sustainability performance. Financial aspects are overshadowed by social and environmental sustainability during this evaluation stage, and once selected, the suppliers are subject to continuous monitoring and control procedures; as an instance, every facility involved in the manufacturing (cutting facilities, sewing plants, screen printers, embroiderers, laundries and packaging locations) of Group 1-branded products is periodically monitored to verify their compliance. This constant work is essential for the group to gain visibility with an aim of ensuring a fair, safe and non-discriminatory working environment at supplier facilities. This outcome is line with [42
] stating that assessment is a necessary prerequisite for collaboration. In addition to periodically performed audits, extra audits can also be carried out when there is a specific situation about a supplier facility. For instance, part of ensuring an ethically responsible working environment needs that employees can report any concern regarding potentially unethical activities by using a grievance system taking place at each supplier facility. This grievance system allows the workers to feel empowered to shed light onto some social or environmental issues that may need greater attention. To regularly communicate the expectations, suppliers are continuously engaged with the group activities, including meetings, traceability and verification checks, and quality controls. For those suppliers that need support to meet the requirements, Group 1 provides guidelines and support through a creation of remediation activities. Support offered includes training, development, technical assistance and financing, where needed. Therefore, it can be described as a hand to hand approach whereby every time when Group 1 has certain issues, it engages with their suppliers to ensure not only the compliance but also the improvement. Nevertheless, suppliers need to demonstrate a certain level of commitment towards sustainability to get access to this support [51
For a focal company is not easy to reach sub-suppliers across lower tiers to gather information and influence them to drive change towards enhancing transparency. Due to supply chain complexity, this attempt is hindered and moving further upstream becomes more and more challenging. Group 1 has visibility on all tier 1 suppliers as well as on the majority of tier 2. The way in which the group reaches further sub-suppliers depends on different aspects, such as the brand, the product and the supply chain structure. Generally, dealing with suppliers is necessary to arrive at sub-suppliers. Certain suppliers, like the ones located at tier 1, are exclusive to Group 1. Therefore, with most of them the company has a really strong relationship based on trust, which represents a strong enabler to gain visibility. Additionally, differently from what was declared by [46
], being a large (and influential) player makes things easier. Group 1 exerts a big leverage on suppliers. However, Group 1 uses their expertise and influence to reach sub-suppliers and, therefore, to engage them through joint resolution techniques to the end of enhanced transparency. In this way, it becomes possible to obtain and verify information to disclose supplier lists and supply chain sourcing maps. “It’s really “let’s sit together and see how we can help you make this happen”. The more we are committed to them, the more they are committed to us. It’ a two-way relationship”
illustrates the CSR Sustainability Coordinator for the EMEA market of Group 1.
Every year, the corporation enlarges the pool of suppliers to be engaged through collaborative actions. For example, Group 1 is now trying to expand the pool of products that are completely traced (the number is currently 9 but the goal is to increase the number of totally traceable products up to 40). Undoubtedly, it will be practically impossible to ensure that without the involvement of the suppliers. It is also challenging to ensure this for all product models. For this reason, at the initial stage, products that are more relevant for the customers are chosen. However, at the same time, Group 1 is truly committed that, regardless of the traceability status, all products are, and will be, made in more transparent and sustainable ways. By leveraging on the strong relationships that Group 1 has with the majority part of the suppliers, the objective is to institutionalize traceability as a best practice within their global supply chains. In this way, as mentioned, factory disclosure could really become a means to elaborate new standards and shared solutions, helping to advance sustainability conditions in across the chain.
To address and ensure sustainability at lower tier supply chain stages, Group 1 makes a large use of policy documents. Through policies, the company ensures that raw materials are sourced from those that are committed to the use of environmentally responsible methods, respecting human and animal rights, and maintaining traceability within their supply chains. Group 1 has policies in terms of animal derived materials, forestry derived material and conflict minerals. These are able to guarantee that certain components and certain materials are actually not present in the final product. To illustrate, leather is no longer purchased from Brazil to help preserve the Amazon forest.
