Brands! holier than thou?

Sam Setter comment
Published:  25 June, 2021
Credit: Andrew Neel

In ILM’s new column ‘Against the grain’, Sam Setter shares his views on the issues affecting the leather industry around the world. His most recent piece covers the relationship between the fashion industry and suppliers, as well as working conditions and industry standards.

Ours is an industry that is dependent on fashion, hence if we want to sell, we need to dance to the tunes of the fashion industry, whether that is directly or indirectly. The client is always right, or almost always. The fashion industry actually imposes itself on its suppliers and on its buyers. The fashion industry tells its buyers through fashion shows, influencers and the media what they must wear from season to season. What colour they wear or what their accessories must be. Spending millions and cashing in hundreds of millions. The other side of the coin, their suppliers, are being told what to produce and what price is acceptable. Each brand has its own ideas of which chemicals are acceptable and which are not, hence one chemical may be approved by one brand and rejected by another.

Shareholder return
Let us be realistic: a brand has one objective. Its bottom line must be as sunny as possible to attract investors and give its shareholders the best possible dividend, because more profit attracts more investors and creates more dividends. LVMH stock ranged in a Covid dominated 12-month economy from €364.50 to €698.90 per share. Hermès registered for the same period a range from €679 to €1237.50 and Burberry’s shares went from a minimum of £1232.50 to a maximum of £2267. The lower share price was recorded one year ago and the higher figure is the situation “today” (June 2021).

How do brands create their huge profits? They sell at a high price and they buy at cut-throat rates as has been highlighted in newspaper articles or TV reports, where leather handbags have been reported to be manufactured at somewhere around €15 and sold just below €1000.

Working conditions
Working conditions of many workers are rarely checked, nor whether the workers are working legally or below the (tax) threshold. Some workers were reported to have worked for up to 18 hours a day for wages far below any minimum limit. Some brands have been reported to buy from companies in Italy who are unable to meet the price paid by the brands in their regular production, but who, by outsourcing to subcontractors that employ mostly illegal (Chinese) workers, are able to satisfy the price demanded by the brand and make a few bucks in the process. Officially, the brands do not know that of course and deny any knowledge. A brand recently threatened an Italian TV station that had exposed these practices with a lawsuit, but retracted that quietly when the reality was made clear.

All brands display to their consumers an image of sustainability, responsibility in their supply chain and many adhere to noble initiatives such as those of the various industry standards based around environmental protection, labour, ethics and social responsibility. Tanners are told that either they comply with the brands’ individual requests and the various auditing standards, or risk being removed from the supplier list.

But when it comes to the brands themselves, they consider themselves above all the restrictions they impose on their suppliers and then sustainability is focused on the bottom line. Otherwise, there is no way to promote circularity, sustainability, the environment, responsible use of raw materials and social responsibility, when you make use of an irregular workforce, squeeze your suppliers to the last drop and sell products made of plastic, independent of whether the plastic is recycled or not. Recycled or not, it remains plastic and it is made of fossil fuel derived hydrocarbons, which are an irreplaceable and non-renewable raw material sourced from nature.

Industry standards
Most brands support a number of standards and auditing entities, which is fine as long as the objective is to improve the leather industry, and has no commercial objective. I fully support LWG (Leather Working Group), who have set industry standards in a sector that had no standards at all, and have improved the overall quality level of the leather industry by promoting these standards. As everyone knows, to be audited and obtain a certification rating is an expensive exercise and here is where I do not agree. The cost of an LWG audit excludes many small tanneries, particularly in less privileged areas or countries and hence such tanneries automatically are off brand radars and their distribution channels. Sure, there is the great ‘Tannery of the Future’ initiative, but it offers no recognition, which in the end must come from an official LWG audit for which TOTF is a stepping stone. And then the tannery is back to the expense it needs to become compliant.

The fact that the LWG aims at making its standards tougher with each new protocol makes the inclusion of smaller tanneries even less possible as it means that every two years or so, they must again invest to remain compliant. LWG does not recognise for its audits third party certifications, which means that a tannery can spend money on ISO, ICEC, OEKO-TEX, CSCB, SLF and other certifications, but these do not count for LWG audits and hence the money spent on highly recommendable certifications is spent for nothing. The newly formed SLF (Sustainable Leather Foundation) takes a different approach and recognises all existing certifications and embraces them, including the LWG certifications, in their “Dashboard”, which is totally transparent and shows in detail where a tannery stands in terms of compliance. Therefore, to become SLF compliant a tannery needs to be audited only for those sectors for which they have no other certification.

Furthermore, a tannery can be a SLF member, have its dashboard published but still be in the process of gradually becoming compliant. Through the dashboard, this is visible to brands and consumers, who can then judge whether the tannery responds to their supply requirements or not, or not yet. Then there is a direct line to the consumers who can participate in SLF “Leather Hub” discussions, which allows the industry to understand the mindset of consumers towards the leather industry and correct certain misunderstandings that consumers may have about the industry.

In my view, the certifying process must be a service to the industry, accessible to as many stakeholders as possible. It should not be a business!

Sam Setter

samsetter2020@gmail.com