We believe that investing in sustainability is good for business. For example, sourcing from suppliers and factories which treat their workers fairly is an obvious objective of our ethical trading work. It also tends to mean working with suppliers and factories which deliver quality assured products on time.
Our ethical trading work encompasses many topics and projects with suppliers and other stakeholders, which take place across our key sourcing countries as well as internally with our buying, merchandising and technical teams. The Ethical Trading part of this key pillar covers the following areas:
- Ethical Audit Programme
- Code of Conduct Guidebook
- Topshop and Topman’s ARC Programme
- Strategic Labour Priorities
- Sumangali Scheme
- The Responsible and Accountable Garment Sector (RAGS) Project
- Sandblasting – Health Risks
- Uzbek Cotton Harvesting
- Fairtrade
1. Ethical Audit Programme
Our ethical audit programme means that brands must submit a third party factory ethical audit dated within a year in order to receive a grade for a new factory set-up.
We grade these audits on a scale of red, orange, yellow and green. If the audit is graded red, which is of critical concern, we will not allow the brand to work with the factory until this is resolved, whether this involves a new or current factory. These concerns are serious breaches of our Code of Conduct and local laws, such as non-payment of minimum wage or locked fire exits. We encourage factories to resolve these non-compliances, using our Code of Conduct Guidebook for practical assistance.
Orange and yellow graded factories are given specific timescales to demonstrate progress and, again, our Code of Conduct Guidebook can help suppliers to resolve concerns raised during audits. Green graded factories have achieved compliance with our Code and we monitor this periodically. Wherever possible we encourage factories to submit evidence of change, such as photos or documents, to avoid the need for another audit.
In the financial year of September 2010 – August 2011, we reviewed 915 ethical audits of factories making goods for Arcadia brands and BHS, affecting approximately 326,000 workers.
The percentage breakdown of grades for these audits since our current audit programme began in 2007 has gradually improved overall.In 2010-11, 38% of the audits graded were orange, compared with 45% the previous year.
Since 2007, of the audit reports reviewed, 650 were follow-up audits. Of those, 57% improved, 31% remained the same and a further 12% deteriorated (in which case we expect the supplier to progress their corrective action plan).
We often refer to Topshop and Topman specific projects. This is because we use these brands as forerunners for our work due to their leading position in the Group.
2. Code of Conduct Guidebook
Our Code of Conduct Guidebook was published in 2009 and extends practical guidance to suppliers and factories on how to improve labour standards based on our Code of Conduct. Click here for full details.
3. ARC (Assessment, Remediation, Capacity building)
ARC is Topshop and Topman’s ‘beyond auditing’ tool. The objective of ARC is to empower factory owners, managers and workers to create a fair working environment and to reduce audit fatigue (repeated auditing of factories by numerous brands, initiatives and retailers). We work closely with an industry expert to further enhance the programme.
Previously we have been focused on the ‘A’ and ‘R’ of ARC – the assessments and remediation. We have since moved to the ‘C’ – capacity building, by which we mean supporting suppliers, factories and workers to develop their own skill sets to ensure a fair working environment. One way in which we have developed this is to encourage dialogue between workers and managers so that both parties can work jointly to agree company policies and procedures. We see this as building blocks for mature systems of industrial relations.
4. Strategic Labour Priorities
In addition to our ethical audit programme and Code of Conduct Guidebook, we have four interlinked strategic labour priorities:
a) Living wage
b) Freedom of association
c) Purchasing practices
d) Vulnerable workers.
a) Living Wage
Arcadia supports the position that all workers in our supply chain, including piece rate, subcontracted, informal, home and migrant workers, should always receive enough wages to meet their needs for nutritious food, clean water and other needs (shelter, transport etc) as well as a discretionary income, which is now a generally well accepted definition of a living wage.
We pay attention to campaigning groups such as Labour Behind the Label and the Asia Floor Wage Campaign to influence our work. The Asia Floor Wage (AFW), which is an Asia-wide campaign to measure and set a living wage in each country, has provided an example of how to measure the living wage.
Despite this, there remain various views of a living wage. There are also many practical difficulties to agreeing and implementing a living wage. In our view, in addition to the activities we are working on, the most effective solution would be by governments increasing the minimum wage, which would create a level playing field for all parties.
Topshop and Topman’s living wage project has been developed around Labour Behind the Label’s four pillars: collaboration; worker organising and freedom of association; purchasing practices and developing a route map to a living wage.
b) Freedom of Association
At Arcadia, Freedom of Association is one of our key projects because we believe that worker representation and dialogue with management is fundamental to empowering workers to improve their working conditions.
In reality, ensuring freedom of association is guaranteed can be difficult. Only a small percentage of the factories our suppliers use (excluding BHS) are known to have trade union presence, excluding China (we do not count China because independent trade unions there are illegal). Because of this, we continue to communicate with suppliers and factories about the benefits of freedom of association and at the very least we expect our suppliers to ensure that factories give workers the right to organise.
