Why Supply Chain Transparency Beyond Tier 1 Is Important

With Fashion Revolution Week upon us it is timely for us to reflect on the value of transparency in building supply chain standards in fashion. In the nine years since the Rana Plaza collapse, much progress has been made toward improving working conditions for garment workers. However, as the supply chain is decentralized and deep, mapping and sorting beyond tier 1 gets tricky. Let’s take a look at why transparency of the supply chain beyond tier 1 is so important.

The latest data on supply chain transparency 
Many apparel brands have made great strides towards mapping and disclosing their tier 1 suppliers (cut and sew factories) however this trend decreases the further down the supply chain you go. Latest data from from  Fashion Revolution’s Fashion Transparency Index (2021) has uncovered that, of the 250 major brands surveyed:

• 47% disclosed information about their garment factories (tier 1), 
• 27% about their processing facilities (tier 2), and only
• 11% about their raw material suppliers (tier 3).

Encouragingly, the data shows an upward trend in supply chain disclosure with 7% more brands disclosing their garment factories, 3% their processing facilities and 4% their raw material suppliers than the previous year. However, progress is slow and without transparency of the entire supply chain, it is impossible to guarantee a garment has been made without exploitation of people and the planet.  

Risks to people and planet further down the supply chain 
As with garment factories, there are many mills, tanneries, dye houses and farms doing great things to support their workers and to protect the environment. But, a lack of visibility and regulation over the lower levels of the supply chain can cover up worker exploitation including: forced labor, trafficking, child labor, excessive overtime, withheld wages, intimidation and threats, unpaid overtime and unsafe working conditions. This is why the ban on cotton in Xinjiang, China is so important and nuanced. It can also hide practices that damage the environment such as: water pollution from tanneries, dying houses and farms; illegal rainforest clearing for cattle ranching for leather production; and use of harmful fertilizers and pesticides on fiber crops. 

The case for supply chain transparency
There are many good reasons that transparency is needed in all levels of the fashion supply chain, including: 

• Moral responsibility - it is a brand's responsibility to ensure they are not supporting the exploitation of people or the planet. A brand does not always have visibility of the production process from raw material up to their garment factory. If they care, they dig deeper, but not all brands do this work.

 

• Business efficiency - having greater visibility over your supply chain enables you to pinpoint inefficiencies that may be draining your resources and identify risks that may lead to reputational damage. In addition, with consumers and advocacy groups demanding greater brand transparency, it is becoming increasingly important for brands to be able to provide information about their supply chain to build brand trust and a competitive edge. 

 

• Legislation - right now governments across the world are creating legislation to hold the fashion industry accountable for its social and environmental impact (see our previous blog post on the New York Fashion Act). In the near future it will be a legal requirement for companies to map their supply chains and set targets to bring their social practices and environmental impact in line with human rights standards and science based sustainability targets. 

Transparency is required all the way up the supply chain in order to protect workers and the environment from exploitation. In our blog next week we will take a look at some practical steps you can take to improve transparency of your supply chain.  Interested in learning more ways in which you can transition your brand to support ethical and sustainable production? Sign up for our newsletter for a weekly dose of news, resources, and tips.

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