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Manufacturers Need Ethical and Meaningful Partnership

BAYLA President and Founder and CEO of Merchant Bay Abrar Hossain Sayem recently shared his opinion and called for a fair and transformative buyer-supplier partnership at the 12th United Nations Forum on Business and Human Rights- 2023 in Geneva, Switzerland.  “Manufacturers are surviving on a very thin margin as costs have gone up, and prices are not reevaluated as per the ratio,” said BAYLA president Abrar Hossain Sayem at the Forum. As businesses grapple with ongoing challenges and uncertainties, the call for resilient and ethical collaborations within the supply chain intensifies. The imperative is to redefine buyer-supplier relationships, transitioning from existing transactional models toward enduring partnerships.

This year’s forum commenced on November 27, 2023, in Geneva, by addressing the limitations of the current short-term transactional model between buyers and their suppliers. A session titled “Resilient and Responsible Global Supply Chains: Are Partnerships the Answer?” was held to discuss the scope of a revised partnership model. The discussion was sparked by research published by the Stern School of Business of New York University, titled “A Broken Partnership: How Clothing Brands Exploit Suppliers and Harm Workers– And What Can Be Done About It,” concluding that global outsourcing of low-skill, low-paid apparel production has significant consequences for millions of workers. There is an urgent need for a third phase of global outsourcing characterized by genuine collaboration between buyers and suppliers.

The conversation revolved around key points:

  • Current sourcing model and value distribution
  • Contradictions between low price and worker safety
  • Reevaluation of price and commitment
  • Momentum shift in International Regulation in respect of human rights due diligence
  • Long-term Brand-Manufacturer Partnership model and its potential
  • Leverage and risk distribution in the proposed model
  • Shared cost of transparency and social responsibility
  • Obstacles of shared responsibility
  • Changing relationships between supplier tiers

The discussion began with researcher Sanchita Banerjee Saxena providing an academic overview of the current partnership model within the supply chain. She stated, “The current model of sourcing has been mostly punitive and transactional, focusing on short-term interactions between corporate buyers and multiple suppliers with the ultimate goal of minimizing buyer costs.”

BAYLA President Abrar Hossain Sayem offered an overview of the challenges Bangladeshi suppliers are facing and how fair-weather partnerships are harming them, which means many buyers saying to be partners in good times but backing out in tough times. He emphasized the need for long-term partnerships to ensure a robust, responsible, ethical, and sustainable supply chain. He highlighted the detrimental impact of fair-weather and blackmailing partnerships on Bangladeshi suppliers, especially since the onset of the Covid-19 pandemic, whereas over last decade Bangladesh has invested the most in being a sustainable and ethical manufacturing hub.

Abrar Hossain Sayem along with other speakers.

In response to a question regarding transparency within the supply chain, Sayem mentioned the changing landscape of the Bangladesh Apparel Industry, with over 2000 socially compliant factories. He expressed confidence that manufacturers are willing to disclose everything stating, “Whatever a manufacturing unit owner knows about his factory, whether it’s about pricing, components, or strategic elements, everything is disclosed for audits to third parties, everything is disclosed to buyers. This is how the industry has been working. So, I’m very confident that manufacturers will be very open and transparent from every perspective but the value of this transparency is demanded.” 

Sayem also emphasized the importance of shared responsibility in meaningful partnerships and the necessity of an international regulatory body to prevent cases of malpractice.

Referring to the NYU STERN research, Sayem highlighted the unfair practices suffered by suppliers in Bangladesh, such as the buyer’s tendency to shift orders if manufacturers ask for revised prices after implementing social and environmental improvements. He called for shared partnerships while sharing the cost of sustainability and social welfare to ensure the sustainability of manufacturers and the protection of worker and environmental rights.

He also addressed the unfair value distribution within the value chain, where only 0.6% of a product’s retail value goes to workers as per the price given to manufacturers. This called for a fair reevaluation of prices so that manufacturers could offer better wages and welfare to workers. He added that without fair re-evaluation and distribution of retail prices, manufacturers will not be able to take the responsibility of being sustainable and contribute to workers’ welfare alone as they are struggling to sustain in the first place. 

H&M Group’s Head of Social Impact, Sustainability Payal Jain, highlighted the changing dynamics in brand-to-business partnerships, emphasizing the need for a new partnership model that addresses risks throughout the supply chain. She mentioned that as we move upstream, the leverage of a brand decreases, and the leverage of a manufacturer increases.

Panelist Fernanda Carvalho called for worker-centric partnerships, and Dijana Mozina Zupanc advocated for the implementation of UN guidelines.

The consensus among the speakers was that partnerships need to be legally binding. Both buyers and suppliers need to be clear about transparency and accountability. ILO’s Dan Rees summarized the discussion, stating that effective partnerships require legally binding aspects, clear commitments, accountability, transparency, inclusion of stakeholders, and access to remedies. A dedicated convener, whether from international organizations or governments, is crucial for the successful implementation of guidelines by bringing partners together, ensuring accountability, and bridging regulatory gaps.

Abrar Hossain Sayem, President, Bangladesh Apparel Youth Leader’s Association (BAYLA)

The multistakeholder session was moderated by international human and labor rights specialist Auret Van Heerden and attended by the Global Fund to End Modern Slavery-GFEMS’s Fernanda Carvalho, Deputy Human Rights Ombudsman of Slovenia Dijana Mozina Zupanc, University of California researcher Sanchita Banerjee Saxena, Director of the Better Work Program at ILO Dan Rees, H&M Group’s Head of Social Impact, Sustainability Payal Jain, and President of Bangladesh Apparel Youth Leader’s Association Abrar Hossain Sayem, representing Bangladeshi apparel manufacturers.

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