Marks & Spencer, Gentle Giant

LONDON, United Kingdom — A chain is only as strong as its weakest link. In fashion's global supply chain, that link is the unethical state of its garment factories.

“In Cambodia I met with workers who are fainting in their workplaces due to malnutrition and exhaustion, sometimes over a hundred at a time... I went to Sri Lanka last year and met 70 factory workers who had all been fired for joining a union, after they asked for their annual pay increment to be paid.” Anna McMullen is the policy director at Labour Behind the Label, a co-operative that campaigns for garment workers' rights. She reels off the problems like a round of gunshots: “Poverty pay; excessive working hours; repeat short-term contracts and casualisation of the labour market; systematic and violent undermining of freedom of association; dangerous workplaces.”

Since the late 1980s, western fashion brands have taken their production on a tour of the globe — first to China and, then, to poorer countries, such as Cambodia and Bangladesh. The geographical trail went from West to East, but the real journey was a race to the bottom, in search of factories that could offer the lowest costs. The brands created ripples of new jobs in the markets where they established production contracts. But media reports of unethical working conditions crashed in waves upon the shores they had left behind.

In the UK, Marks & Spencer is not only a household name but something of a cultural institution. ‘Marks and Sparks’ is where much of the nation buys its school shirts, first suits and, famously, its underwear. In addition to its 798 stores in the UK, M&S has also opened 455 stores in international markets, including Western Europe, India, Russia, China and the Middle East.

But like most high street clothing brands, Marks & Spencer’s 2,000 third-party suppliers are largely based in the developing world: 50 percent of its production is based in the Far East; 30 to 40 percent on the Indian subcontinent (the remaining 10 to 15 percent is made in Europe). And yet, M&S is confident that its supply chain is ethically sound. How?

In 2014, Ethical Consumer magazine named Marks & Spencer the most ethical high street fashion retailer. It was one of only four clothing companies included in Ethisphere's 2015 Most Ethical Companies list.

“When Rana Plaza happened, there was a big panic from lots of retailers,” said Krishan Hundal, who is responsible for ethical sourcing at Marks & Spencer. “We didn’t panic. We’ve been dealing with some of our factories in Bangladesh for 15 years. We know every factory, when it was last visited, who was there and what the standard is. It sounds obvious but it’s still quite unique!” According to Hundal, M&S has 60 factories in Bangladesh, which a local team visits twice a week.

Through long-term relationships with suppliers, closely monitored by local teams, M&S has made the prevailing system of garment manufacturing march to its own ethical tune. Take subcontracting, often cited as a core cause of human suffering in the supply chain. When vendors sub-contract production to other facilities, the brand that placed the original order is often left with little clue as to where — and under what conditions — its products are made.

“That was the problem at Rana Plaza,” said Fiona Sadler, head of ethical trading at Marks & Spencer. “Most of the people that were sourcing actually didn’t know they were in there.” Factories working for M&S can use sub-contractors — but only if M&S has inspected, audited and approved that sub-contracting facility first.

“Many companies will go round to audit a factory and point out everything that’s wrong and then just walk away and say, ‘See you in six months’ time!’ And the poor factory’s left thinking, ‘What do I do now?’” said Hundal. After an audit, M&S sends in one of the 27 full-time compliance managers in its regional teams, who draws up a corrective action plan and supports the factory to act on it.

When we have a very good factory on ethics, they also deliver outstanding quality: they have less returns, less rejects, less issues from our customers.

Back in 1999, M&S was one of the first companies to publish global sourcing principles, outlining standards on ethical issues, from protecting workers’ unions, to working hours, wages and safety, signed by then-CEO Peter Salsbury.

In 2007, M&S launched ‘Plan A’, an ambitious initiative that now includes over 180 commitments on social and environmental issues and reports its progress each year. Under Plan A, M&S has trained half a million workers on employment rights, healthcare and financial literacy since 2010 and every supplier factory has had its building structure independently assessed. The company also carries out anonymous mobile phone surveys of workers to unearth any issues not visible in audits. In 2014, 75,000 workers in 40 factories participated in this scheme.

According to Claudia Coenjaerts, president of the Fair Labor Association, publicly traded companies like M&S often struggle to invest in ethical policies: “It seems easier for privately held companies to make decisions that come at a cost.” But even though M&S has had a tough few years — in January, the company reported its 14th consecutive quarterly drop in clothing sales — its CEOs (formerly Stuart Rose, currently Marc Bolland) have stuck by Plan A as a non-negotiable part of the business.

“Plan A proves that an effective sustainable business plan ultimately delivers value for shareholders,” argued Mike Barry, director of Plan A. “Last financial year, it delivered a net benefit of £145 million.” When it launched, Plan A was predicted to cost the company £200 million over five years. By 2013, M&S reported that it had saved the company £320 million.

“When we have a very good factory on ethics, they also deliver outstanding quality: they have less returns, less rejects, less issues from our customers,” said Hundal. When M&S grades the performance of its suppliers, it gives equal merit to sustainability as to commercial and technical improvements. “It’s very difficult now to keep your staff in some countries where there are becoming potential labour or skills shortages. The only way you’re going to protect those garment workers is if you treat them really well.”

This begins with a ‘living wage,’ generally defined as that which enables a worker to cover basic costs of living. According to Anna McMullen, legal minimum wages in Bangladesh are around a quarter of what would be considered a living wage.

M&S has created a buying tool that calculates a living wage, which has been factored into the prices it pays to factories in Bangladesh, India and Sri Lanka. M&S’s Ethical Model Factory programme in Bangladesh also aims to “ensure the cost price benefits are paid to workers.” In the first three pilot factories, worker absenteeism dropped by 85 percent, while staff turnover fell by 65 percent. As a result, productivity increased, leading to a rise in salaries between 12 and 42 percent.

While Labour Behind the Label ranked M&S in its highest tier of companies taking action on implementing living wages, questions remain about how M&S factors these wages into pricing. In 2014, the company's sales of general merchandise — mainly clothing — were £6.1 billion. M&S clothing generally costs more than retailers such as H&M and Primark, but on items such as knitwear the company has similar price points to brands such as Uniqlo and Gap, which have been the subject of labour scandals on poor pay.

“Without worker involvement in holding suppliers to paying this, or scrutiny over the calculation, how can we know that these aren't empty promises?” asked McMullen, who challenged the company to publish the actual wage figures that are paid by its suppliers.

In response to prolonged financial woes, Marks & Spencer is now increasing the direct sourcing of its products in a bid to keep up with its competitors. Though M&S targets an older consumer than most high street chains, the discrepancy in speed is clear: M&S adds new products to shop floors every four to six weeks; H&M and Topshop do so at least once a week.

“We set up our supply chain for our brand values,” said Hundal, noting that operating without clear forward planning can make things “difficult” for suppliers. “Obviously some businesses are much more ‘fast fashion’ than we would be.”

Indeed, fast fashion’s practice of buying in irregular orders with quick deadlines to respond to fluctuating demand and keep up with changing trends exacerbates problems like excessive overtime and replacing full-time staff with casual workers (to whom employers pay less benefits). Will speeding up production require that M&S reshape its ethical policies?

“We’ve just said, our approach to ethics is our approach to ethics,” said Krishan Hundal. “We can’t deviate from that.”

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A version of this article first appeared in a special print edition of The Business of Fashion, which highlights ‘7 Issues Facing Fashion Now,’ from sustainability and the human cost of manufacturing clothing to untapped business opportunities in technology, Africa and the plus-size market. Join the discussion on BoF Voices, a new platform where the global fashion community can come together to express and exchange ideas and opinions on the most important topics facing fashion today.