Achieving Socially Fair Decarbonization in Fashion Supply Chains

The fashion industry is trying to wake up and tackle the worryingly high environmental cost of its business.

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Fashion brands have public announcements, ambitious climate targets and net-zero pledges. However, decarbonization efforts, coupled with operational demands, affect the people doing the manual labor in the garment industry. Since there is little to no information on the impacts on factory-floor workers of fashion’s current sustainability practices, it is time to find solutions to the most pressing issue: how can fashion supply chains decarbonize, in socially fair and equitable ways?

We conducted multilevel field research, used in the organizational behavior field, to investigate an attempt to transition to low-carbon supply chains in the fashion industry. Situating this research in a fast-changing and politically, socially, and environmentally complex nation, Türkiye, which is a strategic production country for many fashion giants, we have focused on the experiences of the people working at 19 companies across tier-1 (finished garment manufacturers), tier-2 (fabric producers), and tier-3 (yarn making) to understand how fashion players achieve, or do not achieve, their climate and social goals and what key challenges and issues stand in the way of a just transition in complex supply chains.

Although there are many barriers to just transition to decarbonization throughout fashion supply chains, our research reveals two of the most significant barriers stem from incentive misalignment, particularly order imbalances and their impact on supplier performance scores, and structural power and the resulting governance structures in the fashion industry.

Order imbalance

Fashion’s supply chain decarbonization is hindered by a lack of demand forecasting and supply chain planning by fashion brands. Most brands use performance scores to rate their suppliers. The fulfillment of orders is directly linked to the performance score of suppliers, with the score summarizing the supplier’s performance across multiple categories, including environmental and social measures, quality, price and delivery.

Yet, brand buyers rarely give consistent order times or quantities, and this order imbalance results in, not only cost issues and resource consumption-linked environmental impact but also, specific social issues including unbalanced overtime and physical and psychological impacts on factory-floor workers. In our research, managers at multiple suppliers expressed that there were long periods during which orders were minimal and then periods when overtime was essential for meeting deliveries. Failing to meet orders, even when there were last-minute changes, resulted in performance score reductions.

Fashion giants, due to their size and dominance in the industry, have made public commitments on overtime and wages, with many stating that suppliers’ workers should not work overtime and, if needed, not work more than the legal overtime limit ( e.g. , in Türkiye, a worker cannot work more than two hours after a nine-hour shift). Supplier managers, however, stated that overtime was a direct consequence of order imbalance, especially for cutting, sewing and finishing operations at garment manufacturing factories (tier-1 operations).

Suppliers and lower-tier suppliers stated that they can manage the investment and operational costs required for decarbonization only when there is an order guarantee and committed financial and emotional support from fashion giants. Supply chain decarbonization and living wages can only happen when fashion giants guarantee orders over longer periods and pay suppliers on time, which, in many cases, we did not see happening.

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Fashion giants have a target price from their sales and production teams.  They inform suppliers what fabrics, items and methods to be use in the pursuit of design and operational efficiency. Buyers negotiate the price with suppliers, but these negotiations rarely include wages for lower-tier suppliers or the people who work for lower-tier suppliers. It is pivotal to state that living wage principles are not factored into existing purchasing models and practices. The prices set by fashion giants do not take into consideration workers’ wages and, as a direct result, 98% of garment workers across global fashion supply chains do not earn a living wage.

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Exclusive supply chain governance structures

The suppliers in our research are struggling to operate in an industry characterized by ever-increasing and often competing operational, financial and sustainability demands. These competing demands create pressure for direct suppliers who are expected to pass these demands onto their own suppliers. Direct suppliers face conflict and tension in both satisfying their buyer clients and in explaining, convincing, motivating and assisting their lower-tier suppliers. Direct suppliers and their lower-tier suppliers acknowledged their mutual dependence and used relational and collaborative methods and dialogue. But we did not see this happening between the fashion giants and their direct suppliers and rarely to never interact with lower-tier suppliers.

Brands and retailers define policies and procedures for short-, mid- and long-term operational as well as sustainability targets, but this does not involve supplier consultation. Neither suppliers nor factory-floor workers are included in goal setting or strategy development. Even though consultation, inclusion and representation of suppliers and factory-floor workers are imperative to ensure fair decarbonization, fashion supply chains are still characterized, almost exclusively, by top-down decision making, standardized performance tools and unreliable third-party audits.

Fashion giants that are not in dialogue with the people who make the garments, create management systems and tools that fail to understand their workers’ needs and do not reflect the nuanced insights of the factory-floor workers that the fashion giants could benefit from. Suppliers and workers have useful, innovative and scalable ideas, for example how certain cut-and-sew techniques can reduce waste on the assembly line; what colors to abandon at the design stage to reduce water and chemicals in the dyeing and printing stages; how garment workers remake clothing designs developed by fashion designers to ensure both efficiency and sustainability. However, mechanisms to support, share and protect these suggestions are missing.

Exclusive governance structures result in a mismatch between fashion giants’ and suppliers’ perceptions when it comes to policies and strategies. For example, fashion giants’ sustainability values, goals or vision were perceived very differently by suppliers than the way these brands intend. Furthermore, the use of third-party auditors increased the physical and emotional distance between the fashion giants and their lower-tier suppliers, effectively removing fashion giants from the issues supply chain workers face and the innovations they could provide.

How fashion giants’ goals and strategies are perceived are very different to the reality. Suppliers do not understand what many are trying to achieve, why certain goals are set, who is setting them or how targets are supposed to be met. Without transparent communication, suppliers are left to make interpretations on their own and have no invitation to voice their opinions or contribute to these vital conversations. We need a wholesale change in the procurement strategies and practices of fashion giants.  They can no longer outsource their supplier management to third-party auditors with unreliable, ineffective and top-down monitoring mechanisms. We need true inclusion and real supply chain relationship management.  It is time for a revolution in the fashion industry, transforming from an environmental and social pariah to a just transition trend-setter. Putting factory-floor workers front and center is key to achieving fair and equitable decarbonization in fashion supply chains.

Dr. Hakan Karaosman is a globally recognised and award-winning expert in supply chain sustainability with a special research interest in fashion and textiles. He is Associate Professor at Cardiff Business School and Chair of the Union of Concerned Researchers in Fashion (UCRF).

Prof. Donna Marshall is multi-award winning sustainable supply chain scholar and is ranked among the top supply chain researchers in Europe. She is a Supply Chain Professor at University College Dublin.

Karaosman and Marshall lead the research centre Fashion’s Responsible Supply Chain Hub (FReSCH), which has received funding from the European Union’s Horizon 2020 research and innovation programme under the Marie Sklodowska-Curie Grant agreement No. 895711.

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