Oral evidence: Sustainability of the fashion industry, HC 1148
Oral evidence, 27 November 2018.
Witnesses
Mike Barry, Paul Lister, Jamie Beck and Leanne Wood.
Chair
I welcome people to this meeting. Can I ask that all our guests in the audience make sure that their phones are switched off, and our witnesses as well, please? We do not want to be interrupted. We are going to be livestreamed on the BBC Parliament channel, so if people can keep background noises to a minimum, we will be going live in about 30 seconds. I call the Committee to order. This is the penultimate session in our fast fashion inquiry. I welcome our guests and witnesses here this morning. For the purposes of Hansard, can you please introduce yourselves, starting from my left?
Mike Barry
Mike Barry, Director of Sustainable Business at Marks and Spencer.
Leanne Wood
Leanne Wood, Chief People, Strategy and Corporate Affairs Officer at Burberry.
Jamie Beck
Jamie Beck, Head of Supplier Management at the Arcadia Group.
Paul Lister
Paul Lister, responsible for ethical trade and sustainability at Primark.
Chair
Thank you all very much indeed for being with us here this morning. Throughout our inquiry there has been a recurring theme. That theme is the issue of the fashion industry chasing the cheap needle around the planet. We have been very concerned by the conditions that your garment workers are living in and working in. Mr Barry, Marks and Spencer’s Plan A has long been seen as a shining example of corporate responsibility. Can you explain why you are not part of the International Garment Workers Union, IndustriALL’s initiative for better standards in your supply chain?
Mike Barry
Thank you for the question. To reassure you, human rights is at the heart of buying hundreds of millions of garments around the world from thousands of factories. We have just been benchmarked fourth out of 101 in the corporate human rights benchmark, best modern day slavery statement British business in the FTSE 100. Put that to one side and let’s answer that direct question. We have been working now for decades in the world of ethical trade, working with ETI and working with SEDEX to understand what is truly happening in supply chains. We work in lots of different initiatives. Not every single one that is put in front of us do we need to work with. We keep talking with all these initiatives, we keep understanding what difference they can possibly make to the journey that we are on. Very respectful. No one is going to solve this journey on their own and that is why this panel is so very, very important. On this very specific initiative we decided that we can move things forward through the existing partnerships we have, but we will keep watching them.
Chair
You talk about SEDEX, but that is essentially the fashion industry marking its own homework, is it not? You do an audit and then once they are on your suppliers’ list you do not check second- and third-tier factories, do you?
Mike Barry
We go beyond first tier. Let’s again be very, very clear about SEDEX. It is bringing together the audits done by multiple different businesses and multiple different factories. By bringing the industry together, we are collectively sending a signal to the whole marketplace, all the producers, that these standards matter. I think that is very, very important to say at the beginning. We know from work on things like modern-day slavery that you have to go beyond tier 1. We work now through tier 2, tier 3, right back to the cotton field as well. There is in no way complacence, but I want to be very, very clear we cannot take part in every single possible initiative out there but we are totally committed to human rights in our supply chain.
Chair
It is funny that you are committed to human rights and yet you do not want your workers to express their human right to freedom of association, collective bargaining, discussions around pay, overtime and working conditions. Is not the best audit the audit that is taken by workers through their elected representatives in your factories? Is it not the case that Marks and Spencer does not recognise trade unions here in the UK and once you realised the Act was about recognising trade unions in third countries, you could not be part of it?
Mike Barry
Let’s start with the first challenge there. For our 85,000 colleagues we work very, very closely with business through business involvement groups. They have a really good voice in the direction of travel of the Marks and Spencer business.
Chair
Are these the garment workers you are talking about?
Mike Barry
You asked the question about our own employees. Let’s be very clear, we work very closely with our workforce. Secondly, back down the supply chain, absolutely we support freedom of association. Again, there is a transparency map on our website naming every food and clothing factory around the world we use, telling you whether they have freedom of association in that factory or not. We have nothing to hide. We absolutely support the need for freedom of association in supply chains, absolutely in terms of the audits that we do. We are working with worker representatives to understand the reality of what is going on in the factory. We are not naive. We know that people can be intimidated, we know that problems can be covered up, and we go looking for them. Again, this is why you have to work in partnership with multiple other businesses to get under the skin of the issues in supply chains. I want to be very clear with you that human rights matters to us; freedom of association matters as well.
Chair
How many of your factories are unionised?
Mike Barry
I could not tell you off the top of my head. The information is there on the website.
Chair
Do you not put it there? Do you not know?
Mike Barry
I do not know personally but it is up there. It is available in the public domain as to how much freedom of association is in our supply chain. We are one of the few businesses in the world that do that.
Chair
Can you talk us through the audit process that SEDEX does, because it is not clear to us? One of the constant refrains that we have is that this is the industry marking its own homework and that CSR—we have you all here today from the social responsibility side—is the kind of add-on to give you permission to operate and basically to cover up the fact that your workers are getting paid maybe 10 cents for making a pair of jeans that you are retailing at £30.
Mike Barry
Again it is a legitimate question. Let me explain how we do it within the business. We have a very small team in the central business I lead: 10 people who deliver the policy strategy over all partnerships within the business. Everything else is integrated into our business units, our clothing business, our food business, our retail business and logistics. They run these things day to day. They have teams with local sourcing officers that work very, very closely with independent third-party auditors that check every factory every year. We share that information again through the SEDEX platform. We are constantly working with other businesses to understand the problems that they are identifying, we are seeing, and working together. We, too, would challenge the audit systems that we have today that can be better. There are pieces of work going on from the Consumer Goods Forum, through the Ethical Trading Initiative, through SEDEX, to improve the audit system. None of us is complacent about this but I do believe that we are finding the issues that matter and dealing with them.
Chair
How many factories have you pulled out of working, and in which countries, as a result of a SEDEX audit?
Mike Barry
Over the last what length of time?
Chair
Over the last five years.
Mike Barry
It will be a small number, and it is a small number for a very clear reason: we do not cut and run. If you find a problem, you stay and you put it right. The only reason we would leave a factory is if we felt that that factory did not take seriously the problems that we had found and were not willing to work with us to put them right. If you find a problem, you stay and you put it right.
Chair
How do you put it right if you do not know where the unions are and you are relying on a third-party auditor? They come to you with a problem. There is no independent workplace voice, or you do not know whether you have trade unions or not. It does not sound very convincing, does it?
Mike Barry
Let’s be clear, we do know that we have trade unions. All I am saying today is that out of the thousands of factories we use I cannot give you a specific percentage today, but our teams on the ground know. When they go into a factory they will meet workers and workers’ representatives in the process of the audit. The happens all the time.
Chair
Globally, less than 10% of garment workers are in a trade union, so that would probably be a similar percentage for your factories, would it not?
Mike Barry
I think it is a higher figure and I think, in terms of freedom of association, again trade unions are very, very important in this process. Let’s be very clear, trade unions are in a really important role in supply chains, but there are other ways of doing freedom of association as well.
Chair
What are those ways? If they are sitting down with management in the factory, that acts as a block on workers’ trade unions being set up, does it not?
Mike Barry
Of course, and this is why we were working, again with other brands, to share best practice on how workers can have a voice in the factory. Again let’s be clear. We have seen repeatedly in our own business, in our food supply chain, that when workers are well looked after you get a business case. They are more productive; you have less absenteeism. It works. It is in our interests to support better labour rights in factories and supply chains.