To deal with the supply chain complexity and with the limited direct control the group has on upstream actors, Group 1 collaborates with other actors, such as industry peers, working groups, academia, government agencies and NGOs by pursuing a multi-stakeholder mechanism. These actors are able to identify possible improvements thanks to their localized knowledge. The company leverages on the existing partnerships with them in order to develop policies and programs for assuring that products come from factories that certainly meet the strong compliance principles. Suppliers that are using recognized third-party certifications are qualified. For instance, Group 1 works with Better Cotton Initiative (BCI) to source cotton and supports BCI by giving funds to support them to establish on-field relationships with the farmers. Similarly, when it comes to leather, the group asks their tanneries to be compliant with the Leather Working Group (LWG) specifications.
Supplier engagement and supply chain collaborations are fundamental to reach sustainability targets (reduction of emissions, reduction of materials impact and so) and to enhance transparency at large. Commitment, in this vein, appears to be a strong antecedent to enhance sustainability through joint actions. Additionally, Group 1 engages the suppliers on topics such as renewable energy, climate change, chemicals and traceability and helps them to get access to funds that eventually empower the supplier communities. For instance, one of the group goals is to help 2 million people in their supply chain by 2030 through a number of development programs dedicated to suppliers, aiming to enhance well-being as well as health.
4.2. NGO’s Influence
Consumers demand sustainability [66
] and transparency [57
], and, consequently, a wide range of industries, including electronics [34
], apparel and footwear such as fast-fashion [31
] and luxury [24
] are gradually paying attention to transparency. Yet, fashion, in particular, is a secretive business [17
] that has fragmented and complex supply chains [13
]. In this challenging industrial setting, supply chain transparency is not fully addressed. To bring the operational stages under the spotlight, the public is growingly raising their voice to provoke companies to open up about their supply chain stories. Fashion Revolution, founded in 2013, (www.fashionrevolution.org
) is one of the most profound NGOs requiring fashion companies to disclose supply chain information. "Consumers have the right to know where and how a garment has been made and if, during the manufacturing, people and planet have been safeguarded"
, states Fashion Revolution.
Fashion Revolution works closely with the consumers through several engagement and awareness increasing activities. Fashion Revolution therefore exerts an indirect influence on firms, mediated by the consumers. By being engaged into the conversation, the consumers feel empowered and demand information by asking one essential question: #whomademyclothes. Fashion Revolution creates advanced awareness through multiple loops of learning, and, consequently, the consumers use their voice to influence the brands, signaling a collective bottom-up approach. Responding the research gap [55
], it becomes apparent that NGOs do have the leverage to enhance transparency by empowering the final consumers.
Particularly, Fashion Revolution creates tools, recommendations, publications and engagement events to increase knowledge about sustainability performance of the fashion brands. By doing so, it creates an open as well as transparent platform on which everyone can act upon the solution. The consumers ask questions, demand information and pressure the companies to disclose more information about their supply chains. The approach adopted by Fashion Revolution is based on communication and education. It mainly consists of organizing and/or taking part in sustainability events, conferences and conventions and of creating events with the students at their schools. Through direct engagement, it becomes evident that they increasingly communicate and spread the message, resulting in higher awareness and stronger demands. The first message the NGO wants to convey is that the consumers have the opportunity to vote with their money for the world they desire by choosing what and where to buy. This aspect is at the base of the systemic change aimed by Fashion Revolution. Customers could and will choose those brands publishing supply chain information such as where clothes are produced, what materials are used, if there are certifications related to the fabric origin, if human rights are respected across the chain and if fair wages are taking place.
The main tool provided to the public in order to learn about transparency and sustainability actions undertaken by fashion companies is the “Fashion Transparency Index”. Every year, a comprehensive set of questions are sent out to fashion companies. Then, the Fashion Revolution team aggregates all this collected information and performs their bespoke methodology to analyze the data in order to come up with a final score. Every year, fashion companies are ranked based on their supply chain disclosure and the Fashion Transparency Index indeed depicts a picture about who is more transparent and who is not. In this way, by visiting Fashion Revolution website, the public becomes aware of who is doing what. Furthermore, this represents rather an opportunity than a pressure, as such, fashion brands can in fact have the opportunity to share information required by consumers while understanding the weak areas where their performance must get improved. This outcome is in line with the earlier findings [67
] addressing that NGOs can be seen as a source of opportunity that companies can learn from rather than a source of risk that can damage the company. "We tell our followers that it is very important to be in touch with their favorite brands and to write to them, posting on social media direct requests towards companies saying “I love your brand, I would like to buy it, but I would like to know more about where and how your clothes are made”. Now we have access to customer services of every brand. You have to keep in touch with the brands to show that you care, and you have the right to ask for more information"
explains the Country Coordinator of Fashion Revolution Italy.
