Summary of Results
Traceability and risk assessment is among the lower-scoring themes of the benchmark. Disclosure on traceability is limited, showing a lack of both first-tier supplier lists and information on sourcing countries of raw materials. Less than half of the companies disclose conducting a human rights risk assessment on their supply chains. However, companies benchmarked in both 2016 and 2018 score an average of 54/100 (increasing from 43/100 in 2016), demonstrating that they have improved their performance on this theme.
Thirteen out of 43 companies disclose a supplier list comprising the names and addresses of their first-tier suppliers. While this number remains low overall, it marks a significant improvement since 2016. Since KnowTheChain's 2016 benchmark, Gap, Hugo Boss, L Brands, Primark, PVH, and VF have published supplier lists which include the names and addresses of their first-tier suppliers.
Five companies disclose second-tier supplier lists (Adidas, Inditex, H&M, Nike, and Puma). H&M discloses the names and addresses of some second-tier suppliers, namely fabric and yarn mills.
Seven companies disclose the countries in which their lower-tier suppliers are based, such as fabric and yarn mills and wet process suppliers. Encouragingly, 18 out of 43 companies disclose some information on their suppliers' workforce, showing some understanding of the demographics of the workers in their supply chains. Companies most commonly report on the number of workers per supplier, or a range of the number of workers per factory. Lululemon discloses estimations of the number of workers per supply chain tier (including finished goods, fabric mills, and second-tier subcontractors), the gender distribution of workers, and the number of migrant workers. Notably, Nike reports the number of workers per supplier, including the percentage of both women and migrant workers employed.
Only a quarter of the companies (11 out of 43) disclosed information on the sourcing countries of raw materials at risk of forced labor in their supply chains. The information provided tended to be very limited. Moreover, Adidas and Kering were the only two companies to give detail on where they source their materials. Adidas discloses the sourcing countries of 90% of its leather, all of its natural rubber, and its cotton. Kering discloses the sourcing countries of leather (both bovine and lamb leather) and cotton.
Less than half of the companies (21 out of 43) disclose that they conduct a human rights risk assessment on their supply chains. This is disappointing, as risk assessments are essential to both understanding and addressing forced labor risks posed to workers in a company's supply chains. However, since the 2016 benchmark, Inditex, Kering, Under Armour, and VF have established and disclosed a risk assessment on their supply chains that includes forced labor. Seventeen companies make clear that they assess forced labor risks as part of a risk assessment and ten companies provide detail on the process, for example by disclosing the sources they use or particular indicators included. Primark, for example, discloses that it assesses forced labor risks in its supply chains using four sources: external reports, audit findings, consultation with stakeholders, and consultation with workers in its supply chains. Ralph Lauren discloses risk assessments focused on specific issues in its supply chains, including migrant workers in Jordan and Sumangali schemes in India.
Seventeen out of 43 companies disclose risks of forced labor that they have identified in their supply chains. However, only seven companies name forced labor risks that exist in different tiers of their supply chains, demonstrating a more comprehensive understanding of the risks posed to their suppliers' workers. Gap, for example, discloses forced labor risks identified in cotton from Brazil, silk and cotton from Uzbekistan, and leather from Bangladesh. It additionally states that it has identified Syrian refugees as an at-risk population, as well as workers in the garment industry in Tamil Nadu in India. The company more broadly highlights the risks of unauthorized subcontracting and the hiring of foreign contract workers in the Middle East, Asia, and Southeast Asia. Adidas points to forced labor risks in leather tanneries in China, Indonesia, and Vietnam and risks in raw material sourcing including with cotton, natural rubber, and leather. The variety of different risks identified by disclosing companies illustrates the endemic nature of forced labor throughout the sector's supply chains.