Chair
It worries me about Marks and Spencer because you will be talking about your animal welfare, about happy cows, the quality of the turkeys, the hens that lay your eggs, yet you cannot tell us what is happening to your workers in second- and third-tier factories, or you are saying that if you go and audit, that you find problems and then you work to perhaps sort them out but you are not sure. It does not sound like a proper system. In this digital age what is stopping you from working with the global garment workers’ union? You were involved with them in 2015; you pulled out in 2015. Why did you not sign that memorandum of understanding?
Mike Barry
I want to be very, very clear with you. We know where every factory is, we are auditing every factory, we are transparently putting on our website where every factory is. That is among the leading standards in the world. The corporate human rights benchmark has gone through laboriously what we do in terms of human rights and found very, very high standards, fourth out of 101 in the world. I am being very, very clear with you today: as a panel we are not complacent. We are not for one second saying that human rights is cracked and there is not a better way of doing things. We are also saying how respectful we are of the good work that trade unions do in those supply chains, but we cannot take part in every single initiative that is put in front of us.
Chair
We notice the fact that of all the initiatives that you are taking part in, the one that involves independent scrutiny of what you are doing is the one that you are not part of. I am going to move on to Ms Wood, Burberry. You have a very interesting approach to factories in Asia and you refuse to supply from Cambodia, Bangladesh and a couple of other countries. Can you tell us why that is?
Leanne Wood
Yes, we do not work with partners in those countries because we do not feel that we can be confident necessarily of the standards and we cannot audit or ensure them, so we have made a choice not to operate in those countries.
Chair
What are the weaknesses in the audit systems in those countries that you have discovered?
Leanne Wood
Beyond the audit system, at this present time we do not feel confident that all of the things that we believe in in our responsible business principles that we would necessarily be able to find suppliers who would be able to commit that they could meet those standards.
Chair
Is this in particular about human slavery in Myanmar?
Leanne Wood
It is across a range of issues. We very much are in favour of all the work that is happening around modern slavery. Our CEO was one of the founding members of the CEO group against modern slavery. We are recognised as one of the top 10 FTSE businesses in our reporting in this area, so it is certainly something that is hugely important to us.
Chair
Have you considered going into the IndustriALL ACT, the industrial trade union for garment workers? Are you considering joining that initiative?
Leanne Wood
We will always look at and consider initiatives, we are very happy to do that. About 75% of the workers across our supply chain are covered by collective bargaining agreements. Again, our responsible business principles set out that we want to be able to ensure that people are able to access freedom of association, so we are always looking at associations that can help us further these goals.
Chair
You have a factory in Wakefield, in Castleford. Do you recognise trade unions in this country?
Leanne Wood
Our employees are free to join trade unions. We are the first luxury industry business to be accredited as a UK living-wage employer. That is something that is hugely important to us, so we certainly support all of our employees to be able to join a union.
Chair
Do you recognise any trade unions?
Leanne Wood
We do not recognise them collectively but we do have collective arrangements in place across many of our supply chain businesses.
Chair
In this country or overseas?
Leanne Wood
Our own manufacturing is in this country primarily, in Yorkshire, as you say. We have also recently acquired a factory in Italy.
Chair
Thank you very much. Can I move on now to Mr Beck, Arcadia Group? You have been in the news recently, have you not, with your boss, with allegations of racism, sexual harassment, bullying, belittling of senior management in the UK? How does having a boss like that affect the culture in your group with regards to workers’ rights?
Jamie Beck
It does not affect it at all. We have a strong fashion footprint programme, an ethical trading programme, which we have had for many years. We have a core code of conduct that is implemented throughout our factories and throughout our supply chain, and we have an audit programme similar to other high-street retailers to monitor that.
Chair
If culture is set from the top and the top management are being bullied and belittled by Philip Green, is that not a problem for the culture throughout the organisation?
Jamie Beck
I am not here to comment on that specifically. I thought we were here to talk about the supply chain and workers’ rights.
Chair
This is about workers’ rights in this country. There have been reports of what Philip Green is alleged to have said to workers in this country. He sets the standard and the tone for your dealings with workers further down the chain, if you like.
Jamie Beck
As I said, we have our code of conduct and that is in our conditions of trading with our suppliers and that is to meet the minimum standards throughout our supply chain.
Chair
You are in the ACT initiative, is that correct?
Jamie Beck
That is correct.
Chair
What difference has that made to your supply chain?
Jamie Beck
At the moment no direct impact. At the moment, where ACT is at, we are working with a number of trial countries, one in particular, where we are looking at what steps we can get to for a collective industrial agreement for wages in that sector. I would say that there is strong progress being made.
Chair
Which country is that?
Jamie Beck
It is Cambodia.
Chair
That is particularly important around child labour, is it not?
Jamie Beck
Sorry, can you repeat that?
Chair
Are there particular issues with child labour in Cambodia?
Jamie Beck
Not that I am aware of.
Chair
There certainly have been in the past, because obviously after the killing fields nobody had any documentation. One of the things was the destruction of the administrative pillars of society, which has taken a long time to rebuild. I was wondering if that was an issue.
Jamie Beck
No, not that I am aware.
Chair
Have you thought about going any further with ACT and signing up to a global framework agreement, as ASOS has done?
Jamie Beck
Yes, we have always had a very good, strong working relationship with the ITGLWF, which then turned into IndustriALL. We have had, like I say, a good, healthy working relationship where if they do find any concerns in the supply chain, they come and talk to us. We work with them and we help retailers to resolve any issues.
Chair
Thank you very much. Mr Lister, Primark is famous for its very cheap t-shirts. How can you justify selling t-shirts in your stores for as little as £2 or £3 and how can you be making a profit on those?
Paul Lister
That is a question that is often put to us. I think it is because our business model is slightly different from perhaps others. We do no advertising. You will have seen no billboards, no television advertising. Primark has never done any significant advertising at all. That can save us, in any year, £100 million to £150 million compared to some of our larger rivals. That goes straight into price, so that keeps our pricing low. With our arrangements with our factory, we often buy on longer lead times, in quiet periods for the factories, and then we pay the factories early. If you are a factory owner, you will be able to give Primark a better price to reflect that. Then from the factory through to the store, we keep our costs to the absolute minimum and in the store our margins are very tight. Our published margins are between 9% and 12%. It is our business model that takes us to the £2 t-shirts.
Chair
You said in your response to us that you are a founding member of ACT—Action, Collaboration, Transformation—on living wages, but you do not know of any child labour in your supply chain. That is one of those slightly ambiguous phrases, is it not?
Paul Lister
No. I sit here today and say I do not know of any child labour in our supply chain. We look. I know of the risks of child labour. We look. I have a team of 110 people who are based predominantly in our sourcing countries around Asia. We know the risks and we have our code of conduct, as everybody has been referring to. Our code of conduct has a list of things we look for and one of those is child labour.
Chair
What is your definition of “child”? Is this anyone under 15?
Paul Lister
Under 15, 15 or 16. We do not look to 14. I think China has 14. We define child labour.
Chair
Can you be clear? Nobody under what age is employed in your factories?
Paul Lister
Under 16. Sorry, they are not our factories, they are suppliers.
