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Transparency Report Card: Frequently Asked Questions

February 3, 2007

1. Is ETAG encouraging consumers to shop at the stores with the higher scores?

ETAG does not endorse any particular companies. We are urging consumers to demand sufficient information from all companies so they can make ethical choices on their own based on the information available.

The ETAG report shows that no major retailer or brand is currently providing customers or shareholders sufficient information to make ethical choices.

A few major brands and retailers, most of which have been the subject of anti-sweatshop campaigns, are beginning to provide more information to consumers, investors and other stakeholders, including candid reports on the worker rights violations in their global supply chains and what they are prepared to do about those abuses. However, there still isn't sufficient information publicly available to judge on a year-to-year basis whether conditions are actually improving.

The main objective of the Report Card is to encourage companies to provide more and better information on where and under what conditions their clothes are made and what they are doing to improve conditions. When companies disclose sufficient information, consumers and investors will be able to track improvements and make ethical choices.

2. Companies like Levi's, Reebok, Gap and Nike score highest. Does that mean they are now good companies?

No companies are "SweatFree." Worker rights abuses are endemic to the garment industry as a whole. Nike's 2005 Corporate Responsibility Report shows that there continue to be serious worker rights violations in their supply factories around the world, many of which also produce for other companies. What has changed is that companies like Nike are no longer denying it. And they are also willing to discuss what they could do to improve labour practices.

Companies like Nike, Gap and Levi's that have been the target of anti-sweatshop campaigns over the past decade are finally admitting that there are serious problems in their global supply chains. They are reporting on their findings and on the steps they are taking to deal with the problems. It's no accident that these are the companies that scored better in our study.

Other companies have not been under the same level of public scrutiny, and have therefore not felt compelled to admit that the problem exists or to take action to deal with the problem. It's no accident that these companies scored lower in the study.

3. Didn't you declare Wal-Mart "sweatshop retailer of the year" a while ago? Why do they score higher than Sears and other companies?

In response to all the public criticism it is receiving, Wal-Mart is beginning to report on what it's doing to address worker rights abuses in its global supply chain. Because they are reporting at all, they score higher than companies that are reporting little or nothing.

However, as the Report Card shows, there are serious problems with how Wal-Mart is dealing with workplace issues. For example, their code of conduct allows for a 14-hour workday and a 72-hour workweek. Their policy of cutting and running when serious worker rights violations are uncovered has discouraged workers or other stakeholders from bringing problems to their attention, though there are now some indications that they are reassessing this policy. Their lack of transparency on factory locations or audit findings keeps consumers in the dark on working conditions.

Their score is still a failing grade and is nothing to be proud of. The fact that some companies are not even showing up for class doesn't mean that Wal-Mart is a good student by comparison.

4. Isn't it possible that some companies that rate low in the Report Card are using factories with better working conditions, but just don't report on what they're doing?

That's what many companies tell us, but without any evidence, how can we know if what they're telling us is true? Consumers want verifiable evidence of decent working conditions. The "just trust me approach" just doesn't sell anymore.

5. Aren't you comparing apples and oranges when you compare Canadian department stores and discount chains with major US brands?

Multi-product retailers often complain that they shouldn't be evaluated on the same basis as brand merchandisers because they are very different kinds of companies and retailers' products are made in so many supply factories around the world.

In fact, retailers and brand merchandisers have a lot in common. Department stores and discount chains sell both their own private label apparel products and "national brands," such as Levi's jeans or Liz Claiborne shirts. Often these products are made in the same factories. For instance, an MSN staff person has visited a factory in Lesotho that, at various times, produced blue jeans for Gap, the Hudson's Bay Company and Levi Strauss. All these companies have a responsibility to ensure that there are decent working conditions in this and other shared factories. In fact, they should be working together through a multi-stakeholder initiative to ensure that those factories have decent working conditions.

6. Why does it matter whether companies disclose the factories they are using? How is that information useful to the average consumer?

When companies disclose factory locations, they are inviting other buyers using the same factories to collaborate with them on efforts to ensure labour standards compliance. They are also inviting local and international unions and NGOs to bring problems to their attention when they arise. While disclosure of factory locations isn't of immediate use to consumers, it does encourage increased scrutiny that, in the long run, will result in more information on working conditions being available to consumers and investors.

"Disclosure of supply chains is a key to unlocking greater collaboration among brands and to creating the incentives necessary for factories to turn their CR performance into a point of differentiation," says Nike's 2005 Corporate Responsibility Report.

7. What evidence do you have that consumers or shareholders really care about the conditions under which their clothes are made?

Numerous reports have shown that Canadians care about how their clothes and other consumer products are made. A 2002 Vector public opinion survey showed that 36% of Canadians and 44% of students said that during the previous year or two they had refused to buy a product they believed was made by child labour or in a sweatshop. The same poll found that 84% of Canadians support factory disclosure regulations. A 2001 Vector poll revealed that 80% of Canadians and 75% of shareholders want the federal government to establish standards for corporate social responsibility and make companies publish what they are doing to meet the standards.

8. Why are you focusing on what companies should do? Doesn't the government have a role to play?

As the Transparency Report Card shows, voluntary action by companies is not an adequate solution to the problem of sweatshop abuses. Action by government is also needed to make companies more accountable. The Report Card outlines a number of actions government should take to require and promote greater corporate accountability and transparency. (See Recommendations to Government in the Report Card.)

9. What can consumers do?

Consumers should demand that all retailers provide sufficient information for them to make ethical choices.

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