Top 10: Ethical Labour Practices in Supply Chains

Throughout the supply chain, companies are working to create just, sustainable and responsible global networks.

From fair wages to community engagement, ethical labour practices represent a holistic approach to business that prioritises people and planet alongside profit.

Today's conscious consumers and stakeholders demand more than just quality products — they seek transparency, fairness and a commitment to human dignity throughout the entire production process.

Companies that embrace these ethical standards are finding themselves more competitive, more resilient and more attractive to both consumers and top talent. 

The true value of a product extends far beyond its price tag — it encompasses the entire journey of its creation.

10. Community engagement

Company: Patagonia

CEO: Ryan Gellert

Director of Environmental Action: Beth Thoren

Community engagement is a strategic process of working with and involving local populations in decision-making, policy development and implementation to strengthen relationships, build trust and empower communities.

By supporting local communities where suppliers operate, investing in education and healthcare initiatives in supplier regions and respecting indigenous rights and local cultures, companies can have a positive impact on the communities they engage with.

Patagonia's commitment to community engagement extends beyond its immediate workforce, positively impacting communities throughout its supply chain.

In 2002, the company’s founder Yvon Chouinard co-founded 1% for the Planet, an alliance of businesses that pledge to donate 1% of their sales to environmental causes.

This initiative has since grown to include thousands of member businesses and has channelled millions of dollars into environmental conservation efforts.

This fosters goodwill, strengthens local economies and ensures that communities benefit from the company's presence.

9. Freedom of association

Company: H&M

CEO: Daniel Ervér

Director of Sustainability: Leyla Ertur

Freedom of association allows workers to form or join trade unions of their choosing and to collectively bargain with employers, enabling workers to have a collective voice in negotiating working conditions, addressing grievances and protecting their interests without fear of discrimination or interference.

As an ethical labour practice in supply chains, freedom of association is crucial for several reasons:

• Empowerment: It gives workers the ability to advocate for themselves and address workplace issues collectively, balancing the power dynamic between employees and employers
• Improved working conditions: When workers can freely organise and negotiate, they can more effectively address concerns related to wages, working hours, safety and other labour standards
• Conflict resolution: It provides a structured mechanism for resolving disputes between workers and management, potentially reducing labour unrest
• Compliance with international standards: Freedom of association is protected by key ILO conventions and is considered a fundamental human right
• Enabling other rights: As an enabling right, freedom of association often leads to the fulfilment of other workplace rights, such as fair wages and safe working conditions.

H&M respects workers' rights to form and join trade unions, promoting collective bargaining in its supply chain.

It reports that 84% of its supplier factories in Bangladesh have democratically elected worker representation, demonstrating a commitment to worker voice and empowerment.

“We believe brands should be accountable for their value chain and more industry-wide transparency commitments will help to drive real, positive change and ultimately a more sustainable fashion industry,” says Leyla Ertur, Head of Sustainability at H&M Group.

8. Development

Company: Unilever

CEO: Hein Schumacher

Chief Sustainability Officer: Rebecca Marmot

Development in the context of ethical labour practices in supply chains refers to initiatives that focus on enhancing the skills, knowledge and opportunities of workers throughout the supply chain. 

This is crucial for several reasons:

• Skill enhancement: It provides workers with the necessary skills to perform their jobs more effectively and safely, improving both productivity and workplace safety
• Career advancement: Development programmes create opportunities for workers to advance in their careers, potentially increasing their earning potential and job satisfaction
• Empowerment: By investing in workers' development, companies empower them to take on more responsibility and contribute more meaningfully to the organisation
• Sustainable livelihoods: Improved skills and knowledge can lead to better job security and increased income, contributing to more sustainable livelihoods for workers and their families.

Unilever's Enhancing Livelihoods programme exemplifies this application. The company has helped more than 2.5 million smallholder farmers improve their agricultural methods, resulting in increased yields and incomes.