Chair
Suppliers, yes, we understand that, thank you, that you are purchasing from. If I can come back to Mr Beck, you say there is no person under the age of 15 in your factories, so there is already a discrepancy there in terms of differentiation of “child”.
Jamie Beck
That is with our code of conduct, which mirrors that of the ETI and globally, really. That is convened from ILO standards.
Chair
One store says no one under 16 and one store says no one under 15.
Jamie Beck
It is the law within that country, but we say at a minimum it is 15 and that is the same for all the high street retailers’ codes of conduct.
Chair
It is not, because your colleague next to you has just said it is 16, so it is not the same for all high-street retailers, is it?
Jamie Beck
I ask the colleague maybe to check his code of conduct, because they are the same.
Paul Lister
I will do that.
Chair
Mr Lister?
Paul Lister
We will do that, but I think it is 16 in our codes of conduct.
Chair
Mr Barry, what is your definition of a child?
Mike Barry
Let’s start working down. Under 18, young people, you will start taking a lot of due attention at 18 but people can work in there under 18. Most countries in the world would look at 16 and we would absolutely comply with the law of the land there; if it is 16, it is 16. In a small number of countries 15 is acceptable. We would accept it in that context provided there are really good, stringent controls in terms of what that young person is doing at the time. It is very, very, very rare, but 15 very occasionally will happen in a supply chain.
Chair
Which countries?
Mike Barry
I could not tell you off the top of my head right now, but it will be a small number might be doing it. You are talking a tiny number.
Chair
We heard evidence of girls being bonded into three years of bonded labour by their parents in south India, 15 to 18, 14 to 17, in order to work for their dowry. Is India a country that you source from?
Mike Barry
Yes, we source from India, Bangladesh, we source from Cambodia and Vietnam. Again I am being very clear we understand the risks in these countries and we are constantly looking out for them. We work with local NGOs and local government officials to spot the risks all the time, and communicating with each other as well. Again, we never turn around and say—
Chair
You say local government officials?
Mike Barry
Yes.
Chair
Like the ones who inspected the factories in Rana Plaza that then collapsed? The whole reason that Rana Plaza collapsed was because of corruption in the building standards there.
Mike Barry
Let me be very clear, Marks and Spencer had nothing to do with Rana Plaza. Secondly, let me also respond to that. You have to listen to different people and you triangulate. I will listen to trade unions, local NGOs, local government officials, other businesses and brands in that space. Everybody gives you a bit of intelligence to understand what is going on there. You have to be there and you have to be listening. I do not think anybody tells you the gospel truth, you have to be listening to everybody. The more you have people on the ground, the more you hear, the more you can share and respond to that.
Chair
You are very defensive about Rana Plaza, but any one of the three fast fashion brands sitting here could have been employing people in Rana Plaza, could you not?
Paul Lister
We were in Rana Plaza. We had a supplier in Rana Plaza.
Chair
What contribution did you make to the fund?
Paul Lister
In relation to Rana Plaza, we announced we were in Rana Plaza on the day that it collapsed and very early on we started to provide food aid because people were not being paid and food became the most important thing to everybody in Rana Plaza, irrespective of whether they were in the Primark factory, which was one of a number of factories within that building. After that, people had fled. The building owner had fled, the factory owners had fled. It became apparent that wages were also important, so we agreed that we would pay short-term compensation for three months’ salary for everybody in the building while we then developed our own long-term compensation scheme. This is in early May, when the building had collapsed in late April. That took longer, the compensation scheme took longer, because we were determined to have a compensation scheme that was based on the injuries suffered. Each individual had to be assessed for their injuries suffered. We also determined that the person who was entitled to the compensation would keep that compensation. It would be for them and not the family, because they were the people entitled to it. That took longer to develop than we thought it would, so we eventually paid nine months’ compensation in terms of short-term compensation to everybody within that building. Our total compensation, when it went to the long-term compensation and started to pay that out, was $14 million.
Chair
How many workers were directly lost in the Primark factory? It was about 1,400 overall.
Paul Lister
Yes, it was about 250, I think. I would have to check the actual number.
Chair
That is a lot less than you would have paid had a similar disaster happened in this country, for example?
Paul Lister
We based it on an insurance scheme that would have happened in this country. We looked at what would happen in Europe in relation to compensation, where the wages are taken into account and life expectancy, and the actuarial model was based on a European system with the inputs provided based on local data. That is how we reached the numbers we paid. That we then also agreed with the ILO, who were doing the parallel scheme, which I think is the one you are referring to. The ILO was also basing it on those numbers. The actuarial model was based on the European standard with the inputs based on the local numbers.
Chair
Mr Beck, did you have any sourcing from Rana Plaza?
Jamie Beck
No.
Chair
You did not. Did you make any contribution to the ILO fund?
Jamie Beck
No.
Chair
You did not. What about you, Mr Barry?
Mike Barry
We were not there and we did not make a contribution.
Chair
Thank you very much.
Joan Ryan
Leanne Wood, we are pleased that Burberry has announced an end to the wasteful practice of burning unsold stock. A concern would be that you could hardly have been said to have done this voluntarily as a progressive move or because of a concern about the ecological emergency that we face. In fact, your initial response was described as brazen. Although now it is a good move, it appears to have been done to avoid further reputational damage rather than any other concern. However, how widespread do you think this practice is across the rest of the luxury fashion industry?
Leanne Wood
Yes, we have committed to stopping it in our environment. It is something that we started in 2017, with establishing some goals for ourselves around how we revalue waste. It is an industry practice. We are the only luxury business that has reported it in its accounts, so we do not have specific numbers for other companies but it is something that does happen in the industry.
Joan Ryan
Mike Barry and Paul Lister, M&S and Primark have both piloted takeback schemes. What has been your experience of how successful they are?
Mike Barry
Just to step in with two observations, one is your internal clothing. Each year you are producing samples, you are producing garments that you cannot resell, customer returns. What we do is we give back half a million garments a year to charity. The rest is sent for commercial repurposing, nothing to landfill or incineration. With our customers, we worked with Oxfam for 10 years on something called Shwopping. It takes back about 30 million garments over 10 years. It has sold those products and raised about £21 million for overseas development work. We do not think the great challenge is about takeback. Takeback is possible. It is what you do with 1.2 million tonnes of fibre that the British industry uses collectively each year and we need to work harder, all of us, in terms of developing new industries that can use the fibres. It is quite possible to prevent anything going to landfill or to incineration. It is much harder at the moment to do something with the fibres you recover. We make sure, certainly with Oxfam, anything it does not sell in the UK is sold ethically overseas. Anything that cannot be done there is recycled.
Joan Ryan
They are interesting points because clothing production has roughly doubled in the last 15 years, yet across the whole industry only 13% of total material input is in some way recycled, so it does not seem a hugely effective way forward at the moment. Would you agree?
Mike Barry
I would agree. I think that is why we are all sat here. At the moment that 1.2 million tonnes of fibre that costs probably several billion pounds around the world to buy and put into garments to be sold to consumers is not recovered as well as it could be. We could have a really important industry in the UK, a circular economy industry, that uses hundreds of thousands of tons of cotton, wool, leather, any material that we bring back. There is lots of potential. M&S has made a good start; I would say all of us can do so much more.
