Will government intervention solve fashion’s traceability problem?

The world’s leading democracies are standing firmly against forced labour and making a commitment to ensure our global supply chain is held accountable for unethical behaviour. The Biden-Harris Administration have already started taking additional steps to try enforce greater transparency but will it be enough?

August 24th, 2021

Written by FibreTrace®

Fashion’s greenwashing problem cannot be solved by consumer demand alone. Buzzwords and an overall lack of data and accountability from brands have made the world of sustainable fashion a tricky one for most consumers to navigate. 

The recent issues raised in Xinjiang have led to increasing pressure on importers to be able to demonstrate the origins of their textiles and manufacturing. Governments have already started to crack down on stricter legislation around what products are now permitted into the country, with brands and their suppliers already feeling the repercussions. 

 Fashion needs a set of clearly defined rules and laws that hold brands legally responsible for knowing their entire supply chain, from raw materials to finished goods while protecting consumers from false or misleading information and marketing that amplifies this information. 

Projections are estimated that the US sustainability market alone will reach US$150 billion in sales by 2021, with this scale and value illuminating why government intervention is vital to ensure the progress of transparency agendas worldwide. Further, with imports of textile and apparel products to reach pre-pandemic levels, the time is now for brands and retailers to protect their supply chains through improved sourcing practices that lead to more transparency and traceability. 

Here is the situation in the US as it currently stands. 

Withhold Release Order

The US Customs and Border Protection (CBP) issued a new “Withhold Release Order” in January 2021, impacting imports of cotton products produced whole or in part in the Xinjiang region. This references a piece of legislation in Section 307 of the US Tariff Act dating back to 1930 which puts sole responsibility on importers to ensure the products they are attempting to import do not exploit forced labor at any point in their supply chain, including the production or harvesting of the raw material. 

Under the WRO, the CBP can detain any shipments suspected of violating these rights at their port of entry, with importers having to take a series of steps to have them released. At this stage, any and all cotton-based products that were shipped from ports in China or ports in Asia from manufacturers with Chinese ties are considered high-risk for potential WRO’s. As it stands, it is the sole responsibility of the importer to provide evidence with proof of provenance within three months of detainment. 

Obtaining this documentation to provide sufficient evidence is difficult for most importers as most only have direct vendor relationships with the exporters of the final goods and not upstream subcontractors and suppliers that make the finished goods, fabric, yarn and grow the raw fibre that makes it into imported goods. 

So, the question many brands and retailers have is ‘what will be required from us to prove that our goods were not made with forced labor and secure release?’ 

Essentially, importers must provide transaction documents for every level of the supply chain and transportation documents evidencing that the cotton is not sourced in XUAR. 

Cotton products are “affidavit from yarn producer and the source of raw cotton that identifies where the raw cotton was sourced. Purchase Order, Invoice, and Proof of Payment for the yarn and raw cotton. List of production steps and production records for the yarn, including records that identify the cotton and cotton producer of the raw cotton. Transportation documents from the cotton grower to yarn maker. Supporting documents related to employees that picked the cotton, time cards or the like, wage payment receipts, and daily process reports that relate to the raw cotton sold to the yarn producer.”

Currently, 35 of 49 active WROs are on goods from the PRC, and 11 WROs are on goods made by forced labor from Xinjiang.

The Uyghur Forced Labor Prevention Act

The Uyghur Forced Labor Prevention Act was introduced by Sen. Marco Rubio on 27 January 2021. Its aim is “to ensure that goods made with forced labor in the Xinjiang Uyghur Autonomous Region of the People’s Republic of China do not enter the United States market, and for other purposes”.

If passed, the Act would require the CBP to create a plan to submit to Congress on what more they can do to prevent imports from Xinjiang produced using forced labor. It also asks the Secretary of Homeland Security, USTR and the Secretary of State and Secretary of Labor to hold a public hearing on the realities of forced labor in Xinjiang and for that group of officials to make recommendations on tools and technologies the CBP should employ to help audit US imports. 

