Keywords

Introduction

This chapter emerges from the melding of two opposing realities in the global apparel industry: (1) the damaging social and environmental impact of fast fashion and (2) the idea that consumers can play a role in enacting organizational change via anti-consumption. With a strong focus on increasing sales turnover and rapid clothing cycles, the fashion industry is the second largest polluting industry in the world after oil (Sweeny 2015), and often operates to the detriment of its workers, as seen in the Rana Plaza incident in 2013 (D’Ambrogio 2014). The previous chapters in this book postulate the need for both public (political) and private (corporate) led changes in governance. This chapter further emphasizes the potent role that the consumer, or indeed the anti-consumer, can play in the general dynamics of the global apparel industry and specifically to prevent similar tragedies to the Rana Plaza collapse. In the debate over corporate social responsibility (CSR), several arguments have been raised that downplay the ability of consumers to play a more active role in pushing companies to adopt more rigorous environmental and ethical labour standards.

One argument is that consumer pressure alone is insufficient to change firm practices in the apparel industry and that the issue is a political one, namely that developing countries are often reluctant to stifle their own competiveness by making business “more difficult” for multinational corporations (MNCs). The fear is that any legislative improvements in governance may drive businesses elsewhere. However, two counter-arguments to this perspective revolve around the power of the consumer. First, even though some countries are desperate for MNCs to “set up shop” in their country, MNCs themselves are often highly concerned about their reputation (Fontaine 2013). This is particularly so in highly competitive industries where positive consumer perceptions may lead to increased market share, price premiums, and, ultimately, shareholder value (Bryan 2016; Karolewski and Suszycki 2011). Second, emerging countries need to be aware of their own ability to counter negative country of origin effects, where poor governance, in terms of both environmental and labour policies, may be associated with poor quality control and workmanship. Thus, an improvement in labour and environmental legislation may also assist such countries in elevating their status in the eyes of the global consumer and manufacturer.

An argument against the private (corporate) incentive to change is that there is no conclusive evidence to suggest that ethical labour practices and CSR make a financial difference for the corporation, that the employees are better off, or that the consumer actually cares about such initiatives (Balabanis et al. 1998; Corporate Watch 2016; Tsoutsoura 2004; Vogel 2008). There are very long processes at play with many sub-contractors and suppliers brought in to engage in a last-minute demand-orientated system. The lack of financial advantage identified in CSR or government initiatives may not reflect general consumer indifference towards third world workers. Rather, the gap between positive business practices and increased sales or profits may simply be a case of the global consumer feeling disempowered when faced with a complex and convoluted supply chain, cynical towards CSR efficacy, and suspicious of potential governmental corruption.

We believe what is currently preventing positive change within the global apparel industry is a vicious downward spiral of doubt, fear, and cynicism, propelled by a lack of transparency. MNCs doubt that consumers are willing to pay for, subsidize, or respond to positive changes in governance. Governments are fearful that MNCs will discontinue business within their countries if more stringent standards are legislated. And consumers are doubtful and cynical of the true intentions of MNCs’ CSR initiatives, in addition to potential corruption within the supply chain and regulatory system (Dobscha 1998). In all cases, the three parties lack transparent understanding regarding the intentions and processes of the other parties. Most fundamentally, the consumers with whom the ultimate decision rests (to buy or not to buy?) appear apathetic, perhaps because they cannot be sure that their purchase decisions will have an impact, and because they cannot see the link between actions and consequences. Their vote for an ethical shirt is punctuated by multiple points of potential interference; from the retailer and importer, to the exporter and wholesaler, to the manufacturer and supplier, to the way the raw materials are grown and sourced, and every step in between. It is no wonder that the consumer experiences a sense of ambivalence between wanting to do the right thing and the feeling of hopelessness. Furthermore, the number of consumers demanding companies to act ethically and avoiding products that are made under unethical conditions remains a minority (Pieters 2015). Some consumers either do not know about labour, ethical, or environmental issues, or forget about these issues when they see something they like at the point of purchase. We suggest that more transparency is needed. Our hope is that consumer empowerment and activism, corporate accountability, and government intervention will all combine with social media, online retailing, search engines, and social enterprise to realize several “platforms of engagement”. As a result, consumers, corporations, and countries may all be granted better access to, and understanding of, the governance structures in the global apparel industry. Ideally, they will also be able to see the direct consequences of the processes or purchases they have engaged in and the future benchmarks waiting to be achieved.

A decade ago such ambitious tracking systems to promote transparency and consumer confidence would have appeared impossible, but work is already underway, much of it drawing on the food industry and the growing importance of transparency and traceability. For instance, in 2008, clothing brand Icebreaker implemented a “Baa code” enabling the end-consumer to trace clothing through the supply chain all the way back to the sheep farm from which the raw material was sourced (McLaren 2008). Such programmes, while onerous to account for from the corporation’s perspective, serve a dual purpose beyond brand positioning. Not only do they provide the much-needed transparency that enables consumers to feel more empowered and informed in their decision-making, but the more secure the system, the more it may act as a brand protection strategy to deter counterfeiting and other forms of illegal distribution. Finally, even if CSR, compliance costs, or any other politically motivated change in governance has an unclear outcome, it is still no reason to abandon hope. Advertising, marketing, and many business practices are notoriously difficult to measure; however, that does not prevent corporations investing millions of dollars to try to bridge the gap between consumer awareness, intention, and behaviour, therefore why should CSR initiatives be any different? The bulk of this chapter will delve into such cases of “best practice”, hopefully revealing that although there is still much work to be done, such work is not futile.