Paul Lister
We piloted a takeback scheme in 2016. What we wanted to do there was learn how the clothing went through the logistics of a takeback scheme. We will next year in 2019 put a takeback scheme into all of our stores. One thing we learned was we needed to put the boxes in store in a recognised place in front of house as opposed to in a service area behind the cash tills. The takeback scheme is being developed. We are talking to a number of recyclers and then the money that is benefited from the takeback scheme will be donated to local charities, depending on the country in which we operate. In relation to unused stock, we have very little unused stock. It is about 0.25%. That is being donated to Newlife, which is the charity. They benefit and they save to the tune of about £4 million from that. In the last year that has benefited something like 25,000 children that it has been looking after.
Joan Ryan
It is good to hear of these initiatives and to give you the opportunity to talk about them here, but it does seem that it is making very little impact overall at the moment. Is there a real commitment within your companies and within the industry to make these changes for the right reasons to deal with the ecological emergency we face and also with the waste that you create that helps to support the profit of your business, or is it really just to avoid the situation Burberry got itself into?
Mike Barry
I can be very, very clear that we take it seriously. That is what we have been working on for 10 years. We have done 30 million garments. Could it be more? Possibly. We have to push ourselves harder to get more. What we are running into is the constraint of the current system. If there are better outlets to take the fibre back that we recover, the many thousands of tons of wool, for example, that we use in suits, to use that productively to upcycle or to put into another industry, then you can really start to drive some scale. We also need consistency across the high street. You have heard a good story there from Primark and we do good stuff. What we need is consistent recovery of garments. Underpinning it all—and I think we will come back to this later—is the need for us all to sell quality goods that last a long time. The ultimate way to stop waste is to sell quality, but once you do get it back, make sure you use that material time and time again.
Joan Ryan
We know that as an industry you have not yet been required by legislation to take responsibility for discarded garments, so it is quite different there to, say, the electronic goods. This is to everybody, so you might all like to come in on this. The Government are currently working on a new resources and waste strategy. What policies would you like to see Ministers include to reduce and reutilise the mountain of clothing waste we are currently producing, or that you are currently enabling to be produced?
Leanne Wood
One of the things that we would be very keen to see is anything that can stimulate investment in innovation in some of these areas that Mike was mentioning, or in recycling technology. There are certain fabrics, whether it is fibres or even finished fabric, that today is very difficult to find recycling solutions for. The UK could lead the way in this area, ways to stimulate innovation, new ideas. We participate with the Royal College of Art in a partnership to look at developing new kinds of fabric and I think there is a huge opportunity for us in this area.
Paul Lister
We are looking at new fabrics. We look at new fabrics and the new technologies that we have been talking about. It is difficult at the moment to disentangle, if you like, cotton and polyester. If you have a polyester and cotton shirt, it is difficult to disaggregate those two materials, but new technology may be able to do that. We are speaking to people in relation to new technology that will be able to do that and produce virgin cotton and virgin polyester that could then be recycled again. It would be very helpful if there were incentives in relation to that. That could be done in the UK where the clothes end up.
Joan Ryan
Do you think we can do this in the timescale that we now know we have in order to reverse the damage that we have done to the environment?
Paul Lister
Yes, I do. The Committee, I know, has heard from people who are looking at it now and are testing that technology. If that technology works, there is no reason why it cannot be done in a very short period of time. It needs to be done here—it would be better to be done here—than in the developing world because this is where the clothes stay.
Mike Barry
Three quick observations to the questions there. In terms of extended producer responsibility, I think again the policy system needs to consider the 1.2 million tonnes of fibre. Is it a valuable resource compared to the other resources that Government could intervene on? Quite possibly, yes. I think that EPR could well be considered. Zero Waste Scotland has done some good, innovative stuff to start to create micro-enterprises that can take material back and reuse it. I think that is very, very important. The thing I do not want us to forget is new business models emerging. It is very early days yet. We can start to see rental models and sharing models starting to emerge that will get people to participate in the use of clothing in a different way. It is small, it is early, but it will start to disrupt the marketplace. Is it quick enough? That is probably the homework question here. Probably not. We need to think quite rapidly how over the next five years we can move to a position where a significant amount of 1.2 million tonnes is, either voluntarily or legally driven, reused in the UK economy.
Joan Ryan
Mr Beck, do you wish to add anything?
Jamie Beck
No. I agree with the comments that have been given. I think that the focus is on the fibre-to-fibre model. It has to start at a fibre and then be able to go back to the fibre. It is the research needed for that and the facilities, as Paul said, here in the UK.
Joan Ryan
What is Arcadia’s commitment in relation to these issues?
Jamie Beck
At the moment we are just staying abreast of what innovations are out there, but I think that it is fairly limited in what can go all the way back from fibre to fibre. We would be happy to look into purchasing.
Chair
Essentially, you are not doing anything?
Jamie Beck
Not fibre to fibre, no.
Chair
No end-of-life collections?
Jamie Beck
Sorry, yes, we do have a takeback scheme in our head office and we have trialled it also in our main store. Are you talking about takeback schemes?
Chair
In your head office?
Jamie Beck
Yes, for the samples and materials that might come in, for our employees.
Chair
In one store?
Jamie Beck
Yes.
Chair
How many stores do you have in the UK?
Jamie Beck
I could not tell you off the top of my head.
Chair
Maybe you could write to us with that information. What about the fabric that is lost in the cutting in these countries where you manufacture? What happens to that?
Jamie Beck
From my experience in visiting factories, the fabric that is wasted is an extremely small amount. When you look at the technology that goes in, because the cost of the fabric of the overall cost price is the majority, the investment in technology to make sure that there is as little waste as possible through different design and cutting techniques is huge. The actual waste from that is very, very minimal. In the factories there that I know about that I have seen, it is recycled.
Chair
You have been to one factory and it was recycled there?
Jamie Beck
No, I have been to many factories and the fabric is never wasted.
Chair
What happens to it?
Jamie Beck
It would be sold on, normally, by the factory.
Chair
For what?
Jamie Beck
Normally to go to recycling to make things like insulation or to other industries.
Chair
We have done a Google and there are 2,500 outlets in this country and one takeback scheme for the public?
Jamie Beck
Yes.
Mr Goodwill
Marks and Spencer, Arcadia and Primark have all signed up to the sustainable clothing action plan. This relates not just to setting targets for waste, which we have talked about, but also carbon emissions and water use. What challenges have you faced in addressing these targets and is it something that you lie awake worrying about meeting these targets or is it just another box on the corporate social responsibility plan that you can tick and tell your shareholders and customers that you are doing the right thing?
Mike Barry
We are huge supporters of SCAP, the waste resources action plan that is generally across the UK in plastics and other materials. SCAP is very, very important. There are two insights there. One is existing work. Some of the challenges are particularly around measurement, making sure there is an industry consistently measuring environmental impact. You may well have heard of the HIGG index. It is a global scheme now to make sure we all consistently define environmental impact in the same consistent way. Making sure that the UK industry adopts HIGG voluntarily across everything it does will help SCAP enormously. The other thing that SCAP can do is address new issues. You have heard evidence already about microfibre shedding from clothing and the impact on the oceans and the risk that is growing there. SCAP has a really important role to do in convening the whole industry to come up with solutions. We are working with something called the European Outdoor Group on that, but I think that the SCAP platform in the UK can be very, very powerful for solving it.
