For more on this topic, see generally the documentary “Fashion Victims” by Alessandro Brasile and Chiara Cattaneo, recounting episodes of exploitation in the fashion supply chain (Brasile 2019
An overwhelming majority of fashion brands include their code of ethics either amongst the site navigation links on the main webpage, public corporate documents, or contained in a section dedicated to sustainability and/or CSR programs. This last part is significant in so much as CSR plays an important marketing function for a company. It is equally noteworthy that only a scarce few of the brands surveyed made their codes of ethics available through separate websites (i.e., group websites, in the section dedicated to organizational structure).
In general, we will use the terms “code of ethics” and “code of conduct” interchangeably, except where we have intentionally distinguished between the two. On the difference between codes of ethics and codes of conduct, see generally Benatti
(2014, pp. 7–13
), and Nieweler
For a definition of sweatshop, see Shaw et al.
): “Although there are a number of definitions of ‘sweatshop’, it can be loosely defined as factory production in which employees are exploited by means of low wages, excessive working hours, under age employees, or other exploitative practices, frequently but not exclusively in developing economies where labor laws and workers’ rights can be less rigorous”.
For instance, just two years before the Rana Plaza disaster, on 24 November 2012 a fire broke out in the Tazreen Fashions garment factory in Bangladesh leaving more than one hundred dead. See Bajaj
The reference is to the well-known global campaign by Orsola de Castro and Carry Somers.
Reference is made to the well-known 2015 documentary directed by Andrew Morgan that focuses on fast fashion.
Notwithstanding this apparent progression, an Italian journalistic TV program recently conducted investigation on the purchase by well-known brands of feathers plucked from live geese in Hungary for the manufacture of down jackets. For further information, see “We’re all geese” (Siamo tutti oche
) by Sabrina Giannini, available online: http://www.report.rai.it/dl/docs/14149594048311_siamo_tutti_oche_report.pdf
It has been pointed out that, compared to older generations, millennials and “Generation X” are increasingly committed to taking concrete steps toward sustainable fashion (Howe 2018
), despite not always being willing (or able to afford) to pay higher prices for ethical products (Coughlin 2018
On the consumer difficulties of engaging in eco-conscious apparel, see also Connell
For instance, the National Industry Recovery Act of 1933 authorized the President to regulate industry via wage and price control, which eventually led to the adoption of “codes of fair practices”, and the President of the SEC advocated the need for self-regulation of industry to control those areas of commerce that were too minute for government oversight (Benatti 2014
i.e., by adopting compliance programs, and the establishment of the Business Ethics Advisory Council by Luther H. Hodges, then Secretary of Commerce (Benatti 2014
In 1961, nearly 1500 damage suits were filed against various electric industry players—the majority of which were against General Electric and Westinghouse—and a number of their executives for antitrust violations (namely price-fixing and collusive bidding) (NYTimes.com 1964
Such as insider trading on Wall Street.
In light of the company’s duty to maximize shareholder value, and in any case not to harm corporate interests, companies were required to adopt codes of ethics because failure to do so could result in significant sanctions (Benatti 2014
On the adoption of codes of ethics to prevent, or limit, reputational damage, see Chatov
(1980, pp. 20–29
): “Most corporate attention is given to areas with a potential for dramatic impact on the corporation. That the corporation will be a transgressor or a victim is of most concern”. See also Lee
(2017, p. 14
): “as negative public opinion started producing economic loss, multinational retailers and brands started taking steps to set up their internal codes to apply to their suppliers”.
On the adoption of modern codes of ethics in a comparative perspective, see generally Benatti
(2014, pp. 19–22
). With particular reference to the fashion industry, see also Jacometti
) (discussing the sustainability issues that have prompted government and industry to regulate processes common to textile production); Sajn
) (describing the trends of fast fashion—including statistics—and how the EU has responded to such trends on a legislative level, for example by passing the new Waste Directive, the Packaging Waste Directive, the Landfill Directive, as well as by laying down European standards and creating a voluntary certification program that provides incentives for fashion brands to be more eco-friendly through competitive advantage); Sajhau
(2000, p. 75
): “few European enterprises in the textile or footwear sectors have … taken any structural ethical approach at the individual level leading them to adopt a code of conduct … Mondial International has drawn up a fairly detailed code based on the United States model … however, at the European level, initiatives in this sphere have mainly come from the trade unions … employers’ associations … and the Commission of the European Communities. At the EU level, France presented in February 1995 (during its presidency) a proposed social charter to promote basic social rights in the multilateral trade relations. Within the Commission of the European Communities, the question of codes of ethics in the TCF sector has been the subject of a tripartite debate within the framework of the textiles/apparel sectoral ‘social dialogue’ … the Union of Textile Industries (UIT) of France adopted in 1995 a code of ethics in which participating enterprises undertake to respect, within the framework of international trade, fundamental ILO standards … In the same way, the German Textile Confederation (Gesamttexil) established in 1994 a Social Guide which establishes a number of rules to be respected in international trade concerning respect for the environment and labor standards”.
