This article appeared first in The Sustainability Gap, an in-depth analysis of BoF’s new report, The BoF Sustainability Index, which tracks fashion’s progress towards urgent environmental and social transformation. To learn more and download a copy of the report, click here.

Key Insights from The BoF Sustainability Index

• The inaugural BoF Sustainability Index tracks fashion’s progress towards ambitious sustainability targets for the coming decade. It examines public disclosures to rigorously benchmark performance and enable like-for-like comparisons at 15 of fashion’s largest companies.
• While fashion companies are speaking about sustainability more than ever before, BoF’s comprehensive analysis found actions are lagging public commitments, even among the industry’s largest and most highly resourced businesses.
• The average overall score of the companies assessed was just 36 out of a possible 100, with significant disparities between engagement and action. Overall, progress skews towards target setting, with data often self-reported and unverified, pointing to a wider accountability challenge.

The BoF Sustainability Index Workers’ Rights Targets:

a. Corporate Strategy — The Baseline: Protecting human rights is embedded in corporate strategy.

b. Purchasing Practices — By 2022: Fully align purchasing practices with commitments to ethical working conditions.

c. Living Wages — By 2025: Ensure workers receive a living wage.

The rise of today’s fast-moving, mass market and globalised fashion system has created convoluted and unequal supply chains, plagued by labour abuses that range from poor wages and excessive overtime to fatally unsafe conditions, child labour and modern slavery.

Decades of effort to manage the problems through private inspections and certifications have created a multi-billion-dollar audit industry, but no solution. High-profile scandals in recent years highlight how endemic these problems remain.

Workers’ rights is among the worst-performing categories in the Index.

• All the brands examined in the Index have well-established corporate policies to uphold labour rights, but after years of focus, this is considered a baseline.
• The first target in this category was designed with a high bar to reflect the fact that labour abuses remain systemic and require urgent attention deep in the supply chain.
• Eight of the companies indicated their efforts to monitor labour rights extend across the second tier of their supply chain, but only a fifth disclosed information on the outcomes of audits at this level, with varying degrees of regularity and granularity.

Companies are not improving on frameworks that have failed garment workers for years.

• The two forward-looking targets on living wages and purchasing practices were the worst-performing in the entire Index.
• Companies largely continue to rely on voluntary initiatives and private auditing firms, notwithstanding criticism that this approach has historically acted as a self-regulated corporate fig leaf and failed to bring about real change.
• Information on how effectively companies are engaging local communities and labour organisations is hard to decipher, even though this is seen as crucial to address the criticism raised against the current system.
• Though more than half of the companies indicated a commitment to responsible purchasing practices as defined in the Index, information to demonstrate how these are being implemented was much more limited.

Commitments to living wages are limited and are not backed by concrete action.

• Only Inditex, PVH Corp and H&M Group indicated a public commitment to ensure workers receive a living wage that covers the basic needs of a worker and their family. More companies addressed this issue if a wider definition is applied.
• Only a fifth of the companies provided details of how they plan to secure living wages for workers in their supply chain. PVH Corp, Inditex and H&M Group all engaged through ACT On Living Wages, a five-year-old multi-stakeholder initiative focused on securing industry-wide collective bargaining agreements on wage levels in major manufacturing countries.
• None of the companies provided information about the proportion of workers in their supply chain already receiving a living wage.

The Sustainability Council’s Take

“When it comes to workers’ rights, we have been stuck with the current state of play for more than 10 years and the discourse is still way ahead of the action. The system remains opaque and, crucially, doesn’t include the voices of workers and their representatives. This means it’s incredibly difficult to adequately remediate issues. No matter how many committees are set up in factories, they are just not working. Going forward, there has to be a system of collaboration and binding agreements with workers’ organisations. Commitments to a living wage are meaningless if buying prices do not cover the cost of living wages.” — Anannya Bhattacharjee, International Coordinator, Asia Floor Wage Alliance

The BoF Sustainability Index is built on over 5,000 data points gathered across the 15 companies included in this year’s edition. To request access to the full underlying data, click here.

The BoF Sustainability Index is based on a binary assessment that examines companies’ public disclosures up until December 31, 2020. There are limitations to this approach and while the assessment was conducted in good faith, the results should be viewed as a proxy for sustainability performance and not an absolute measure. Where BoF was unable to identify public evidence to support a company’s performance relating to the assessment criteria, it does not necessarily mean the company is taking no action at all or that bad practices are present. Read the full methodology on pages 38-41 in the report here or see the FAQs.

Disclaimer: LVMH is part of a group of investors who, together, hold a minority interest in The Business of Fashion. All investors have signed shareholders’ documentation guaranteeing BoF’s complete editorial independence.