Moreover, the index enables the companies to find out where to focus, as in the case of Group 1, and where to improve from a communication perspective. To illustrate, Group 1, despite having a strong function dealing with sustainability through ad hoc action plans, was not always able to communicate the commitments as well as the achievements. Therefore, Fashion Transparency Index has been a good tool whereby an industrial benchmark enabled the group to understand how other industrial players communicate decisions and actions in a better way. Coherently with what was addressed previously [41
], Fashion Revolution does not make distinction among brands, as all brands are considered equally responsible regardless of their size and the strategic importance of their products.
Fashion Revolution encourages the consumers to have a direct contact with the companies by using social media and customer services through which people can directly request information from their favorite brands about how and where their clothes are made. Therefore, the NGO role is mainly teaching and guiding people about which questions to ask and how to deal with them. By receiving a lot of transparency inquiries, companies start realizing that they need to provide answers and that there is a strong tendency among young consumers toward sustainability. “Consumers can go to our website and see the transparency index to know exactly who is doing what. This is one of the tools. We like to consider this an opportunity for a company rather than a pressure” states Country Coordinator of Fashion Revolution Italy and adds “Companies that do not want to disclose information about their supply chains, I could imagine they have some kind of little secrets to hide".
The desire to buy something made by pursuing ethical principles is becoming widespread among consumers, demonstrating that companies need to be able to disclosure information. Given that avoiding transparency is becoming more and more difficult for the brands, those who keep doing business as usual will eventually lose their clients. This actually appears to be one of the strongest motivations for fashion brands to improve their supply chain disclosure performance.
Fashion Revolution has successfully raised public awareness about the importance of transparency. This resulted in millions of people calling out fashion brands to answer who actually made the clothes. In the end, what emerges is that the final influence on the fashion companies is actually remarkable. This is confirmed by a significant increase in terms of the number of companies disclosing information. That is, Fashion Transparency Index revealed that 37% of 150 major global fashion brands disclosed information about their manufacturers in 2018, a rise from 12.5% in 2016. An average 5% increase was witnessed between 2017 and 2018 relating to supply chain transparency amongst 98 major global fashion companies.
4.3. Effects on Collaboration
During the last decade, Group 1 has shown progress by adopting a radical shift in terms of supplier management strategies, moving from compliance to collaboration. Group 1 has opted to directly work with their business partners rather than pursuing basic efforts such as audits and checklists. In addition to acknowledging the market signals, top management commitment was also ensured to improve supply chain sustainability and transparency. In this direction, a specific team (Responsible Sourcing team) was established to improve sustainability across the portfolio brands. For Group 1, NGOs influence has become central to detect issues and topics that the group was not aware of otherwise. Brand T, and consecutively Group 1, has improved their Fashion Transparency Index performance over the years. By acknowledging what Fashion Revolution demands and by providing evidence-based supply chain information, Brand T has improved their transparency score. To illustrate, the level of traceability was roughly 40% in 2018, it was increased to 68% in 2019 and it is scored more than 80% in 2020. NGOs and companies evidently cooperate to address issues with the latter sometimes representing the proactive part, as in the case of Group 1. This cooperation allows to further engage other supply chain partners in practices, resulting in enhanced supply chain visibility.
Collaborative relations with the suppliers can be accelerated by the brands, considering their purchasing power. Thus, willingness and commitment are fundamental to engage supply chain actors and enhance transparency. Supplier involvement, driven by their clients, help ensure sustainability improvement and is deemed fundamental for spreading sustainability upstream. To summarize, as illustrated by Figure 1
, it can be roughly interpreted that NGOs influence the consumers to demand transparency and pressure the companies. Companies, relatedly, feel the need to provide information for which they look up at their supply chains partners to collect, analyze and disclose information.
However, this study could not differentiate the specific impact of NGOs on supply chain collaboration for transparency enhancement. Nevertheless, it is sufficient to summarize that NGOs’ pressure is an essential driver that motivates companies to begin and to sustain a transparency enhancement process while it requires an effective internal commitment to avoid greenwashing [51