By  on December 7, 2010

WASHINGTON — A new era for how companies approach labor and environmental issues has emerged from years of finger-pointing and crisis management.

The most advanced corporate social responsibility, or CSR, programs in the fashion industry have shifted from a focus on minimizing a company’s risk to a strategic approach that makes responsible labor and environmental practices central to the company’s operation.

The definition of socially responsible business practices has also expanded from a concentration on issues such as eliminating child labor to include everything from working conditions throughout the supply chain to environmental sustainability.

Fifteen years ago, CSR was primarily seen as “risk mitigation,” said Kindley Walsh Lawlor, vice president of social and environmental responsibility for Gap Inc. Now companies are looking at their CSR programs more holistically.

When companies “talk about the human benefit, there’s a correlation between workers who are treated fairly and paid fairly who make higher quality products,” she said. “We’ve taken the foundation of the auditing model in the field and evolved to a stakeholder model doing more than just monitoring.”

Gap evolved beyond the checklists of wages, working hours and conditions in the facilities to also look at the business case for responsible practices, from education for workers to what quality of life workers had when they went home at night, Lawlor said. The company also broadened its focus to include the full supply chain from design through the product’s end of life and trying to educate consumers on what to do with clothing instead of throwing it away.

CSR programs have become more integrated into how companies operate, said Amy Hall, director of social consciousness for Eileen Fisher.

“This is how we need to be doing business,” Hall said. “It’s a survival strategy when you get right down to it.”

In a broad sense, CSR efforts “used to be about avoiding risk and meeting legally required compliance standards, and nowadays it’s much more about marrying the values to the brand and what’s important to the brand,” she said.

At Eileen Fisher, responsible labor and environmental practices, grouped under the umbrella of “social consciousness” by the firm, are one of four key values that the company seeks to incorporate into every decision it makes, from ordering office supplies to supply chain decisions, Hall said.

“CSR has become a part of the fabric of how companies do business as opposed to a button stuck on the side somewhere,” said Randy Rankin, vice president of CSR services with Bureau Veritas Consumer Products Services, a certification organization. “It’s not about one or two people [at a company] who want to save the world, the ideologue off to the side. It has become a part of how companies look at business plans.”

The number of companies operating true social responsibility programs is still relatively small, but the numbers have grown in the last 15 years, said Marsha Dickson, a professor and chairwoman of the fashion and apparel studies program at the University of Delaware.

“The general trend has been to invest only to the extent that is needed,” Dickson said. “The majority of programs have been very risk-focused, with the emphasis on staying out of trouble.”

But a handful of companies recognized that in order to succeed, the commitment to CSR had to be integrated into every part of their operating procedures, she said. If the design practices, buying tactics, price points, manufacturing deadlines and other important decisions aren’t made in the context of socially responsible practices, a company’s sourcing arm can end up working against the aims of its own CSR team, Dickson said.

“We have fully integrated the CSR system into our sourcing production process,” said Cara Chacon, director of social and environmental responsibility with Patagonia. “What that means is that people from sourcing, quality control and social responsibility all sit at the table and make decisions together and report to the same vice president.”

By integrating CSR into its business model, Patagonia can include things like fair or living wages in cost calculations, Chacon said. In order to achieve that integration, the company streamlined its supply chain and culled its number of suppliers from more than 100 to closer to 50, she said.

The long-term goal is to have all its factories fully invested in a socially responsible operating model. Until then, the company works with factories to make sure its own standards are met, she said. If there are minimum wage or overtime issues at a facility, for example, Patagonia may run a program for the management and workers educating them on how to find the root of the problem and what systems could be used to address the issue, Chacon said.

“Everyone is talking about sustainability, but we need to talk about CSR and sustainability side by side,” said Steven Jesseph, president and chief executive officer of the Worldwide Responsible Accredited Production organization, which certifies factories. “How do you continue being a socially responsible business and making sure your supply chain is operated in a legal and ethical manner, and at the same time how do you sustain your industry and your enterprise?”

Jeannette Ferran Astorga, vice president of corporate social responsibility for Ann Taylor Stores Corp., said, “We view having an active and thoughtful CSR program as being absolutely essential in how business is conducted today. Ann Taylor has worked to establish partnerships with its factories — in one instance in Indonesia working directly with a factory and connecting them with a consultant who helped them manage production better to avoid excessive overtime.

At their core, CSR programs are about two things, said Jeff Streader, senior vice president of global sourcing at Guess Inc.: protecting your brand and ensuring that vendors and suppliers are adhering to international standards for labor and workers rights.

“Worker rights have improved significantly in the last decade,” Streader said. “Nobody wants to support a factory that abuses their workers or doesn’t pay their workers or where the working conditions are horrific. No one wants to be associated with that, but they exist throughout our industry because not everyone is on the program.”

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