Denim brands ‘unethical’ to suppliers yet demand better practices
4-2-2025
DENIM BRANDS ‘UNETHICAL’ TO SUPPLIERS YET DEMAND BETTER PRACTICES
A
new denim industry analysis has revealed a disconnect between brands' desires
for fair garment worker practices and how brands treat suppliers.
Non-profit Ethical Denim Council (EDC), which aims to address unethical behaviour within the denim industry has said key challenges remain within the denim supply chain based on the results of its 2024 State of the Denim Industry report.
The report, which is based on a survey sent to 123 suppliers with 74 supplier representatives providing feedback and insights, suggests: “Brands, retailers, and importers are engaging in behaviours that could be deemed unethical while showcasing record profits and promoting fair labour practices”.
The EDC explains the unethical practices include:
• Delayed payments
• Cancelled or deferred orders
• Imposed discounts.
It continues: “While these practices may not have been explicit in contracts they have been implied or imposed by brand practices. Similar to the report from 2020, many in the denim industry fear repercussions from speaking out.”
Key findings on the denim sector from brands’ suppliers
The survey’s sample accounted for 233,000 employees across the industry with 90% of respondents having factories in an Asian country and denim fabric and/or garments being manufactured by 84% of respondents.
Most of the suppliers surveyed (73%) believe not having commercial compliance is unfair and said it’s time for brands to start putting together the link between how much (and when) they pay the supplier and how much workers are being paid.
The report states: “While factories are expected to comply with sustainable and ethical policies, it is next to impossible to accomplish under current purchasing practices.”
The same proportion of suppliers (73%) said they had experienced delayed orders, and over 61% had orders cancelled.
EDC says this reflects the trends it had detected in its earlier research with 60% of responses showing they experienced two or more of these disruptive practices.
Pricing changes are also an issue with over half of the surveyed suppliers seeing a decrease of up to 30% in the price for their main product, despite consumers paying higher prices on account of inflation.
Most respondents declared that they hadn’t received purchase orders (POs) with cancellation clauses. Half also did not feel obligated to accept lower payments.
63% said that longer payment terms were being imposed on them. While a few payment terms are longer than six months (5%) the average payment term was 77.5 days despite the industry standard being 30 days.
The report suggests there is a major disconnect between denim brands and suppliers with brands not acknowledging the impact their behaviours have on garment workers within the supply chain.
However, suppliers say that each practice has a direct impact on factory employees.
The report notes: “Suppliers have real fears of having to temporarily or permanently lay off workers or the inability to increase wages. Though one respondent claimed they will always pay those working for them, this sentiment was not common. Moreover, it seemed this was simply not possible for others in the supply chain.”
Over 20 brands were named for exhibiting unethical behaviours. Other respondents said these behaviours were exhibited by “all major brands” suggesting it is becoming the industry standard.
EDC says: “It is concerning to see that so many brands are engaging in unethical behaviours without linking these practices to the welfare and wages of labourers. With growing awareness and demand for ethical and sustainable practices, it is important for brands to take responsibility and make positive changes toward a more conscious and responsible industry.
What does the report suggest as next steps?
1. Commercial compliance
EDC suggests including a commercial compliance as part of the contracts between a denim brand/retailer/importer and the supplier. It would be designed to confirm a brand’s commitment to fair and just practices. Plus, it would acknowledge their understanding that payment practices have a direct impact on the workers they claim to protect.
EDC says: “Having this in place not only keeps the supply chain honest but also encourages a more ethical and sustainable denim industry that benefits everyone involved.”
It believes the commercial compliance should be based on the Transformers Foundation’s eight ethical principles:
• Honesty and transparency
• Empathy
• Promise-keeping and trustworthiness
• Loyalty
• Fairness
• Reputation and morale
• Accountability
• Respect
2. Ethical Denim Council
EDC also believes an autonomous panel is needed to oversee possible ethical violations within the denim supply chain.
The Council will be composed of members of civil society not related to the denim industry including individuals from academia, NGOs, business and governance. This is intended to maintain impartiality. EDC sees this council as aiding the shift of power imbalance and creating a fair and just supply chain.
The Council would follow four structured steps to deal with potential ethical violations:
1. Complaint
2. Consideration
3. Arbitration
4. Council hearing
Overall conclusions on the future of the denim sector
EDC concludes that brands are influential players in the denim industry so they must “bear significant responsibility” for driving ethical change.
Rather than assigning blame and sole responsibility to suppliers, the report says it is imperative that brands acknowledge the power imbalances within their relationships with suppliers and take proactive steps to rectify them.
The EDC continues: “Brands must lead by example, not only through statements of commitment but, through tangible actions that embrace ethical principles. They should reevaluate their sourcing practices, ensuring fair negotiations, reasonable lead times, and fair compensation for suppliers.
“Suppliers, on their part, should be encouraged and supported in their efforts to uphold ethical standards. This approach fosters a more equitable relationship between all stakeholders, mitigating existing power imbalances and enabling a collective effort toward ethical transformation.”
Denim trade show Kingpins wrapped up in New York last month (January) after highlighting the most recent innovations in denim textiles and eco-friendly practices.
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