Ethical issues in the fashion industry

ABSTRACT

Since the last decades have been a significant strengthening in ethical concern among consumers, which has led to an increase in demand for “ethical” choices in the marketplace. The textile and clothing (T&C) industry is one of the industries with a significant impact on ecological and social footprints on our planet, mainly driven by resource, and labour­intensive practices and driving the largest carbon footprint throughout the value chains. This study contributes to current knowledge of sustainability in the textile and clothing industry. This study first portrays the importance of sustainability and business ethics in the fashion industry based on the extant literature. Second, it seeks to provide a current status of the problematic on sustainable and ethical practices in the fashion industry taking as an example the Swedish multinational clothing retail company, H&M, well-known for its wide controversies. The analysis research is aligned to international organisations' standards and principles, and it is mainly divided into four dimensions implemented by the United Nations: respect for human rights, labour, environmental protection, and anti­corruption.

KEYWORDS: Corporate Social Responsibility, CSR, multinational, fashion industry, H&M, United Nations, DETOX, Greenpeace.

1. Introduction

Globalization has enabled the gradual decrease of trade barriers and has facilitated the flow of goods, services, and labour more unrestrained than ever. Since clothing is a basic need that all require to survive, the fashion industry was one of the first industries to become global. Unquestionably, this industry is of great importance to the economy in terms of trade, employment, investment, and revenue all over the world, playing a vital role as employers since the industry currently hires about 60 million to 75 million employees and roughly 75% of them are women (ILO, 2015; Fashion United, 2015). It seems that the fashion industry has the power to influence trends, then it also has the power to play a positive role in protecting the planet. Nonetheless, while alternative business models to the linear fast fashion culture already exist, they are not yet the majority. Likewise, the fashion industry suffers from short product life cycles, vast product differentiation and is branded by long and inflexible supply processes.

it is not a secret that global fast fashion brands are manufacturing more clothes than the planet can handle and unfortunately, not all fashion companies operate under ethical norms nor sustainable conditions. According to the UN, the fashion industry is the second largest polluter in the world just after the oil industry (UN, 2019). Moreover, the manufacturing of clothes is considered a high labour-intensive activity and therefore multinationals search for a cheap workforce in the world as a solution for outsourcing production. Every year consumers spend huge amounts of money on clothing. Fashion industry statistics reveal that the global fast fashion market was valued at $35.8 billion. Moreover, only in 2020 in the UK the fashion company Zara achieved revenue of £22 billion while Nike was the leading worldwide brand with a worth of nearly £35 billion based on fashion industry trends (Statista, 2021). In addition, around three-quarters of the world's clothing's export and half of the textiles come typically from developing countries (Gardetti and Torres, 2013).

For all these reasons, the role of CSR and ethical business practices among companies are primordial. Nevertheless, there are still many companies, whose knowledge about social responsibility and sustainability is narrow or non-existent. As result, different international organisations have developed specific criteria and guidelines for companies to adopt and implement in their strategic plans, since they might play a significant role in the socio­economic impacts on society and the degradation of natural resources and environmental issues. These international entities are engaged in sustainable development plans. This paper refers especially to the reports made by the United Nations which state that over the last years companies' have shown more commitment and have adopted certain approaches towards human rights and ecological management. However, the UN also clarifies that companies social and environmental strategies have not been enough to successfully navigate and address these 21 st century challenges (UNGC, 2010).

The aim of this paper is to study and analyse the ethical business of the clothing and textile industry based on the fundamentals of sustainability and contributes to current knowledge in this area. Therefore, this study answers the following questions: What are the ethical issues in the fashion industry? What are the unethical issues of the second-biggest clothing industry, H&M? What are the CSR initiatives of H&M to counteract these issues?

2. Method

Qualitative research method such as the collection of scientific literature is used for the seeking of definitions and theoretical background. A search was conducted for books, published journal articles, and newspapers using the search words, Corporate Social Responsibility, Corporate Responsibility, Sustainability, International Business, ethical issues, H&M from key databases. The databases include Taylor & Francis, Emerald, Elsevier, Research Gate, Pro-Quest, and Google Scholar. Likewise, based on the secondary data, this study uses as a method the qualitative content analysis of reports of international organizations such as the European Parliament, United Nations, and the H&M's CSR reports. H&M's current sustainable initiatives and its compliance with international sustainable policies are analysed to discuss its real commitment to a toxic-free future. Besides, the reports and content provided by the DETOX campaign of Greenpeace and the fashion industry collaboration of renowned fashion brands called ZDHC serve as international guidelines for this paper to evaluate the current H&M's unethical activities.

