using disruptive technology to reform the garment industry

Using Disruptive

Technology to REFORM

the Garment IndustryJulie Horwat

Danielle MasurskyVanessa Harrington

Bangladesh

Bangladesh

• Created by British partition of India in 1947• Formerly called East Pakistan• War for independence in 1971• Transitioned to democracy in 1991• Unitary parliamentary republic• Emerging economy• Current population: 156 million

Bangladesh Garment Industry

• Estimated as many as 5,000 factories• Employs an estimated 15 million workers in factories and related jobs

Bangladesh Garment Industry

• Fulfils a crucial role in economy:

• Accounts for approx 76% of the country's total exports

• Represents 10.5% of the country's GDP

• Contributes 40% of its manufacturing output

- M2 Presswire [Coventry], 2009

Bangladesh Garment Industry• Has supplanted China as

preferred location for textile plants, has the lowest wages

• Helps keep clothing cheap in the developed world

• Has boosted the fortunes of chains including Wal-Mart in the US, H&M and Zara in Europe

- Washington Post, 2013

Bangladesh Wages

The minimum wage in the Bangladesh garment industry is equal to about $38 a month

Bangladesh Wages

• Most are unskilled; jobs in clothing factories are their only opportunity to escape poverty

• Workers can barely afford shelter, running water, food for family, medical services

• People are hard-working – typically 12 hours a day, 6-7 days a week

• Little prospect of improving their living conditions

Bangladesh Garment Workers

• Industry anchors the economy and sustains millions of families

• However, has lead to development of massive slums, such as Moakhali, where 50,000 garment factory workers live in squalor

Global Race to the Bottom

Staff member, U.S. House Education and the Workforce Committee:• “The fashion industry has designed a system that allows

companies to easily move from country to country, from continent to continent, whenever there is an opportunity to cut costs."

• "Factories in the supply chain are pressured by this global race to the bottom, and, to remain competitive, far too often compromise basic labor rights by abiding poor health and safety conditions, engaging in wage theft, and in violent repression of unions.”

- US News & World Report, 2014

Citizen Protest

Despite protests by tens of thousands of citizens, gov’t refused to raise minimum wage

Government Response

• Widespread gov’t corruption• Suppressed protestors with rubber bullets and

tear gas

The Dilemma

Gov’t knows that if it raises wages, garment industry will move to another country

This would cause economic disaster

Corporate Responsibility

Retailers and apparel companies can make a difference, and they will, if pressured by consumers

“As long as we keep paying companies to be unsustainable and unethical, they will be,“ says Bruno Pieters, founder of Honest By fashion website

- NY Times, 2013

Trend Towards Consumer Activism

Socially Responsible

InvestingShareholder Advocacy

Fair Trade Movement

Corporate Responsibility

Consumers are increasing supporting companies with ethical supply chains:

Fair Indigo, a fair trade only retailer, saw 35% rise in revenue immediately after the 2013 factory collapse in Bangladesh that killed over 1000 people.

-Business Insider, 2013

Corporate Responsibility

Knights Apparel produces ethically made sports logo apparel for universities

A response to pressure from student activists!

(Recently purchased by Hanes)

Corporate Responsibility• Alta Gracia was founded in

2010 as a division of KA• The only apparel company in

the developing world that is independently certified as paying a living wage, defined as the income necessary for a worker to meet all of their family’s basic needs

• Manufactures collegiate branded clothing in the Dominican Republic

Transparency“Transparency means that you disclose where your products are being produced in a way that lets independent third parties look into the conditions of those factories, whether the claims you're making are accurate or not,” says Ben Hensler, general counsel to the Worker Rights Consortium

- US News & World Report, 2014

TransparencyThe idea of an industry policing itself and

offering consumers an educated choice is nothing new

Motion Picture Associationof America

• 1968 the MPAA begins its movie rating system

• 3 party oversight by the Nat’l Ass’n Theatre Owners, MPAA, Int’l Ass’n Film Importers & Distributors

