Category: Companies & social sustainability

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Can sustainability reports regulate companies’ conduct?

Browsing articles in the research journal AAAJ the other day, I noticed that my own article, published over a year ago, was on their list of ‘most read in the past 7 days’. This fact made my week. It is more than great when your research matters to the research community, however, sometimes there are learning point for non-academic society too. Rereading the paper, I do think there are points in the paper that could be interesting for non-researchers as well. Hence this blog post.

In recent years, it has become mandatory for large companies to produce a sustainability report each year. In Sweden, it became mandatory because of an EU directive. The idea behind this kind of regulation is that the company’s sustainability report will inform its stakeholders- such as customers, local community, employees and investors- about what the company does in relation to sustainability issues such as climate change, human rights, anti-corruption etc. The stakeholders can then use this information, if they are unhappy with what the company does, to exert pressure on the company. The stakeholders can thus hold the company accountable for its actions. In this way, corporate conduct is regulated; the company will want to change its corporate conduct because of the stakeholder pressure. It is called ‘civil regulation’.

Interestingly, there are a number of cases in the research literature, specifically studying sustainability reporting, where civil regulation does not work as planned. There are cases of stakeholders, for example NGOs, that receive the sustainability reports and read them but do not feel equipped to exert pressure on the company. The company reports and the stakeholders receive it, but there is no civil regulation taking place. The company can continue with business as usual.

Reviewing these cases of ‘failed’ civil regulation, I try to explain why the reported information may not be enough to produce such civil regulation. My article argues that we, in these cases, tend to overestimate the ‘power’ of information and confuse it with knowledge. I use the example of ESG investor analysts, i.e. analysts that focus on how companies handle sustainability issues such as energy consumption, pollution, human rights etc. These investors do attempt to hold companies accountable for their unacceptable sustainability performance, a practice the industry calls ‘company engagement’. In my study I find that when the analysts do so, not all information is alike and the analysts rely on several other types of information, for example from consultants and media, plus many other types of resources such as theories, calculations etc. to show that they know what the company does and how it should change its practices.

Consequently, I argue that we need to carefully distinguish between information and knowledge. Information, such as sustainability reports, may indeed contribute to knowledge but is rarely enough on its own to hold the company accountable. We cannot assume that if someone has information about someone’s actions s/he will be able to hold this person accountable. What kind of information we hold matters: where it comes from, if it contradicts or confirms other accounts. It matters how it is used, together with other resources or to disprove other statements. Moreover, in some cases other resources other than information, for example theories, helped the analysts to hold the company accountable.

This study does not, however, show that sustainability reports are not useful for regulating companies’ conduct. It just illustrates that information in the form of a sustainability report is not enough on its own. If we construct this kind of reporting-based civil regulation, like the EU-directive, we should not overestimate the power of a single source of information. In this context, empirical studies such as the one in AAAJ can inform us about the role the reported sustainability information plays in practice.

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Another sustainable wardrobe challenge: Me made May 18

April ended with Fashion Revolution week, a yearly event that commemorates the Rana Plaza disaster (and which I’ve blogged about before).  This year marked its five year anniversary and brands such as Danish Serendipity Organics and Swedish Asket answered the challenge and showed their customers how their products are made. Fashion Revolution week thus clearly has an impact on companies and encourages another level of traceability in the supply chain. It’s not enough to know where things are made, but also by whom, how and by what materials. I’m already looking forward to next year, new companies accepting the challenge and seeing where this movement will lead.

As a very appropriate follow-up, May starts with the social media event ‘Me made May‘. The initiative involves wearing garments where your own hands have been involved in its making. As Fashion Revolution originator, Orsola de Castro, says: the less we know about how our fashion is made, the less we connect with it. It’s much more difficult to throw away a garment you’ve put lots of effort into making yourself than something you’ve bought cheaply at the store. Consequently, making clothes yourself is often an eyeopener and makes us realise how the cheap prices of fast fashion should be impossible. Learning about seams and finishes, we learn to recognise the difference between high and low quality garments. There are thus many good reasons to at least try to mend, alter or even sew clothes yourself.