Mr Goodwill
Mr Beck?
Jamie Beck
Yes, I agree with everything Mike says. The components of SCAP is the correct recipe for dealing with some of the things that have been spoken about here today in terms of the consumer advertising campaigns that it has done and the focus in reducing carbon, water and waste. Yes, we actively support it.
Mr Goodwill
Mr Lister?
Paul Lister
As we do, being part of this. Where Mike said earlier, any collaboration, you learn from each other. That is helpful. SCAP is one of those things that we have learned from and we have made big progress in relation to the targets set.
Mr Goodwill
When you are looking at the type of fabric you might use in a garment, you obviously have a lot of manmade fibre out there, you have mixes and you also have natural fibres, which I suppose if you are looking at energy field you would be looking at the sustainable energy versus fossil fuel and it is basically a fossil cloth. Do you look at that as you are starting the process of sourcing a new garment or is that something that is the end-of-the-exhaust-pipe problem that you try to solve rather than at the start?
Paul Lister
In terms of when the garment is being designed and what goes into the garment at that stage?
Mr Goodwill
Yes. If you use cotton as opposed to a polyester or what have you, does that mean the end of the life of that garment or as you produce waste during the production, that is going to be much more sustainable and meet the targets that have been set or is this the sort of problem you have to deal with at the end of the process?
Paul Lister
The buyers look at a garment in an overall view and the manufacturing process in an overall view. Part of that will be where they source, how they source, what goes into the garment and the end result of the garment, the whole environmental footprint of that. That is all set out in a document that they will produce and look at in order to determine what that garment looks like in its overall context. There are fashion elements as well that go into that. They are not blind to that.
Mr Goodwill
As a rule, at the bottom end of the market it is more manmade and at the top end it is more natural fibre?
Paul Lister
No, nearly 50% of our garments are made out of cotton. Cotton is by far and away our largest fabric.
Mr Goodwill
Would you like to come in again?
Mike Barry
Very briefly, I think this is a really good discussion because every fibre that we use carries an impact. Polyester manmades might be worse in terms of carbon footprint. We know that cottons have enormous challenges in terms of fertiliser use, pesticide use, labour standards in fields. Many of us are on the pathway now to 100% BCI cotton, better, more sustainable cotton. Every time you make a decision to hop from getting out of that fibre because it is a problem into another one, you run the risk of jumping from frying pan to fire. That is why the HIGG index is so very important to allow us to compare fibres to work out how we take the optimum decision about managing that environmental impact. There is more for us all to do, but what I would say is every raw material we use is on a pathway to be very much more sustainable than it was. We have not quite worked out how to work out whether one fibre is 17.8% better or worse than the other one at this moment in time. That will come.
Mr Goodwill
To the whole panel, do you think that a voluntary approach is going to be sufficiently robust to deliver the reductions in carbon, but also water use, as we have mentioned, or should we move to more compulsion in this, as we have seen in other industries, which may be more energy intensive but every bit counts towards our overall CO2 reduction targets?
Leanne Wood
We are committed to 100% renewable energy. At the moment it is about 50% but we are making good progress towards that target. I certainly think that individual companies on their own may struggle to do this, particularly smaller companies, so anything that we can do to support, whether it is in industry collaboration or by learning from each other, is very helpful. Beyond that, there are going to be companies with different challenges and it is going to be hard to pinpoint one rule for everybody.
Mr Goodwill
Of companies that source globally, how much control do you have over the way that a factory is heated or the air conditioning or lack of it that is in a particular factory in India or Bangladesh?
Jamie Beck
I would say limited in some of our smaller suppliers. Where we have greater purchasing power and we have strategic supplies—which is the majority, I would say, of our intake of garments into the business—then, yes, we will have some sway about where they source their energy from. In a lot of the countries they are encouraged to do that anyway, generally, as a good business operating model.
Mr Goodwill
Would on-shoring more production be a way of achieving these goals possibly?
Jamie Beck
Potentially.
Chair
Can I challenge you on this? You have agreed, under SCAP, voluntary targets—no hassle if you miss them—to reduce your waste by 7.5% by 2020. So far the signatories have reduced waste by 0.8%. Those are the figures that we have. Are they wrong? You are looking puzzled, Mr Barry.
Mike Barry
Yes, there is a new report coming out in January. Again, it is not in the public domain yet. It is not for me to say what the numbers say, but our experience is that we are making much more progress as an individual business than that. I do want to face into this point because I think you used the words “environmental crisis” a moment ago. I work in a food business and a clothing business. I am used to these challenges in food. Clothing faces the same challenges as food started to face 10 years ago. I want to be very clear with you: environmental and social, we need to be much better. Voluntary, I think I would look at us having one opportunity to do something like plastic packed. At last on plastics the industry in its entirety, brands and retailers, have faced into the lee for enormous change on plastics. WRAP is voluntarily leading that, supporting everybody in plastics packed. I think that we are at a stage where as an industry we might need something of that enormity in terms of the fibres, the factories, the takeback that we have. If we do not produce I would understand if you guys turned around and said, “You need a law to take you forward”. We would not be averse to that, but I do think generally the marketplace, if it takes things seriously—and that is an “if”—can solve this in a voluntary way. All the initiatives that we need are out there. They just need ownership and commitment to them.
Chair
Okay. The figures that I have from WRAP from July 2017 show that the industry or the signatories have reduced their carbon footprint by 10.6% against a target of 15%. There is no way you are going to meet a 2020 target of getting to 15% in that time. What are your figures now? Are you able to share them with us?
Mike Barry
I would think it was inappropriate with the figures coming out in January to put anything into the public domain just now. I would say that the industry has made a good start towards that figure. I am being, again, very clear. It is not enough. In terms of the carbon footprint, the environmental social footprint of clothing, the billions of garments sold in the UK every year, we collectively need to be better.
Chair
The waste is only at 0.8% per ton of clothing. You are 10 times away from this 7.5% target there.
Mike Barry
That is a very legitimate challenge on waste.
Chair
Of course, the impact of increased volumes of clothing, which you are all in the business of selling us more, outweigh these efficiency improvements, don’t they? So even if you become more efficient at dealing with your waste you are still selling more and creating more waste because that is the model that you operate under, isn’t it?
Jamie Beck
I think it is the investment upfront in the design stage. With the support of SCAP we have just developed an internal training document, a fibre toolkit, which is designed and trained out to the designers and buyers to start this at the very beginning—so at the design stage—to see what sustainable alternative fabrics there are, and on the accessories as well. As you say, it is from the outset doing it so if it is selling more garments then it would have less impact so it would offset that.
Chair
You are one of the signatories?
Jamie Beck
Yes.
Chair
How are you doing with your waste reduction, water reduction and carbon reduction?
Jamie Beck
We are making good progress.
Chair
Are you going to hit the 2020 target?
Jamie Beck
That is the aim.
Chair
Mr Lister, are you a signatory?
Paul Lister
We are.
Chair
Are you going to hit the 2020 target?
Paul Lister
I think that in the three categories SCAP will hit its target and we will be part of that. With waste what you have identified is the more challenging one. With all the processes you have to start somewhere, you have to make progress, then we can share the progress that we make in SCAP across the industry. The difficulty with all of this is that you have to turn over the pebble. You have to start. Once you have started, share what is difficult; share what has been easier.