Overall, we believe that the consumer has a central role in enacting change, but we do not downplay the influence of public or private initiatives. Instead, we argue that the solution must involve transparency within the triad of corporations, countries, and consumers. Thus, this chapter highlights the role consumers/anti-consumers have had in enacting some positive governance changes to date. We explore the link between consumer demand for CSR and ethical working conditions, consumers’ anti-consumption behaviour or attitudes after the Rana Plaza incident, and the actual implementation of CSR and ethical working conditions by firms. The following sections provide some industry background, an overview of anti-consumption, and how consumers may influence firms to raise their standards of labour protection and change the long-term governance of the apparel industry. The case of outdoor clothing retailer Patagonia is exposed, demonstrating a company with a different approach to environmental issues and ethical working conditions. We conclude the chapter by offering some tentative solutions addressing the real barriers to change.

Background

The global apparel industry is valued at US$3 trillion, accounting for 2% of the world’s gross domestic product (GDP) (Fashion United 2016). However, the Rana Plaza incident in 2013 has had a tremendous impact on the way many consumers perceive the so-called fast fashion industry. Intensive media coverage turned a somewhat unknown building into the flagship of fast fashion manufacturing. Consequently, consumers are more aware of inhumane labour conditions and unethical firm practices (Rheannon 2013; The Guardian 2013; Transparency International 2014). The increasing awareness of the societal and environmental impacts of the fast fashion industry has led some consumers to “vote” with their purchase, making more informed purchasing decisions, and avoiding products or services based on negative company, practices, and reputations (Mintel 2015; Wicker 2016). Additionally, consumers are increasingly asking where their clothes were made, what they are made of, and who made them (Fashion Revolution 2016). Media coverage of the collapse also resulted in consumers boycotting firms involved in outsourcing production at Rana Plaza, such as Primark and The Gap, and demanding that such firms change their practices (Francis 2014; Morrison 2013). As a result, apparel firms, including Adidas, Cotton On Group, Inditex, Mango, and C&A (ACCORD n.d.a), founded the Accord and the Alliance for Bangladesh Worker Safety (Business Human Rights Resource Centre 2014). The creation of the Accord and the Alliance was a result of firms reacting to media and consumer sentiment towards fair labour wages and conditions. Firms often need to respond to competing demands from a variety of stakeholders in order to maintain profitability, contribute money to charities, protect the environment, and help solve societal problems (Cormier et al. 2005; Darnall et al. 2010; Henriques and Sadorsky 1999). Stakeholders, including non-governmental organizations (NGOs), activists, trade or labour unions, as well as shareholders, represent their own agendas or goals by pressuring businesses to change or adapt their strategy, practices, or operations (Habib-Mintz 2009). These stakeholders are capable of changing, positively or negatively, a firm’s position as well as environmental and social issues existing within society (Habib-Mintz 2009). Overall, consumers can actively pressure or boycott firms to adopt socially and environmentally responsible governance practices, rewarding or punishing firms depending on their behaviour.

Anti-consumption, where consumers resist, reject, or reduce the consumption of goods and services (Chatzidakis and Lee 2013; Lee et al. 2009), is increasingly changing the ways many businesses operate. Some companies adapt business practices because of anti-consumption behaviour, for example addressing boycotts that may negatively impact a firm’s image or reputation (Aguilera et al. 2007; Dawar and Pillutla 2000; Osterhus 1997). H&M, for example, has been exposed to boycotts relating to child labour, poor working conditions, and organic cotton fraud (Green Resistance 2010). The company responded to these boycotts and media attention by changing parts of its supply chain, attempting to provide more transparency and revealing its ethical processes in annual reports (H&M 2016). Anti-consumption theory posits that people are “against” certain products or services based on their personal values, attitudes, and experiences, and that such reasons against consumption may be just as pertinent to their decision-making as the reasons “for” consumption (Chatzidakis and Lee 2013a; Lee et al. 2009). The demand for fair trade products may be attributable, to some extent, to anti-consumption activities such as protests, boycotts, consumer resistance, and general discontent towards status quo industry practices.

Furthermore, anti-consumption is becoming a widespread phenomenon because of information available about societal and environmental issues and increased awareness of the problems associated with one’s own consumption and firm production processes (Adams 2014; Creyer 1997; Dailey 2015). For example, media and press reports have uncovered hazardous living and working conditions of workers in various fashion firms, including Nike, Walmart, and Primark (Daily Mail 2008; Harvard Law School 2016; Wazir 2001). This information, provided by media and press, although sometimes biased, empowers some consumers to make educated purchasing decisions to selectively avoid, reduce, or boycott certain companies, or demand that firms change their practices.

