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Keeping you in-the-know on environmental, social and governance developments

The Christmas and Hanukkah season is upon us – usually great news for the clothing and retail industries. After all, it’s the time for joyous gifts of socks and ugly sweaters (did you know there is a website dedicated to ugly Christmas sweaters? Because, well, of course there is…). But the past weeks have also brought less welcome tidings to those industries, specifically concerning human rights issues in their supply chains. While this isn’t anything new, a number of related developments popped up in the same general time. For instance:

The Guardian reported on troubles with the Higg MSI, the most widely-used sustainability assessment tool in the apparel industry:

“In Singapore at the start of the month, the Sustainable Apparel Coalition – a non-profit alliance that makes up over half the global apparel and footwear industry – convened for their annual meeting. There was one big question on attendees’ minds: how would the coalition respond to claims of greenwashing?”

This was primarily in response to the Norwegian Consumer Authority warning that the Higg MSI “could not be used to support sustainability claims.” Others – including Adidas and Kering – had already stopped using Higg MSI, with “Kering citing concerns about the accuracy of the data.”

Then a Bloomberg investigation found that Shein – a Chinese company valued at $100 million, backed by U.S. private equity and the largest online-only company selling clothing to US consumers – was using cotton originating from China’s Xinjiang region. Under the U.S. Uyghur Forced Labor Prevention Act, goods produced with materials originating from China’s Xinjiang region – especially cotton – are prohibited from import into the U.S. According to Bloomberg:

“Laboratory testing conducted for Bloomberg News on two occasions this year found that garments shipped to the US by Shein were made with cotton from China’s Xinjiang region… In a statement, Shein didn’t dispute Bloomberg’s test results or say whether it uses cotton from Xinjiang.”

How, then, are these goods still being imported into the U.S.? Shein sells its products direct to consumers.

“Typically, its individual shipments to customers fall below an $800 value threshold that triggers reporting requirements to US Customs and Border Protection, meaning they’re not subject to the scrutiny applied to retailers’ bulk imports… Shein’s items escape such targeting under a so-called de minimis rule that lets goods of low value enter the US while avoiding Customs declarations or duties. Roughly 2.7 million such packages arrive in the US daily, a number that has almost doubled since the 2021 fiscal year, Customs data show.”

Finally, Boohoo is back in the news as The Sunday Times (London) levied claims that

“Workers at the fashion giant Boohoo are forced to walk the equivalent of a half-marathon per shift in a sweltering warehouse in which night-time temperatures can reach 32C, an undercover Times investigation has found. Staff fulfilling online orders at the retailer’s warehouse in Lancashire label themselves ‘slaves’ and have complained of racism, sexual harassment, gruelling targets, inadequate training and ill-fitting safety equipment. The harsh conditions have led to workers collapsing in the aisles, with an ambulance called to the site once a month on average.”

What This Means

Although much emphasis in the ESG world these days is on climate and diversity/equity/inclusion, supply chain social risks are still top of mind for apparel and retail and shouldn’t be given short shrift. In the EU, new laws concerning supply chain due diligence are coming into effect and will require more effort and transparency from regulated companies soon. I’ve written previously about these risks and things to consider when developing and relying on ESG certification/assurance frameworks. Even though most ink these days is dedicated to carbon emissions and investor demands, it wouldn’t be prudent to believe that other ESG risks have gone away. members can take advantage of a variety of tools to help manage these risks, including checklists on assessing your company’s ESG approach, using internal audit for ESG data verification, selecting ESG auditors/advisors, navigating the Uyghur Forced Labor Prevention Act and internal controls for E&S information, as well as Guidebooks on using the FTC’s Green Guides for marketing and E&S data validation.

If you aren’t already a member with access to these as well as our growing collection of member-exclusive blogs, checklists, podcasts, guidebooks, sample disclosures and other resources, sign up now and take advantage of our no-risk “100-Day Promise” – During the first 100 days as an activated member, you may cancel for any reason and receive a full refund.

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The Editor

Lawrence Heim has been practicing in the field of ESG management for almost 40 years. He began his career as a legal assistant in the Environmental Practice of Vinson & Elkins working for a partner who is nationally recognized and an adjunct professor of environmental law at the University of Texas Law School. He moved into technical environmental consulting with ENSR Consulting & Engineering at the height of environmental regulatory development, working across a range of disciplines. He was one… View Profile