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Dhaka Tribune

Why transparency makes business sense

Brands are increasingly realizing the genuine bottom-line benefits

Update : 22 May 2019, 09:48 PM

We hear all the time that there are social and ethical reasons for becoming a more transparent organization by, for instance, revealing the names and addresses of suppliers in company supply chains. 

But the real reason why organizations are becoming more transparent is that there are genuine business benefits to being more open and upfront with industry stakeholders. 

Most of the world’s leading businesses now understand that -- which is why many leading apparel brands are now going down the route of listing their supply chains on their websites and making public transparency pledges on these issues.

In addition, many such businesses are now taking a more open and progressive approach generally by, for instance, working with other industry stakeholders -- including NGOs -- on industry-wide initiatives, as well as collaborating with their competitors on sustainability initiatives in a way we would never have seen just a few years ago.

Bangladesh has led the way on the issue of apparel industry transparency in recent years. The Bangladesh Accord and the Alliance for Bangladesh Factory Safety both carried out major safety programs across the Bangladesh RMG sector. Most importantly, the full findings of their factory inspections are publicly available on the websites of these respective bodies.

It has just recently been announced that Bangladesh’s top court has extended the work of the Accord on Fire and Building Safety in Bangladesh by 12 months through to 2020. Crucially, once the accord’s work is handed over to a new, national body in Bangladesh, all existing transparency features of the accord will be maintained, including full disclosure of all results of inspection and remediation activities on a public website. 

There is more. Earlier this year, it was announced that a team of researchers have begun work in Bangladesh to begin the process of mapping every single garment factory in the country. The researchers are carrying out a door-to-door census, visiting thousands of factories, equipped with mobile apps. 

This will allow them to amass thousands of GPS-linked data points collected on the ground from factory-owners, workers, and organizations in the boldest step yet towards radical transparency in garment supply chains. 

C&A Foundation and BRAC University, in collaboration with BGMEA, are administering the digital factory map. The aim of the mapping is to democratize data collection and transparency by permanently transitioning accountability for apparel factory improvements in Bangladesh.

Clearly, our own country is leading the way in this new era of radical transparency. But what are the business benefits to being more transparent? There has been much written on this issue and many commentators believe the benefits are focused around issues such as improved brand reputation, improved access to capital, and improved legal compliance in supply chains.

One of the biggest benefits to being a transparent business is that it improves business reputation. Apparel companies such as H&M, Levi’s and Nike have led the way on this issue but they have been followed by the likes of Benetton, Primark, Hugo Boss, and Abercrombie and Fitch. Research from Fashion Revolution found that as of April 2019, 180 Brands across 75 companies were disclosing at least some of the facilities making their clothes.

All of the businesses that have publicly chosen to disclose their suppliers have received positive publicity, boosting their reputation. Likewise, apparel brands which continue to refuse to reveal their supply chains have suffered from poor reputation, as well as coming under public pressure from NGOs on this issue. One would expect to see further developments in this area so that, as far as credible reputation is concerned, listing which suppliers produce your clothing will one day become non-negotiable.

Reputational issues are applicable to many stakeholders -- from consumers who prefer to know where their clothing garments come from, to investors who are increasingly interested in making ethical investments and also want to ensure they are investing in businesses which they can trust.

There are also operational and legal issues around the issue of transparency. Publishing lists of suppliers can help with the issue of unauthorized sub-contracting -- a huge problem in the global apparel industry and Bangladesh is no exception. 

It also helps to shine a light on workplace problems, potentially reducing the risk of labour violations in businesses supply chains, providing stronger due diligence, and offering better compliance with current regulatory regimes.

There are wider factors to consider here. In the past couple of years we have seen growing consensus around the issue of transparency from organizations such as the German Partnership for Sustainable Textiles (which encourages members to list suppliers) and the US-based Fair Labour Association (FLA) which has recently decided that its company affiliates should publicly disclose their supplier lists

It would not be a surprise if other affiliate groups followed this example and also demanded full supply chain disclosure from their members.

Things are moving fast on these issues, with smart apparel brands realizing that there are genuine bottom-line benefits to being more open and transparent with stakeholders and showing they have nothing to hide.

Mostafiz Uddin is the Managing Director of Denim Expert Limited. He is also the Founder and CEO of Bangladesh Denim Expo and Bangladesh Apparel Exchange (BAE). He can be reached at [email protected].

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