Though safety conditions seem to have improved for workers in some factories where companies have committed to the Accord (Hoffman 2014), many factories remain where worker conditions have not improved. Chua (2016) recently stated that working conditions in H&M factories have not improved since the Rana Plaza collapsed. Furthermore, in May 2016, when H&M’s annual shareholder meeting was taking place, New Yorkers were boycotting H&M’s Times Square store, attempting to influence H&M to keep its promise to ensure that Fire and Building Safety standards in Bangladeshi factories were met (Chua 2016). According to analysis by labour groups, many of the factories have not installed fire-rated doors or are behind schedule (Chua 2016; Galpin 2016). Perhaps owing to the lack of changes and transparency at the macro-level, some consumers try to act and create changes through the clothes they do not purchase (Banister and Hogg 2004). Therefore, if consumers are informed and the governance processes are transparent, then consumers should be able to identify what they deem as acceptable standards, since they are the ones who will decide how much value such standards are worth. But in almost all cases of manufacturing, consumers are kept in the dark and cannot influence governance decisions, except for the ability to vote with their wallet by purchasing products or brands they want to support and rejecting those that they do not.

A survey by Pew Research Center in 2011 showed that a number of anti-consumers want to change unethical industries, specifically labour practices as well as environmental issues arising from consumption and production processes (Rayapura 2014). Younger consumers, specifically “Millennials” or “Generation Y” (those born after 1980) are the most sustainably conscious generation in terms of what they will and will not consume (Rayapura 2014). Members of Generation Y are more supportive of stricter environmental laws and favours environmental policies (Rayapura 2014). They also demonstrate an increased willingness and are more likely to pay a higher price for products that reduce environmental and social impacts (Adams 2014; Rayapura 2014). However, the increased awareness of these issues and how consumers consume is country-dependent. Younger people in the USA, especially Generation Y, feature in the category described above. However, in Canada, younger as well as older people tend to be conscious about labour and ethical practices and are very decisive about what they will or will not consume based on information regarding a company’s ethical and labour practice issues (International Institute for Sustainable Development 2013).

Anti-consumption and Business

In this section, we propose that anti-consumption shifts consumers from mere “choosers” to active citizens capable of influencing firm production practices. Anti-consumption occurs when consumers resist, reject, or reduce the acquisition or use of certain products and services owing to personal experiences, personal beliefs, and/or values (Chatzidakis and Lee 2013; Lee et al. 2009). Anti-consumption is not only focused on a consumer’s opposition to over-consumption, it also emphasizes consumer actions directed against specific targets such as products or brands, companies, or even nations. Consumers, investors, and interest groups increasingly demand that companies comply with laws and regulations related to ethical issues. Managers are, therefore, under pressure to adopt CSR practices and take into account the needs of society and environmental protection when making business decisions (McWilliams 2015). Additionally, activists collectively demand that companies change their unethical practices, such as child or slave labour in supplier factories (Shao 2009). Activists also campaign against unhealthy and unsafe working conditions in supplier factories, including the use of toxic dyes that may have an impact on the health of workers in those factories, as well as faulty electric wiring, defective appliances, and overcrowded work floors, which may lead to unsafe working conditions (ACCORD n.d.b). Additionally, labour unions in developed countries pressure companies to improve social benefits of workers and increase firm awareness of environmental consequences (Ioannou and Serafeim 2010). Mohr et al. (2001) found that: (1) consumer knowledge about social and environmental responsibility issues is positively related to socially responsible consumer behaviour; (2) the more consumers see their purchasing power as influential over firms, the more likely they will force firms to adopt socially and environmentally responsible behaviour; and (3) consumers are more likely to boycott irresponsible firms than to support responsible firms.

Ethical Firm Practices and Consumer Demand for CSR

Many companies include CSR in their business practices in response to consumer groups that either want to purchase ethical and environmentally responsible products or to make consumers feel good about their purchasing decisions (Becker-Olsen et al. 2006). According to Davis (2011), some customers search for information on how to live sustainably and expect firms to develop and sell environmentally and socially responsible goods allowing customers to adopt lifestyles that have a minimal environmental impact and contributing to customer well-being. Scholars have shown that people prefer to deal with parties who are perceived to be altruistic and trustworthy, and that is why some consumers avoid companies deemed to be malevolent and untrustworthy (Kohn 2009; Nooteboom 2002). However, some consumers can be cynical towards CSR initiatives because of beliefs that firms cannot behave in an altruistic way without expecting a return on investment (Dobscha 1998; Barone et al. 2000; Brown and Dacin 1997). As Nobel prize-winning economist Milton Friedman (1970) once argued, firms do not have a social duty, they only exist to make profits, which is why some consumers still believe that firms would not voluntarily incorporate CSR or pursue ethical working conditions even though it is the right thing to do. Often, the incorporation of CSR is considered by consumers as an investment that helps gain market share, enables firms to charge a price premium, and/or allows them to avoid consumer anti-consumption behaviour, such as boycotts, which may impact profits and reputation of the firm. This phenomenon of firms incorporating CSR for firm growth or profit reasons and not for the social good is visible in firms across the globe and is often referred to as greenwashing. Companies such as Nike committed publicly to clear out chemicals from their supply chain, but did not do so according to Greenpeace (Greenpeace 2016). Some companies, such as Ally Fashion, Boohoo, Brand Collective, Forever 21, and Pumpkin Patch, are reported to lack insights regarding their supply chain and worker conditions (Nimbalker et al. 2016, 6). According to goodonyou.org.au (Emmanuel 2015), Forever 21 only began random inspection of its labour conditions in 2012, after the US Labour Department investigated the company for sweatshop-like conditions along its supply chain. The company refers to its CSR commitment by referring to charities it is contributing to, treating worker rights as an optional charitable cause (Emmanuel 2015).