Namely, Australia, Canada, and the UK.
On the globalization of codes of ethics, see Stohl et al.
). On the factors that contributed to the introduction of codes of ethics in developing countries, see Benatti
(2014, pp. 22–26
For instance, by putting pressure on producers to require compliance with such codes by their suppliers and other third party affiliates. In particular, in 1919, the International Labor Organization (ILO) established the first internationally binding convention on worldwide labor rights, and in 1998 the ILO adopted the “Declaration on the Fundamental Principles and Rights at Work” that ties all ILO member countries. The Fair Labor Association (FLA), Social Accountability International (SAI) (Social Accountability n.d.
), Worldwide Responsible Accredited Production (WRAP) and Worker Rights Consortium (WRC) are third party organizations that monitor compliance with company codes of conduct in foreign countries. Canopy also works with fashion brands and their suppliers to protect against deforestation; CARE International strives to improve gender equality and achieve social justice; the Clean Clothes Campaign is dedicated to improving working conditions for textile and garment laborers; the Fairtrade Foundation works to promote fair trading conditions; the Fair Wear Foundation strives to improve working conditions for garment workers; TRAID is a charity working to stop unwanted clothes from being thrown away. For an exhaustive list of organizations involved in changing the fashion industry, visit https://www.fashionrevolution.org/key-organisations/
Additionallyy, private, independent organizations, private, independent organizations conduct factory inspections and publish findings, the ILO regulatory reports on corporate compliance with international labor principles, and social media keeps an increasingly close eye on industry practices. Indeed, the fashion industry has been marked by the launch of startup fashion companies promoting up cycling of old garments or re-using alternative materials to create new trends. See generally Pinnock
) and Toprak and Anis
For example, if a company’s code of ethics states that all employees shall abide by the law, a more detailed code might list specific applicable law, procedures, and/or standards.
Whether because it is more costly to monitor compliance or because requiring compliance from the entire supply chain requires relying on more expensive suppliers, which are typically more expensive due to the increased operation costs associated with ethical business practices.
Overall, despite select fashion companies make express efforts to ensure environmental safety and become “greener”, the main themes throughout the codes of ethics analyzed are employment and workers’ rights (including equality and discrimination issues), labor safety standards, bribery and anti-corruption, and counterfeiting and unfair business practices. It appears that events that have been directly traceable to a specific fashion company drive the direction of company codes of ethics, while environmental protection is still a secondary industry concern. Specifically, a dedicated section on environment and sustainability was not present in all the codes we analyzed. Of the codes announcing a commitment to improving the environment, Gucci, Louis Vuitton, Nike (see Nike 2017a
), and Adidas had the most detailed sections on commitment to the environment. Nonetheless, we cannot exclude that any company has a separate, parallel program in place to improve sustainability and reduce its environmental impact of production. For instance, Phillips–Van Heusen is noted for having an extensive CSR program, which includes efforts to preserving the environment (Phillips–Van Heusen 2018
). Still, all codes concentrate heavily on labor standards and workplace safety.
Gucci, Armani, Prada, Fendi
), Louis Vuitton, Ralph Lauren and Polo, Levi Strauss
), Nike, Adidas, Phillips–Van Heusen (owner of Tommy Hilfiger and Calvin Klein, among others), and Gap (which includes Old Navy, Banana Republic, Piperlime, and Athleta).
The research focused on a small group of fashion brands with global presence to reveal the likely trends of a larger group. To do this, we randomly selected fashion companies from a broad group of brand names, including enterprises associated with both the “fast” and luxury fashion markets. It is interesting to show how industry issues have been incorporated into the Code of Ethics for companies, and how companies can use a different language to give different weight to each issue, depending on the perception of importance or its corporate culture/dedication to a given topic. Consequently, the numerical data are not significant for the purpose of this contribution, which—it should be reiterated—is to hypothesize whether such regulatory instruments can be perceived as marketing tools and/or documents that consumers might rely on when making purchasing decisions. Our research, in fact, was aimed precisely at the relationship between codes of ethics and the ethics-conscious fashion consumer.
In addition to what has been stated above in note 32, it is important to mention that all codes concentrate heavily on labor standards and workplace safety.