Me made May was started nine years ago by blogger Zoe Edwards in order to make the home-sewing community connect with the items they’ve made. I join the challenge this year since I finally came up with a doable challenge for myself. I will wear, each day of May, at least one garment which I’ve either sewn, altered or mended myself. After one year and four moths without shopping I’ve  mended a lot of my wardrobe, so this should be doable. I also expect my few homemade garments to get some extra wear this month. You can follow my progress on Instagram. You can also sign up for this year’s #MMMay18 here.

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The health bonus of no-shopping: reduced chemical exposure

Last year’s resolution of not shopping any clothes brought many benefits: saving money and the environment, reducing waste and getting a closer, more personal relationship to my closet. There is one aspect, though, that I have thought less about but that I was lately reminded of: reduced chemical exposure. It might even be one of the more important benefits of not shopping.

We all have hundreds of chemicals in our blood, many of which are hormone disrupting. And this is in Sweden and the EU where we at least have the REACH chemical regulation. The US has much less regulation, which is discussed in the documentary STINK (can really recommend this documentary, there is a lot of useful information in it).

New clothes are made, dyed and treated with chemicals and these chemicals can end up in our blood stream with serious effects. We were recently reminded of this fact by the H&M burning-clothes scandals (but it applied to numerous other brands too!). One of the reasons the companies are burning seemingly good clothes is because they contain harmful levels of chemicals and substances. Although it is in fact good that we are not sold these items, it is a reminder of the fact that such chemicals are in the clothes at some level. One could question why the companies do not simply remove these harmful chemicals from the production, as our minister for the environment did in the H&M reportage.

One way that chemicals, such as triclosan, gets into our bodies is thus through clothes. I remember buying a pair of jeans some years ago that smelled terribly, “I smell like a walking pool #toxicfashion” I tweeted. I washed the jeans and continued wearing them despite the lingering smell. If I had known what I know now, I would have understood that the smell could be chemicals that would end up in my body and do damage there. I would have returned the jeans to the store.

In the STINK documentary, the story starts similarly with a pair of smelling pyjamas. However, unlike me, the father in the movie realises not only that it’s a sign of chemicals but also that these might be really dangerous to his kids. His wife has recently died in cancer so he realises that some of these chemicals could even be carcinogenic (spoiler alert!- they are).

The obvious benefit with not shopping is that you are not introducing new items and their chemicals into your wardrobe and to your body. If you also consider more environmental friendly washing options (for example avoiding dry cleaning), this will reduce an overall chemical exposure. Shopping second hand, for example for your child, has similar benefits because the clothes have been washed already multiple times which should reduce the chemical content.

One aspect the STINK documentary does not discuss, and which thus is a weakness from a sustainability perspective, is where the chemicals used in production and that result from when we wash our clothes end up: in the environment and in our waters. But I guess you cannot tell all in one and a half hour.  This part of the story has also been brought up elsewhere, for example in the True Cost movie.

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Corporate sustainability in 2017

I’m in the jury for the ‘Best Swedish Sustainability Report’ award and we are announcing the 2017 winner tomorrow. Because of this jury work, I have been reading a lot of sustainability reports this summer and see some current trends.

On the positive side, companies increasingly work with sustainability in their core operations. Compared to when I started my research in this area eight years ago, there is much less reporting on how much money companies give to charities. These days, companies understand that their main focus should be on the social and environmental impact of their business operations. This is where they can really make a difference. Anyone can give money to a charity, but only the company can make demands on its suppliers and reduce the carbon footprint in the operations.

Another trend is that companies increasingly connect their work to the UN sustainable development goals. This can of course be seen as a way for companies to ‘glorify’ their work. Nevertheless, the UN goals may help companies to think about the global challenges and their role therein. It’s a way to connect everyday work to a bigger picture. Similarly, some companies describe how their work contributes to the Swedish state’s sustainability plan ‘Agenda 2030’ (which, in fact all Swedish state-owned companies should do).