The voice of the consumer, whether it is through anti-consumption behaviour or customer feedback, needs to be considered by firms. Consumer demand for CSR has led some fashion companies to change the way they do business or has led to people starting their own businesses based on what a firm should be doing. Firms such as Patagonia choose to adopt and promote socially and environmentally responsible behaviour to customers by using educational campaigns and collaborations, such as the footprint chronicles, which provides an overview of its supply chain, showing where and how Patagonia’s products are made. By clicking on one of Patagonia’s suppliers on the world map, the consumer receives information on the supplier and why Patagonia works with that supplier (Patagonia n.d.). Additionally, the company is part of the fair trade programme to raise workers’ wages and improve living standards. The programme promotes worker health and safety as well as social and environmental compliance. Between Autumn 2014 and May 2016 Patagonia’s apparel workers received an additional US$430,000 (Patagonia 2016). More than 7000 people working for Patagonia along its supply chain worldwide are benefiting from the fair trade programme (Patagonia 2016).

Fair trade companies stand out in labour rights management. Etico and Audrey Blue were ranked with an overall A+ grade for knowing their suppliers, policies, and worker empowerment (Nimbalker et al. 2016, 6). Both companies were able to consistently demonstrate that their workers receive a decent living wage. Other initiatives that have an impact on securing living wages involve companies working with unions to establish collective bargaining agreements, such as Ethical Clothing Australia (ECA), where accredited brands must have annual audits to ensure facilities comply with local laws and appropriate industry rates for workers (Nimbalker et al. 2016, 13).

Furthermore, boycotts of ethical and socially irresponsible firm practices can contribute to successful social change. For example, Nike was exposed to anti-consumption behaviour when it was boycotted by angry consumers for its sweatshop labour conditions in factories abroad (Banjo 2014; Daily Mail Australia 2011; Teather 2005). In 2012, the fashion chain Flannels was boycotted by consumers for selling fur products. After consumers boycotted the brand, the brand decided to stop selling fur products (Ethical Consumer 2016). In 2006, Gill clothing was boycotted, with consumers demanding that the company stop sourcing from Burma, to which the company agreed (Ethical Consumer 2016). In 2005, Inditex withdrew its fur line from the group’s subsidiaries, specifically to avoid a planned international day of action by consumers against fur products of Zara (Ethical Consumer 2016). In all of these examples, corporate governance was undoubtedly modified to avoid acts of anti-consumption, which could have had a negative impact on the firms’ reputation and sales. After the Rana Plaza incident, consumers resisted and rejected brands such as Primark and other firms that were affiliated with the incident. Some consumers even joined the “Fashion Revolution”, which brings people from around the world together on April 24, the day when the Rana Plaza building collapsed, to raise awareness of the true cost of fashion by wearing clothes inside out and asking on social media “who made my clothes?” (Fashion Revolution 2016). Fashion Revolution Day demonstrates a form of activism from consumers, firms, and suppliers of fashion firms cooperating, and showing that issues such as unethical working conditions do not have to exist in the fashion industry.

The Global Apparel Industry and Anti-consumption

According to Schwab (2014), US consumers throw away an average of 65 pounds of clothing per year. Despite the impact of consumption choice and rejection, there is still a majority of consumers who choose to consume and purchase products in a perishable way, wearing fast fashion-oriented products only a few times before disposal, without considering the conditions in which these products were produced (Siegle 2014). “What is cool” is often described as the driving force of the fashion culture, and when consumers define themselves through the clothing they buy, what is cool one day may no longer be cool the next (Joy et al. 2012). Some consumers do not care or do not know where and how products have been made (Chamberlain 2013; Hartley-Brewer 2015; Martinko 2014). According to Marci Zaroff, the owner of a small fashion brand in the USA, Under the Canopy, “consumers do not know what impacts firms have on people… Americans think that clothes grow in department stores they don’t think about where products are made” (Clifford 2013). Nonetheless, Nike is not the only company coming to the realization that labour conditions are gaining importance in consumers’ fashion buying decisions. Additionally, a counter-movement to the fast-fashion industry has developed within the last two decades: the slow fashion movement, focusing on sustainability, fair labour conditions, and wages, as well as high-quality timeless clothing.

