Panorama shows profit is still trumping principle in the world of fast fashion

The drive for cheaper clothes has inevitable results in places where people are desperate – but an ethical approach is possible, writes the chief executive…

In the same week that Syrian children were transported from the Calais Jungle to start a new life in Britain, a Panorama investigation uncovered other refugees who had not been quite so “lucky”.

In Turkish factories, Syrian children were found to be working to produce clothes for high street brands including Marks & Spencer, ASOS, Zara and Mango.

As well as being paid well below the Turkish minimum wage, some were also working in hazardous conditions. The revelations showed another ugly side to the hideous humanitarian crisis.

In fairness to the brands involved, they were quick to condemn the exploitation. However, as well as demonstrating that exploitation is a problem closer to home than we like to think, Panorama also exposed the problems associated with producing fast fashion at cheap prices.

It is imperative, of course, for ethically-minded retailers to keep an eye on their supply chain but even businesses with apparently rigorous inspection programmes in place (such as M&S, which demands all suppliers adhere to its Global Sourcing Principles) still can’t provide any guarantees once work is subcontracted outside of approved factories.

The practicalities of continual daily monitoring of factories is something beyond the reach of most retailers and the sad reality is that there will always be someone willing to exploit the misery of others for their own personal gain.

And there’s no question that there are plenty of retailers competing on the basis of manufacturing and selling clothes as cheaply as possible.

Furthermore, retailers are bracing themselves for an especially tough 2017 thanks to business rates reviews and pressure on the pound resulting from Brexit. So cost (and price) will remain a key issue as they seek to remain competitive.

Fast fashion has always carried a price, whether we like it or not – by definition it is disposable so must be produced quickly and cheaply in order to be on the shelves ahead of rivals.

And it raises the question of how much companies and consumers are willing to pay for cheap, fast and disposable fashion. At the moment, it’s looking like a downward spiral.

Whilst the retailers and brands unknowingly caught out in the Panorama expose were not necessarily in the cheap, fast and disposable bracket, keeping costs down to drive profit improvements will always offer a reason to use low cost factories. And that pressure on profit doesn’t just apply to the brand in question, but to the rest of the supply chain.

The suppliers in the chain are likely to have been subjected to a tough procurement process and beaten down on price, so they will also be looking to how they can improve their margin – and if that’s the exploitation of the dispossessed and desperate, then so be it.

If it’s all about profit, then what is a fair profit? And at what point do businesses, brands, employees, shareholders and consumers prefer not to ask too many questions about how something can be so cheap or so profitable – in case it leads to an uncomfortable answer? Or do they actually take a lead and push for change?

Last week the FT highlighted how “ethical” fund managers and management companies are focused on persuading companies to behave in a way that is more appealing to the growing demands from investors around ethics and sustainability, which in turn means their value and share price goes up.

And Campaign’s recent feature on future trends highlighted the breakdown in consumer trust in the midst of a consequence-free society. Trevor Hardy, chief executive of The Future Laboratory, argued that we need “a new covenant’, to escape the endemic short-termism of quarterly reporting and to set new long-term, sustainable horizons that will rebuild trust.

Following the Panorama revelations, the companies involved are rightly making efforts to do right for the workers in question. No doubt new procedures and processes will follow, including some disciplining of the factories involved.

I’d imagine the news will also prompt other brands that value their public image and aim to operate ethically to review their own supply chains.

But if the number one goal is to get large volumes of fashion out there quickly and cheaply, then sustainability and a clean supply chain are perhaps more about ticking public-facing CSR boxes – rather than being properly factored into the price and profit. So, it’s unlikely that profit before principle is going to go away anytime soon.

Mike Cullis is CEO at Soul

You can read the full article published in Campaign here.