Of the company codes surveyed, only Ralph Lauren states that its code does not constitute a contractual commitment to the company (Ralph Lauren 2016, p. 14
: “[T]his Code does not constitute a contractual commitment of the Company”). On the other hand, it establishes that actions that are not unlawful may still result in termination, clarifying that unlawful actions may additionally result in civil or criminal proceedings (Ralph Lauren 2016
“Armani requires all Suppliers Armani contractually engages in business with to adhere to the following standards and requirements. The Supplier Code of Conduct is referenced in Armani’s Terms and Conditions so as to hold Suppliers legally accountable to this Code” (Armani 2017, p. 1
). See also Ralph Lauren
) (referencing separate Fair Employment Practice Policy and Anti-Harassment Policy contained in employee handbook). Nearly all other brand codes of ethics contain a similar or equivalent phrase.
These may be called codes of conduct or employee/supplier handbooks or guidelines.
For instance, Ralph Lauren has a separate Code of Ethics for Principal Executive Officers (Ralph Lauren 2016, p. 9
Levi Strauss distinguishes between internal principles of the firm, practices applied toward partners, and guidelines to assess supplier countries. Similarly, Phillips–Van Heusen’s code of ethics is divided into general principles guiding the firm’s activities and guidelines for suppliers and subcontractors. Likewise, Nike and Adidas also have a set of rules for the enterprise as a whole, and another for suppliers.
However, according to the 2019 Fashion Transparency Index, even companies that score relatively high on policy and commitments and governance (in the 51–60% and 41–50%, respectively), still fare poorly overall (Fashion Transparency Index 2019
). Specifically, traceability, know, show and fix, and spotlight issues continue to be problematic. See also Thompson
). However, some companies might reduce their liability by expressly providing that “suppliers remain guarantors towards ‘Company name’ for work performed by their subcontractors and suppliers and guarantee respect by their subcontractors and suppliers of this Supplier Code of Conduct and relevant obligations (Louis Vuitton 2017, p. 1
). Indeed, in the case where the supplier of a subsidiary violates the Supplier Code of Conduct, this wording could be instrumental in alleviating the group of any liability for harm; instead, the company to which the supplier directly reports remains liable.
See generally (Fashion Transparency Index 2019
) (discussing the importance of transparency in the fashion business and analyzing the level of transparency of some of the industry’s biggest brands). See also Slot
Armani seeks to raise the standard in countries where it does business by “[possibly setting] standards that go beyond local legislation” (Armani 2017, p. 1
). See also Prada
(2007, p. 10
). Phillips–Van Heusen is another example of companies that exceed industry standards.
This topic will not be analyzed in the present discussion, but it is necessary to remember that the issue of working conditions in developing countries is controversial and the ILO approach it is not widely accepted as being the most ethical (just consider the neoliberal approach of “Doing Business”).
Nike also has a section dedicated to “proof of age” in its “Code of Leadership Standards”.
“Employment of trainees/apprentices both under and over the age of 18 shall be conducted in compliance with local legislation and this Code. Apprenticeship/traineeship schemes shall not be used to systematically avoid the payment of wages and benefits” (Armani 2017, p. 1
Notwithstanding all companies surveyed announce pay shall not be lower than the minimum standards required by applicable law, Phillips–Van Heusen and Adidas establish that “[e]very worker has a right to compensation for a regular work week that is sufficient to meet the worker’s basic needs and provide some discretionary income” and that “[i]f the compensation paid does not meet the workers’ basic needs and provide some discretionary income, our business partners are required to take appropriate actions that seek to progressively realize a level of compensation that does” (Phillips–Van Heusen 1995, p. 2
; Adidas “Workplace Standards” 2016, p. 2
). Additionally, Phillips–Van Heusen establishes that overtime must be paid at a premium, which implies a significant difference between regular and overtime pay (compared to those companies that merely establish overtime is paid at a higher rate) (Phillips–Van Heusen 1995, p. 2
). This provision is significant as minimum wage required by law is not always sufficient to guarantee the basic needs of workers (i.e., so-called “living wage”). We recall countries such as Bangladesh where minimum wage is $
0.09/h (Capital 2014
). It is additionally significant that Nike implements a “fair wage self assessment” (Nike 2017b, p. 30
From an evidentiary standpoint, having a written agreement demonstrates an employer–employee relationship, and all the legal consequences that follow, and makes clear both parties’ duties and obligations.
For instance, by “ensuring building and fire safety, machinery and equipment safety, access to potable water and suitable sanitary facilities, access to appropriate personal protective equipment and emergency care, and appropriate storage and handling of hazardous materials” (Armani 2017, p. 3
It is important to reiterate that, as stated above, we found that some brands had published a separate report on its commitment to environmental sustainability and/or improvement (see note 32). However, as this is not the object of the current contribution, this matter was not investigated further.
On the events, see the introductory paragraph and note 7; on the issues, see note 32.