Chair
I represent Ossett and Wakefield, which have a shoddy and mungo industry that goes back 100 years from the wool producing area of this country, where all the waste that was produced from the mills went into mattresses, refibred into carpets, bedding and insulation. It is not like there is anything new that we can invent, is there? It is just that these traditional industries have died and it has been easy to chuck things into landfill and forget about them. Isn’t that the real problem with the fast fashion industry if you are selling stuff at £5? People are not going to treat it with any respect at the end of its life. It is just going to go in the bin.
Paul Lister
Every item that we make—every item that we produce and sell—we are looking at durability. The durability has a number of tests across that lifecycle. It is about washing. It is about the design. It is about the treatment of that garment. We are proud of the quality and the durability of our garments. They are not bought to throw away.
Chair
What about you, Mr Beck? Every week is a season in Topshop, isn’t it?
Jamie Beck
I am not aware that every week is a season but, yes, we do have a lot of different ranges that come out in terms of newness. I would agree with Paul. We do not sell a lot of garments for £5. They are at a higher price point and again the product is designed and tested rigorously for things like washing and colour fastness to light to make sure it does not fade. These garments are not designed to be a disposable item that would be bought for a holiday. They are designed to be long lasting and that continues on to a secondary use as well of other people, whether that be a charity shop or whether that be given to friends and family. It is designed to a high standard.
Chair
Why is so much of your product ending up in the bin then?
Jamie Beck
We do not believe it is ending up in the bin. We believe it does go to charity shops. We believe it does get reused and sold on.
Chair
Where is the evidence?
Jamie Beck
I have not—
Chair
You are not collecting it so how do you know what is happening? You are just believing.
Jamie Beck
If you look, for example, at the second-hand market even on eBay and you look at the amount of items being sold there, that gives a very good indication that our products are resold on by our customers.
Joan Ryan
Is that not rather an indication of the fact that in the UK there has been this huge increase in the consumption of new clothing? New clothing is now higher in the UK than in any other European country and double that of many other countries.
Chair
Exactly. The model here is predicated on selling twice as many clothes as, for example, Italy buys per head. There will be a lot of stuff for sale on eBay because we buy more stuff, I believe. Okay, we will move on.
Caroline Lucas
I wanted to come to cotton production in Uzbekistan and Turkmenistan in particular. You will know they are both in the top 10 cotton producers in the world and we have had some worrying evidence about the Governments of those two countries in particular forcing their citizens to pick cotton under incredibly harsh conditions every harvest season. I wanted to ask each of you in turn, if that is all right, about whether or not any of the cotton you use is sourced from either of those two countries.
Mike Barry
To answer first, no, it is not. We have banned very clearly in our supply chain the use of cotton from those two countries. Every piece of cotton we use—and we use over 50,000 tonnes—is very close to being 100% Better Cotton Initiative cotton now, so more stable cotton. We have seen demonstrable evidence working with people like WWF, working with 20,000 farmers in India, about the difference that makes. Will we stop there? No, we will keep pushing for higher standards, but we have banned the worst and we are moving all of it to at least a good standard and from there we will move on.
Leanne Wood
We do not source our cotton from either of those countries. We are also members of the Better Cotton Initiative and are targeting 100% of our cotton coming from that initiative.
Caroline Lucas
By when?
Leanne Wood
By 2022. It is over 20% now and we are working on improving it.
Jamie Beck
Again, we do not source our cotton from those countries and that is a condition of trading with our suppliers for both countries you mentioned.
Caroline Lucas
Are you part of the Better Cotton Initiative?
Jamie Beck
We are, yes.
Caroline Lucas
What percentage have you achieved in terms of your—
Jamie Beck
We have a 20% target by 2020.
Caroline Lucas
A 20% target by 2020?
Jamie Beck
That is correct.
Caroline Lucas
What are you at now, do you know?
Jamie Beck
We are well on the way to hitting that target.
Caroline Lucas
What does that mean?
Jamie Beck
I do not have the figures in front of me but I know that we are—
Caroline Lucas
Then maybe in the letter you are writing to us about some other bits and pieces you could add that in.
Jamie Beck
Yes, certainly.
Paul Lister
We have also banned cotton coming from Uzbekistan and Turkmenistan. We are not a part of the Better Cotton Initiative. About five or six years ago we started a sustainable cotton initiative with CottonConnect in Gujarat in northern India where we signed up with the Self Employed Women’s Association to see whether we could get cotton from those fields into our supply chain. That was the aspiration. We started with 1,200 farmers. We have recently expanded that to 10,000 farmers in Gujarat and we have expanded it again now into Pakistan where we have gone to 20,000 farmers, again with CottonConnect. We started. We have the cotton. We have had sustainable cotton pyjamas using that cotton. It has come all the way through the supply chain and next year we would expect about 20% of our production to be from that sustainable cotton.
Caroline Lucas
How does that scheme differ from the Better Cotton Initiative? How do the two relate? One of the difficulties for consumers is just that there are so many different projects out there. How do we know what one is best in terms of its sustainability, for example?
Paul Lister
That is a very good question in terms of what is sustainable and what is more sustainable.
Caroline Lucas
Is there a reason why you did not go with the other one?
Paul Lister
Yes, because when we looked at it we set off with the aspiration that 100% of the cotton in each of the garments that we would classify as sustainable was sustainable. There was not a mass balance element to it. It was 100% from those fields in Gujarat and that was the aim, to see whether we could do it. Having succeeded in doing it, we then decided to expand it and we see that as our way forward that in each garment we have the sustainable label on that 100% of the cotton in that garment will come from the sustainable cotton initiative that we are doing with CottonConnect.
Caroline Lucas
Who audits if this is your own scheme, in effect?
Paul Lister
It is a CottonConnect scheme. We are not cotton experts so that is why we have the partners. CottonConnect introduced us to the Self Employed Women’s Association. It is women farmers in Gujarat and they were introduced to us by CottonConnect, who had the connections anyway, and CottonConnect are our cotton advisers.
Caroline Lucas
Do they audit and check it?
Paul Lister
Yes, they check it and then it goes through various schemes in order to make that happen.
Caroline Lucas
Do you have a definition of sustainable that you can share with us because it is a word that gets used and abused?
Paul Lister
It is quite tough. I forget the name of the organisation that verifies it in terms of the verification, but the sustainability elements come from us in that there is a reduction in fungicides and pesticides.
Caroline Lucas
But a reduction, sorry?
Paul Lister
Forty or 50% of a reduction in each of those, and then there is a switch from chemical fungicides and pesticides into a more earthy—
Caroline Lucas
Organic?
Paul Lister
Organic, thank you. No, it is not really organic. It comes from cows and the like.
Caroline Lucas
That is organic.
Paul Lister
It is organic. It will do, yes. That is the reduction there. Yields have gone up and then also irrigation—
Caroline Lucas
Yields have gone up?
Paul Lister
Yields have gone up.
Caroline Lucas
Even though your pesticide use has gone down?
Paul Lister
Yes, yields have gone up by I think it is 6%.
Caroline Lucas
To what do you attribute that?