This approach not only enhances the quality of life for workers but also ensures a more stable and skilled workforce for the company.

By investing in development, companies like Unilever demonstrate a commitment to the long-term well-being of their workers and the communities in which they operate.

This aligns with the broader goals of ethical supply chain management, including sustainability, fair labour practices and positive social impact.

7. Fair wages

Company: IKEA

CEO: Jesper Brodin

Chief Sustainability Officer: Karen Pflug

Beyond paying the legal minimum wage, companies that pay fair wages consider factors such as local cost of living, family needs and economic conditions.

Fair compensation reduces financial stress and improves overall wellbeing and can contribute to economic stability and poverty reduction. 

IKEA's commitment to fair wages extends throughout its supply chain. The company works with suppliers to ensure living wages are paid, considering local cost of living and family needs.

This has led to wage increases for more than 600,000 workers in IKEA's supply chain, promoting economic stability and reducing poverty.

The company says: “The IKEA Responsible Wage Practices Framework and Assessment Methodology takes a holistic approach to the subject of wages by placing equal focus on equality at work, pay principles, competence, enabling dialogue and a living wage.

“The ambition is to create a wage system that’s fair, inclusive and for the many. 

“Our aim is to enable people and families in the IKEA value chain to live a decent life, wherever they are.”

6. Non-discrimination and equal opportunity

Company: Nike

CEO: Elliott Hill

Chief Sustainability Officer: Noel Kinder

Non-discrimination and equal opportunity in supply chains refer to actions that ensure all workers are treated fairly and have access to the same opportunities, regardless of personal characteristics unrelated to job performance. 

This ethical labour operation promotes a workplace where all individuals are valued based on their skills and contributions, rather than personal attributes.

Nike’s Code of Conduct explicitly prohibits discrimination in its supply chain based on race, gender, age or any other protected characteristic.

The company actively promotes diversity and inclusion, with 51% of Nike's global corporate workforce being women.

This approach not only fosters a more inclusive work environment but also taps into a broader talent pool.

Implementing non-discrimination and equal opportunity applications can involve:

• Developing clear policies against discrimination
• Providing training on diversity and inclusion
• Establishing fair recruitment and promotion processes
• Creating mechanisms for reporting and addressing discrimination complaints
• Regularly auditing practices to ensure compliance.

5. Training

Company: Nestlé

CEO: Mark Schneider

Vice President Global Head of ESG Engagement: Rob Cameron 

Training and development, while similar, are different.

Where development refers to the long term upskilling, training is being equipped with the correct knowledge to do your immediate job.

Although training can often lead to development, the two are distinct.

Training also goes hand in hand with health and safety – it helps to reduce accidents.

Nestlé's Nestlé Cocoa Plan provides comprehensive training to cocoa farmers in its supply chain.

The programme has trained more than 150,000 farmers in better agricultural practices, improving crop yields by up to 40%.

This not only enhances worker skills but also improves product quality and sustainability.

4. Elimination of child and forced labour

Company: Apple

CEO: Tim Cook

Vice President of Environment, Policy and Social Initiatives: Lisa Jackson

Apple's rigorous supplier assessment programme has led to significant improvements in eliminating child and forced labour.

The company conducted 1,121 supplier assessments in 2020, covering 94% of its spend. 

Apple's zero-tolerance policy has resulted in the termination of 20 suppliers for serious violations.

This ensures human rights are protected and upholds the dignity of workers throughout the supply chain.

Implementing this involves:

• Developing clear policies against child and forced labour
• Conducting regular audits and assessments of suppliers
• Providing training and education on labour rights
• Establishing reporting mechanisms for violations
• Collaborating with local communities and NGOs to address root causes

By prioritising the elimination of child and forced labour, companies like Apple contribute to more ethical and sustainable supply chains, positively impacting workers' lives and communities globally.

