May 14, 2019

ICAR’s new report, The Benefits of Transparency: A Business Case for the Apparel and Footwear Supply Chain Transparency Pledge, makes the business case for companies to adopt greater supply chain transparency measures, showing that when they do, businesses enjoy better reputations, greater operational efficiency, improved legal compliance, and increased access to capital.

The report calls on companies to adopt the Apparel and Footwear Supply Chain Transparency Pledge, which requires businesses to publish and regularly update public, searchable information about the factories in their supply chains, including factories’ names, addresses, product category, parent companies, and number of workers. The report cites the following four major benefits to businesses that sign the Pledge and implement greater supply chain transparency:

• Reputational factors: Transparency practices like the Pledge have a positive impact on a company’s reputation with 1.) investors, who are increasingly interested in making ethical investments; 2.) consumers, who prefer to purchase ethically sourced goods; and 3.) employees, who tend to be more loyal and motivated when working in more transparent work environments.

• Operational efficiency: Greater transparency and disclosure helps 1.) enhance the efficiency of workplace grievance mechanisms; 2.) increase trust with suppliers and prevent unauthorized subcontracting; and 3.) improve industry-wide collaboration.

• Legal compliance: Increased transparency means lower risk of labor violations in businesses’ supply chains, stronger due diligence, and better compliance (and hence, market access) with current regulatory regimes.

• Access to capital: There has been a significant growth in socially responsible investments – a 38 percent increase since 2016 – showing an emerging trend toward responsible businesses. Adopting transparency standards sends a signal to investors and potential new shareholders that a company is prioritizing sustainability, helping to attract this capital.

You can download the full report here.

You can read the press release here.

For more information, please contact Nicole Vander Meulen at Nicole@icar.ngo.