Still, there is more work to be done. Sustainability, in its essence, is about the long term perspective. According to the 1987 definition, it’s about future generations. In this respect, the old criticism that companies’ sustainability reports are not really about sustainability at all is still valid. When you set goals for 2020 you are not considering future generations. When you mainly report what you did last year you do not see the longer time perspective. As a company you should ask how your business operations will affect the life conditions of future generations. If there is no unpolluted water left, how will it affect future generations? No biodiversity? Unfortunately, very few companies think in terms of such time perspectives (yet).

Still, there are reasons to be optimistic. A few companies stand out and show that things can in fact change fast. Swedish textile company Ellos isn’t known for their sustainability work. However, in two years they have gone from sourcing only conventional cotton to 46% ‘better’, organic or recycled cotton. By 2020 it should be 100% and, at this pace, they will definitely make it. If all companies went from 0 to 50% in one to two years it would help the environment tremendously.

From 2018, all large Swedish companies will report on sustainability (a Swedish adoption of the EU directive). I am excited to see how this will affect business practices.

 

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Is expensive fashion more sustainable?

You might, as I once did, think that you avoid the sustainability issues in fashion because you don’t shop at H&M, Gina Tricot, Dressman etc.

The short answer is no, expensive fashion is not necessarily more sustainable. Luxury production in Europe should guarantee better working conditions and less chemicals, but only a few luxury brands still produce in Europe. Those who do might only produce certain parts of the collection in Europe. And ‘Made in Italy’ can these days mean made by Chinese in Italy. Even when something is made in Europe, the fabric may be imported. Luxury brands often source their materials from outside of Europe and then we have the issues with conventional cotton and synthetic fibre etc.

There are also environmental issues with the chrome and heavy metals involved in tanning of leather. If you do want a new luxury bag, check where the leather came from, that it can be tracked to sustainable farming, and for vegetable tanning. I found that Swedish brand Palmgrens had a longstanding relationship the Italian farm the leather derived from and used vegetable tanning processes for a certain bag. Thus it’s the last bag I’ve bought, before my current year of no-shopping, and I don’t feel I compromised on design just because I focused on sustainability.

Another issue with luxury brands is that they don’t consider the environmental impact of care. Many put dry cleaning on the care instructions (as on this Ralph Lauren jacket, made in the Philippines) which isn’t environmentally friendly. And, in many cases, the items are better cared for by hand washing. I don’t know how many times the dry cleaner couldn’t remove stains and when I try at home, as a last resort, it works perfectly. Money and chemicals wasted.

The luxury conglomerates seem to lack a thorough understanding of sustainability issues. For example, when LVMH reports on biodiversity, they write about how they finance biodiversity research rather than how they take biodiversity into account in their sourcing of raw materials. Now I am all for funding research, of course, but certain issues we already know a lot about, such as pesticides and biodiversity. We can act on these today.

Similarly, it is admirable that Kering has developed the Environmental Profit and Loss account (which I often teach to students) but more important is how they handle their everyday sustainability challenges. I searched for organic on Kering’s website and only found ‘organic growth’.

Taking the opposite road, many cheap brands are not as diligent about working conditions and where things are made* but are instead rapidly increasing their share of ‘better’ or organic cotton and renewable fibre. They hardly ever prescribe dry cleaning. But then again they don’t make clothes that should last.

Thus while some brands are working on social issues and others focus on some of the environmental, few brands cover all the necessary issues. Those who do are generally those that started their business with a sustainability focus. These brands are generally slightly more expensive than fast fashion but usually much cheaper than luxury brands.

So the answer is no: price is not a good indicator of sustainability.

* The Inditex group (Zara, Massimo Dutti etc. ) is an interesting exception. Around 60% of their suppliers are located in proximity to the headquarters in Spain.

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Slow Fashion in memory of Rana Plaza

This week it’s four years since the Rana Plaza disaster in Bangladesh . 2500 workers were injured and 1129 killed when the eight-storey factory collapsed. This event is commemorated with the Fashion Revolution Week each year. Customers and consumers are encouraged to ask their brands ‘who made my clothes?’. Consequently, social media is buzzing with activity and many brands have shared pictures and stories about their production, for example Serendipity Organics and many more (to see the brands and their stories follow @fash_rev on Instagram). Even conventional fashion media, such as British Vogue, report on the activity.

