More minorities are filling supply chain roles. How can brands protect them?

To receive the Vogue Business newsletter, sign up here. As labour shortages continue, fashion and beauty suppliers are seeking ways to widen the talent pool by improving diversity at all levels of the supply chain. However, experts say fair working conditions and wages must remain front of mind — otherwise people from marginalised backgrounds will continue to be exploited in lower paid supply chain roles, particularly in third-party factories where brands have less oversight. While people from marginalised groups — women, people of colour and migrants — have long been overrepresented in low-paid roles in garment factories and warehouses, these groups have been underrepresented in managerial and desk-based higher paying supply chain positions. This appears to be changing: the number of people of colour across all supply chain positions in the US, Canada and Europe increased 30 per cent in 2022 compared to the previous year, according to cross-industry research from Gartner and US-based non-profit Association of Supply Chain Management (ASCM). “We’re starting to not just see an increase in diverse individuals in the supply chain workforce, but also in higher level positions,” says Lisa Veneziano, board chair of ASCM. The number of supply chain organisations that consider ethnicity and race in their diversity, equity and inclusion (DE&I) strategies and objectives increased year-on-year from 62 per cent to 75 per cent in 2022, according to Gartner. Meanwhile, more fashion companies are developing supplier diversity programmes to boost minority-owned businesses. “Supply chain leaders are realising they need to expand their potential candidate pool. That includes being an interesting and rewarding place for women and underrepresented groups and intersections of those groups to work,” says Dana Stiffler, VP and distinguished analyst in the supply chain research and advisory group at Gartner. As diversity improves across different levels of the supply chain, experts warn that monitoring and improving pay and conditions at the lower rungs must remain a top priority. Pay is the most common red flag uncovered in employment diligence reviews, according to Deloitte UK employment law partner Marian Bloodworth. Part of the problem is a lack of transparency: only 3 per cent of brands voluntarily disclose the ethnic pay gap in their operations, according to the Fashion Revolution Transparency Index, published in July 2022. Meanwhile, marginalised groups have less access to unionisation and resources to help them collectively bargain for better wages. “If you want to attract [talent], you need to provide better jobs,” says Ciara Barry, policy and campaigns manager at Fashion Revolution, who co-leads the EU’s biggest campaign on living wages in the fashion industry, the Good Clothes, Fair Pay campaign. “Living wages and collective bargaining rights and unionisation disproportionately impact the most marginalised and vulnerable people.” Minorities and people of colour should be able to “see themselves in supervisors or in managers”, adds Gartner’s Stiffler, if suppliers want to attract a more diverse pool of candidates and foster a more inclusive culture. People from marginalised and disenfranchised communities have fewer options and resources. “For a lot of garment workers, the focus isn’t what they’re getting paid, it’s actually just on getting a job,” explains Fatima Zaahra Li, senior youth and community worker and support worker at the Fashion-workers Advice Bureau Leicester (FAB-L), which offers support to garment workers in Leicester, a major UK garment manufacturing hub with a large population of South Asian immigrants. For people who don’t speak English, it can be hard to secure work in warehouses because they can’t pass the health and safety tests. In the US, Macy’s is taking steps to improve the language barrier across its operations. “We offer onboarding sessions in Spanish to train Spanish-speaking colleagues joining Macy’s to make sure they are fully prepared to begin working with us. From there, we provide all of our communications in both English and Spanish,” says chief supply chain officer Dennis Mullahy. The company also offers support tools for additional languages and for colleagues with hearing challenges. Women are overrepresented in lower paid supply chain roles — around 80 per cent of garment workers globally are women, according to Fashion Revolution. Some fashion and beauty companies are working with US-based management consultancy Business for Social Responsibility’s HERproject initiative to support women in the supply chain, with a focus on health, financial inclusion and gender equality issues. Estée Lauder Companies (ELC) was the first prestige beauty company to sign up in 2019. “Women involved in certain parts of the supply chain in many countries may face challenges related to access to and control over resources, training and education,” says Mindi DeLeary, vice president, responsible sourcing, sustainability and upstream procurement at ELC. Tackling third-party supplier compliance For fashion, beauty and retail companies, one of the biggest DE&I challenges is lack of oversight of third party suppliers or contractors. “We worked with a brand who told a factory in India they want to match the fair wages for people working their line, but the suppliers said they can’t have 10 out of 1,000 workers being paid fairly and not the others,” says Shameek Ghosh, co-founder and CEO of supply chain traceability platform TrusTrace. “The brand made the call to match their part and ask the factory to have an open discussion with their other clients. Overall, one thousand people got a wage hike.” Companies can add a requirement for regular reporting on diversity data and wages into their contracts with third party suppliers. “If you want to be assured on a more regular basis, you can build those terms into your contractual arrangement that the [supplier] will provide you with data that you can monitor if it falls below a certain level,” says Deloitte’s Bloodworth. Fashion brands tend to only engage with unions and worker committees when something goes wrong, rather than all year round throughout their due diligence process, says Fashion Revolution’s Barry. Employees need proactive support, she adds. “It’s not up to a marginalised woman in a factory who risks losing her job and may be experiencing poverty, debt or domestic violence to prove to any big fashion brand that she’s been sexually harassed. It’s up to the brand to have systems in place to reverse the burden of proof through anonymous whistleblowing and protect her.” Supporting minority-owned third party suppliers While working with third-party suppliers presents challenges, it also represents an opportunity for big companies to support small suppliers and vendors owned by minorities. In November 2022, Macy’s launched SPUR Pathways: Shared Purpose, Unlimited Reach, a funding programme for minority-owned and underrepresented businesses projected to provide $100 million in capital across the next five years. “It's very much a multifaceted effort to create generational wealth for the founders of these businesses and really help the communities that they're based in,” says Matt Bergantino, Macy's VP of procurement. The programme is the “best in class” according to Justin Dean, senior partner at BCG, part of the supplier diversity consulting team. “They're committing to working across the ecosystem and growing more diverse vendors with the understanding that those vendors will then provide opportunities for folks in marginalised communities,” he says. Black startups raised only around 1 per cent of total venture capital in the US in 2022, according to Crunchbase. In the US, 96 per cent of all Black-owned businesses are sole proprietorships, according to BCG’s Dean. “As we looked at our supplier diversity work, it was very apparent that one of the largest hurdles to growth was the access to capital. We want to make sure we’ve got the right products and services that support our changing customer demographics so when we can grow the suppliers and have the best product selection possible for our customer, there’s a huge benefit to Macy’s as well.” Macy’s has been thinking about social capital and educational capital, too. “We think about how we can introduce these companies to executives within Macy's, connect them to other retailers that they might be able to support, provide mentorship that many of these companies don’t necessarily have,” Bergantino says. The company has also partnered with social mission financial services company Momentus Capital to offer financial literacy courses. ELC has a similar programme aimed at supporting minority-owned suppliers. “We believe that having a diverse and equitable supply base is a business imperative,” says ELC’s DeLeary. “Supplier diversity programmes help to stimulate economic growth, create more jobs and support the communities from which we source.” ELC increased its spend with diverse (i.e. minority-owned) and small suppliers by 111 per cent to $402 million between 2020 and 2022, according to the company. “We have highly established diverse suppliers who are multi-billion-dollar companies with thousands of employees, globally,” says DeLeary. “We also have emerging diverse suppliers who are delivering some of the most promising innovations in the industry. Through our programme, we’re hoping to shift the narrative of who diverse suppliers are and what they can do.” Comments, questions or feedback? Email us at feedback@voguebusiness.com. 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