Cosmetics Industry

• 1996 Coalition for Consumer Information on Cosmetics began assigning the Leaping Bunny logo to cruelty-free cosmetics brands

Food Industry Solutions

• As a result of pressure from consumers, food producers and retailers are embracing transparency - offering information to consumers about where food originates

Whole Foods Market

Produce Ratings• Responsibly Grown

– Pesticides– GMO’s– Bee & Butterfly– Farmworker Health & Safety

Meat & Seafood Standards• Animal Welfare and Meat

Quality – Antibiotics & Hormones– Quality of Life

Chipotle• Has positioned itself as

a leader in “sustainable” food sourcing

• Marketing strategy since 2001 touts “food with integrity”

• It’s stock has been trending upwards for a decade while other fast food chains struggle

Garment Industry Solutions

Many NPOs are developing standards for sustainable and fair industry practices

Follow the models from other industries, especially food “supply chain” transparency, to present information to consumers

Solution: Consumer Empowerment

Information would be present without the consumer needing to do their own research

Shopper in an interview said that if someone told him his jeans were made in a sweatshop by 8-year olds, he wouldn't buy it, but how is he supposed to take the time to trace where his pants were made?

Fair Working Conditions

• Quality auditing organization• Measure and formally accredit best

employment practices worldwide• Established in 2006• Over 2000 site audits conducted

FWC Standards

• Earnings/Overtime• Working Hours• Under Age Workers• Occupational Health & Safety• Discrimination, Forced Labor, Discipline• Collective bargaining

Earnings & Overtime

• Wages paid for a standard work week must meet the legal and industry standards

• Wages must be sufficient to meet the basic need of workers and their families

• No disciplinary deductions

Working Hours• Comply with the applicable

law • No more than 48 hours per

week • At least 1 day off for every 7

day period• Overtime paid at a premium

rate and not to exceed 12 hours per week

• Overtime may be mandatory if part of a collective bargaining agreement

Underage Workers

• No workers under the age of 15

• Lowered to 14 for countries operating under the ILO Convention 138 Developing-Country Exception

• Remediation of any child found to be working

Discrimination, Discipline, Forced Labor

• No discrimination based on race, caste, origin, religion, disability, gender, sexual orientation, union or political affiliation, or age

• No forced labor, including prison or debt bondage labor

• No lodging of deposits or identity papers by employers or outside recruiters

• No corporal punishment, mental or physical coercion or verbal abuse

Occupational Health & Safety• Provide a safe and healthy

work environment• Take steps to prevent

injuries• Regular health and safety

worker training• System to detect threats

to health and safety• Access to bathrooms and

potable water

Collective Bargaining

• Respect the right to form and join trade unions and bargain collectively

• Wlaw prohibits these freedoms, facilitate parallel means of association and bargaining

• Founded by a group of leaders from global apparel and footwear companies

• Recognize that addressing the industry’s current challenges are both a business imperative and an opportunity

• Seek to lead the industry toward a shared vision of sustainability

The Higg Index 2.0

• Developed for apparel and footwear products to assess both environmental and social/labor performance

• Spans the apparel life cycle - materials, manufacturing, packaging, transportation, use, and end-of-life

• Helps organizations standardize how they measure and evaluate environmental performance across the supply chain at the brand, product, and facility levels

The Higg Index 2.0

Technology-Based Solution

Aggregate existing audit systems and metrics– Fair Working Conditions Standards – Higg Index criteria used to evaluate – Fair Trade Certification

Empower consumers to make sustainable choices

Technology: QR Code

App-based access to “life cycle” information about intended purchase: consumer scans code and life cycle information is displayed

Technology: Bar Code Scanner

Price check-style scanners located in stores: consumer takes product to scanner and scanner displays life cycle information

Technology: Google Glass

Google Glass or similar technology displays life cycle information about purchase

Technology: Corning Glass

Interactive glass screens adjacent to product would display life cycle information

Technology: Websites

The same life cycle information about shoes and clothing would be available on retail websites