Paul Lister
We think it is to do with the use of these organic pesticides and fungicides. We think it is also to do with irrigation. I visited the fields recently. The seed initially was scattered all over the place; now it is in lines. It seems basic to us. It was not basic to these women farmers and now it is in lines so irrigation is properly done.
Caroline Lucas
Are you using more water or less water?
Paul Lister
Less water. They would just flood. To be fair, they have been doing it a long time. They did not have the education. Having had the education, they then have learnt to do it properly and, frankly, their income has also gone up. Their income has gone up by something like 240%.
Caroline Lucas
These targets, for example—the 50% reduction or whatever in chemical pesticide use—is that something that is going to be further ratcheted down over time or is that, once you have hit that, then your standard?
Paul Lister
No. When we started we did not know. You have to start somewhere. You have to kick off and see where you get to. I think that we will always look to reduce or the farmers will always look to reduce. These are expensive chemicals. They were expensive.
Caroline Lucas
My concern is that while it is laudable to reduce chemical use by 50%, if you are also increasing the amount of clothing that is being produced by 150% then obviously the net difference is not the same. The overall volume of what you are producing risks undermining the good reductions that you are making in terms of the pesticide use. I am just trying to understand whether or not you have a motivation to move towards completely organic, for example.
Paul Lister
Not organic. It is the same thing. Not organic. We will continue to look at the sustainable cotton initiative that we have driven, so that is why we are looking at the takeback schemes. Cotton is easily recyclable if it is in a purer form. If it is starting to be mixed with polyester it becomes more difficult. That is why I was talking before about new technologies that are perhaps available and will be available that we are looking at now. A combination of in the field all the way through to what happens at end of life is the more holistic approach that we are looking at.
Caroline Lucas
Can I move to Mr Beck and ask what proportion of the cotton that is in your shops is organic?
Jamie Beck
I do not have the figure off the top of my head. It is not a large proportion that will be wholly organic. They will all have elements in there and again with our Better Cotton mix that we have as well.
Caroline Lucas
Can you just say a couple of words about the Better Cotton Initiative?
Jamie Beck
Yes, certainly. The Better Cotton Initiative is all about training farmers and similar to what CottonConnect is, but they will train the farmers to use the land sustainably. They do not use harsh pesticides that will give the farmers initial quick yields. It will be very much about looking after and maintaining the soil so it will produce a yield over a longer time and with less harmful pesticides.
Caroline Lucas
What percentage of your cotton is under the Better Cotton Initiative?
Jamie Beck
We have a target of 20% by 2020.
Caroline Lucas
That is what you are going to tell us, yes.
Jamie Beck
Yes, that is the one I will come back and confirm to the Committee.
Caroline Lucas
It would be interesting to have that figure to know how far you are towards that because 2020 is quite close.
Jamie Beck
Yes. I know we are making good progress.
Caroline Lucas
Leanne, could you let us know what percentage in your cotton is organic?
Leanne Wood
We use primarily natural materials, obviously a slightly different business model. I will come back to you on the particular percentage around organic, but over 20% of our cotton is sourced through the Better Cotton Initiative.
Caroline Lucas
Do you know if there is an aspiration to increase that 20%?
Leanne Wood
Our goal is 100% by 2022.
Caroline Lucas
Mike?
Mike Barry
Yes, we are 75% of the way there in terms of BCI cotton. We will be 100% next year, 2019. I think that a very important point raised across the table has been this extension support. It is not just sending a standard down a supply chain from London and hoping for the best. It is about working with farmers to make a real difference out there. As I said at the start of the discussion about cotton, we cannot rest here because I think what you are getting is the industry to a good common standard. We are working with Textile Exchange. We have brought 30 brands around the world together to commit to 100% BCI cotton. Good start; get everybody to that silver standard and then you have to push on to gold from there.
Caroline Lucas
Just very quickly, what work are your companies engaged in to reduce the amount of synthetic shed that happens from products when they are being washed and so on? I know we have touched on this a few times, but it is in terms of the companies. Maybe I will go back to Paul Lister and work along.
Paul Lister
It is new. We had to start. We joined the microfiber initiative, which is being advised by the University of Leeds to see quite what that looks like. It is early stages.
Caroline Lucas
Are you putting money into that directly? When you say you are joining it, does that—
Paul Lister
We have joined. I cannot tell you whether there was a joining fee. I could come back to you on that. I cannot tell you whether there was, but the learnings from that we would then take and apply.
Caroline Lucas
Same question?
Jamie Beck
Yes. We joined the industry acting on microfibers and I think, yes, there was a fee of around £5,000. We are now looking at the next step of what we can do with them to support them in their goals, which I think first and foremost is about collating what evidence and research has been obtained already and then looking where there are gaps.
Leanne Wood
We are members of the Ellen MacArthur Make Fashion Circular initiative, and as part of that we have joined a working group with them on microplastics. We have also committed to their New Plastics Economy Global Commitment as well. We are working on this with the companies that are involved in that foundation.
Mike Barry
We, too, are part of the European Outdoor Group Leeds University collaboration on this—payment of £5,000. I would say it is the least understood of all the environmental challenges the industry has and I think I have just seen some research that suggests it is not just synthetic fibres. Natural fibres like cotton that are heavily coated in chemicals get into the environment and might not break down as well. It is just indicative of how much more research is needed in this space.
Caroline Lucas
I must admit when we started off on this inquiry I was shocked at how little research was being done in this area. As well as giving some support to what is happening at the University of Leeds—and I know you have explained what you are doing with the Ellen MacArthur Foundation—are any of you doing anything else on this separately from what is happening at the University of Leeds in terms of research?
Mike Barry
Again, all our efforts are going in there because I think that we need one truth. There is a real risk if you end up with four or five different competing research arms coming up with different ways of defining what is shed and the impact it has. I think that it is very important that the Leeds initiative, European Outdoor Group, brings together all the businesses to commit. Will there be more research in the future? Absolutely. This is just the beginning on this one.
Caroline Lucas
What incentives could the Government be putting in place to encourage greater use of recycled fibres? Is there anything you think that a legal framework could help? Would it help to have a percentage of recycled fibres going into—
Mike Barry
We have set up a voluntary target of 25% of our clothing having 25% recycled content by 2025. That is a target that we have set. Could Government work on something around extended producer responsibility, EPR, to encourage that? Yes, they could.
Caroline Lucas
What percentage are you at now towards that 25%?
Mike Barry
Very tiny. We have done a few ranges. We have done a men’s suit with David Gandy where we have 50% of the wool recovered from our swapping scheme. We have taken suits back and reused them, but it is more to raise awareness of the issue rather than to claim that is hundreds of thousands of garments. It is not. I think that the only way is up from here, but we have set a very clear marker for our business and our business units. We need to move forward on this one.
Leanne Wood
We have invested £3 million with the RCA and a future materials research group that is not only looking at this issue but certainly is trying to look at what future more sustainable materials could be. To your question about Government intervention, I think that targets are one thing. The other area that I think could do with some help is innovation and stimulating innovation. I completely take the point about old industries being able to do this and, in fact, many of our raw materials will go into some of the areas that you talked about, but I still think that there must be some new solutions and innovations that we could help stimulate.
Caroline Lucas
Do not think you have to add if there is nothing more to add.
Jamie Beck
No, I agree with the comments that have been made.
