The true cost of your affordable fashion addiction


If you knew that your clothing and appliances were made by forced labour, would you still buy them? If you were invested in companies that found their products and services were made with exploitative labour practices, what would you do?

Modern slavery refers to exploitative labour practices, including servitude, child labour, forced labour, human trafficking, debt bondage, slavery-like practices, forced marriage and deceptive recruiting for labour or services. It is estimated that 40 million people around the world are trapped in modern slavery, with one in four estimated to be children.

In addition to being something that people find abhorrent, modern slavery is high on the agenda across Australia as the Modern Slavery Act has come into force this year. Under the Modern Slavery Act, businesses with more than $100 million in revenue are responsible for investigating, reporting and managing their exposures to modern slavery, both in their own offices and, critically, in the supply chain.

modern slavery child labour cost of cheap clothes

Every year, businesses will have to file a Modern Slavery Statement covering how they manage their responsibilities. Organisations will have to file their first statement by March of 2021, but early adopters are already publishing their statements.

Human rights and labour conditions are issues that have been front and centre as risks in the sustainability sector, but these concerns have more than just reputational impact. Take, for example, the 2012 tragedy at the Rana Plaza textile factory in Bangladesh, which left more than 1100 people dead.

In addition to the sheer human toll of such incidents, the companies that source from factories that engage in modern slavery and exploitation can also face business risks in terms of production delays and quality issues. Plus, there's the damage to brand values - knowing that the $15 tee shirt you're eyeing may have been made by someone who isn't being paid fairly for their work may make you put it back on the rack.

There's also a correlation between exploitative labour practices and the impacts of COVID-19. For example, Baptist World Aid published a pandemic edition of its Annual Ethical Fashion report recently, which assesses more than 400 fashion brands on their ethical sourcing practices. Modern slavery falls into the area of concern on ethical sourcing.

More than 70% of global fashion brands around the world could demonstrate at "at least some deliberate positive action" to support vulnerable workers during the COVID-19 pandemic, but the pandemic also exposed areas needing "vast improvement", the report said.

The report scores brands against six fashion commitments, which this year focused on responses to the COVID-19 pandemic: support workers' wages by honouring supplier commitments; identify and support the workers at greatest risk; listen to the voices and experience of workers; ensure workers' rights and safety are respected; collaborate with other to protect vulnerable workers; and build back better for workers and the world.

The report found that 56% of companies were unable to provide evidence of action in all six areas, but a range of Australia and New Zealand brands, such as Country Road, Glassons, Retail Apparel Group and Kathmandu, were recognised as 2020 top scorers in the report, alongside a of international brands such as Patagonia, The Iconic and UNIQLO.

The report noted that the first part of 2020 saw 50 million garment workers lose wages, totalling to US$5.79 billion, and the economic impacts of COVID-19 caused Australian retail foot traffic to fall by 71%. As clothing sales plummeted, fashion companies were forced to furlough staff and temporarily shut stores.

The drastic plummet in retail spending had a knock-on effect. According to the Baptist World Aid report, "more than half of garment manufacturers in Bangladesh reported in March that the majority of their in-progress or completed production had been cancelled by major fashion brands". By May, more than 30% of Bangladeshi garment workers reported their children had gone without food.

Both the investor voice and the consumer voice have a powerful role to play here.

A coalition of investors including AustralianSuper, Cbus, Aware Super, HESTA, Australian Ethical, Colonial First State Investments Limited, Fidelity International, and First Sentier has sent a letter to ASX100 companies encouraging them to examine broad supply chain risks of labour exploitation as a leading indicator of modern slavery. The coalition represents $5.8 trillion in assets under management and regularly meet with listed companies to speak about sustainability-related risks and opportunities.

The consumer voice is also powerful in this circumstance. For you fashion mavens who are concerned with buying ethically, Chantelle Mayo, advocacy project manager at Baptist World Aid Australia, recommends looking at the guide accompanying their report, ranking brands on their commitment to ethical sourcing.

"Consumer attitudes are shifting and that's impacting companies' ethical sourcing practices," Mayo says.

Consumers can communicate with companies and express their views on ethical and sustainable production, she says.

"Realise the power that you have," she says. "When you make a decision to buy clothing, make sure you understand the decisions behind it ... You could have brands that you really like, and you look at their grades in the report, and think ok, they're doing pretty well, I'm happy to buy a piece of clothing from them. Talk to companies, tell them how they prioritise these issues matter to you."

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Rachel Alembakis is the Managing Editor of FS Sustainability, a Rainmaker title that examines how investors and companies integrate environmental, social and corporate governance issues into their decision-making processes. She has more than a decade's experience covering investment issues for a range of publications in Australia and overseas. Rachel hosts the ESG podcast, The Greener Way.