The owner of Zara, Inditex, has been urged to publish a full list of suppliers amid pressure on retailers to prove they are not using fast fashion sweatshops, news agency Reuters has reported.
- Inditex shareholders have stepped up calls for the company to show no trace of forced labour in its supply chain, with Dutch asset manager MN saying that it had asked for a list of suppliers and their geographical location.
THE BACKDROP: Clothing retailers are under pressure to prove that there is no forced labour in their supply chains, and that garment workers are paid decent wages.
- Inditex rivals H&M and Primark already publish supplier lists, as do Adidas, Hugo Boss, M&S, Nike, and Puma. The details include factory names and addresses.
- Currently, Inditex publishes annually the number of suppliers it sources from in 12 core countries, but gives no information on individual factories.
- Inditex's published supply chain figures since 2019 show the company has cut suppliers in China and increased them in Bangladesh and Morocco. But it gives no details on the amount of products it buys from those suppliers.
PLUGGING SHAREHOLDERS: Reuters asked Inditex shareholders what they wanted to see from the company in terms of improved disclosure.
- MN said: "In our engagement with Inditex one of the things we ask is if they could disclose a list of their suppliers and the geographical location. Even though Inditex assures us that they have this data available, up until now Inditex is not willing to disclose this information unlike some industry peers who publish extensive supplier lists." MN said it was important to have this insight to show whether Inditex has this information available, as well as for its own due diligence.
- MN leads the Inditex dialogue for Platform Living Wage Financials (PLWF), a group of 20 institutional investors with combined assets under management of 6.58 trillion euros ($7.16 trillion). It works to promote higher income for garment and footwear industry workers.
- The five Inditex investors who responded to Reuters' questions hold a combined stake of worth around $2 billion in the company, whose current valuation is about $140 billion.
- MN had earlier in December divested from off-price retail chain TJX.
PRESSURE ON INDITEX: Inditex has an agreement with global trade union federation IndustriALL under which it provides it with its full list of suppliers. But IndustriALL wants wider disclosures from all companies, including Inditex.
- Benchmarking initiative Know The Chain gave Inditex a lower overall score in its 2023 assessment than its 2021 assessment. "The company is encouraged to strengthen its supply chain transparency by disclosing a full, rather than partial, list of its direct suppliers," it said.
- Clearbridge Investments, which holds Inditex shares, said: "It's very important because of all the scrutiny around ESG, and labour, and inputs. They claim to be a leader in this so it's really important for them to actually have that level of disclosure."