There is clearly no question as to their commercial purpose when CSR statements are not public or otherwise accessible to consumers, or in the event they are in no way connected to the promotion of products. See Beckers
On greenwashing in general, see Bowen
In the United States, the Federal Trade Commission’s Green Guides are designed to help marketers avoid making environmental claims that mislead consumers. The guidance they provide includes: (1) general principles that apply to all environmental marketing claims; (2) how consumers are likely to interpret particular claims and how marketers can substantiate these claims; and (3) how marketers can qualify their claims to avoid deceiving consumers. More information is available at https://www.ftc.gov/news-events/media-resources/truth-advertising/green-guides
. In Europe the Directive on Unfair Commercial Practices—Directive 2005/29/EC (UCPD) provides two main principles related to environmental claims: (1) traders must present their green claims in a clear, specific, accurate, and unambiguous manner, to ensure that consumers are not mislead (Art. 6 and 7); and (2) traders must have the evidence to support their claims and be ready to provide it to competent enforcement authorities in an understandable way if the claim is challenged (Art. 12). These principles are also reflected in several national guidance documents on environmental claims, notably the Danish Guidance on the use of environmental and other claims in marketing, the UK Green Claims Guidance, and the French Practical Guide to Environmental Claims for traders and consumers. For more information on the E.U. position see (European Commission 2019, p. 95 ff
The Guidance on the application of the Unfair Commercial Practices Directives contains a useful definition of “ethical claims” by the Danish Consumer Ombudsman’s Guidance on the use of environmental and ethical marketing claims: “‘Ethical claims’ means in particular the use of statements, etc., which convey the impression that the manufacturing of a product or planning of an activity of a trader is made according to generally recognized and accepted standards, for example concerning child labor and general working conditions, nature protection, health, animal welfare, corporate social responsibility (CSR) initiatives, and charity donations. Such claims are typically based on the trader’s wish to accommodate general or specific developments and trends that can be inferred from consumers’ behavior”. The Guidance recognized that CSR has become a marketing tool used to meet the growing concern of consumers that traders comply with ethical standards and therefore, such initiatives are in most cases, “directly connected with the promotion, sale, or supply of a product” and can be qualified as a commercial practice within the meaning of the UCPD.
See Chemerinsky and Fisk
), posing challenging questions such as: “May a company selling tuna fish tell consumers—in advertisements, letters to environmental groups, and elsewhere—that its tuna is caught in a dolphin-safe manner, when company officials know that the company’s nets regularly capture and kill dolphins? May a cosmetics company tell consumers—through advertisements, letters to department stores, and otherwise—that it does not test its products on animals, even though it knows that it regularly uses animal testing in a way that many of its customers would find repugnant? May an agricultural company tell consumers that its products are organic when it knows that it uses pesticides and herbicides that would not fit anyone’s definition of organic? May a manufacturer represent that its products were “made in the United States” or produced with union labor, when it knows those statements are untrue?”
On varying attitudes towards codes of conduct in a European context, see Howells et al.
Every legal system has its own laws against misleading advertising. Generally speaking, there are different types of enforcement regimes, such for instance self-regulatory enforcement of advertising guidelines, civil enforcement through private actions for breach of advertising norms, and enforcement action brought by government agencies to police marketplace for the good of general public. See Nehf
), Inc., et al. v. Kasky, 539 U.S. 654. For an analysis of the case, see Benatti
(2014, p. 203
) (highlighting that this line of thought has not yet taken hold).
For a review of the 1990s events that involved Nike and the labor conditions of contractors in its factories, see Vogel
(2005, p. 77 ff
In the United States, laws against false or misleading advertising are regulated on two levels: at the state-level and on the Federal level. The Federal Trade Commission (FTC) Act (enforceable by the FTC on behalf of consumers) and the Lanham Act are two fundamental federal laws.
), Inc., et al. v. Kasky, 539 U.S. 654.
Directive 2005/29 of the European Parliament and of the Council of 11 May 2005 concerning unfair business- to-consumer commercial practices in the internal market, amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC, and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No. 2006/2004 of the European Parliament and of the Council, OJ L 149/22 of 11 June 2005.
It seems possible to assume that, given the Directive’s purpose and availing of a teleological interpretation, this article covers both multiparty codes and self-regulatory codes. See also Chiari
(2017, p. 172
The ACL became effective on 1 January 2011 and replaced the Trade Practices Act 1974, as well as previous Commonwealth, state, and territory consumer protection legislation. It is contained in Schedule 2 to the Competition and Consumer Act 2010 (Cth) (CCA) and has been adopted into national legislation.
Section 18 of the ACL replaces the repealed section 52 of the TP Act.