3. CSR and Business Ethics

In the 1950s, the core of CSR changed from an individual perspective to the behaviour of companies (Blowfield & Murray, 2019) . Bowen (1953), who is considered as the father of corporate social responsibility theory, gave a convenient mark for the start of CSR and emphasised the sense of “social obligation” in its concept. He stressed that companies should perform this policy in decision-making and act under the values accepted in the society they are operating in. Years later, Davis (1973), argued that social responsibility was more than simple acts of individuals, that companies should be treated as whole institutions (Davis, 1973). Besides, Carroll defined the idea of being socially responsible by saying: “Social responsibility can only become a reality if more managers become moral instead of amoral or immoral” (Carroll, 1991) . Since then, there have existed bitter debates about the fundamental values that companies must adopt. This dispute claims who determines the values one company must embrace, whether the company itself or the society within it operates. Carroll created in 1991 the Pyramid of CSR, Carroll (1991) and introduced the four types of CSR responsibilities. They involve the entire company's responsibilities, in order to be accepted. It was intended to be conducted as an analytical tool or template for helping business' managers to organize ideas involving the practices of the company at different levels (Carroll, 1991). Carroll's Pyramid of CSR is depicted in Figure 1, which portrays the four levels or types of CSR responsibilities with a perspective focused on as a unified whole. It suggests that the entire responsibilities of companies should involve the comprehensive realisation of the firm's economic, legal, ethical, and philanthropic responsibilities (Carroll et al., 2018).

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Figure 1: The Pyramid of Corporate Social Responsibility. Source: Carroll, 1991

Some authors state that CSR arose as an answer against the social disparities generated by globalisation (Khan & Lund-Thomsen, 2011) and it also leads to a necessity for a better understanding of the modern business ethics role in the development of every company. Since the word “social” in CSR has always been ambiguous and missing precise direction as to whom the company is responsible (Carroll, 1991), CSR might also be treated as synonymous with business ethics. Crane defines business ethics as “the study of business situations, activities, and decisions where issues of right and wrong are addressed” (Crane & Matten, 2010). Ethics in business involves the integration of values such as honesty, trust, integrity, respect, and fairness into the company's policies, performs and decision­making. Thus, it is also expected that it develops an ample and relevant code of conduct or code of ethics, which is a set of rules that orients behaviour within a company to promote social, environmental, and/or ethical good practices (Visser et al., 2010).

Currently, there is a resurgence of interest in business ethics as the result of corruption and scandals in the last decades among multinational companies (Blowfield & Murray, 2019). Furthermore, researchers have noticed that after adopting CSR values, companies started addressing their role in society much more reasonably, broadly, and professionally than in the last decades (Crane et al., 2019). Nonetheless, critics claim that companies may assume the language of business ethics with cynicism and the real attitude to natural settings or society are not sustainable (Henderson, 2007).

4. Sustainable issues in the clothing industry

Since the last decades, the clothing industry has faced strong price pressure, aggravating its efforts to become more sustainable (Hansen & Schaltegger, 2013). To remain competitive and low costs, many companies have opted to outsource to emerge and developing countries and tend to transfer to low wages countries such as China or India (Diviney and Lillywhite, 2007). This covers a big part of their supply chain. This reallocation of value chain activities to low-wage countries has created more sustainable challenges since it is even more difficult to manage and control the labour and ecological practices at supplier locations in supply chains (Hansen et al., 2009). Even the European Parliament is using the term “slave labour” to define the current labouring conditions of garment workers in Asia (European Parliament, 2014). Figure 2 depicts the origin of EU textile and clothing imports.

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Figure 2: The selected origin of EU imports of clothing and textiles in 2013 Source: Euratex, 2014

Furthermore, over the last 20 years, the price of garments has dropped, and the textile and clothing industry has been selling exacerbated amounts of goods to a fast-growing demand. This leads to a “take, make and dispose” model (UN News, 2019). Moreover, the clothing industry is linked to severe ecological and social problems in almost all stages of its supply chain process from fibre production to, spinning, fabric production, dyeing, and finishing, to clothing production (Goldbach and Seuring, 2003). The United Nation has described some facts such as the consumption of 2000 gallons of water just for one pair of jeans, it consumes 93 billion cubic metres of water far enough for the survival of 5 million people, it generates 20% of global waste, it causes 8% of global greenhouse gas emissions and the clothing production doubled between 2000 and 2014 (UN, 2019).

