At the end of 2020, S Group commissioned a study concerning the factories manufacturing its private label clothes and footwear. The study surveyed the suppliers of materials used in these products and the practices for verifying sustainability. The results were illustrative.

The study revealed what a vast network of actors is present in the value chain even behind the first step. It also told us how dependent we are of the information we receive from our contractual partners and of their methods of operation. 

The survey concerned 50 suppliers of goods, and we received 33 replies. In 2020, 57 per cent of the own brand and own import clothes and footwear purchases were made from these factories.  S Group has a total of some 17,000 suppliers of goods or services, so the sample size is of course small. 

The responding parties, i.e. our Tier 1 suppliers reported approximately 400 as the total number of their own direct suppliers of materials (i.e. Tier 2 actors) and named 145 of them. This means that we did not obtain information from anywhere near all material suppliers.

The report illustrated the vast extent of the network involved in the supply chain. It also demonstrated what a difficult and slow process the “complete” survey and verification of complex, long and constantly changing value chains is. 

In practice, investigating the different steps of the supply chain would require the Tier 1 supplier carrying out a similar survey of its own suppliers and so on, until we might reach the actual production or raw materials after five or six tiers. The investigations are further hampered by the fact that the supplier relations vary in all phases of the chain. 

The difficulties in investigating should be kept in mind when considering what the company can reasonably be expected to know of its value chain and which matters it can influence. 

Transparency and sustainability practices are implemented in the value chains hand in hand, step by step. The expectations and practices are agreed upon in agreements, but these agreements do not reach all the way through the chains. They are only concluded between two actors. The report indicated that 79 per cent of Tier 1 suppliers had imposed sustainability requirements on their own partners (Tier 2). Ninety-one per cent of the responding parties also monitored the fulfilment of the requirements by various means. This means that the expectations were passed down the chain, but not completely. 

 Obligation of diligence is the duty of each actor in the chain

The UN Guiding Principles on Business and Human Rights include a good understanding of the multiple-step structure of chains and the companies’ possibilities to influence matters. Every company must act with diligence, assess its human rights risks and seek to mitigate them. The expectation applies to every company. The idea of UNGP will work if every company, large or small, acts with its own network in the manner required by the diligence principle. That would create a uniform chain. 

However, our own investigation revealed that we do not receive transparent information of production chains and all actors in in. This blocks off our visibility of the chain and its operations.

In our investigation, we also asked whether our goods suppliers have faced any serious problems related to human rights or work conditions in their own supplier networks. In their replies, a couple of suppliers told us that there had been such cases. But how can we prevent these occurrences, if all actors in the chain are not acting with diligence? How can we help rectify these matters, if we are not informed of them? Unfortunately, the answer is: we really cannot.   

So, is the situation so hopeless, and don’t we have any possibilities to influence or do something to advance matters? Of course it is not. We must continue our systematic work and develop transparency and promote the implementation of sustainability practices. 

But we cannot succeed with the ‘big brother is watching’ approach. It is obvious that no actor can alone monitor every step of the supply chain. Instead, our view continues to be that the key is the obligation of diligence concerning every company in compliance with the UNGP. For this, we need help from the legislators. As shown by our investigation, legislation should be passed at the EU level and apply to all in order to be equal and have a genuine impact on the materialisation of human rights. Respecting human rights should not be voluntary. 

Long-term work for sustainability 

S Group has been developing the sustainability of its private label textile products for many years. The factory audits in the textile factories of so-called risk countries began in 2005. Among other things, the audits are conducted to investigate the practices concerning occupational safety, working conditions and wages. 

We want to provide our customers with information on the origin of products as transparently as possible. The information of the country of manufacture of a product is shown on the washing instruction label or the packaging, in addition to which a list of the factories manufacturing clothes and footwear is published annually on our website.

For the part of its private label products and its own imports, S Group is committed to promoting the use of sustainable cotton by its own chains. The goal is for the cotton to be sustainably produced by the end of 2025. By then, all cotton should be 100% organic or recycled, or produced in line with the Fairtrade International or Better Cotton initiative.