The production chain is long and complex

To answer this, we must start at the beginning: the production chain. Before a piece of clothing ends up in our cupboard, it has already gone through more than a hundred pairs of hands. It is designed, raw material is grown (the growing time of cotton alone is eight months), picked, washed, spun, woven, dyed, sewn, packaged and transported.

This long and complex process is created by a chain of all kinds of companies and people that must seamlessly connect to each other in order to function properly. If things go badly for one party, others feel it at once. But if all links are hit at the same time, as they are now, the chain will collapse like a house of cards.

If all links in the production chain are hit at the same time, as they are now, it will collapse like a house of cards
Johanna Schmidt

Cancelled orders

Two months ago, Fashion Revolution ran a headline that many major fast fashion brands abruptly cancelled their orders at factories, or refused to pay for orders already placed. This immediately resulted in an economic disaster in the largest producing countries, which had already been hit hard by the pandemic and the temporary closure of factories that followed.

Due to the acute lack of income and financial buffers (a direct result of fast fashion's race to the bottom), millions of textile workers - mainly women - found themselves on the street, often without payment for work done.

Changing major fashion chains positively from the inside

Johanna Schmidt conducts research into fair wages at major fashion chains. She also advises on new and existing investments in clothing companies.

During this time, she is in close contact with the brands that Triodos Investment Management (Triodos IM) invests in. “The responsibility of companies for their employees and the preservation of jobs, especially in developing countries, is currently a major priority for us."

Living wage

Even before the crisis, many textile workers received less than a living wage (the absolute minimum to provide for the basic needs of a worker's family). Due to the growing crisis caused by the corona crisis, there is also an increasing risk of other problems relating to workers' rights, such as child labour, occupational safety and the number of hours worked.

It is therefore crucial that textile workers keep their jobs. Although this does not automatically mean that safety regulations are observed or that there is a healthy workload.

The production chain is a long and complex.

Fair clothing industry

Triodos IM invests in several large, listed clothing brands such as Adidas, Inditex and Nike. The goal is to encourage their sustainable transition from within. Both are important for the transition to a fair clothing industry.

Schmidt: "Of course, we set strict conditions for this investment. To be approved as an investment, a company must contribute to at least one of Triodos IM's sustainable transition themes and meet its minimum standards.

"Our role is to ask critical questions about fair wages, working conditions and environmental impact. We only invest in brands that can substantiate their plans and continuously demonstrate their sustainable steps. On that basis, we determine whether or not to keep a company in our portfolio."

Has the corona crisis affected this? “We are paying even more attention to this now. For example, we are currently pushing brands through our Platform Living Wage Financials (PWLF) to commit to honour their contracts and pay for their orders.”

Increased Transparency

Of the major fashion chains, H&M was the first to announce that it would not cancel its orders from factories. Triodos Impact Equity and Bond funds do not invest in this company for other than sustainability reasons.

In addition, Schmidt emphasises that brands are encouraged to not only take action, but also to become more transparent. “Ultimately, we can only make the industry more sustainable if there is more disclosure and transparency. Investors - such as consumers - need to know what they are buying, and evidence must become even more important”.

Ultimately, we can only make the industry more sustainable if there is more disclosure and transparency.

A stronger chain together

Fortunately, this crisis also offers new perspectives and opportunities. An increasing number of people, from consumers to brands and producers, are realising that this crisis can lead to a major system change.

These times are a good illustration of the fact that a production chain where everyone works for themselves is not a sustainable system. The strengths of a fair chain where all links work together becomes clear. But how do we make this the norm?

Schmidt: “The chain must be shorter, and the money must be better distributed among all parties. Everyone in the chain must take their own responsibility for this and become more transparent. It is not only the brands, but consumers and governments also play a major role in this. We must understand what a fair price for clothing is and pay it."

No one knows exactly how the post-corona era will turn out. Some see this period as a big wake-up call, others think we will soon fall back into old work and consumption patterns. In any case, what has become even clearer in recent weeks is that we are in control of positive change. When we become aware of the power of the chain and our own role in it, we will make different choices. Choices that not only benefit us, but everyone.

This article is based on an article written by Sara Dubbeldam and recently published on De Kleur van Geld.

For more related news, views, insights, and economic outlooks regarding COVID-19 and the economic crisis, visit the COVID-19 page on our website.