Social Responsibility of Business
In the era of globalisation, every industry is seeking to find ways to prosper and survive in the cut throat condition. In this report, the fashion industry in the global perspective is taken into account. The fashion industry is inclusive of the companies which are concerned with designing and selling apparels, footwear and other related accessories that are in line with fashion aspect. The categories of the products under the ambit of fashion industry are inclusive of everything that ranges from the basics such as undergarments to posh items like cashmere sweaters (Aspers and Asaf, 2011). Conventionally, the apparel companies were into whole sale business, selling off large quantities of goods to the retailers, who mark up those items and sell them to the customers at a profit. However, it becomes complex to draw a line between the retailers and the whole sellers as most of the companies in the fashion world these days carry out both kinds of operations (Value Line, 2019).
Since the world is deluged with the unending supply of dirt-cheap apparels, the ethical activists from different corners of the world are raising their concerns with respect to the fashion sector’s continuous exploitation of the humans, natural resources as well as other living beings such as birds and animals (Anand and Mary, 2004).
On the aftermath of Rana Plaza tragedy which brought tremor to the fashion world, the companies in the sector operating internationally were forced to reconsider the fact that how their process of manufacturing put an adverse impact upon the workers, the communities they have inhabited and mother nature. The philanthropists, human right activists and the environmentalists and conscious community around the world started raising their voice against the unethical practices applied in fashion industry (Value Line, 2019).
In this report, the main objective of is to figure out the issues concerned with sustainability and ethics which were faced by Balenciaga, and comprehend the impact of such concerns on the company’s resources and its productions and operations in the coming 10 years. At the end, the report considers the possible rectifying measures for the firms to deal with such issues (Anand and Brittany, 2008).
The introduction of the report discusses about the various important factors in the context of the fashion industry as well as the ethical issues that are to be taken care of. In the next section of the report, an overview of the fashion industry is incorporated. The second section deals with the sustainability and ethical issues in the global fashion industry are being pointed out. The third section incorporates the ethical and CSR issues being faced by the selected company, i.e. Balenciaga. The fourth section takes into account the implications of considering the ethical issues. Lastly, in the conclusion chapter, the key issues will be stated and evaluated. It will also incorporate the competitive advantage of the company and the implications of the sustainability practices will be evaluated.
Fashion companies design and produce the items that are sold to the retailers, which include departmental stores, more particularly the speciality shops. Most of the time, these companies own a license to produce goods that come under specific brand names, and they will market and promote those product lines. One license can help in covering many products and in certain cases; a fashion company can only have the rights to manufacture the items that comes from a specific brand, such as shirts or ties, while excluding the other product lines. These productions are being outsourced to predominantly to the developing nations, where he cost of labour is relatively less in comparison to that of United States and European countries. The market of whole sale business is seasonal and the retailers pile up the merchandise prior to the shoppers who would hit the outlets at the time of holiday times or the peek-back-to-school periods (McKinsey and Co, 2019).
This multi-billion dollar global industry is concerned with the business of selling and manufacturing apparels and other fashion products. There have been some observers who would point out that the apparel and fashion industry are different. By the 1970s, these boundaries have been blurred (Sassatelli, 2007). The idea of fashion is defined just by the style of clothing and the accessories to be worn at any time by any group of people. There could be a difference between the expensive fashions designing which is shown on the New York and Paris and the mass produced sportswear and the street fashions which are sold in local outlets and malls throughout the world. However, the fashion industry incorporates the design, distribution, manufacturing and marketing, advertising and retailing all kinds of apparels (men’s, women’s and kids’) from the most expensive form of sewing to the ordinary clothing worn every day- from Juicy Couture-brand sweatpants to couture ball gowns. In some instances, the macro term called “fashion industry” is being used to denote to the numerous industries and services that employs huge number of people internationally (Suhrawardi, 2019).
The fashion industry has witnessed dramatic shifts in the year 2018. From racist comments on the part of fashion designer Stefano Gabbana to the Me Too campaign where the big names in the industry such as Bruce Weber and Mario Testino were busted for some serious instances for sexual misconduct, the industry had the some terrible moments which shook its very base (Crill, 2006).
Trafficked and forced labor
The labour issues with respect to the fashion supply chain have been a serious problem. This is due to the poor working conditions, under aged, underpaid and overworked employees in the developing nations. Apart from that, here is an even more alarming factor involved within this issue, which says that a massive portion of the supply chain involved into the fashion industry- predominantly the suppliers in tier 2 and tier 3- composed of trafficked and forced labour.
Culture, race and appropriation
The social media rant of Stefano Gabbana to the Chinese community was broke in the media by the famous fashion account called Diet Prada makes an indication of to what extent the aspect of race plays a crucial part in the industry at the top level. The speech came in response to the criticism concerned with a video campaign surfaced by Dolce and Gabbana which slammed the customers of Chinese origin due to the overt application of Chinese stereotypes (Pathak, 2013).
Ranging from use of Koranic verses on the clothes buy the channel to the recent key chains of Prada which carried a significant similarity with the sambo dolls earlier, the fashion industry babble around the issues of cultural sensitivity and race in a way which is bizarrely not falling at the right place.
The fashion has been lagging behind with respect to application of technology since the industry is known to be a slow mover. For a long period of time now, the industry has seen observed the impact on everything from publishing to the retail sector in their bottom lines and with regard to the aspect of relevance owing to the poor strategy and execution on technological grounds (Stinson, 2019).