We have produced a ‘Right to Organise Guarantee’ template, drafted with the help of the International Textiles Garment and Leather Workers’ Federation (ITGLWF). This is included in our Code of Conduct Guidebook (Part 4, pages 258-9) and we have requested of suppliers that this be translated, posted on notice boards, explained and given to all workers twice yearly with a pay slip. When visiting factories we request to see this and when speaking with workers we ask them if they have had this guarantee communicated to them.
We have a working relationship with the ITGLWF and have made a commitment to act on any concerns or reports of restriction of freedom of association that the Federation may bring to our attention.
Our future intentions for Freedom of Association are linked to our management systems portfolio.
c) Purchasing Practices
We believe that by improving the way we design and buy goods and by raising awareness amongst our teams of the potential effects on factory workers, we can have a positive impact on how suppliers’ factories manage their people, their production and their working environments.
These kinds of changes need to be systematic and properly embedded into the way we work. This requires time and critical support from senior levels of our business. This is why we chose to roll out training on purchasing practices from the top down and have received support to deliver this training from senior management in the Arcadia brands.
In 2011 we launched this training to all appropriate staff (everyone in design, buying and merchandising) this year and aim to have everyone trained by the end of 2012.
The training is just one aspect of our purchasing practices work. We have already rolled out ‘supplier 360° reviews’ which allow our suppliers to identify issues and sticking points that they experience – much of this feedback has helped shape our training. We have also developed key performance indicators (KPIs) in a number of key areas of the buying process, for example, on critical path management, on reducing the number of samples requested per design and how long it takes these to be approved – all of which can have a negative impact on factories and their workforce.
d) Vulnerable Workers
This project covers:
- migrant workers
- contract workers
- home workers
- Migrant Workers
Over the last few years, Arcadia has taken a close interest in improving the recruitment and working conditions of migrant workers who travel from one country to another for employment. This migration is generally beneficial but the people involved can be in a vulnerable situation, and can be exploited by unscrupulous recruitment agents, for example.
Within the Arcadia supply chain, the countries which use by far the most migrant workers are Mauritius and United Arab Emirates (UAE).
We work with Next plc and the Institute of Human Rights and Business (IHRB) – a global centre of expertise on the relationship between business and human rights – on this topic. In January 2011, we participated in the IHRB’s Roundtable on Migrant Labour in the Apparel Sector in Mauritius. The theme was ‘Responsible Recruitment, Responsible Return’. This gave us the opportunity to continue dialogue with the Ministry of Labour and the Employers’ Federation on the benefits of supporting the kinds of protection outlined in our Migrant Workers’ Guidelines. It also allowed suppliers to come together to share best practice on the recruitment, employment and welfare of migrant workers.
Also in January 2011, we ran a seminar (supported by Impactt Ltd - an ethical trading consultancy) in Dubai for the suppliers and factories which make our goods in the UAE. On this occasion we invited the supplier from Mauritius with whom we have been working most closely on improving migrant labour practices in order for them to share experiences, benefits and learnings. Feedback from this session was very positive.
Topshop and Topman have been working in the UAE with Impactt Ltd to visit suppliers’ factories and assess the recruitment and working conditions for migrant workers against our guidelines. The results of this were mixed, with some suppliers already implementing good practice and others committing to continuous improvements.
The third and final step in Topshop and Topman’s work in the UAE is to return to the factories visited to follow up on the seminar and assessments and to work with them to create their own management system.
The next leg of IHRB's conferences took place in a 'sending' country (i.e. one that tends to provide workers rather than receiving them), Bangladesh, in June 2011. A broad cross-section of stakeholders attended, and there was considerable discussion about the role of the recruitment agent and how this needs to change. Arcadia's position is that all recruitment and travel costs must be borne by the employer and not by the worker.
For further information on the IHRB's work, please click here.
In future we plan to investigate the situation for migrant workers in Egypt, another sourcing country which uses migrant labour, to ensure that suppliers there understand and adopt our Migrant Workers’ Guidelines.
"IHRB feels that Arcadia and Next have led the way in many regards on building migrant worker rights into employer management systems and codes of conduct and there is much to be learned from your example". - Contract Workers
Contract workers are employed on temporary contracts indirectly through an agent who is paid a fee by the employer – in this case a factory manager/owner. This allows factories to react to temporary fluctuations in worker needs. However, this kind of contract can be manipulated to avoid giving workers permanent contracts that afford them greater stability and benefits.
Our attention was drawn to the concerns related to exploitation of contract workers in December 2010 when we attended the AEPC (India’s Apparel Export Promotion Council) conference in Delhi. We are now involved in their task force, which includes local NGOs and other retailers.
Working with a third party, we are investigating the use of contract labour specifically with four factories near Delhi, including meeting with the contractors and interviewing workers. The results will be shared with the AEPC task force.
Initial results have demonstrated differing scenarios at each factory rather than a consistent pattern of practice. From this work, the goal is to produce guidelines by the end of 2011 on best practice when using and providing contract labour. - Home Workers
Home working involves carrying out tasks on products at home. When managed properly this provides a way for individuals to balance their work and home life and we support factories which provide this option.