Many of those active during Fashion Revolution Week are also all year round Slow Fashion proponents. Karen Templer of Slow Fashion October did a thoughtful  blog post defining ‘Slow Fashion’ as considering the human, environmental and monetary cost of clothing as well as taking full responsibility for what we own:

By take responsibility, I mean commit to wearing each item (whatever it is, wherever it came from) for as long as it lasts, extending the lives of things through care and mending, and re-homing anything that doesn’t work for you.

Independent pattern maker ‘In the folds‘ organised an Instagram challenge to direct attention to the time and skill it takes to make clothing. Most clothes are still made by hand and it should be valued, whether we do it ourselves or someone does it for us, she argues.

Elisalex of ‘By Hand London‘ made tutorials for Fashion Revolution Week on how to embroider and sew on patches to cover wholes, imperfections or just to make items more fun. The purpose is to make our clothing more useful so that we use what we have instead of buying new or throwing things out. The workers put a lot of effort into making clothing for us, one way to value their work is to give the clothing a long life (find my strategies for doing so here)

It seems to me that the Slow Fashion movement is here to stay. It is starting to have a presence in social media all year round. Fashion Revolution Week keeps the memory of Rana Plaza alive and educates customers and consumers about social responsibility in fashion production. The question is if the brands are changing their ways as fast as their customers are learning about the issues.

The Rana Plaza disaster shouldn’t have happened but it did. Supporting better and safer business practices is one way to commemorate the events.

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Can conscious consumerism change the world?

Last week, I heard from two sources that conscious consumerism, i.e. using your purchases to support good business practices is not enough. In this podcast, Stiv Wilson argues that we need to get political instead. Which is exactly what their organization Story of Stuff is all about. This article by blogger Alden Wicker states it a little more harshly:

“Conscious consumerism is a lie. Small steps taken by thoughtful consumers—to recycle, to eat locally, to buy a blouse made of organic cotton instead of polyester—will not change the world”.

These kinds of arguments are used in two contexts: those that want us to get involved politically instead, as in the above two cases, or those that want to give up, ‘it doesn’t matter anyway’, ‘we can’t change the system’ and so on.

Unsurprisingly, I do believe my purchases matter. I believe in political power too. I also believe I can make a difference with my research and teaching. Basically, let’s use the means that are available to us and with which we are comfortable. Some people are comfortable marching for environmental causes, others are more comfortable changing their purchasing behavior. However, like the politician that argues for public service and then doesn’t pay the tv-licence, it is desirable to try to be consistent.

How could then purchasing behavior make a difference? Will H&M or Varner notice that I am doing a no-shopping year? No, they will not. Most likely we cannot affect H&M and Varner politically either. They are private companies, not states, and they can shop around for the tax and environmental rules that suit them, if they like.

So the impact of purchasing behavior depends on who you are trying to affect and how important your purchases are to them.

My local organic food store in Bergen has only so many customers and I purchase most of my food there. They would notice if I move. The people I purchase food from at the farmers market might notice (Bergen’s farmers market on the picture above) . Based on this fact, I feel quite comfortable telling people to stop buying from the fashion giants (they will not notice) and start buying from small sustainable brands (who will notice). For small businesses, your purchase does make a difference.

At this point, the ‘elitist’ argument usually appears. The small sustainable brands are more expensive. Not everyone can afford to buy all their food at the organic food store. This is absolutely true but it is not an argument against conscious purchasing behavior generally. We who can afford the sustainable brands have a bigger environmental footprint than people with less purchasing power. It is more important that those with the biggest environmental impact and who can afford do change their behavior. Moreover, buying food directly from the farmer is not necessarily more expensive. Second hand stores are terribly cheap.  Most likely, we could all save money by buying less and learning to mend.

But how do we affect the big companies that are larger than states and that we cannot affect by vote or with our individual purchases? I think maybe social movements can play a role here. These companies are at least concerned with trends among customers. How large groups of consumers behave affect their business. Now I might have prided myself in being the only one I know that is on a shopping fast. Getting active on Instagram, however, I soon discovered that there are many more like me. You could even say I am late to the trend. We are not as unique as we might like to believe. If I decide to only buy grass-fed local meat, there are many more like me, acting on similar impulses. Most likely we are already part of some social movement or trend, whether we know it or not. And, as group, how we behave does concern these companies.

