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Transparent value chains can help make the fashion industry’s post-COVID recovery more resilient ‎and sustainable ‎

Accelerating the transition to more sustainable and transparent global value chains needs to be at the heart of the fashion industry’s response to the severe socio-economic challenges and supply chain disruptions caused by the ongoing COVID-19 pandemic.

According to the ILO, the COVID-19 crisis is affecting millions of jobs in the global garment industry. An International Textile Manufacturers (ITMF) survey of 700 companies worldwide revealed that globally, current orders dropped by 31 per cent on average. And in Bangladesh, where the garment industry accounts for more than 80 per cent of the country’s annual exports, the crisis is putting at risk about 4 million workers, mostly women, with one million garment workers having already lost their jobs.

Embedding due diligence and sustainability considerations into COVID-19 crisis management is a chance to switch to more responsible business models. Transparency and traceability of the value chain can sustain such efforts and translate into value that will support the industry’s recovery, bringing long-term benefits for their balance sheets and productivity, linked to factors such as: 1. Investors’ increasing interest in a company’s environmental, social performance and governance; 2. The need to manage legal risks, due to e.g. cancellation of orders, unilateral imposition of pay-cuts, and inadequate health and safety measures on the workplace; 3. The capacity to manage reputational risks vis a vis investors and consumers; 4. Access to emergency relief programs, remedy mechanisms and funding.

At a recent UNECE meeting, 170 experts from industry, government, NGOs, standard setting bodies, academia and think tanks, discussed concrete actions that can strengthen the contribution of supply chain transparency and traceability towards a sustainable recovery in the hard-hit garment and footwear industry. Representatives of the European Commission, the French Ministry of Economics and Finance & National Contact Point to the OECD, the African Caribbean Pacific (ACP) Group of States, and EURATEX, all emphasised the recent acceleration in policy and law making aimed at strengthening the industry’s due diligence, sustainability and circularity.

“There is a need to foster policy coherence at the regional and global level,” said Maylis Souque, Secretary General of the French NCP to the OECD at the French Ministry of Economics and Finance, emphasising the role that intergovernmental actors, like UNECE, can play. Mauro Scalia, Director Sustainable Businesses at EURATEX welcomed “the efforts of the UNECE initiative considering the EU and global policy requirements on transparency and traceability”, and warned of the need for SMEs-friendly solutions and underlined the large participation from the industry that the UNECE initiative is gathering.

The virtual meeting took place as part of  a multi-year EU funded UNECE-UN/CEFACT project aimed at ‘Enhancing Transparency and Traceability of Sustainable Value Chains in Garment and Footwear’.  Traceability and transparency of value chains are essential to ensure that claims about sustainability are based on reliable data from all actors intervening along the value chain. Participants reviewed progress on project deliverables, including the development of a UN/CEFACT policy recommendation and call for action, an information exchange standard, and a blockchain pilot project for transparency and traceability of value chains, to be rolled out with industry partners in Egypt, Germany, Italy, Switzerland, and the UK.

With their different backgrounds, participants provided a wide range of expertise on how to build the architecture of a single traceability system, which would enable companies and key actors to share product information on sustainability criteria in a standardized format. Using a common language, building upon UN/CEFACT methodologies and standards for information exchange will be at the core of this new architecture.

Experts also recommended practical steps, such as the creation of a scorecard of actions, and a minimum set of criteria for traceability and transparency of the value chain. Given the differences between industry players, a differentiated and gradual approach would be needed for large companies and SMEs. The UNECE project team together with key industry players, such as Alba Group, Vivienne Westwood, and Cittadellarte Fashion B.E.S.T, discussed a twofold business approach for traceability: 1) a basic approach for SMEs, and 2) an advanced approach for large enterprises – noting that support to SMEs is a central pillar of the UN’s response to the current crisis.

Experts also discussed the enabling role of advanced technologies, with Haelixa showcasing concrete examples, such as the use of DNA markers to ensure the connection between the organic content of a cotton shirt and its label, in a cost-effective and trust-worthy way.

The COVID-19 crisis can be a catalyst for change, for the industry to become more responsible, inclusive and resilient. It calls companies to live up to their responsibilities in terms of decent work and the climate emergency. Let us prepare for a sustainable recovery and ensure that it will have the right tools to contribute to the Sustainable Development Goals of the 2030 Agenda.

Meeting documents and presentations, information on next project steps are available on the virtual policy dialogue  and project web-page.