However, the lack of visibility of home workers combined with their complicated employment status has made them a particularly vulnerable worker group. This is why we have been working on improving our understanding of the incidence of and conditions for home workers in our supply chain.
Topshop and Topman work on this subject with Next plc and an independent consultant based in India. This consultant has assisted us with mapping out home workers in our supply chain through visiting communities in the National Capital Region, India. The focus was on ensuring that home workers are being paid a timely and fair wage and on assisting worker groups with gaining access to artisan cards, which in turn allow workers access to government subsidised credit and benefits.
Topshop and Topman are currently finalising home worker guidelines. The plan is then to roll out training to factories about their responsibilities towards home workers and providing visibility of them.
5. Sumangali Scheme
In 2011, retailers and brands received a report from Anti-Slavery International expressing concerns about unacceptable labour practices such as excessive work and low wages in cotton mills and factories in Tamil Nadu, India, through what is known locally as the Sumangali Scheme.
In this scheme, girls and young women are recruited in return for a wage, accommodation, and a considerable sum of money upon completion of their three-year contract. This lump sum may be used to pay for a dowry (money or other valuable goods which a woman is expected to bring to marriage), which is prohibited in India but still a general practice.
We recognise the role we can play in condemning such practices and in encouraging national and local government bodies to eliminate such labour rights abuses. We have been liaising with other retailers about actions that can be taken locally to support this and resolve these concerns. We expect to continue this collaboration, working with local partners such as the Tirupur (a city in Tamil Nadu) Exporters Association.
6. The Responsible and Accountable Garment Sector (RAGS)
We are one of a number of retailers to have committed to supporting the Benefits for Business and Workers Model (BBW) of RAGS, run by industry consultant Impactt and established by DFID (the Department for International Development).
The BBW model is designed to contribute to the overall objective of RAGS ‘for responsible and ethical production to become the norm in the garment manufacturing sector supplying the UK’.
Key strengths of this work are collaborating with other high street retailers and Impactt’s experience and methodology, which have previously demonstrated improvements in pay and job quality for vulnerable garment workers.
It involves 110 factories in India and Bangladesh over two years and will focus on improving factories’ management systems in order to:
- build management skills in production, quality and human resources;
- enable workers to communicate their views;
- enable factory managers to understand the needs and aspirations of workers; and
- support the negotiation of improved packages meeting workers’ stated needs.
Phase one of the project lasts 15 months and involves a pilot with nine factories affecting over 14,000 workers. Two factory ‘needs assessments’ have taken place at Arcadia suppliers’ factories – one in Bangladesh and one in India.
Positive outcomes in these factories included: a long-serving, loyal workforce, a dedicated HR team, an established concept of linking pay and performance and the availability of bonuses. Opportunities for improvement identified were: increasing standard wages to further meet workers’ needs whilst decreasing overtime, reducing rework and refining the incentive scheme.
A work plan and project group, including workers, were agreed with the factories and consultancy visits are ongoing to achieve these opportunities.
In terms of the entire project across all retailers’ factories, at the end of phase one, the results were the following:
- Factory efficiency increased in India by 39% and in Bangladesh by 7%
- Quality improved, up 3% in Bangladesh and 1% in India
- Absenteeism went down 57% in Bangladesh and 21% in India
- Worker turnover reduced 44% in Bangladesh and 24% in India
- In Bangladesh there was a 22% reduction in working hours and 6% increase in take-home wages (data for India not available at time of reporting)
Learnings and tools taken from phase one are being used to scale this model to the remainder of the factories involved in the BBW project.
7. Sand blasting – Health Risks
In early 2011 our attention was drawn to the serious health risks being faced by workers carrying out sand blasting, a technique used to give denim a worn or faded look. Workers fire sand under high pressure at jeans to create this effect but when this sand breaks down into fine silica sand particles and is inhaled, it can cause the fatal lung disease silicosis.
This is, of course, unacceptable and Arcadia banned the process of sand blasting in February 2011. Sand blasted garments account for a very small part of our brands’ ranges. However, in preparation for the ban, in September 2010, we contacted all of our relevant suppliers about the health risks involved with silica sandblasting. They confirmed that they use manual sandpapering for small areas of fading or chemical bleaching and would adhere to the ban. Our brands also confirmed that they will not design or place orders for sand blasted garments; any fading will be achieved through sand papering or chemical bleaching only.
When it comes to using chemicals, our suppliers, their factories and factory workers are expected to adhere to local laws and our Code of Conduct Guidebook, which covers the safe usage and storage of chemicals.
We have also been liaising with the International Textiles Garment and Leather Workers’ Federation (ITGLWF) and other brands on the implications of this ban. We will be monitoring this with key suppliers in 2012.
8. Uzbek Cotton Harvesting
We banned the use of Uzbek cotton in 2008 due to concerns about forced and child labour in Uzbekistan during cotton harvests. We ask our suppliers to provide proof of where they source their cotton to verify that they do not source from Uzbekistan. The project involves all areas of our business, mapping our cotton sources to origin.
9. Fairtrade
From July 2010 - June 2011 Topshop and Topman sold 14,000 Fairtrade garments each. We hope to grow this in future.
