Commercial Compliance – The Name of the Game

The Ethical Denim Council’s entire mission rests on two words that pack a big punch — commercial compliance. “Building a just denim supply chain through commercial compliance” is more than a tagline. It’s a commitment to fostering a denim industry where universal respect and ethical behavior are the epicenters of business decisions.

What is Commercial Compliance?

At the core of commercial compliance is adherence to the regulations surrounding business practices throughout the supply chain that often encompass environmental, safety, and human rights standards. The idea is that these regulations cultivate a fair, just, and ethical network that promote sustainable growth. By all reports, commercial compliance is still being practiced. But, a peek behind the curtain reveals a different story.

The Challenges

In 2020, the global supply chain was put front and center on the world’s stage. Cracks that had been forming for decades were finally on display for the world to see. Orders were canceled at an alarming rate. Every industry, from fashion to aerospace, was impacted. Business Insider reported that fashion brands canceled over $16 billion worth of goods within a three-month period. However, the COVID-19 pandemic didn’t cause the problem – it only exacerbated it.

Our 2023 survey of nearly 80 denim suppliers highlighted the pervasive nature of the issue. It was clear that canceling orders and delaying payments weren’t the practices of a few questionable brands. These behaviors had become the industry norm.

The Untold Consequences

The repercussions of these practices extend far beyond the balance sheets of brands and suppliers. Reports revealed suppliers struggled to pay their workers when orders were canceled, jeopardizing their livelihoods. The considerable burden suppliers have been left to shoulder alone, trickles down to factory workers. It is estimated that order cancellations in 2020 alone cost workers billions of dollars in lost wages.

What we’re doing

The Ethical Denim is using two approaches to tackle the problem. The first is through contracts. While brands rightfully have extensive lists of compliance standards, there’s nothing in place to protect the supplier. We believe adding a cancellation clause is of the utmost importance in this new age of manufacturing. According to our survey, 90% of suppliers agree. While brands and buyers have prioritized growth, suppliers have been left with the responsibility of covering the costs and the consequences. This way of doing business cannot continue if we expect the denim industry to survive and thrive.

The second facet is our Council. The Council is a panel of individuals from diverse backgrounds unrelated to the denim industry. Using the Eight Ethical Principles, the Council assesses if unethical behavior has taken place between a buyer and supplier. The ultimate goal is to close the existing power gap.

We may be a small entity but as Margaret Mead once said:

“Never doubt that a small group of thoughtful, committed, citizens can change the world. Indeed, it is the only thing that ever has.”