Slow Fashion, an Industry Focusing on Ethical Consumption

Anti-consumption can be used to shed light on the slow fashion movement. Companies in this movement reduce, reuse, and recycle materials and products to minimize the overall impact of their products on the environment. The slow fashion movement can be related to the anti-consumption-oriented values that chief executive officers (CEOs) or owners of these firms incorporate and promote to consumers. Many of these firms promote the reduction or the slowing down of consumption as well as the reuse and recycling of their products to minimize the environmental as well social impact that the fashion industry has on workers. Much like some consumers who live simply, slow fashion firms also (from a governance perspective) try to reduce their impact by making durable, high-quality, timeless clothing, in an ethical way.

Slow fashion seems to counter the trend of disposable or wasteful fashion. The term slow fashion was introduced by Kate Fletcher in 2007 (Fletcher 2007). Akin to the slow food movement (Van Bommel and Spicer 2011), slow fashion focuses on slowing down production and consumption to a more sustainable pace, as well as consideration of the rest of the supply chain, including workers who manufacture the products. Slow fashion can be described as not being time-bound, but quality-based, where the design, production, and consumption of a clothing item is not based on the latest trends available in store, but on durability, longevity, and the reduction of the clothing item’s environmental impact (Fletcher 2007). According to Pookulangara and Shephard (2013), by slowing down consumption, people might realize that consuming fashion continuously is not good for society and that it is unnecessary to buy new trends every six weeks if the current clothing items can still be worn. Slow fashion seems to have a greater focus on sustainability by: (1) downscaling production capacity; (2) limiting the availability of products; (3) reducing the negative impact of production on the environment; (4) paying workers fair wages and having strong and long-lasting relationships with suppliers, which are more like a friendship than a business relationship; and (5) reducing over- consumption of products by offering long-lasting quality products. All these governance decisions resemble anti-consumption values and practices of anti-consumers who are critical of mass-consumerism and pro-environment. The slow fashion industry has a stronger connection to the garments and clothing items sold, and has a greater awareness of environmental constraints compared to fast fashion. The focus of the industry is, therefore, on providing customers with high-quality clothing that is durable, and ethically and environmentally guilt free. The aim of firms in slow fashion is not necessarily volume growth, but reducing the environmental impact of goods by producing ethically along the supply chain and selling less for more.

Nonetheless, slow fashion does not refer to speed as the word slow suggests, but relates to a philosophy of conscious shopping decisions by being aware of the various stakeholder needs (including manufacturer and worker needs) and of the impact resulting from fashion on workers, consumers, and ecosystems (Pookulangara and Shephard 2013). The slow fashion movement challenges apparel firms within the industry to make an effort to include ethical practices in their designs, to select production methods that emphasize quality, craftsmanship, and experienced labour, and to educate consumers so that they can play an active role in making informed decisions regarding their apparel selections. An example for this is the company Tom’s Shoes, which educates customers about people in need. For every pair of shoes purchased the company provides a pair of shoes for someone in need. Therefore, customers making the conscious decision to purchase a pair of Tom’s Shoes know that their purchase will also result in a gift to someone in need.

Nonetheless, ethics aside, getting consumers to buy less in slow fashion does not fit with designing a fashion line in the current system, where high sales volumes are better for a country’s gross domestic product (GDP) and a firm’s financial position. Fortunately, sustainability is increasingly becoming a core consideration for the apparel industry, affecting strategy, operations, workforce engagement, and connection to consumers and communities (McWilliams and Siegel 2001). Obviously, compared to fast fashion businesses, slow fashion has different goals and priorities and is less growth oriented (Fletcher 2010). Slow fashion firms recognize that all actions of firms are interconnected and have an influence on ecological and social systems (Slow Fashion Forward n.d.). The success of slow fashion firms is determined by how a company markets the idea of slow fashion to consumers and how consumers connect to what they buy, when hearing a story about the designers, materials, and collections (Pookulangara and Shephard 2013).

Entrepreneurs choosing to incorporate the values of slow fashion into their business strategies and operations often possess strong anti-consumption values themselves and choose to reduce their personal consumption as well. Therefore, the owners’ or CEO’s beliefs can be visible in the firm’s operations, strategies, and marketing as the company promotes anti-consumption to its consumers (Kotey and Meredith 1997). Overall, firms can incorporate and promote anti-consumption-oriented values and promote anti-consumption to consumers, which will be demonstrated further in the case of Patagonia. Owners of firms in the slow fashion industry want to see and create change in the industry as well as in the minds of consumers. Additionally, some owners and managers of slow fashion-oriented firms see themselves as activists who want to change the industry, but often have too little influence individually. As a result, many companies in the slow fashion movement have adopted a certification called B-Corp or Benefit Corporation. The following section briefly discusses the B-Corp certification process.

