Only 21 Percent of Fashion Firms Name Suppliers
● Too few firms name the extended suppliers in their supply chain, says a Planet Tracker report.
Too few fashion brands and retailers are naming their suppliers, and the financial — and reputational — consequences are a burden to bear.
A June 2022 report published Thursday titled “Lifting the Rug” from Planet Tracker, a nonprofit financial think tank, outlined fashion's business case for supply chain traceability against a number of environmental and human rights malpractices. The nonprofit also recently published a report evaluating the financial risks of business-as-usual in big plastics, especially relevant given incoming legislation.
In Planet Tracker's analysis of 52 publicly listed retail companies, 19 companies (or 37 percent) published a supplier list, and of those only 11 companies (or 21 percent) had published any suppliers beyond Tier 1. Supply chain traceability approaches from Patagonia (including its "Footprint Chronicles" disclosing its supply chain), LVMH (and its portfolio use of Aura blockchain technology) and more were documented in the report.
Only 11 percent of brands published their raw materials suppliers. The overall brand traceability score was just 19 percent in 2021 (up from 16 percent in 2020).
Planet Tracker worked with Segura, a digital supply chain company, to evaluate the financial risks and opportunities inherent in supply chain traceability. Common opportunities to curb impact include reducing air freight, consolidating suppliers and reducing production.
With all industries inclined to change thanks to an increasingly sustainable consumer and motivated lawmakers, Planet Tracker wants to ensure investors are up to speed — detailing definitions, case studies, questions to ask and a number of supply chain technologies.
“Fundamentally, traceability is about capturing data, and transparency is about sharing that data to build trust with stakeholders,” the report noted.
Apparel companies, according to the report, can improve net profit on average by 3 percent to 7 percent, based off of Segura's retail ROI calculations and Planet Tracker's 14,000-strong textile data points. By introducing traceability industry-wide, the researchers conclude that the industry could introduce a retail net profit between $3 to $8 billion (atop of an existing $80 billion net profit).
As for funding, Planet Tracker said apparel companies invested less than $200 million in supply chain traceability technology in the last 10 years. This is significantly less compared to the secondhand clothing market, which has seen $3.5 billion of public and private capital raised since 2015. This lack of funding is consistent with a WWD analysis from last year that examined investments made in science-based emissions targets, chemical management and innovative materials, among others.
A common sense call to action closed the report, "There are challenges still and these will remain, but our conclusion is simple — the technology is there, the companies just need to implement it — and this is where pressure from investors is key."