Equal Partnership

Patagonia suppliers are expected to provide full transparency regarding challenges with working conditions. The approach the company takes to gain this full transparency is one of partnership and mutual respect to foster the commitment needed for continuous improvements. This approach builds trust and encourages suppliers to share accurate information and authentic documents during audits. Patagonia puts a high value on problem solving together with its suppliers to understand root causes and find sustainable solutions.

“Honesty and transparency is at the heart of the relationships with our supplier partners.  They respect our high standards and we respect and value their know-how. It is equal partnership, mutual respect and transparency that allows us to work together and make gradual improvements on any issue at hand.” – Wendy Savage, Senior Director of Social Impact & Transparency.

Norwegian Concept is working towards taking more of a partnership approach with their suppliers. One element of this is more regular video calls instead of just emails, giving suppliers opportunities to share any challenges they are facing and then trying to be flexible to find joint solutions. One Chinese supplier informed them that they had a lot of excess fabric from their products, so they worked together on development of a new product (a padded seat for hiking), to use up the material. Another issue raised by the supplier was that they had very few orders in low season and were struggling to have enough work to keep workers employed. Norwegian Concept chose a best-selling product they could order early, after working with the sales team to analyse what quantities would match their needs. Even though they had to store them in their warehouse, they saw the benefit of levelling the workload of the factory and avoiding excessive overtime later on.

C&A have amended their terms and conditions (T&Cs) for suppliers, integrating certain clauses from the Model Contract Clauses 2.0 (MCCs), a set of UNGP-aligned clauses developed by an American Bar Association working group in 2021. The MCCs form the basis for the Responsible Contracting Project Toolkit, which seeks to establish a shared-responsibility approach to contracting where both parties commit to working together to prevent and remedy adverse human rights impacts in their supply chain.

C&A’s T&Cs now have a strengthened commitment to responsible purchasing practices, giving suppliers the right to raise issues and concerns. They include clauses on mitigating human rights impacts associated with order modifications, negotiating a price that enables appropriate human rights risk management (referring to the ACT labour costing protocol) which includes a commitment to ring-fence direct and indirect labour costs, and responsible exit. Suppliers may choose not to fulfil an order if it would result in a human rights infringement. This aims to shift towards a more cooperative model, prompting conversation, so that the parties can more effectively address issues that arise and find solutions together.

Patagonia has several channels for gathering feedback from suppliers, including regular in-person meetings throughout the year and various online supplier data gathering mechanisms. A ‘reverse score card’ was developed in 2018 to allow suppliers to score Patagonia on its performance in sourcing, quality, product development, social and environmental responsibility and RPP with the option to respond anonymously. This allowed suppliers to give feedback if the company’s business decisions and actions had negative impacts on working conditions.

The company has also partnered with Better Buying Institute to conduct annual confidential surveys with their suppliers to quantitatively and qualitatively rate Patagonia’s performance in core purchasing areas. In both cases, feedback is reviewed internally to produce an action plan for changes that need to be made, and these improvements are then communicated to suppliers. The company wants to gain feedback in order to continuously improve their processes, become better business partners and add additional human rights and environmental safeguards.

H&M builds long term relationships with their strategic and key suppliers, giving them a 3-5 year plan and then more detailed capacity planning is provided on an ongoing basis.

Part of this partnership approach is to work together on improvements and to reward suppliers based on their performance in the Sustainability Index, where suppliers are scored based on seven sustainability indicators, including performance on worker wages. If suppliers have a low score, H&M invite them to participate in factory-based training and improvement programmes, to support mitigation and improvement. Scoring contributes to business decisions on order placement. Higher scoring suppliers get access to better business opportunities, including longer-term planning and more insight into what products are needed.

The H&M local staff in the manufacturing countries provide training and support to suppliers such as their programme to promote workplace dialogue and also their ‘Wage Management System’ programme, which develops routines and processes to enable improved wages for workers. An information platform makes self-led learning available to all suppliers for free on wage issues, gender pay gap and gender-based violence.

Fast Retailing reviewed and improved its responsible exit procedure and included this in its Responsible Purchasing Policy, after gaining feedback and guidance from the Fair Labor Association (FLA) and discussing best practice with other FLA member companies. Each exit plan is examined by its Business Ethics Committee when decisions to exit or to significantly reduce business volume at a facility need to be made.

If any Fast Retailing brand decides to terminate a business relationship with a factory, the Committee recommends an appropriate schedule for the termination based on the footprint of the brand, the financial situation of the factory and the factory’s management, and the employment situation of workers at the factory. If required, the brand notifies the factory of its decision at the appropriate time. It continues to monitor factory conditions until all remaining orders are completed, and to ensure there are no violations of human rights or other issues at the factory