B-Corp Certification—A Way of Gaining Trust in Suppliers and Firms

A B-Corp certificate is to business what fair trade is to the coffee or cocoa trade (B Corporation 2016). B-Corps or Benefit Corporations are for-profit businesses that are certified to meet very strict standards related to social and environmental performance, accountability, and transparency. A B-Corp serves more than just shareholders. Businesses that are certified B-Corps are as responsible for community as the environment and use business as a means to do good (B Corporation 2016). The B-Corp certificate has been described as one of the highest standards for socially responsible businesses (Honeyman 2014). Because some consumers lack trust in companies’ ethical and CSR practices, third-party certifications help to build trust. Many B-Corporations state that the certification helped them to build deeper, more loyal customers. For example, Neil Grimmer, co-founder and CEO of Plum Organics, says, “B-Corp certification—and the rigorous standards and third-party verification that the logo represents—helps us communicate our story, our mission, and our values in a way that our consumers understand and can trust”(Honeyman 2014). The B-Corp certified outdoor clothing business Patagonia is notable in its promotion of anti-consumption, as well as the reuse and recycle philosophy to consumers, thus encouraging them to consume less, more consciously. Furthermore, the transparency of the company’s supply chain efforts is demonstrated as well as how the company builds trusting relationships with its customers.

Patagonia—A Case of Conscious Consumption and Ethical Practices

One impact of media coverage of increasing ethical awareness and consumer anti-consumption practices has been the development of more ethically focused business strategies, with firms within the fashion industry choosing to produce ethical and socially responsible clothing for a conscious consumer. These companies focus on slow fashion and see themselves as corporate activists aiming to change how people think and buy clothes through the way they market themselves; their transparency in the supply chain; and the raw materials they use to manufacture clothing. A slow fashion-oriented strategy may seem to be a counter-intuitive governance strategy, but the business owners and managers of these companies aim to create an ethical and socially responsible enterprise by embracing anti-consumption behaviour and attitudes.

Patagonia is an outdoor clothing manufacturer based in California, USA. In 2011, the company launched a Don’t buy this jacket campaign, asking consumers not to buy its products unless they really needed to (Assadourian 2012). With this ad, the company addressed issues relating to the apparel industry as well as environmentally harmful consumer consumption behaviour. The campaign reduced the amount of products sold to customers (Patagonia 2011), but this strategy also allowed the company to gain new customers and might have increased the willingness of customers to pay a premium for their products, as they perceive they will receive higher value, repairable goods that will last a lifetime or even longer. The company created awareness of the negative consequences of disposable clothing on the environment. The company therefore promotes anti-consumption to its customers. Patagonia’s values and mission have a strong focus on the environment and sustainability, which is also visible through their strategies (Patagonia 2011). Firm values as well as founder or CEO values can strongly influence a firm’s strategies (England 1967) and also whether a firm wants to promote anti-consumption-oriented values or conscious consumption to its consumers and other stakeholders or not. Additionally, the company went into partnership with eBay to encourage and help customers to resell their worn Patagonia clothes. Patagonia did not have a share in the eBay partnership, nor did the company make any profits by encouraging customers to resell their worn clothes (Assadourian 2012). The firm provides its customers with high value products that are durable and of good quality, but chooses not to encourage over-consumption of its products for the sake of making more profits.

Patagonia adopts a slow fashion strategy. The company is an exceptional example of a firm whose governance philosophy is to reduce environmental damage, attract green customers to buy its clothing, and reduce (over-)consumption. Companies deciding to discourage customers from consuming more seem counter-cultural to the status quo of corporate governance, since consumption reduction may involve decreasing production as well as profits (Peattie and Peattie 2009). Patagonia’s governance strategy has anti-consumption-oriented values because the company focuses on producing high-quality long-lasting products and asks its consumers to only buy what they really need and to reject unnecessary consumption. The company, therefore, promotes anti-consumption to its customers, in the sense that they encourage the rejection, reduction, and reclaiming of certain goods (Lee et al. 2011).

Patagonia also launched the Product Lifecycle Initiative, where the company commits to lengthen the lifecycle of its products by repairing, swapping, or reselling services for their garments. This strategic choice allows Patagonia to change or adapt to the behaviour of consumers and reduce over-consumption through repair services or even product-sharing options (Sheth et al. 2011). The idea of slow fashion could, therefore, be related to anti-consumption-oriented values as firms like Patagonia downscale their production and consumption by offering customers high-quality, timeless products. Additionally, aside from functional benefits, the corporate mission and symbolic ideology of Patagonia’s governance decisions move beyond selling more products and making more profit. The company has adopted B-Corp certification, to focus on doing good for society and the environment. B-Corps use the power of businesses, in terms of their ability to solve social and environmental problems, as long as growth and profits are not the main factors determining business success (B Corporation 2016). Firms such as Patagonia can influence how consumers consume products based on the (emotional) values and beliefs the products convey to customers (Brown and Dacin 1997). Beliefs about the firm influence attitudes towards behaviour, which are translated into intention, and under the right circumstances into subsequent behaviour (Ajzen 1991). In the present context, a firm that changes societal values and beliefs, for example by promoting the idea that unnecessary consumption is socially unacceptable, may influence how consumers consume products and may also influence other firms’ choices of governance strategies, competitive positioning, and value creation.

