Style over substance
Why ethics are not in fashion for designer labels
The term ‘sweatshop’ is often heard in connection with garment production. While you might expect a garment costing a few quid to have been made under sweatshop conditions, when paying a lot more for something you’d be forgiven for thinking the workers were paid a decent wage. But alas, this is not always the case, as Ethical Consumer has discovered. In this report we have rated leading designer clothing companies on their Corporate Social Responsibility (CSR) performance and the results are far from encouraging.
While high street brands are used to having their names dragged through the mud following sweatshop exposés, their designer counterparts have been largely unhampered by such reputation-damaging scandals. During London Fashion Week in September 2011, we are calling for the luxury sector to take responsibility and start reporting on its social and environmental impacts.
The luxury clothing sector has long been riding high on a reputation established years ago around high quality, crafted items. However, the reality is far removed. A designer item can no longer be assumed to have been hand-made in Italy, but is far more likely to have been produced in China or another similarly low-cost country. Just like high street companies, the luxury clothing sector has shifted garment production overseas to cut costs. The difference being that, thanks to pressure from campaigners, most high street companies do have at least some sort of policy or management system in place which seeks to provide reasonable working conditions, such as decent pay, a limit on overtime and a safe workplace. Luxury brands have yet to step onto this first rung of the ladder.
While the CEOs of luxury conglomerates pay themselves hefty annual bonuses – some to the tune of £5 million - the workers who actually make the clothes aren’t even being promised enough wages to cover their basic costs of living. The companies show no signs of tackling their environmental impacts either.
WWF published a report in 2007 that rated luxury goods companies.(1) The findings showed that the luxury sector was, in general, not engaging with CSR at all. Four years later, our research finds that little has changed.
There seems to be something of a vow of silence amongst luxury companies. Each one covered in this Buyers’ Guide was sent a questionnaire including over 20 questions on what they were doing to reduce the negative environmental and social aspects of their business. Only one company responded (Burberry) and after asking which other companies were participating in the research, their representative declined to fill in the questionnaire. As a sector which reaps huge profits from the sky-high mark-up on its products, it has perhaps the most scope to ensure its business does the minimum harm. But we have found that in fact it is being far outperformed by companies who sell clothing at vastly lower mark-ups.
Something doesn’t add up and it’s time to ask for more. At the end of this report, we define the actions we want companies to take, and what you can do about it.
Read the Deeper Luxury report here: wwf.org.uk/deeperluxury/
Luxury fashion brands tend to also produce their own fragrances. Each and every company in this buyers’ guide gets a worst rating for its animal testing policy. According to anti-vivisection campaigners Uncaged, the best-practice companies adhere to a Fixed Cut Off Date scheme. This means that the company will not buy or use ingredients that have been tested on animals by themselves or their suppliers after a set date (e.g. 1995). A mere statement that a company does not test on animals does not guarantee that it doesn’t use animal tested ingredients.
Uncaged publish a list of companies that do not test on animals on their website.
The environmental impacts of clothing are huge. Non-organic cotton growing uses huge quantities of water and chemicals – 22.5% of the world’s insecticides and 10% of all pesticides, on 2.5% of agricultural land.2 The ‘wet processes’ of applying finishes and dyes to fabric also use a great deal of water, plus many hazardous chemicals. In poorly-regulated countries, garment factories often release toxic waste into nearby waterways. Greenpeace is currently campaigning for companies to stop using toxic chemicals and recently published a report on water pollution from Chinese sportswear factories.
Again, none of the companies replied to our questions on this issue or displayed any information on their websites that suggested they were aware of and attempting to reduce their environmental impacts. Nor did they show any recognition of their other environmental impacts, such as energy use, CO2 emissions, generation and disposal of waste or transportation and packaging.
Phthalates in perfumes
According to a laboratory analysis commissioned by Greenpeace in 2005, phthalates were found in all but one of the 37 brands of perfume tested in 2005. Studies have indicated that exposure to these substances can upset the body’s ability to regulate hormone production, damage reproduction, and cause liver and kidney defects. It is thought that they may also cause cancer. Their application to the skin in the case of perfume gives them an easy route into the body.(8)
During the ‘90s supermodels helped make fur taboo, by posing for a People for the Ethical Treatment of Animals (PETA) ad campaign which stated they’d “rather go naked than wear fur.”(5) Fast forward to 2011 and these same models are regularly seen parading around in real fur.
