The Edge

The Dirty Secret Hiding in Our Outerwear

Patagonia pulled on a thread and found migrant workers suffering under servitude in its supply chain. Will its disclosures prompt other brands to air their dirty laundry (or even look for it) as well?

The Dirty Secret Hiding in Our Outerwear

In 2012, Patagonia discovered "egregious" labor practices among seven of its suppliers. Photo: Electra-K-Vasileiadou/iStock

When’s the last time you read about sweatshops in the news? Back in the late ’90s, when U.S. brands Gap and Nike were facing major public relations battles over child labor? Or perhaps you’ll recall that in 2013, more than 1,000 workers perished when Rana Plaza, a deteriorating Bangladeshi garment factory, collapsed. Either way, you probably do not associate your gear closet with unethical labor practices. Turns out, you probably should.

In early June, Patagonia revealed on its company blog, the Cleanest Line, that three years ago it discovered evidence of “egregious employment practices,” including debt bondage, among seven of its suppliers. It worked to remediate the problem, only to discover that it was widespread, so it created a special policy across all its Taiwanese suppliers to root out the practice.

Debt bondage “creates a form of indentured servitude that could also qualify, less politely, as modern-day slavery. And it’s been happening in our own supply chain,” the company wrote.

Though it’s a private company, Patagonia is known for being radically transparent about its supply chain’s environmental and social impacts and for working hard to be a good corporate citizen. So if Patagonia had this kind of forced labor in its supply chain, does that mean it’s likely other outdoor brands do as well?

Yes, it does, say labor rights experts, including Rich Appelbaum, who chairs Global and International Studies and Sociology at the University of California, Santa Barbara. None of the experts we spoke to for this story were surprised by Patagonia’s finding. 

The issue is not that brands lack strict codes of ethics and standards around the labor practices of their suppliers. These exist, and they are enforced—but they are generally not enforced across the brands’ entire supply chains, which are divvied into tiers. The top tier, or tier one, includes the sewing factories where all the pieces of your soft shell or Lycra bike shorts are put together. Tier two generally consists of fabric mills where the textiles are processed before moving up to the sewing factories. Trim makers—zipper companies, Velcro suppliers, snap or button makers—are generally considered tier two as well. Tiers three, four, and so on account for all the suppliers that source and dye the fiber (or polymers, for synthetics) that go into textiles. 

“Most companies—not only apparel companies—focus on [labor standards at] tier one suppliers. They implicitly expect those suppliers to be cascading appropriate controls down the supply chain. But that implicit expectation does not translate into explicit practice,” says Dan Viederman, CEO of Verite. 

Look at what you’re wearing right now. A long list of companies, farmers, and individual garment workers had a hand in making it. Supply chains are big, messy phenomena, and when they harbor unscrupulous actors, the results are not always easy to see. When brands enforce ethical labor standards, they are generally enforced only across their tier one suppliers.

That leaves a tremendous amount of room for abuse. Verite, a Massachusetts-based nonprofit that advocates for workers’ rights worldwide, estimates that 20.9 million workers are victims of forced labor around the world today. Forced labor is most prevalent in textiles, agriculture, and fishing. The International Labour Organization estimates that globally, forced labor is linked to $150 billion in profits each year. 

In any given part of the world, the size of the available—or willing, in many cases—workforce is outsized by the work itself. In Taiwan, garment work pays minimum wage, roughly $600 per month. Yet Taiwanese citizens often elect to take other jobs that may be just as low-paying but require less physically repetitive tasks and offer more opportunities for upward mobility, such as working in retail, says Viederman, of Verite. That leaves a gap that migrant workers, looking for a better life or a way to provide for their families, are happy to fill.

It’s not unlike the U.S. agriculture industry, which employs thousands of migrant workers, many of them from Mexico and Central America, because most Americans would rather sell cigarettes in a corner store than pull tobacco leaves on a farm. The textile industry in Asia, particularly in Taiwan, Malaysia, and Singapore, relies heavily on migrant workers.

“These are middle-income countries where the lower-skilled, lower-wage labor is being filled by migrants,” Viederman explains.
Taiwanese factories tend to bring in Filipino, Thai, Vietnamese, and sometimes Indonesian workers, he says. Malaysian factories tend to bring workers in from Burma, Nepal, and Indonesia. 

To attract workers, many garment factories in those countries employ labor brokers who act as middlemen, recruiting individuals and arranging travel and housing to get them set up with their new jobs. They do this for a fee, of course, which is generally fine and legal—except for when the fees and the broker’s actions are not at all fine or legal. 

These brokers sometimes charge workers insanely high fees and promise an inflated salary. They then offer high-interest loans, which the migrants accept in the hope of a better life. But once on the job, workers are paid less than promised while the loan interest piles on. They find themselves in what’s referred to as debt bondage and can’t get ahead. Sometimes they can’t leave because their passports are kept from them. 

Stephanie Hepburn, co-author of Human Trafficking Around the World, says that debt bondage can quickly turn migrant workers into indentured servants, whose dreams of providing for their families back home quickly fade. “There is no way to actually pay the debt back,” she says. “Then there’s the whole psychological part: emotional or physical abuse, language barriers, threat of deportation. It’s very complex.”

In 2011, confident that its tier one factories were following Patagonia’s fair labor codes, the company’s chief operating officer, Doug Freeman, said, “Let’s look deeper,” explains Cara Chacon, Patagonia’s director of social and environmental responsibility. That’s when the indentured servitude was discovered among tier two two suppliers.