In most of the countries in which clothing is manufactured, untreated toxic wastewaters including lead, mercury, arsenic, and others are dumped directly into the rivers. Thus, extremely harming the aquatic life and the health of the surrounding communities. A Greenpeace study for the Detox Campaign has recognised 11 chemicals used to make the clothes that contain toxins, carcinogens, and hormone disrupters (Greenpeace, 2018). Moreover, cotton requires a lot of water and heat to grow and needs up to 20,000 litres of water for 1kg cotton. This generates pressure on this scarce source and leads to dramatic ecological outcomes. A good example is the desertification of the Aral Sea due to the production of cotton. In addition, around 700,000 individual microfibers are released into the water becoming food of the food we eat, and according to a recent study of the University of Plymouth, in one year one person only wearing a garment can release 900 million synthetic fibres into the air (De Falco, Francesca, et al., 2020).

There have been high controversies regarding the salaries of garment employees in Asia. There is a lack of information among these employees about their rights and official salaries ranges. According to a survey, by 2016 most of them earned monthly salaries around €80 and €115 (SÜDWIND Institute, 2016). Furthermore, according to the Transparency Index produced by the Fashion Revolution showed that only 17% of brands have revealed how they are implementing their approach to paying living wages to workers in their supply chains, and just 4% reported on their progress (Business & Human Rights, 2019; Fashion Revolution, 2019). As response to the current sustainability challenges that companies are facing and due the alarming statistics, producers and consumers of fashion are gradually waking up the awareness of the urgent need to change, and many small and large retailers are including sustainability principles into their business strategies (UN News, 2019) .

5. International Guidelines

Every facet of doing business is part of a globally integrated structure and normally they are outside of the influence of national legislations. In order to make sure that companies, especially multinationals, make profits without harming the environment or society, international organisation plays here a crucial role. These organisations have developed certain guidelines that provide international active companies guidance and serve as a foundation. These guidelines have been settled to guarantee international companies' social, ecological, and sustainable behaviour (FMLSA, 2021). For instance, in 2015 the United Nations (UN) launched the Sustainable Development Goals (SDGs), defined as “the 5 blueprint to achieve a better and more sustainable future for all”, to “stress the global challenges we face, including poverty, climate change, environmental degradation, inequality and peace and justice” (UN, 2020). Moreover, it created the Agenda 2030 which encourages companies to commit themselves in global sustainable development. This agenda has set up new priorities to the multinationals such as the welfare of their local communities” (United Nations, 2020). Also, the United Nations helps cleaning up the fashion industry and has joined ten different UN organizations to establish the UN Alliance for Sustainable Fashion, launched during the 2019 UN Environment Assembly in Nairobi.

Furthermore, since 2007 the European Parliament has stated that large listed companies with more than 500 employees should comply with the social and environmental impacts of their operations and together with the United Nations has focused on four dimensions: respect for human rights, labour, environmental protection, and anti-corruption and bribery (EP, 2020).

Respect for human rights: According to the Office of the High Commissioner for Human Rights, human rights are considered the basic rights of each human being independent of race, sex, religion, political opinion, social status, or any other point (OHCHR, 2020). Also, the International Labour Organization (ILO) commits countries to respect and promote principles and rights highlighting the importance of freedom of association and the effective recognition of the right to collective bargaining, the elimination of forced or compulsory labour, the abolition of child labour, and the elimination of discrimination in respect of employment and occupation (ILO, 2021).

Labour: All employees must have proper and honourable working conditions while child labour and forced labour should be penalized, even if they exist nowadays. The UN Global Compact states that companies are required to uphold their labour standards in each country they operate in and should provide fair salaries. Moreover, companies should guarantee workplace security, social protection, better prospects for personal development and social integration. Likewise, they should insist on non-discrimination, equal possibilities and treatment, and freedom to express workplace concerns (UNGC, 2021)

Environmental protection: Since the planet is facing a series of unprecedented environmental challenges, more innovative solutions are needed to increase stewardship of natural resources and contribute to sustainable development. Therefore, the UN Global Compact has developed several frameworks and guidelines such as de SDGs for companies to embed sustainability into their strategy and take action to secure a resilient future (UNGC, 2021).

Anti-corruption and Bribery: The UN Global Compact refers to this dimension as an expanding set of guidelines, laws, and regulations that call for human rights due diligence and reporting based on the corporate responsibility to respect human rights. Companies are supposed to “know and show” anti-corruption compliance and understand the intrinsic relationship between corruption and human rights (UNGC, 2016).

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