The fashion industry has resorted to all kinds of measures to sneak fur back into the mainstream, including offering it free to cash-strapped fashion students. Animals farmed for their fur are subjected to life in tiny wire cages with no bedding, often going long periods without food or water. They are often handled roughly and their death is brutal, with methods including suffocation, electrocution, gas, and poison.(6)
All kinds of animals are farmed for their furs, including mink, raccoon and fox. Perhaps one of the most disturbing furs on offer is Karakul – the skin of a newborn lamb or foetus of a particular breed of sheep. The foetuses are either ‘harvested’ from their mothers’ wombs about 15 to 30 days before they are due to be born, or are killed as newborns at one or two days old. Keira Knightley wore a karakul coat to an awards ceremony in 2009.(5)
The fur trade is attempting to win favour by promoting its wares as the eco-friendly equivalent to fake fur. However, studies have shown that the chemicals such as formaldehyde and chromium used to preserve real animal furs are potentially carcinogenic and have devastating effects on the environment when they get into rivers and streams.(7)
A report by an engineer at the Ford Motor Company calculated that the amount of energy needed to make a real fur coat from farmed animals – which accounts for 85% of furs worldwide – is 66 times that needed to make a fake fur coat. This figure takes into account feed, cages, skinning, pelt-drying, processing and transportation.(7)
Find out more about fur and animal cruelty at www.peta.org
Most of the companies in this buyers’ guide make no mention of workers and their rights on their websites, and as stated earlier, not a single company replied to our request for information on this – or any other – sustainability issue.
With production being shifted overseas to places like China, the legal minimum wage is often below the amount necessary to cover basic living expenses like food, shelter and school fees. And some garment factories even fail to pay the meagre minimum. Garment workers often work in cramped, unsafe and unsanitary conditions for very long hours at a poor rate of pay. It is common for garment factories to prohibit workers from joining trade unions so that they are powerless to make demands, which therefore keeps costs low.
The use of subcontractors and homeworkers makes suppliers less traceable and pay and conditions for these workers can be even worse.
These kind of working conditions can occur even when a company is trying its best to avoid them through regular audits of their supply chains. When a company has no policy or auditing processes in place, the likelihood of poor conditions increases dramatically. All the signs indicate that this is the case for the luxury sector.
The majority of companies in this buyers’ guide were found to either have holding companies or subsidiary companies based in tax havens. Holding companies exist merely to own the shares in a company, often not carrying out any function themselves.
Tax havens are territories which have their own laws designed to undermine the laws of other countries and attract money to their own financial services sector.(5)
Having a holding company or a subsidiary registered in a tax haven means the company can avoid paying the higher rates of tax in the country or jurisdiction where the company’s operations are based. It means companies can avoid paying tax in the countries where they’re based, which has a negative effect on the public finances of those countries. This practice is made more frustrating because the resulting large profits go towards nothing more worthwhile than lining the pockets of already-rich company executives who pay themselves mind-bogglingly generous annual bonuses.
Gold & Diamonds
Many luxury clothing companies also offer jewellery. Ethical Consumer researcher Leonie Nimmo recently appeared on Channel 4’s Dispatches to challenge high street jewellers’ claims that they knew where their gold came from. The programme “The Real Price of Gold” uncovered the shocking reality of gold mines, including child labour, dangerous mining conditions and communities poisoned by pollution. Secretly filmed assistants working for Argos, Earnest Jones and Goldsmiths were found to be making misleading claims about how and where their gold was sourced.
“Most companies have no idea where the gold they sell comes from”, says Leonie. “Companies need to take urgent action to ensure that their gold supply chains are not tainted by human rights abuses and environmental destruction.”
Companies that appear in this Buyers’ Guide that sell gold products but make no commitments to source responsibly lose half a mark in the Human Rights and Pollution & Toxics categories. Those that make no credible claims about responsible diamond sourcing lose an extra half mark in the Human Rights category due to the diamond trade’s fuelling of conflict in Africa.
Echoing our findings, a recent report called ‘Uplifting Earth: The Ethical Performance of Luxury Jewellery brands’ found that only two out of the ten brands surveyed were active in addressing the ethical, social and environmental aspects of their business throughout their supply chain.(4)
Visit the Dispatches website to sign the pledge calling on the British jewellery industry to clean up its act.
The No Dirty Gold campaign is calling on British jewellery retailers to sign the 12 Golden Rules for responsible gold mining.
Read ‘Uplifting Earth’ at www.lifeworth.com.
