Rethinking MSIs: Binding Brands to Create Change

Public outcry over corporate behavior led a range of brands to quickly mend their ways. However, the question remains why public outcry was even needed. Brands have spent years promoting programs they claim guarantee protection for their workers. So why couldn’t they rely on those?

In the 1970s and 1980s garment brands started to outsource production abroad. This was a step that seemed to have only advantages: lower prices, lax labor regulation, less risk. Reduced to a mere client of garment factories elsewhere in the world, garment brands and retailers could wash their hands of any responsibility for workers – or so they thought.

Enter the rules, but set and monitored by whom?

Following a series of exposés in the 1990s documenting horrific conditions in sweatshops, brands took action to curate codes of conduct and imposed them on supplier factories. This progressed to the emergence of a social auditing industry to oversee suppliers’ compliance, as well as social compliance initiatives to synchronize and oversee these codes, often in the form of voluntary, multi-stakeholder initiatives (MSIs). This all prompts the question: given the tools brands have created to regulate working conditions in the garment industry, why are workers being left to suffer during the pandemic?

The answer lies within the mechanism of these voluntary MSIs. Behind the façade of battling exploitation, MSIs have become little more than a fig leaf for fashion; a tool enabling brands to dictate the rules, while shielding the industry against responsibility and criticism, rather than protecting the workers.

MSIs, which come in different shades of brand-friendliness and ambition, have certainly played a role in normalizing ideas of supply chain responsibility, as well as facilitating discussions between brands, unions, NGOs and other stakeholders. However, as a recent report on supply chain transparency published by the Transparency Pledge Coalition has shown, many MSIs are no longer taking the lead in moving the more unwilling brands towards stronger politics, but are instead surpassed left and right by members who voluntarily go beyond what the MSIs prescribe. Only one MSI was willing to take the challenge of the Transparency Pledge coalition to actually take the lead and make transparency a membership requirement. Another recent report shows that a “soft measure” such as due diligence reporting, remains wanting. And although MSIs’ complaint mechanisms still remain useful avenues for workers and labor rights activists to appeal to if a member brand is unresponsive to resolve a case of labor rights violations, which continues to be tried again and again, the same limitations apply: the outcome is not binding.

Voluntary has failed, binding is the way forward

It is seven years after the Rana Plaza collapse in Bangladesh, whose factories were audited without noticing the death traps they posed; and eight years after the Ali Enterprises fire, certified as SA8000 compliant only weeks before over 250 workers got trapped behind closed exits and barred windows. By now, it must be clear to all that we have to leave the era of voluntary self-monitoring behind us. In April, Commissioner for Justice Didier Reynders announced the EU will be working towards mandatory due diligence legislation. Other countries, such as France and the Netherlands, already have legislation in place that holds companies to account for their supply chains. With these legislative initiatives, governments are showing businesses that the respect of human rights can no longer be a question of voluntary corporate social responsibility but is an obligation when doing business.

Even though legislation is the crucial next step, it would be too easy for brands and retailers to just wait for that. We have known for years that binding works and that there are ways to introduce it into how stakeholders change the industry together. Weeks after the Rana Plaza collapse, unions and brands signed a binding agreement to make factories in Bangladesh safe. The Accord on Fire and Building Safety in Bangladesh has made factories safer for over 2 million workers and provides workers a credible and transparent avenue to access remedy, which has prevented workers from having to enter unsafe factories and protects them against retaliation if they report safety violations. The program works, because member brands and retailers put their signature under a binding contract with extensive enforcement procedures that have eventually led to court cases against non-compliant brands. This has kept other brands in line and led to very real results for workers. The current Accord agreement is valid until June 2021, which makes it of extreme importance that a new, this time more international, binding agreement is negotiated that could roll out similar safety programs in other countries where unions have shown interest, such as Pakistan.

The Accord is not a mere anomaly in an industry still dominated by voluntary cooperation. Indonesia has had a binding protocol on freedom of association signed by sportswear brands, suppliers and unions since 2011. Last year in Lesotho, brands and unions signed a binding agreement to address gender based violence together. Last month, labor rights organizations presented model clauses for arbitration, to facilitate the creation of more binding agreements. We need regulation on government and international levels, but brands, retailers, and unions do not have to wait for that.

Real solutions

A paradigm shift from brands and retailers is needed, to recognize that lip service is not enough. Too often brands still give in to the reflex to hide behind an auditor, an MSI or even a binding agreement. When we wrote to brands asking them to speak up for higher wages in Bangladesh, many of them responded that they signed the Bangladesh Accord, apparently believing that by signing one agreement they were off the hook on other issues as well. It is paramount to realize that no initiative is a “get out of jail free” card. They cannot be shields against criticism or real responsibility. We have to rethink what MSI’s actually contribute to workers’ rights. Stakeholder cooperation to improve labor rights can be meaningful only if the agreement is concrete, the implementation is transparent, and the commitments are binding. If we truly want to leave the lawlessness of early globalization behind us, concrete binding regulations and agreements making due diligence mandatory are the way forward. The time to act is now.

Authored by Christie Miedema, Clean Clothes Campaign for MSI Integrity

July 23rd, 2020