SUMMARY

By helping consumers vote with their dollars:– Pressure

corporations to provide a living wage

– Ease poverty conditions in Bangladesh

– Improve working environments

CONCLUSION“There is much to be done at all steps of the fashion supply chain. If end consumers like us can gain a better understanding of our T-shirt’s production cycle—the sustainability of its fabric and the working conditions of its farmers and sewers—we can put pressure on these corporations to help us make a more informed and conscious decision about our clothes. The more transparent the entire production process becomes, the more claims to ethical and sustainable practices will become sought after attributes of the printed T-shirt we see on the shelves.” (de Jesus & Kay, 2012)

REFERENCESClifford, S. “Some Retailers Say More about Their Clothing Origins.” The New York Times9 May 2013. Retrieved from: http://www.nytimes.com/2013/05/09/business/global/fair-trade-movement-extends-to-clothing.html Fritsch, P. "Bangladesh Stares into the Abyss." Far Eastern Economic Review 166.47 (2003): 46-9. Retrieved from: http://www.readabstracts.com/Business-international/Bangladesh-stares-into-the-Abyss-Indias-creeping-caste-entitlements.html

Greenhouse, S. “An Apparel Factory Defies Sweatshop Label, but Can It Thrive?” The New York Times, 18 July 2010. Retrieved from: http://www.nytimes.com/2010/07/18/business/global/18shirt.html D’Innocenzio, A. “It’s Incredibly Difficult to Prove That Clothing Is ‘Ethically Made’” Business Insider. Retrieved from: http://www.businessinsider.com/hard-to-find-ethically-made-clothing-2013-5 De Jesus, J. & Kay, T.. “Ethical Style: How Is My T-Shirt Made?” GOOD, 9 Feb. 2012. Retrieved from: http://magazine.good.is/articles/ethical-style-how-is-my-t-shirt-made Landauro, V. “Teens in Sweatshops.” Junior Scholastic 106.8 (2003): 8. Retrieved from http://search.proquest.com/docview/202831510?accountid=14214 “Prospects for the Textile and Garment Industry in Bangladesh.” M2 Presswire [Coventry] 27 Apr 2009. Retrieved from: https://www.textilesintelligence.com/tistoi/?pageid=3&repid=TISTOI&issueid=135&artid=1414

REFERENCESSchneider, H . “Changes to Bangladesh garment industry grind ahead, but slowly.” Washington Post 26 Nov2013. Retrieved from: http://www.washingtonpost.com/business/economy/changes-to-bangladesh-garment-industry-grind-ahead-but-slowly/2013/11/26/088e66a2-56d9-11e3-ba82-16ed03681809_story.html

Sneed, T. “Why Cleaning Up the Fashion Industry Is So Messy” US News & World Report. 16 Jul 2014. Retrieved from: http://www.usnews.com/news/articles/2014/07/16/efforts-to-clean-up-fast-fashion-supply-chains-face-a-tough-road

Clifford, S. “Some Retailers Say More About Their Clothing’s Origins” NY Times. 8 May 2013. Retrieved from: http://www.nytimes.com/2013/05/09/business/global/fair-trade-movement-extends-to-clothing.html

Johnson, L. (2013). Walmart app users spend 40pc more than average shopper. Retrieved from: http://www.mobilecommercedaily.com/walmart-app-users-spend-40-percent-more-than-average-shopper

Motion Picture Association of America. (2015). Film ratings. Retrieved from: http://www.mpaa.org/film-ratings/

Whole Foods, I. (2015). How our rating system works. Retrieved from http://www.wholefoodsmarket.com/responsibly-grown/produce-rating-system

REFERENCESPantsios, A. “Chipotle Proves Sustainable Food Sourcing Is Profitable” Ecowatch . 6 Feb 2015. Retrieved from: http://ecowatch.com/2015/02/06/chipotle-proves-sustainable-food-sourcing-is-profitable/

Leaping Bunny. (2014). About us. Retrieved from: http://www.leapingbunny.org/about.php

Alta Garcia. About us. Retrieved from: http://www.altagraciaapparel.com/about.html

Knights Apparel 2.0. What we do. Retrieved from: http://www.knightsapparel.com/