So, in my opinion, our consumption does impact the world and if you choose to purchase consciously it will too. This, however, is not an excuse for politicians and companies to not do their job and instead put all responsibility on the consumer’s shoulders (as happens all to often). We have some big challenges, so we all need to do our best.

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What we pay workers in developing countries

On Wednesday night, I was out talking about my research. Since the fashion industry had been on my mind lately, I decided to use it as an example of how we can measure companies’ sustainability. When I was about to speak I realised the audience was, apart from two women, only men. On average 50+. A crowd that might not be so concerned with fashion.

In hindsight, I’m glad I didn’t adjust my examples to the audience.  I suspect 50+ men do not get preached to about environmental problems and working conditions in the fashion industry so often. They were surprisingly interested. I was asked about child labour, so there is some awareness in this crowd too.

This time, I used working conditions in the supply chain as one indicator of how ambitious a company is in regards to sustainability. These issues are of course not limited to the fashion industry. A recent Swedwatch report shows that the tobacco industry might be worse. Child labour in combination with hazardous argochemicals is a  very bad combination (smokers- choose organic and Fairtrade!). While wine production might not be equally bad, there’s still good reason to consider how certain wine stays so cheap.

There are many components to working conditions but one of the most important ones is wage. There are certain key terms or certifications that we can look for as they indicate what the company is paying the workers.

Many companies simply pay minimum wage. This is the legal minimum in a country and part of what lures companies to start production in a ‘new’ developing country. But these ‘new’ low wage countries come with problems, as HM recently learnt (again!) when it got out that they (again) had child labour in the supply chain earning less than the minimum wage. Getting labour in Myanmar as cheap as a third of the hourly rate in China must have been very tempting.

Paying the minimum wage is, in many cases, not sustainable as it is not necessarily enough for workers to support themselves. Consequently, the companies get trouble over time because workers have to work overtime to support themselves.

Recognising that they have to go beyond minimum wage, some companies then decide to pay a ‘fair wage’. It is sometimes unclear what this exactly entails, but it is should be more than minimum wage. Norwegian Varner (Dressman, Bik Bok, Cubus, Volt, Solo etc.) is in the process doing something in this area but we don’t know what they will eventually decide on.

A little more ambitious and well defined is the concept ‘living wage’. According to most, a living wage should at least be able to support the worker and a child or half a family. If you’ve seen documentaries where female workers send their children away because they cannot take care of them, then living wage sounds pretty good. HM has said that they will pay a living wage for ‘strategic’ suppliers from 2018. It’ll be interesting to see if they achieve this goal.

A decently ambitious standard that requires companies to pay living wage is SA8000, used by for example Aiayu.

Some companies go further and adopt some kind of Fairtrade certification. This generally means that the community of workers get paid a little extra in order to invest in the community. Two examples are  Patagonia (American Fairtrade) and Serendipity Organics (FLOCERT).

Even more ambitious are, from my point of view,  artisan collaborations. Rather than putting people in factories, when working with local artisan groups and communities companies support people in their existing traditional craft skills. This has a cultural value of its own. One fashion example in this category is People Tree. Within furniture there’s American West Elm. IKEA also has occasional collections in this category.

It is always important to check how big part of the production any of these initiatives apply to. Sometimes companies announce these initiatives so boldly that it seems as if it concerns the whole company when in fact it is only a pilot project.

A final note on poverty. Many chains argue that by placing orders in developing countries they help alleviate poverty in that country. It would be worse if they closed production (as if paying minimum wage or closing production are the only two options). However, if companies wanted to alleviate poverty there are many other ways to do so. Putting people in factories for long hours and paying minimum wage (and sometimes failing at that) is arguably not the best way. 

Another thing we often hear is that Western companies pay more than local companies. So Western companies are already doing something good by being slightly better than these companies. But that’s why our companies placed the production there, because its among the lowest wages in the world. How difficult is it to be ‘good’ when you are comparing yourself to producers acting at the bottom?