When push comes to shove, it is often the manufacturing companies at the end of the supply chain that have to bear the brunt: orders are canceled, payments are delayed or delivery times become shorter and shorter. In September 2021, the Sustainable Terms of Trade Initiative (STTI) was launched, a global, manufacturer-led initiative focused on creating fairer purchasing practices in the textile and apparel industry.
More than two years later, many milestones have already been reached and hurdles overcome. FashionUnited spoke to International Apparel Federation Secretary General Matthijs Crietee about some of the initiative’s achievements, the role of due diligence, the way forward and more.
STTI is led by the STAR Network (Sustainable Textile of the Asian Region), the Better Buying Institute and the International Apparel Federation (IAF) and supported by 13 apparel industry associations from 10 countries, including BGMEA and BKMEA (Bangladesh), TAFTAC (Cambodia ), CNTAC (China), AEPC (India), API (Indonesia), Amith (Morocco), PTA, TMA and PTEA (Pakistan) and TCMA (Turkey).
What are some of the initiative’s key achievements?
According to Criettee, the publication of a white paper in September 2021 was the first important success: “The white paper answers the question: Which purchasing practices do manufacturers have to use with their customers and which purchasing practices do they no longer want to see?”
“It was unique because it let manufacturers determine their own priorities. It introduced the concept of ‘commercial compliance’ – a shared understanding of purchasing practices that do not cause obvious and avoidable harm to manufacturing companies and do not prevent them from achieving their sustainable business goals – with the terminology deliberately chosen to reflect the meaning of reciprocity in supply chain relationships,” explains Criettee.
A large portion of the white paper was also included in the Common Framework created by a group of multi-stakeholder initiatives including the Fair Wear Foundation, the Ethical Trade Initiative (ETI), and the German partnership for sustainable textiles. This was a second important achievement, which also included the drafting of a memorandum of understanding between STTI and the Fair Wear Foundation and STTI and ETI.
The joint framework of STTI and the “Common Framework” also provided an important contribution to the Brand Retail Module (BRM) of the Sustainable Apparel Coalition and served as the basis for the Supplier Model Contract Clauses of the Responsible Contracting Project (RCP). Also worth mentioning is regular participation in numerous international conferences, including the annual OECD forum on due diligence in the clothing and footwear sector.
Working with the Better Buying System ensured that questions about “commercial compliance” were included in supplier surveys. STTI also supports manufacturers in engaging with the learning and implementation community and the Common Framework to work with brands to improve purchasing practices. Last but not least, STTI serves as a catalyst and example for greater involvement of suppliers in the design and implementation of global sustainability initiatives.
IAF and STTI emphasize that purchasing practices are fundamental to effective due diligence. How does STTI support European legislation on corporate sustainability due diligence?
“Purchasing practices are clearly included in the OECD due diligence guidelines for the clothing and footwear sector, and STTI emphasizes this point in its contacts with legislators and the media,” said Criettee.
“STTI is also communicating with participating manufacturers and their associations that European corporate sustainability due diligence legislation, if implemented correctly, is very good for them, particularly because it includes the need for improved purchasing practices. The more manufacturers recognize that this legislation is potentially a major improvement over the current audit and risk-shifting approach to sustainability, the more they will be able to push and support their customers to properly comply with the new legislation. “STTI will therefore focus on transferring knowledge to its own members to support the correct implementation of legislation that ultimately promotes improvement in purchasing practices,” adds Criettee.
Whenever a crisis like the recent Covid pandemic, inflation or natural disasters like earthquakes occur, buyers try to reduce prices or withdraw orders – how can STTI help in such cases?
“We all work with the awareness that we are dealing with systemic problems. The way the fashion industry is organized and how it is dictated by the prevailing business models leads to constant and harsh price pressure. In this context, changes in purchasing practices will not occur suddenly; it requires a combination of a change in business models and legislative pressure. STTI works on both,” explains Criettee.
“Currently and in the coming years, we will work with our partners to develop an institutional infrastructure that enables legislators and others to assess buyers’ purchasing practices and their efforts (due diligence) to improve their purchasing practices . We will work with our partners and try to influence the implementation of European due diligence laws so that they really lead to improved purchasing practices,” adds Criettee.
STTI partner IAF will also publish a paper on alternative procurement models based on shared risk together with the International Trade Center (ITC) in the first quarter of 2024. “This will create more revenue for all partners along the supply chain, increasing profit margins per product and providing a better economic basis for a more even and fair distribution of risks and rewards in the supply chain,” said Criettee.
The minimum wage in Bangladesh remains one of the lowest in the world, even after the recent increase by the Wage Authority. What can an initiative like STTI do to support fair and living wages?
Criettee points out that STTI is about purchasing practices and collaboration between manufacturers and their associations worldwide. “STTI is not intended to directly address the issue of wages. However, it is undeniable that wages are linked to purchasing practices. The same applies to the relationship between environmental sustainability and purchasing practices. As we say here: ‘You can’t trade green when you’re in the red’. So, in the STTI vision, improving purchasing practices will create the necessary space for improving social and environmental conditions in the clothing and textile industry,” explains Criettee.
What can we expect in terms of future events or milestones currently in the pipeline?
As some of the activities carried out directly by STTI or by some of its partners in collaboration with STTI, Criettee cites the joint publication of a study on “full supply chain profitability”, pilot projects for the implementation of the RCP supplier clauses and training for Manufacturers, buyers and both on the topic of duty of care in the area of sustainability.
Other important areas include continued work on establishing manufacturers’ complaint mechanisms on purchasing practices and the ongoing participation of manufacturers in the learning and implementation community, as well as work on establishing an assessment framework for purchasing practices.
This interview was conducted in written form.