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Wednesday, June 7, 2023

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Opinion | The True Cost of a $12 T-Shirt

In Malaysia and other garment-producing countries we surveyed, workers described being caught in the same trap: becoming debt bondage after paying exorbitant recruitment fees to unscrupulous recruiters.

The apparel industry suffers from what economists call an “agency problem.” Brands rely on auditors to spot irregularities in factories—and then often require factories to pay for their own audits. Unsurprisingly, the typical audit is short, unreliable, and, as Transparentem found in most of the audited factories we surveyed, easily spoofed. Vendors already have thin margins and cannot afford to lose customers. Neither can auditors, who are often so uninterested in reviewing clients that they feel uncomfortable.

Young consumers, inclined to progress and skeptical of accepted wisdom, hold the world’s best hope for change. They focus on ethical consumption as a matter of self-identity. In 2015, 73% of millennials worldwide said they would pay more for sustainable products. That number is likely to grow even higher as millennial incomes continue to rise. The millions of users of sites like Poshmark and Depop (a site that helps users buy and sell used clothes) are millennials and Generation Z, many of whom are looking for a way to avoid junior fast fashion consumption altogether.

Many young consumers are also clinging to the truth, and won’t buy from brands that make ostensibly “greenwashed” or ethically produced flimsy claims. Neither should they. So far, few companies — Patagonia being a rare exception — have even attempted to be sufficiently transparent about the real working conditions in their supply chains. While younger consumers are willing to pay more for sustainable products, brands lack the transparency needed to seal the deal.

This presents an opportunity. We know that younger consumers are willing to pay more for clothing made by workers who can hear. We all need to know those workers are okay. A first step, and an urgent one: Apparel companies should publish comprehensive, detailed social compliance audits designed to assess working conditions in all upstream factories. Such disclosure will enable investors, other brands, consumers, activists, unions, and crucially, workers themselves to audit auditors and gradually become part of more inclusive oversight.

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