Fashion Law Journal
In 2013, a structural failure occurred in 80 story building in Dhaka Bangladesh; the Rana Plaza. With a death toll of 1134, this incident is considered the deadliest garment-factory disaster in history1. This incident was a turning point in the way garment industry was treated in Bangladesh. Leading to a series of widespread protests, and calls for better safety standards. The collapse also lead to an international discourse on the global supply chain, and the corporate social responsibility in thereunder. With big western brands like Mango and Benetton being linked to the plaza, this has raised questions about how these big brands treat and audit their supply chains.
Mckinsey’s State of Fashion 2017 report, states that “Fashion is one of the world’s most important industries, driving a significant part of the global economy. It is one of the key value-creating industries for the world economy”2 .This industry takes up a substantial share of the global supply chain.
The supply chain in a globalised world are dispersed and diverse. The biggest problems faced with fashion supply chain are of sustainability, and exploitative practices in production. The fashion supply chain, simply understood, is the entire process from the ideation of a garment to its end retail. Given the nature of globalisation, the fashion supply chain is now dispersed over the world. Production, usually occurs in developing economies, where cost of labor is low, and these products are then sold in the most luxurious stores in the west. But in the realm of fashion, the journey from concept to consumer is not limited to the creative side. Fashion retailers exist in a world of complex regulations.
Given the globalised nature of the world, the supply chains are fragmented over many countries, as it ensures lower production costs. A nuanced set of issues emerge; labour, sustainability, intellectual property, production regulations etc. It is impossible to discuss all aspects of this chain, so the focus for this article is on Labour related regulations, sustainability, as well as the role of technology in this regard.
The fashion industry is responsible for around 10% of global greenhouse gas emissions3 . Fashion brands, especially fast fashion brands produce high volumes of synthetic garments, that require a lot of energy to produce, and create tonnes of garment waste. This is usually concentrated in developing countries. If left to be, the fast fashion industry will create irreparable damages to the environment.4 To combat this, leading brands are trying to utilise Sustainable Supply Chain Management techniques (SSCM). SSCM refers to an approach that focuses on creating a supply chain ecosystem that optimises economic success, environmental responsibility, and social well- being.
The Drive for Sustainable and Ethical Fashion Supply Chains
The EU’s Corporate Sustainability Reporting Directive (CSRD), released in 2022 requires all European Union countries to disclose how they manage social and environmental challenges. This modernises the law related to social and environmental information that are to be reported by companies. The purpose is to require companies to disclose risks and opportunities arising from social and environmental issues5. By 2025, this directive will also apply to non-EU companies. The EU has made strides in the supply chain regulations, and due to its vast market, it forces companies worldwide to follow suit to the EU’s regulations. Considerations such as Carbon Border Adjustment Mechanism, which puts an import duty based on the amount of carbon expended at the time of production, are all attempts to make the chain more transparent and sustainable.
The Due Diligence Directive of the EU, which will be enforced in the near future, requires companies to monitor and “prevent, end or mitigate” issues such as pollution, biodiversity loss, slavery and labor exploitation. This directive is predicted to make labour issues a more holistic consideration, so that disasters like the Rana Plaza collapse do not repeat themselves. Currently, the USA has the Uyghur Forced Labor Prevention Act, that prevents American companies from funding forced labour on an ethnic minority in china. This was an issue of forcing labour, but the exploitation occurs in other forms. In the Rana Plaza collapse, the main problem was not with forced labour, rather the disregard for labour working conditions. With the supply chain, the primary concern has been human rights issues, such as child labour, but the issue of the carbon footprint of a company is to be closely monitored as well. Energy thinking considerations are now a major part of supply chain management.
In India, supply chain legislation currently focuses on making the country more conducive for investment. Due to its large workforce, and a consumer base that is growing, the market is conducive for FDIs. The initiative to attract FDI, is an integral part of sustaining economic growth in India7.
Although Indian laws are not as developed as the EU initiatives, India has taken steps towards the Supply chain management in India. India however has prescribed to the OECD Guidelines which recommend that companies carry out due diligence, the process by which they identify and account for the negative impacts in their supply chains by focusing their efforts on issues which are most severe. The OECD has developed practical guidelines for companies to carry out due diligence in their supply chains. In 2018, the OECD facilitated the creation of a platform between Indian garment and textile industry, represented by the Confederation of Indian Industry (CII), and global apparel brands to share information and build capacity within the sector to meet international labour and environmental standards and industry best practices as laid out in the OECD Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector.