Furthermore, compared to other companies in the industry, Patagonia provides transparency via its supply chain by engaging in a variety of due diligence activities to promote and sustain fair labour practices, safe working conditions, and environmental responsibility. This monitoring programme includes direct sewing factories and their sub-contractors (Patagonia 2016). The company introduced a supplier workplace code of conduct, which is based on the ILO’s core labour standards and complies with laws and regulations in each country in which the company’s factories operate. This benchmark document, which Patagonia developed, makes its expectations clear to its suppliers and encourages suppliers to follow Patagonia’s example (Patagonia 2016). Additionally, the company is a founding member of the Fair Labor Association (FLA), which provides customers with transparency and assurance that a company’s practices are legitimate and genuine. Associated companies are randomly audited by an objective party and the results of such audits are posted publicly on the FLA website (Fair Labor Association 2012). Additionally, before Patagonia makes a decision on sourcing products from a new supplier, the company follows a fourfold approach it has developed, which includes: (1) sourcing, (2) quality, (3) social, and (4) environmental standards that suppliers must meet (Patagonia 2016). Furthermore, the company is part of a variety of multistakeholder initiatives. Patagonia focuses on its relationship and activities with NGOs to provide ethical and socially responsible products. The company values insights from NGOs to create opportunities through issues that NGOs are facing in the global apparel industry. The company is a participant and member in a number of different associations and programs, such as the ILO’s Better Work Program in Vietnam and Jordan or a portion of the finished products is fair trade certified by Fair Trade USA, which audits the factories. Interestingly, consumers do not seem to play a large role for Patagonia in terms of influencing the company’s actions. The ethical and environmental focus stems from the founder’s vision of the company, and this cannot or will not be changed by consumers, but may influence consumers’ consumption patterns, and other companies in how they might run their own businesses.

Overall, the company is very transparent in its operations: (1) using the footprint chronicles to show customers where their products have been made; (2) using a specific code of conduct for suppliers to secure a certain benchmark that suppliers must meet in order to supply Patagonia, and to inspire and encourage these suppliers to live and produce by the same code of conduct; (3) being part of various associations and possessing a number of certifications such as Fair Trade, fair labour associations, and B-Corp, thereby building trust with its customers; and (4) its blog “the cleanest line”, which provides insights into challenges and issues the company is facing to provide complete transparency to the public. Patagonia is an exceptional example of a firm whose corporate governance promotes anti-consumption, tries to modify current societal and consumption patterns, develops codes of conducts to protect and support workers in their factories around the world, and makes information visible to its customers on a number of different forums. The amount of transparency that Patagonia is trying to bring to the customer in such unconventional marketing techniques as “Don’t buy this jacket”, as well as providing customers with the option of bringing back or repairing products, lets the company sprint ahead of its competition in terms of ethical and conscious firm practices. Additionally, the success of the company may also stem from the intrinsic desire to change and improve social and environmental conditions. The Patagonia case shows more of a bottom-up approach, where a firm sets an acceptable benchmark for standards and regulations with which suppliers and other partners have to comply, compared with a top-down approach through government regulations and policies that may set a lower standard for firms to comply with. Moreover, Patagonia shows that firms that are completely transparent in their ethical practices can be successful. Therefore, it is important for firms to move towards systems of transparency, so that consumers can make more informed choices, which may allow companies to benefit from positive changes in governance.

Even though the company promotes the reduction of consumption or consumers to purchase more consciously, it does not seem to face any financial challenges, which might be because of the higher price of the clothes, the genuine and transparent supply chain of the company, as well as the worldwide accessibility and availability of Patagonia clothes, allowing the company to serve a much larger market. Many smaller ethical companies that have started up since the Rana Plaza incident in 2013 are not as successful as Patagonia, and face financial challenges because the products they produce are long-lasting and customers do not repurchase as regularly as compared to fast fashion retailers, mainly because of two confounding issues. First, the prices of such clothes are higher compared to a fast fashion item, and second, the clothing lasts much longer. Further compounding these issues is their struggle to be recognized by more consumers because of the consumers’ current lack of knowledge and education regarding ethical firm practices. Therefore, these smaller firms struggle to gain international presence and attract new customers because they do not seem to have the financial ability to go overseas or market their products convincingly to customers around a particular country or in the wider world. The following section discusses the importance of transparency and certification as possible solutions.

Possible Solution: The Triad of Transparency

In order for ethically and CSR motivated changes in governance to have an effect, the consumer must trust the system. Such trust is only possible with transparency. As our example of Patagonia demonstrated, the consumer must have access to information related to the multiple points of the supply chain. Such information needs to be accountable and trustworthy. Since governments and MNCs sometimes have vested interests, as previous chapters have argued, they cannot be relied on to audit themselves. Governments and MNCs must be held accountable by independent third party auditors. Such auditors, who may also be biased in some way, should in turn, answer to more than the local government and MNCs. Potentially, a transparent system of reporting could be implemented whereby third party auditors answer not only to the local government at the site of manufacturing, but also to the home government of the MNC, as well as the consumer.