Chair
Thank you. Can I just go back to the Turkmenistan question? One of the things in the evidence was that it is not branded as Turkmenistan/Uzbekistan cotton. It comes through Turkey. Are you buying cotton from Turkey and, if so, how are you making sure that it is not Turkmenistan cotton?
Mike Barry
Again, working very closely with suppliers. We have a very clear policy position. We work very closely with our supply chain, long-term partners. You work back down the supply chain. Can any business say there is a zero kilogram of Turkmenistan cotton in their business having banned it? No, they cannot, but what you can do is rigorously enforce that back down the supply chain. Raising awareness among your suppliers, working back down their supply chains, but again getting 100% traceability on the cotton we sell in the way that we have in factories is the next big horizon. I think that will be one of the final challenges for the industry over the next 5 to 10 years. Those that manage it will succeed. Those that do not will probably struggle in the longer term in the marketplace.
Leanne Wood
We expect all of our suppliers to sign up to our ethical trading code of conduct and our responsible business principles, and traceability is something that is hugely important to us across all of the raw materials that we use. I would agree with the point that an absolute 100% certainty is very difficult for us to achieve, but it is certainly something that we focus on.
Chair
They sign up to your standards and then how do you audit those standards?
Leanne Wood
We carry out more than 400 audits a year—some are scheduled, some are unscheduled—across the supply chain. We have an external advisory body that helps us set the standards for those audits and we go back if there are findings. It could be three months, six months, 12 months, depending on what the findings are, so we carry out those audits very regularly.
Jamie Beck
Again, we communicate it very clearly to all our suppliers that sourcing cotton from those countries is banned and then on each individual factory set-up they have to sign and agree to a disclaimer to say that. Then we will do random checks throughout the year, particularly with Turkish suppliers, and then to receive them on our online system to make sure that there is a paper trail for where they bought that cotton. That is not 100% because it is difficult with smaller suppliers with small orders, as my colleagues here have just said, because of the traceability.
Chair
But you can track it through your data systems, can you?
Jamie Beck
For some, yes.
Chair
But not all?
Jamie Beck
Yes. That is correct.
Paul Lister
Similarly, we banned it and then we banned it through the supply chain. Each of the suppliers was banned from buying it. We have an audit team like Burberry and part of that audit process is to check. We do nearly 3,500 audits. We have a team in Turkey that are well aware of all the issues. Each team in each country frankly is aware of the issues in those particular countries and they are aware and look out for any breaches of our terms of trade, and this is one of the terms of trade.
Mr Philip Dunne
I would like to conclude this session by asking you a little bit about the implications of some of the potential policy solutions. We have touched on some of this earlier. As a Committee we have taken a bit of a lead recently in exposing modern slavery on our high streets. I am not suggesting any of you were involved in that in this country, but it is a subject of considerable concern to us and we have touched on working conditions within your supply chains. We heard from Dr Sumner of Leeds University, who used to work for M&S, that having something in legislation to require companies to expose where their raw materials have been sourced would lead to sea change in attitude. Can I ask each of you whether you would welcome some legislative effect on this issue and whether it would put you at a competitive disadvantage?
Mike Barry
Just a quick intervention: I think that transparency is absolutely key. The bandwidth of Government to be able to legislate on everything is limited. If there is one thing that Government have done particularly well in this space in the last two years it has been the Modern Slavery Act, forcing people to step forward and say whether they are doing something or not and saying what that is. Again, there is still more work that can be done in terms of making sure that it is easy to find everybody’s modern day slavery statement so they can be compared and contrasted. For the FTSE100 M&S rank top at the moment but we are not complacent. If we did that for fibre, I think that there is a lot to be said that Government should be asking us to declare where it comes from and then stepping back and let the marketplace, NGOs and the media mine that information to hold us to account. I saw a great initiative yesterday from TISCreport that has taken the modern day slavery statement information and linked it to every postcode and city in the UK so you can work out where modern day slavery might be most prevalent in any one part of the UK. I think giving people access to those databases drives change without you having to micromanage every aspect of the marketplace. We would certainly support more transparency in the marketplace.
Leanne Wood
We very much are focused on how we can make sure that all the conditions in our supply chain are right for all people that work there. The majority of our production is in the UK and Europe and we do not manufacture in countries where we cannot be confident that we are able to put in place our principles. To your question about other companies, we are the only UK luxury manufacturer of this kind of scale. Our competitors are outside the UK. I think that it would very much depend on what kind of legislation and where that took place.
Mr Philip Dunne
But if it was to require you to identify the sources of your raw material, not where you do your manufacturing, would that put you at a disadvantage or would you welcome that?
Leanne Wood
It would be different from our competitors. That is something that we are continually thinking about, transparency, but it certainly would be different from our competitors who would not have to do that.
Jamie Beck
Again, I could not see it as a disadvantage. I would think that the practicalities of it would be difficult, again, with larger suppliers that import lots of goods versus smaller suppliers where tracing that, let’s say, cotton back would be challenging, but, yes, I do welcome it.
Paul Lister
The initial step for me would be the transparency in the modern slavery statements themselves that exist at the moment. The Modern Slavery Act did a good job, but being able to compare what is going on within each of the businesses that are putting out a modern slavery statement is quite hard at the moment. Transparency in relation to that would shed light on quite what the next steps should be, whether that is something around the key components or whether that is simply around what is going on at the level still of the modern slavery statement, whether everybody who is supposed to be doing one is doing one and then what they each look like in that regard. For me that would be the key first step before we went further because some people clearly will not be going as far as others even at this early stage of the Modern Slavery Act.
Mr Philip Dunne
Finally, in relation to handling the waste, the 1.2 million tonnes, here it seems that there has been very poor progress for all the reasons that you have described. Again, do you think that we should be following, for example, the French model when the Government come out with their resources and waste strategy imminently? We are expecting some additional extended producer responsibility in other sectors. Would you welcome such a thing in your sector? Again, would you see that as putting you, as physical retailers on the high street where you have the space and the capacity to receive takeback—and we have heard it is very variable across the panel—whereas some of your competitors online do not have a physical presence, at a disadvantage? How would we bring them into such a scheme? Could we start with Mr Lister?
Paul Lister
Frankly, any scheme that levels the playing field and is transparent in that we would have no issue with at all. We welcome the Modern Slavery Act. Any scheme on mandatory takeback we have no issue with. It is just that level playing field that we would ask for in any legislation, whatever it may be, be that for the online retailers or for the high street retailers of any size as well. The regulatory burden is often easier for us to fulfil than the smaller competitors, but any regulation needs to be enforced and level.
Jamie Beck
Yes, as Paul mentioned, a level playing field and making sure that there are the wider facilities for consumers to recycle, whether that be at local amenity sites, and allowing free access. I do not think that every consumer before they go shopping will remember to go and collect garments from their wardrobe that they have not worn to take back, whereas I think that if they are doing a spring clean or a clear-out they might well then collate lots of garments to take and that might well go through a charity shop or an amenity centre. Yes, we would welcome a plan, as Paul said, as long as it was fair.
Leanne Wood
I think that the points on level playing field are well made. The thing I would add is that this is a responsibility for all of us. We are trying. There is more that we can do. We do not have it all sorted yet, but it is also about informing consumers about us working in partnership. There is clearly a role for Government here as well.
Mike Barry
We would have no problem supporting initiatives like that.