Remarks by ITC Executive Director at the UN/CEFACT Forum: Enhancing transparency in textile and leather sector for informed and responsible choices
Geneva 24 April 2018
Ladies and Gentleman
Thank you for inviting the International Trade Centre to address you today on an area which we can all agree is of importance to all of us in the room: clothes! But also to discuss how we can support achievement of Sustainable Development Goal 12 of sustainable production and consumption.
Clothing is one of the largest industries in the world economy, generating annual revenues of around USD 3 trillion, producing 80 billion garment pieces, and employing up to 75 million people with direct jobs worldwide, of which two thirds are women. The industry is a global one, with value chains spreading across all countries, driven mostly by big retailers and traders that determine where to produce, what to produce, and at which prices to sell.
Increasingly we want to know how and by whom the clothes we wear are made. The consumer no longer wants what is the cheapest or the most fashionable, it now wants to know how clean the value chain is. This trend of consumer activism towards improved transparency in value chains is driving the purchasing power of the “conscious” consumer. And this in turn is a key driver for sustainable and inclusive products. A whole new industry has been created around this and it holds incredible potential for many of ITC’s main clients- developing country MSMEs- to tap into it.
Improving traceability has become a priority in order to determine how and where parts and components in production processes have been sourced, what are the environmental, social and health risks at the various stages of the value chain, and which tools can be used to improve its sustainability.
Enhancing transparency has also become a critical factor as some brands side-step responsibility by failing to disclose information about the social and environmental impacts of their processes and practices along the supply chain. For instance, companies should know what their human rights impacts are, and be able to show what they are doing to address them. This is the underlying principles of the UN Guiding Principles on Business and Human Rights.
The complex nature of value chains adds to the challenge of improving traceability and transparency in the textile sector. Small and often scattered production facilities located all over the world, numerous value chain actors, short product lifecycles in the textile industry; these factors carry with them many challenges for governments, business and society at a large. But along with the risks related to the lack of transparency and traceability in the textile sector, there are also valuable opportunities for innovation at the policy an industry levels.
Let me focus on 3 factors that are critical for enhancing traceability and transparency in the textile value chain:
First, Business and Government Engagement
Both governments and companies can play a crucial role. Governments can support the reinforcement of responsible production and consumption practices though regulatory approaches, fiscal measures and information campaigns. For companies, the existence of economic gains arising from the implementation of cleaner and healthier production practices, coupled with consumers’ positive reactions to being informed about such practices, supports the view that enhancing value chain transparency can be a win-win situation.
Against these general considerations, however, development-related concerns should not be left behind, and due support should be provided to suppliers who lack the means to better communicate information on their sustainability performance.
Whereas at the firm level, the use of industry guidelines and self-regulatory procedures can have significant impacts, at the government level, policy formulation should be consistent and oriented towards a preventive cleaner production approach – it should help change business behavior - and also consider incorporating monitoring and reporting requirements as integral part of such a policy framework.
A harmonized and internationally consistent approach to public regulations in the textile sector would thus be highly desirable. It could foster innovation, it would be easier to understand by consumers and would facilitate compliance by MSMEs.
Second, collaborative action through international initiatives
We need to work together, not in isolation, if we want to have a transformative impact, and foster change in the way we produce, consume and think about sustainability. There are very good examples of multi-stakeholder collaboration on the textile sector happening now and they should be highlighted.
One of the main recommendations of a recent study conducted by UNECE, in consultation with experts from governments, private sector, academia, NGOs and international organizations, was precisely to set up an international framework initiative on enhancing transparency in textile value chains. The recommendation is a response to lack of awareness and supply chain transparency, and it aims to help countries draw together their initiatives and approaches to enhance transparency in textile global value chains.
Building on these recommendations, UNECE and ITC developed a joint project for enhancing transparency and traceability of sustainable textile value chains. The project combines the work of and expertise of the International Trade Centre as well as in the United Nations Centre for Trade Facilitation and e-Business on traceability of value chains (UN/CEFACT).
It responds directly to the ongoing effort by the European Commission to engage governments, businesses, consumers and other stakeholders in the textile and apparel value chain in moving towards responsible corporate conduct, improving transparency and traceability. It will involve all actors active in textile and apparel value chains and builds on:
- The solid track record of UN/CEFACT in setting norms and standards in trade facilitation and e-trade in transition economies and developing countries.
- The longstanding experience of ITC providing trade-related technical assistance to MSMEs in developing and least developed countries. Following a high demand for technical assistance to SMEs in the field of traceability and transparency, the ITC Trade for Sustainable Development Programme has designed an extended curriculum that incorporates a sustainability standards self-assessment tool for companies, allowing them to assess their level of compliance and design a roadmap that would improve their overall competitiveness. As such, the trainings and traceability tools provided by ITC help value chain actors in moving towards responsible corporate conduct, improving transparency and traceability globally.
Three, leveraging web-based platforms for enhanced traceability
Sustainability initiatives such as voluntary sustainability standards can provide new trade opportunities, mitigate environmental impacts of production, improve compliance with social and labour standards and boost overall competitiveness of SME exports. These benefits will only be fully realized by investing financial and technical resources to formulate and implement sustainability strategies across the value chains. This is often more difficult for small producers in developing countries as they lack technical expertise and have limited access to finance and technology.
On this last point, let me point out ITC’s work to promote transparency in global value chains. Since 2009, the Trade for Sustainable Development Programme (T4SD) has been enhancing transparency and understanding of voluntary sustainability standards, codes of conduct and audit protocols. T4SD has developed a unique database of over 240 VSS, with information and knowledge provided via web-based platforms to a large range of beneficiaries including SMEs, brands and retailers, trade promotion organizations, policy-makers, non-governmental organizations and civil society organizations.
Our new web-based platform Sustainability Map (www.sustainabilitymap.org) supports transparency across sustainability standards applicable to different sectors, including the textile and apparel value chains, and enables a direct linkage between business partners around their sustainability standards. The T4SD database and its associated online and offline tools together form a basis of the many partnerships with industry platforms, NGOs, individual companies and other private or public partners. Such projects are aimed at driving harmonization and convergence of sustainability standards and bring small enterprises into global value chains.
In conclusion, I am pleased that ITC is part of this event today. Enhancing traceability in the textile and leather value chains demands action from all of us: governments, international organizations, the private sector, civil society and individual citizens. Together we can chart the path towards more responsible and sustainable policies and business practices. This is why ITC wholeheartedly support the initiative of UNECE to promote a venue for discussion on such an important topic in our current days. We stand ready to work with you to achieve our common goals.
I wish you all a thought-provoking, idea-rich event.