For the average time-poor consumer who does not have the cognitive or temporal resources to investigate or keep track of such a system, the role of consumer activists, assisted by the connectivity of the internet, could create platforms of engagement where consumers can obtain relevant and reliable information quickly and easily. Following on from this system, a standardized “stamp of approval” similar to the internationally recognized B-Corp certificate, Trade Aid, or Biogro certification could then be developed to aid time-poor consumers in making the right decision. While such certifications are by no means perfect, nor cheap to implement and enforce, if utilized properly they can give consumers added confidence in their decision-making process. The question of who pays for such a system can be addressed by looking at how similar models of certification are currently being funded. In most cases, the cost of implementing, administering, enforcing, and reporting such programmes is shared by the MNCs that are seeking third party approval, the governments subsidizing such programmes through tax revenue, and the customer, who is paying some form of premium for the decision aid and the peace of mind which a reliable signalling system provides. In saying this, it is entirely possible that, in this age of interconnectivity and engagement, some more efficient models may emerge owing to the co-creative nature of the internet. Figure 1 demonstrates this triad of transparency.

Fig. 1
figure 1

Triad of transparency

Full size image

Lack of transparency was certainly one antecedent of the Rana Plaza incident. Worker and factory conditions were not transparent to the public or other stakeholders before the incident. It was not until after the collapse that media coverage of poor labour and working conditions, as well as unsustainable working practices, became apparent and meaningful. Additionally, a lack of transparency has plagued the industry following the Rana Plaza incident. Here, the proposed and enacted changes in governance, at both political and private levels, are met with consumer cynicism and ambivalence, once again thanks to a lack of transparency.

However, there is hope. We witness an emergence of businesses in the fashion industry that position themselves by countering the lack of transparency. Such firms purposefully trace their garments, manufacturing, and fibres. They offer their customers as much transparency as possible regarding their supply chain, thereby creating trust and loyalty, rather than anti-consumption, cynicism, and apathy. Therefore, it is encouraging to see transparency becoming an increasingly important factor for some firms in the industry. It is not just about firms caring about their factory workers, governments caring for their citizens, or consumers caring about how their products are made, but also the transparency that enables all three of these relationships to coexist. Indeed, it is also transparency that may eventually decrease the likelihood of an incident such as Rana Plaza from happening again.

Concluding Remarks

Firms sometimes make the headlines for the wrong reasons, such as sweatshop labour, environmentally unfriendly production processes, or other outsourcing issues. Recently Ivy Park, the lifestyle brand by Beyoncé Knowles and Topshop, was accused of having its collections made in Sri Lankan sweatshops (McGregor 2016). In today’s interconnected world, customers and media have greater access to information about the brands and products they consider and the ethics involved. Customers’ moral beliefs and values may influence the success or failure of businesses; not only in terms of consumption and brand loyalty, but also through boycotts and other forms of anti-consumption that may damage a firm’s reputation. Consumers are equal participants in global trade; they too will try to secure their desired consequences in the business relationship. Thus, companies and countries must consider a plethora of elements pertaining to consumers, including gender, social class, ethnicity, education, or occupation, as well as their access to knowledge, their motivational drivers, and their propensity for transformative boycotting or anti-consumption actions.

Apart from boycotts and acts of consumer resistance, there are positive aspects of the slow fashion movement that the broader industry may benefit from. Such aspects include conscious consumption and a higher feeling of “connectedness” to the source and the supply chain of the materials involved in fashion. Furthermore, firms within the industry and media can make changes in consumer consumption patterns and societal attitudes towards consumption. These firms and other organizations may be able to achieve a positive change within society to reduce negative environmental and social impacts compared with some governments who may be unwilling or unable to regulate or change the industry. Some governments set standards which firms comply with, but such standards are often based on minimum standards (ILO 2016; OECD 2008). A number of measures have been suggested by the EU and the USA to prevent fatal accidents, such as Rana Plaza, from happening again. These measures to change unethical working conditions in Asia include “greater union rights, more regular work, brands doing more due diligence when dealing with contractors, efficient and more cooperative audits, more stable purchasing practices, making some guidelines and principles legally binding, and putting pressure on Asian authorities to have workers’ human rights better respected” (European Parliament 2014). Unfortunately, the “UN Guiding Principles on Businesses and Human Rights” as well as “OECD Guidelines for Multinational Enterprises” are not binding for firms. Similarly, although the ILO sets measures for countries around the world to adopt labour codes, the organization lacks real enforcement power. These standards and guidelines are insufficient to compel firms to act ethically because they are not binding. More often than not, firms incorporate only the parts, processes, or practices that are beneficial to them, neglecting what is good for the public, society, or the environment. It is for these reasons that the consumers’ voice should not be overlooked, since it is their anti-consumption behaviour that can provide pressing incentives for firms to adjust and adopt ethical practices. Moving forward, third party certifications such as B-Corp may become increasingly important for making positive corporate governance changes to provide greater transparency to consumers. Such certification does not set a minimum standard; rather, it demands that the firms involved are transparent and act for the good of society and the environment rather than for profits and sales. In an industry that has been marked by cost reduction, sweatshop labour, environmental pollution, and incidents such as Rana Plaza, it is time that all parties in the arena shoulder the burden of responsibility.