Adidas has been named as the leader of 13 brands in the garment sector when it comes to ensuring workers in its supply chain are paid a living wage.
The ASN Bank report ‘Living Wage in the Garment Sector: Results of the 2019 Reviews’ scores brands on their living wage policies and how they are executed. Results are based on company data.
The 13 are ASN investee companies. Since 2018, ASN says, “most of the companies reviewed made progress” with none falling below its 2018 score.
Adidas moved into the “leading” phase, having scored “even better” on transparency than last year.
“This company provides wage data and compares it to living wage estimates, provides information on collective bargaining in supply chains and has the most extensive information on the functioning of its grievance mechanism and remediation of cases. More specifically, Adidas developed a standard minute costing system with its supplier. This system creates further transparency in the company’s product cost for materials, labour and overhead. Adidas also developed a pilot project in which it organised an employee credit
cooperative that allowed factory workers to earn extra income through dividends and profit-sharing,” reads the report.
In the maturing category were Esprit, KappAhl, H&M, Puma, Inditex, M&S, Gildan and Asos.
But the report says the scoring gap between Adidas and the companies in the maturing phase is not very big, “just a few points” in fact.
Four companies are in the developing phase including Asics, VF Corp., Hanes Brands and Renner.
But the report urges more transparency and ownership including public disclosure either on corporate websites or annual reports, rather than when the brand is asked for it for the purpose of reports such as this.
“Currently, this information is mostly shared by the MSIs in aggregate form, so we cannot link it to individual companies. In our view, ownership of a living wage remains with companies. Therefore we urge them to share information from MSI-related projects in annual
reports or on websites.”
In addition, it calls for a need to negotiate costs and set price levels that ringfence all the labour costs.
“In order for that to happen, companies seem to need more data on both the actual labour costs paid in the supply chain and living wage estimates in supplying regions. It is important here is that companies make a longer-term commitment to continue sourcing
from that region/supplier. This is because manufacturers are afraid to price themselves out of the market.”
The report also calls for a move from effort-based reporting to impact-based reporting.
“Indeed, we now see many companies reporting about the corporate processes they put in place to mitigate human rights, but few indicate whether or not these actions are having the desired effect. Making an impact requires a more analytical approach, whereby progress is monitored and actions adjusted where needed.”