This platform aims to build transparency for investors and consumers. A key outcome was a broad agreement on the need to establish a mutual understanding and a ‘baseline’ for the current context on due diligence impacts in Indian textile and apparel supply chains8.
How Technology is Revolutionising the Fashion Supply Chain
The future of fashion supply chain management is likely to be shaped by ongoing technological advancements, changing consumer behaviours, and an increased focus on sustainability. The digital transformation and technological advancement has made integration of evolving technology an integral part of the supply chain. Technological advancements such as AI, Blockchain, and robots can assist in all stages of production, promising a more efficient and transparent process. Big brands like H&M and Zara are now relying on AI technology to manage their supply chains more efficiently. Blockchain is used for traceability of products on the chain. AI is used in predictive analysis, and demand forecasting. Brands using AI will be able to project the upcoming trends and reduce problems of overstocking.
The speed-bump in the way of this technological growth will be trying to meet global regulatory standards, which will differ from country to country. There is not a lack of technology when it comes to sustainable supply chain management, rather a lack of legislative incentive 9. In the face of uncertainty, the data driven businesses will be replied upon more. Companies will be able to predict the picture of the future global supply chain.
Along with this, standardisation of the technology is yet another issue that will affect accessibility. The future of fashion supply chain management will likely involve a combination of technology- driven solutions, sustainable practices, and a commitment to meet evolving consumer expectations.
The main issue with the use of technology is the standardisation and accessibility so that it serves all in the same way 10 .
Conclusion
Fashion’s globalised supply chain, with production often happening in developing countries, raises concerns about sustainability and labor standards. Fast fashion, in particular, is linked to high volumes of waste and greenhouse gas emissions. The future of fashion supply chains hinges on a combination of technological innovation, sustainable practices, and regulations that prioritize ethical production and environmental responsibility.
The legal regulation in the supply chain does not stop at technology, there are a number of considerations in the fashion supply chain to be looked at. IP laws, consumer transparency, deceptive marketing are all part of the fashion supply chain that can be discussed intensively. The supply chain in the fashion industry is made of a lot of working parts, and balancing the profit focused goals of the companies, with the political agendas of each nation, and the rights of the consumers is a delicate process.
Fashion businesses need verifiable evidence of ESG-compliant supply chains. Incidents such as the Rana Plaza collapse uncover the horrifying reality of the fashion industry and lead to calls for global action. These induce consumers and investors to demand much needed transparency in the fashion production.
Building an ESG complaint supply chain does not happen overnight. While many companies say they place importance of sustainability and ethical practices, it is easier said than done. The European Union (EU) has taken a leading role in regulating supply chains with directives like the Corporate Sustainability Reporting Directive (CSRD) and the Due Diligence Directive. These initiatives promote transparency and hold companies accountable for social and environmental impacts.
1 “Bangladesh building collapse death toll passes 500” BBC News. 3 May 2013. Retrieved 3 May 2013.
2 The state of Fashion 2017, Mckinsey and Co.
3 https://unfccc.int/news/un-helps-fashion-industry-shift-to-low-carbon
4 https://www.sciencedirect.com/science/article/pii/S2772390922000051
5https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/company-reporting-and-auditing/company-reporting/corporate sustainability-reporting_en
6 https://www.fashiondive.com/news/fashion-regulations-supply-chain/694414/
7 https://asiasociety.org/policy-institute/supply-chains-shifting-indo-pacific/india
8 https://mneguidelines.oecd.org/OECD-Apparel-supply-chain-assessment-in-India-TOR.pdf
9 https://www.voguebusiness.com/story/sustainability/legislation-is-coming-for-fashions-supply-chains-are- you-ready
10 https://bthechange.com/the-challenges-of-integrating-the-supply-chain-for-a-more-sustainable-fashion-industry-49d68dae7019
Author:
Rheaa Nair is a penultimate-year law Student at NMIMS Mumbai, with a growing fascination for the world of intellectual property law. She is driven by a passion for the creative industries, and drawn to the convergence of technology and law. Her academic pursuits are complemented by a keen appreciation for fashion. She aspires to a career that champions an innovative yet sustainable spirit within the fashion industry.
