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Aug 17 - By Sharon Kimathi Energy and ESG Editor, Reuters Digital sharon.kimathi@thomsonreuters.com
Hello!
This week, we unravel the fabric that weaves the tapestry of ethical concerns in the fashion industry as H&M delves into a factory investigation in Myanmar amid Zara's pivot away from the region. Myanmar, whose garment industry is a major employer, supplying clothes and shoes to big Western brands and retailers, has been plunged into a political and humanitarian crisis since a military junta took power in early 2021.
Before taking a look at human rights issues at the H&M Myanmar factory, we're eager to hear your thoughts on Sustainable Switch. Share your views! Join the conversation by taking our quick survey here. Your input matters.
Now, let's refocus on H&M and its investigation of 20 alleged instances of labor abuse at Myanmar garment factories that supply the world's second-largest fashion retailer, it told Reuters, just weeks after top rival Zara owner Inditex said it was phasing out purchases from the Southeast Asian country.
Tracking workers’ rights abuse
A British-based human rights advocacy group tracked 156 cases of alleged worker abuses in Myanmar garment factories from February 2022 to February 2023, up from 56 in the previous year, indicating a deterioration of workers' rights since a military coup in February 2021.
Wage reduction and wage theft were the most frequently reported allegations, followed by unfair dismissal, inhumane work rates, and forced overtime, according to a report by the non-governmental organization, the Business and Human Rights Resource Centre (BHRRC), seen by Reuters. "All the cases raised in the report by BHRRC are being followed up and where needed remediated through our local team on the ground and in close cooperation with relevant stakeholders," H&M said in a statement. "We are deeply concerned by the latest developments in Myanmar, and we see increased challenges to conduct our operations according to our standards and requirements," the Swedish retailer said. The BHRRC has been tracking allegations of workers' rights abuses in garment factories since the military junta took power in Myanmar, plunging it into a political and humanitarian crisis. The tracker includes abuse cases at 124 separate factories.
“A responsible exit”
Last month, Zara owner Inditex started the process of stopping purchases from Myanmar, the company told Reuters, as a result of a campaign by global workers' union IndustriALL to convince companies to divest from the country. "Inditex is in the process of a phased and responsible exit from Myanmar, following IndustriALL's call," a company spokesperson wrote in an email. "As a result, we continue to reduce the number of active manufacturers in the country."
Inditex did not give a timeline for its exit. It does not publish a list of suppliers, so it was not immediately clear how many factories in Myanmar are supplying the fast-fashion giant.
How about other retailers?
Spanish fast-fashion retailer Mango told Reuters it has stopped sourcing from Myanmar. Primark said it would "begin working towards a responsible exit" in September last year, followed by Marks & Spencer announcing its planned exit in October.
Still hungry for more fashion sustainability updates? Then check out this month’s Ethical Corporation magazine which focuses on the sustainability challenges facing the $1.5 trillion fashion industry which is responsible for 2-8% of global greenhouse gas emissions, and has huge impacts on human rights, nature and biodiversity. Click here for the magazine.
Talking Points
In Conversation
Tibbe Smith Larsen, European regional coordinator at the international garment labor union alliance, Clean Clothes Campaign, calls on brands and retailers to close the gap between actual and living wages:
“Living Wages have been a key theme for the Clean Clothes Campaign for years, yet this is one of the areas where progress is hardly made. “It remains too easy for brands to evade their responsibility as employers to make sure that their workers are able to live a decent life. “There are numerous voluntary initiatives claiming to work on the issue but the reality is that garment workers can largely be defined as working poor; their purchasing power is extremely low and has barely improved – if not decreased – over the past decade. “Voluntary initiatives have not resulted in meaningful improvements for workers. Legislation, binding measures and strong independent labor unions are needed now to secure living wages for workers.”
ESG Lens
Breakingviews:
Chief financial officers are stepping into an increasingly rapidly revolving door. Finance chiefs at companies from Alphabet to Walgreens Boots Alliance are changing roles, moving employers, or quitting at a faster rate than usual this year. Though explanations vary, higher turnover looks here to stay.
ESG Spotlight
Today's spotlight is on the circular economy and recycling, showcasing initiatives in Sweden, where packaging firm Tetra Pak trials recyclable packaging. Over in Malaysia, the palm oil board and Petronas are exploring the transformation of cooking oil and palm oil waste into sustainable aviation fuel.
The Swedish-Swiss drinks packaging giant Tetra Pak produced 193 billion of its ubiquitous cartons last year, but despite on-pack labels in many markets saying its packages are recyclable, globally only about a quarter of them were actually recycled. It points out that its processing and packaging technology has made it possible to protect perishable foods without refrigeration and enable even remote corners of the world safe access to nutritious food. But it has struggled to lift stubbornly low recycling rates due to its packages’ multi-layered design, comprising paper, plastic and a thin layer of aluminum, which plays a critical food safety role. The company’s long-term plan is to develop an aseptic package that is fully renewable, recyclable and carbon-neutral. It has invested heavily in innovation by replacing plastic caps with biobased alternatives and recycled polymers, increasing levels of Forest Stewardship Council-certified cardboard.
Malaysia's palm oil board and state oil firm Petronas have signed an agreement to study the use of used cooking oil and palm oil waste as sustainable aviation fuel. The two organizations signed a memorandum of understanding (MoU) on Aug. 14 to explore the potential of palm-based products and wastes, such as used cooking oil and palm oil mill effluent, as the main raw materials for local bio-refineries to produce sustainable aviation fuel.
Quote of the Day
“By sourcing from Myanmar, H&M maintains a flow of foreign exchange into the country, helping to sustain the regime. The Myanmar Labor Alliance, which represents most of the trade union movement in Myanmar, has called on companies to divest.”
Global union federation, IndustriALL
Looking Ahead