It’s an open secret that the fashion is one of those industries which are the biggest contributors of environmental pollution. The toxic chemicals are the fundamentals of textile dying and the apparently simple looking act of cleansing the polyester fabrics drains out plastic into the water system with every instance of cleaning (Ciotti, 2012). The complete quantum of pesticides and water applied in producing cotton can cause drought and have been associated with the deadly cancer in India (Kawamura, 2005). This discussion is only on the manufacturing side of the products. There is also a huge waste concerned with the field of textile that appears out of the public consumption of fast fashion- the practice of purchasing, wearing and disposing the apparel only after a few years. As there are many brands which try to incorporate even more sustainable business practices into their already existing business approaches, it is not helping to be enough to tackle with the enormous amount of waste created by the fashion industry on daily basis (Stinson, 2019).
Kering, the parent company of Balenciaga, states that in the year 2016, the 1822 suppliers audit was performed. However, it remained vague that whether 90% of the production volume of the company can be evaluated. Furthermore, Kering doesn’t specify extensively the outcomes of the measures that have been incorporated to enhance the working conditions of the supplying units of Balenciaga.
The company states that the brands under its name apply the process of tanning in order to eliminate the necessity of metal. With regard to some specific products, the impact of such a policy is yet to be clarified. Furthermore, the share of tanneries which are certified by LWG is not specified (balenciaga.knoji.com, 2018).
Kering has never stated a concrete policy in order to reduce the chemicals which ar3e solvent based with regard to their production of shoes and has never put forward the consequences for the its brand Balenciaga.
The company takes into account the measures to develop the labour practices at the apparel manufacturing units. But it has never stated whether such strategies resulted in an increase in the wages of the employees or decreased their working hours (Crane, 2000).
The company never presents concrete information about the measures required to develop the living wage payment system to its direct suppliers. It also doesn’t provide any report upon the terms and conditions regarding the labour policy for the fabric producing phases (rankabrand.org, 2018).
In the year 2018, Balenciaga was convicted of showing disrespect to the homeless considering a window display at Selfridges, a departmental store in London. The mannequins were dressed in baggy pants, hoodies and the company’s track sneaker and they were placed in a slumped position such as sitting on the floor looking down. Although the label was trying to portray the hype beasts that were waiting in queue to a sneaker drop, the pedestrians perceived that the mannequins depicted the plight of homeless people (Van Elven, 2018).
In line with its long term strategy, the company has taken some steps to appraise the risk of forced labour in their supply chain management. Within the management of the company, the policy of procurement falls into two categories: a) sourcing the raw materials such as leather and textile and b) procurement of goods and services of other types in order to support the day to day operations of the business, which includes manufacturing, keeping the energy sources and arranging the office equipments. Even though, mostly the social impact of the goods and services of bought by Balenciaga stays beyond the direct control of the company, Balenciaga takes proactive measures to eliminate the aspect of human trafficking and slavery from their supply chain (Chaudhuri & Majumdar, 2006).
To enhance its brand image and capitalise the business ethics, it becomes more important for the company to emphasis more on the development of social conditions, sustainability and the human resource. At the outset, it is crucial for the firm to put emphasis on the different activities which would help it to augment the employers’ image and the identity of the organisation. This is important because such factors have significant impact towards the stakeholders’ interest as the company wants to have a good employers’ image that signifies better working conditions and perks for the employees. Furthermore, it is very important for the company to focus more on its projects and programs concerned with the interest of the youth as the fundamental target of the company is that chunk of young population. The company must take into account the educational aspect by providing different tutorial projects and scholarship programs. On the top of that, it will be crucial for the firm to put emphasis on the interest of the community as a whole regarding the social as well as the natural environment (Businessethicscases, 2013).
Considering the Social Accountability International’s (SAI) SA8000, the subcontractors, suppliers and the sub suppliers of Balenciaga will be required to make commitment in writing to each and every SA8000 requirement, taking part in evaluating the activities as instructed/ requested by the company, taking prompt action in resolving non conformity with SA8000, if any, and alert Balenciaga about any pertinent relationship. In addition to that, being registered to SA8000, the company will be liable to perform unannounced or announced audit operations to ensure its conformity to SA8000 standards, and the suppliers of the company will be liable to the same condition as well (Kennedy, et. al., 2013). The standard of Kering with regard to the supply agreements refers to and adapted with the SA8000 requirements, making an obligation to its suppliers to stay in conformity to the accepted standard. More often than not, he brands under Kering, such as Balenciaga are tagged with the same suppliers and sub suppliers. Therefore, to the tune certain brands under Kering are already affiliated to SA8000, other businesses of the parent company must be well positioned to be brought under the compliance of SA8000 and generate a format approval (Balenciaga, 2018).
Since there are loads of brands which strive to put in more sustainable measures or business practices into their present state of operations, it is still not contributing substantially to the environment. Therefore, the company need to consider these issues in a serious note. The internal policy of Balenciaga also incorporates its determination to eliminate the issue of forced labour and human trafficking. It is also expected to take care of the working conditions and transparency concerned with its labour related records in order to ensure ethical behaviour and sustainability.
Balenciaga relies upon its managers and employees to carry out a zero tolerance policy against forced labour. In view with that, it has taken several steps to enhance employee awareness and conformity with respect to human trafficking and slavery issues. The code of conduct of the company is given to all the employees and the suppliers. The employees working in the company are being encouraged to make report on any violation of code of conduct. Apart from that, as a part of the SA8000 affiliation, the standard will be displayed at different business locations to make the employees aware of the company’s voluntary commitment with respect to the standard and the requirements to comply with the standard. Kering will facilitate a confidential process for the employees of Balenciaga to report any violation of compliance to the management. Such strategies will also help the company to gain competitive advantage over its rivals and thus help in enhancing the organisational efficiency not only with respect to business ethics but also regarding sustainability.
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