3. Transparency and accountability

Company: Adidas

CEO: Bjørn Gulden

SVP Sustainability: Katja Schreiber

Transparency and accountability in supply chains refers to openly disclosing information about a company's suppliers, working conditions and labour practices, as well as taking responsibility for addressing any issues that arise.

This ethical labour method is crucial for several reasons:

• Stakeholder trust: It builds trust with consumers, investors and other stakeholders by demonstrating a commitment to ethical practices
• Risk identification: Transparency allows companies to identify and address potential labour issues more effectively
• Continuous improvement: By being accountable, companies are motivated to continuously improve their labour and those of their suppliers
• Collaboration: It enables collaboration with NGOs, labour unions and other stakeholders to address complex labour issues
• Consumer awareness: Transparency empowers consumers to make informed purchasing decisions based on a company's ethical practices.

Adidas publishes an annual list of its direct suppliers, including names and addresses, covering 99% of its global production volume. 

This level of transparency allows for greater accountability and enables stakeholders to verify compliance with ethical standards.

Working conditions and faster resolution of labour issues have materialised as a result, with 80% of reported cases resolved within 30 days.

2. Ethical sourcing

Company: Starbucks

CEO: Brian Niccol

Outgoing Chief Sustainability Officer: Michael Kobori

Incoming Chief Sustainability Officer: Marika McCauley Sine

Ethical sourcing involves obtaining products and materials in a manner that respects workers' rights, ensures safe working conditions and minimises environmental impact throughout the supply chain.

It involves actively upholding labour rights, fair wages and business ethics when purchasing from suppliers and mitigates risk, boosts consumer trust and protects human rights.

Starbucks' C.A.F.E. (Coffee and Farmer Equity) Practices programme is a cornerstone of its ethical sourcing strategy and covers 99% of Starbucks' coffee, impacting more than 400,000 farmers across 30 countries.

This comprehensive approach ensures that coffee is sourced in a way that is environmentally sustainable, socially responsible and economically viable for farmers.

Starbucks has committed to ethically sourcing 100% of its coffee by 2025, verified by third-party auditors.

This commitment extends beyond coffee to other products in its supply chain, including tea, cocoa and manufactured goods.

The company's ethical sourcing approaches have not only improved the livelihoods of farmers but also ensured a more stable and sustainable supply chain.

1. Fair working conditions

Company: Marks & Spencer (M&S)

CEO: Stuart Machin

Head of Sustainability: Lucinda Langton

M&S' commitment to fair working conditions is exemplified by its Global Sourcing Principles and Human Rights Policy.

These comprehensive guidelines cover all aspects of worker welfare, including health and safety, working hours, wages and worker representation.

The company's approach goes beyond mere compliance, actively working to improve conditions throughout its supply chain.

One of the key initiatives is the M&S Ethical Model Factory programme, which has been implemented in key sourcing countries and focuses on improving productivity, efficiency and working conditions simultaneously.

In Bangladesh, for example, the programme has led to a 42% reduction in working hours while maintaining or increasing wages, significantly improving work-life balance for employees.

M&S also conducts regular audits of its suppliers, with more than 2,000 ethical audits completed annually.

These audits are supplemented by unannounced visits and worker interviews to ensure compliance with ethical standards.

The company has set ambitious targets, aiming to ensure that 100% of its products are sourced from suppliers meeting high ethical standards by 2025.

The impact of these practices is substantial.

M&S reports that more than 890,000 workers in its supply chain have benefited from improved working conditions.

This includes better health and safety, reduced overtime and access to grievance mechanisms.

The company's commitment to fair working conditions has not only improved worker welfare but also led to increased productivity and quality, with a 16% reduction in product defects reported by participating factories.

M&S's approach to fair working conditions extends to addressing systemic issues in the supply chain. The company actively participates in industry collaborations and multi-stakeholder initiatives to tackle complex challenges such as living wages and worker empowerment.

This holistic approach ensures that improvements in working conditions are sustainable and have a lasting positive impact on workers' lives.

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