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UNECE and partners accelerate action for a sustainable garment and footwear industry at OECD Due Diligence Forum

In September, last year, on the day of the opening of the Milano Fashion Week, The New York Times published an investigation shedding a disturbing light on the practices of several renowned clothing brands in South Italy. Finishing a luxury coat, sold for 800-2000 €, requires some 4-5 hours of highly-skilled work. But all too often, female workers working at home earn a maximum of 4-5 € per hour paid in cash, without any regular contract, insurance or pension contribution. The brands concerned declared that they were in line with ethical sourcing practices, and that they sent regular inspections to their sub-contractors.

This highlights a critical issue: complex and fragmented value chains make it extremely difficult for brands and manufacturers to get the full story behind their goods, to identify where exactly risks lie, and to respond to growing consumers’ and civil society’s demand for attaining sustainability in the sector. Enhancing the traceability and transparency of the value chain, has become a key priority for advancing sustainable production patterns, advance a circular economy approach, and inform responsible consumption choices, in line with the Sustainable Development Goal 12 of the UN 2030 Agenda. And in line with the agenda for sustainable fashion, subscribed by the 100 major fashion brands at the Copenhagen Fashion Summit, last year.

At the OECD Due Diligence Forum, on 12 to 14 February in Paris, attended by about 600 policy makers and experts of the sector, UNECE presented the results of a recent analysis conducted through targeted interviews and field visits, and a detailed survey, involving more than 100 companies from all over the world, from raw material producers to large brands and retailers.

Why traceability? According to the analysis, for more than 65% of companies, traceability helps 1. build trust with consumers; 2. develop more solid networks with clients and suppliers; 3.  identify opportunities for efficient and sustainable management of resources. And while key challenges lie in the fragmentation of the value chain and data security, technological advances (e.g. blockchain, bar codes, chips) can play an important role.

Does the industry track and trace its value chain? Only 34% of the companies have reported to have traceability systems in place, and most of them can identify and track their immediate suppliers only. But information is often lost about the suppliers of their suppliers – not to mention the third and fourth levels of suppliers. The analysis also shows that a positive correlation between traceability and transparency and sustainability, meaning that tracking and tracing the value chain makes sustainability claims more credible.

When it comes to the key ingredients of a robust traceability system, companies (more than 55%) have indicated that data/information to be exchanged along the value chain should include information on the country of origin; features and properties and processing step of raw material, products, parts and components; and compliance with sustainability requirements.

The Study also highlights the relevance of policy and legislation to enhance the visibility along the value chain.  Compliance with national, regional or international regulatory requirements or guidance directives and common criteria to measure and benchmark sustainability performance, coupled with effective auditing systems are a priority for companies (75% of respondents), which have also stressed the need for fiscal incentives (64%), support to R&D (54%) and training for skills development (61%).

Building on these findings, UNECE, jointly with the ITC, the European Commission, ILO and partners from the private sector (including business associations like EURATEX and COTANCE, and brands like Kering, H&M and Hugo Boss), civil society and academia, is working on a Decent Work and Transparency and Traceability Tool. The aim is to help the sector to make risk-informed decisions and operate along a set of internationally agreed practices, thus increasing transparency vis a vis the final consumers. This will include a Policy Recommendation, to enable governments to advance the necessary policy approaches, and a comprehensive Technical Global Standard for the Traceability of Sustainable Value Chains in the sector, covering the entire life-cycle of products.

“Scientific findings and policy principles for due diligence and sustainability in the industry are now widely agreed. It is time to implement and accelerate action”, stressed OECD Secretary General Angel Gurria at the OECD Forum. This project is about action and builds on the UNECE and ITC vast experience and expertise in supporting policies, regulations, standards and tools, which guide value chains towards more responsible production and consumption patterns. The project, funded by the European Union, is to be implemented over the period 2018 to 2021.

Following up on the meeting that the project group of experts held at the OECD Due Diligence Forum on 14 December, to discuss how the blockchain technology can promote due diligence in the sector, the next meeting is scheduled to take place at the Palais des Nations in Geneva, on 4 April 2019, in the context of the 33rd  UN/CEFACT Forum.