What is important to note is the US Government’s decision to place sole responsibility on the importer, who may even be subject to criminal investigation if they knowingly do not comply.

With such responsibility comes room for falsification and greenwashing from importers, who do not always have the sufficient tools needed to ensure proof of authenticity at any point in the supply chain. The truth is, our supply chains have become so opaque and complex that even some of the most conscious suppliers cannot guarantee complete custody of supply. Whilst government intervention has become essential in inciting this change, the adoption of traceability solutions like FibreTrace® is still necessary for implementing radical transparency, backed by irrefutable and trusted data.

The EU is not far behind.

France has introduced one of the world's first legal sanctions directly against greenwashing in April 2020, in a ruling that would mean that guilty parties could be fined up to 80% of the cost of the false promotional campaign.

Italy has also introduced similar legislation and, likely, that the rest of the EU will soon follow suit. 

In the event of unlawful greenwashing activities in the EU, penalties of up to 5 million euros can be issued for non-compliance and damages.

The European Commission, in its “Guidance on the implementation/application of Directive 2005/29/EC on unfair commercial practices”, has provided some practical guidelines to help individuals and brands avoid any unlawful greenwashing: 

1. Have evidence to support claims. 

2. Present green claims in a clear, specific and unambiguous way. 

3. Avoid deceiving context (green imagery) even if using correct information. 

4. Avoid vague and general statements of environmental benefits such as "green" or "environmentally friendly". 

5. Take into account a product's environmental impact over its entire lifecycle. 

6. Review and update claims regularly to ensure they remain relevant.  

7. When making comparisons, ensure it is for the same needs or intended for the same purpose and objectively compare.

It is not only the European Commission that has issued a set of “green” guidelines for brands to follow to ensure they comply with the new greenwashing laws.  

Amendi and PoliticallyFashion have recently pushed the Federal Trade Commission to update their own Green Guides and the Competitions and Market Authority (CMA) is currently seeking views on draft guidance for UK businesses when marketing ‘green’ claims. 

Similarly, other US states are considering their own legislation through various litigation that will set into place legal precedence applying to textiles and fashion. Whilst the Federal Trade Commission first issued guidance on green marketing over 20 years ago and updated it in 2012, greenwashing suits have grown exponentially and continue to do so. The FTC has issued numerous warning letters and brought several enforcement actions against marketers over allegedly deceptive environmental claims. 

Although the FTC’s Green Guides are found in the Code of Federal Regulations, they do not enforce any law but are rather seen as “administrative interpretations of laws administered by the [FTC] for the guidance of the public in conducting its affairs in conformity with legal requirements.” 16 C.F.R. § 260.1.

Growing government intervention means that now, more than ever, brands need to take full accountability for their entire supply chain with the support of data and proof of origin. This is only possible through the support of technology and traceability solutions like FibreTrace®.

Our pigments are based on the same research and tech found in passport and paper security, meaning it is already recognised by governments and other legal authorities as a legitimate and credible form of data security. 

Today, the majority of brands do not know beyond their garment maker or at best, to their spinner, rarely knowing right down to the raw fibre source. With transparency comes accountability, and only with that power can brands start to take full ownership and responsibility for the impact of their goods - socially and environmentally. FibreTrace® allows brands to identify areas of risk within their supply chain and offer a trusted, traceability solution to obtain true custody of supply, access primary impact data and authenticate and verify fibre as it moves through the global supply chain.

“If governments would step in and raise the bar for everyone, it would be a level playing field. But now, it’s whoever does the best job lying.” - Sucharita Kodali, principal analyst from firm tech researcher, Forrester. 

Unlock the power of transparency today with FibreTrace®.

WRO Updates https://www.whitehouse.gov/briefing-room/statements-releases/2021/06/24/fact-sheet-new-u-s-government-actions-on-forced-labor-in-xinjiang/