“What companies don’t understand is that they’re complicit if they’re not looking into how their products are made,” says Hepburn. But the farther down the supply chain one goes, the more suppliers and subcontractors and labor brokers there are to keep eyes and ears on. “Even if you are a really ethical brand, the more convoluted the supply chain, the more room there is for unscrupulous parties to come in and take advantage,” she says.

Rooting out those unscrupulous parties is not rocket science. It’s just a matter of making labor practices as high a priority as the products, says Appelbaum. “Brands say it’s difficult to monitor everything that happens, but they do have quality control people at all these factories.”

In 2013, Patagonia hired a two-person team to work exclusively on labor standards for its tier two supply chain. It hired Verite to perform third-party audits and help Patagonia institute its labor policies among those suppliers. 

It’s an expensive process, but Viederman does not believe brands must be large and deep-pocketed to maintain ethical supply chains. “If a company chooses suppliers without reference to social responsibility, and then needs to undertake an after-the-fact audit-based model to ensure ethical performance,” then sure, it’s very expensive, he says. But he says no matter their size, brands that vet suppliers up front and ensure they will meet high standards for ethical treatment of workers—along with a quality product, on-time delivery, and competitive fees—can in turn ensure ethically made products.

The two-person team Patagonia hired in 2013 included Rita Tseng, a field manager based in Taiwan, and Thuy Nguyen, her counterpart based at corporate HQ in Ventura, California. Working with Verite, they began auditing the tier two suppliers from which their tier one factories source the most material. This process includes interviewing workers and managers; it also includes auditing the auditors. “You need disincentives for the auditors to accept bribes,” explains Patagonia’s Chacon. “Also, auditors need knowledge of local law, unions, bargaining rights … and they need the local language: Your audits can’t be done without speaking to workers in their own language.”

Brokers are also being interviewed and are asked to cough up paperwork showing what they charged each migrant worker they’ve brought in so Patagonia can see where those documents do and do not square with what the workers said they were paid.

June 1 was the deadline by which Patagonia’s tier two suppliers and their migrant workforce brokers had to stop charging fees of new hires. By December 31, 2015, they will have to reimburse all fees, above the legal limit, that migrant workers hired before June 1 paid to labor brokers, to secure their jobs.

According to Chacon, suppliers have not pushed back on these new policies, nor did they necessarily know about their workers’ struggles. “Suppliers expect the labor broker to do the due diligence. They’re often in the dark” with regard to their tactics, says Nguyen. Going forward, suppliers must maintain legally binding contracts with any labor brokers they use, and migrant workers will not be allowed to pay recruitment fees to obtain their jobs. If they do, the supplier must reimburse the fees to the worker within 30 days.

Workers must also be provided a secure place where they can keep and access their passports and other valuables.

Patagonia has made public its migrant worker policy—but not the details of its audits—and says it hopes other brands will use it as a guide to begin investigating their own tier two suppliers. 

Even the Fair Labor Association (FLA), which has developed best practices for labor ethics, conducts audits of only the tier one suppliers of its member companies (which include Patagonia, Adidas, and Puma). 

With respect to forced labor in tier two suppliers, FLA spokesperson Andrew Korfhage, in a written statement, told Outside: “We don’t have data on how widespread these problems are in the garment industry. We know from our own reporting and that of other civil society organizations that similar problems exist in the deeper tiers of the textile supply chain in southern India, and we will be launching a pilot project to help companies investigate working conditions in spinning mills in this area.”

Outside reached out to The North Face, Black Diamond, and Eddie Bauer for comments on whether they have policies or programs that address the labor practices of their tier two suppliers. All three declined our interview requests. Columbia Sportswear (which owns apparel company Prana) also declined an interview but noted that its corporate social responsibility department works closely with the Outdoor Industry Association (OIA).

According to Chacon, Patagonia hosted a one-day workshop in late 2013 to discuss its new migrant worker labor policies and invited representatives from 40 outdoor brands. Only seven attended.

“Patagonia has a lot of resources dedicated to environmental and social programs and a great media and branding team that is comfortable saying, ‘This is where we have work to do,’ and talking about it more publically [than other companies],” says Beth Jensen, OIA’s director of corporate responsibility. 

While Patagonia may be the first company in the OIA sustainability working group to tackle debt bondage, Jensen notes that many outdoor brands scrutinize environmental and worker health impacts at textile mills.

“We are like other brands in that we focus on tier one suppliers when it comes to labor practices,” Amy Roberts told Outside in mid-June, when she was director of sustainability at Mountain Equipment Co-operative (or MEC, essentially the REI of Canada). (In early July, OIA announced that Roberts is its new executive director.) “With tier two, our focus has been more around environmental issues with the chemicals and dyes used in textile processes,” she said of MEC. 

MEC does plan to begin investigating the labor practices of its tier two suppliers—and those plans have been pushed up the to-do list since Patagonia revealed its findings.

Verite’s Viederman explains that aside from the complexity of their supply chains, another major hurdle for brands is that they lack any industry-wide standards or certification systems for vetting their suppliers’ labor practices. Consumers can’t merely look for a stamp of approval on a garment’s hangtag. Buying goods made in the United States is no way to distance oneself from unfair labor practices either—even if something is sewn here, the material is likely sourced from overseas, and migrant workers in U.S. factories sometimes get trapped in debt bondage or other unfair practices. 

So, what should you do? 

“Consumers need to really engage their favorite brands,” says Viederman. First, go to the brand’s website and see if it authentically discloses the labor rights risks in its supply chain. If it doesn’t, engage the brand directly. Because whether you’re a business or a consumer, if you aren’t confident the product you’re buying has been made ethically, chances are it hasn’t been.

Filed To: Politics, Gear

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