3 Ethical Consumer mag 131 July/August 2011, ‘What is a tax haven?’
4 Uplifting Earth: The Ethical Performance of Luxury Jewellery brands, published 2011, Bendell, Jem and Doyle, Ian
How we rated the companies
The companies included in this buyers’ guide have been assessed against 15 ethical criteria spanning animal rights, human rights, the environment and political activities such as lobbying. This assessment is based on what they say about their own social and environmental performance, as well as what campaign groups have to say about them and what is reported in the media. All companies were sent a questionnaire with 22 questions relating to these categories, but none responded.
Redcats, which is owned by PPR SA, in turn owns The Sportsman’s Guide, an online store which sells hunting equipment including guns. As a result, it receives a negative mark in our Arms & Military Supply category as well as in our Animal Rights category, for involvement in bloodsports.(9)
In 2011 Burberry faced a revolt by its shareholder members after it was revealed that Burberry’s chief executive Angela Ahrendts had received a £5.8 million share payment in 2010. Pirc, which is an advisory group for pensions funds and asset managers, described the rewards for executives as ‘excessive’ and recommended that the shareholders vote against the remuneration report at Burberry’s annual meeting.10
LVMH Moët Hennessy Louis Vuitton SA agreed to pay the Chairman and Group Managing Director £3.5 and £4.9 million respectively in 2011.(11)
Holding companies in tax havens: Latimo SA (Vivienne Westwood), Bellatrix (Prada) and Permira Holdings (Valentino)
Subsidiaries in tax havens: PPR SA (Gucci), Giorgio Armani, Burberry Group, Polo Ralph Lauren and Christian Dior.12
Christian Dior and Gucci Group are selling gold and/or diamonds with no available policy on responsible sourcing, having neither signed up to the No Dirty Gold campaign to end irresponsible mining practices, nor become members of the Responsible Jewellery Council, which aims to advance responsible business practices throughout the diamond and gold jewellery supply chains. Many other companies have signed up, and this represents a minimum committment from a company.12
Dirty Laundry, a report by Greenpeace, revealed that suppliers to several big clothing brands, including Calvin Klein – owned by PVH Corp – were polluting two of China’s main rivers with hazardous chemicals. According to the report the companies were taking advantage of China’s lax environmental regulations and Greenpeace called on the companies to make sure their products did not damage the environment and public health. Laboratory tests on samples collected from the vicinity of two major textile suppliers in China over a period of a year revealed toxic chemicals in waste water. Some of the chemicals detected have been found to have hormone-disrupting properties that can cause the feminisation of fish and reduced sperm count in men.(13)
9 www.redcats.com, accessed 22/08/11
10 www.guardian.co.uk/business/2011/jul/05/burberry-shareholder-revolt-executive-pay, published 05/07/11
11 2011 Compensation of Executive Directors, downloaded from www.lvmh.com on 01/07/11)
12 Ethical Consumer’s Corporate Critic database
Two of fashion’s favourite ethical pin-up companies disappoint
The Stella McCartney brand is proudly anti fur or leather, yet its parent company Gucci Group uses fur in many of its other fashion brands. And while Dame Vivienne may be personally committed to fighting climate change, her company Vivienne Westwood Ltd has no environmental policy in place to reduce the global warming impact of its own operations.
What we’re asking of companies
The key is communication. Our research for this Buyers’ Guide reveals that most of the companies do not communicate about how they are reducing their environmental and social impacts at all. We’re calling for the luxury sector to step up to the plate and bring itself into line with what lower-end companies have been doing consistently for years. They aren’t perfect, but they’re several shades better than the luxury laggards.
Luxury companies must start identifying, measuring and reporting on their progress towards reducing their negative impacts. This information must be publicly available, as it is only by opening a dialogue that the situation can improve. By working with campaign organisations and their peers, as some high street companies do, they can find practical solutions to the tasks they face and start working towards a sustainable luxury clothing industry.
It is unacceptable to charge such high premiums for clothes which have not been produced in a fair, responsible way.
What you can do
As consumers you have the power to effect change by telling these companies that you do not agree with their ethics, and are no longer willing to buy expensive, exploitative clothing.
Email the companies and tell them exactly which aspect of their business leaves a bad taste in your mouth (send a 'Brickbat'). You can email any of the companies regarding any of the criticisms appearing on the score table.
You can also praise companies that ARE doing positive things (send a 'Bouquet'), as we also hold information on a huge a range of other companies, including ethical clothing companies.
Click on a brand name on the score table and then click on the company name to go to the page where you can send a Brickbat or a Bouquet.