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3 ASX companies named and shamed as worst in industry

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Three ASX-listed retail giants have been singled out as the worst in the industry for not committing to pay a living wage to factory workers in poverty-stricken countries.

Myer Holdings Ltd (ASX: MYR), Premier Investments Limited (ASX: PMV) and Mosaic Brands Ltd (ASX: MOZ) were also named in an Oxfam report as the worst-rated companies for transparency of supply chains.

According to the report titled Shopping for a Bargain, all three ASX businesses continued to hide their supplier factory names and locations to avoid scrutiny. 

All three refuse to make a “credible, public commitment” to paying living wages to factory workers.

Twelve major retailers have over the years publicly made a promise to Oxfam that factory workers, who are mostly women living in poverty, would be paid enough to cover basic essentials.

The Motley Fool has contacted Myer and Premier Investments for comment.

Mosaic Brands head of compliance, Nic Williams, denied the company refused to participate in the study, saying it offered to “provide the information we could within the bounds of our commercial relationships”.

“Mosaic Brands requires independent and valid audits of all our factory suppliers,” he told The Motley Fool.

“Audit requirements that align with our commitments to the ETI Basecode, which includes employment practices, working conditions, and wages and many other factors.” 

COVID-19 devastated the people who make our clothes

The report depicted alleged abuse of third-world suppliers by Australian fashion retailers this year when COVID-19 struck.

“Practically overnight, major global fashion retailers that have profited for decades from paying poverty wages to workers in countries with little social protection and lax labour laws, cancelled orders and delayed or cancelled payments to their suppliers, many demanding discounts on work already completed,” Oxfam stated.

“In response, factory owners stood down hundreds of thousands of garment workers — approximately 80% of whom are women — without pay, leaving the people who make our clothes without any income, facing a global pandemic in extreme poverty.”

Some retailers backed down after public outcry from customers and suppliers, and have since paid for orders placed before the pandemic.

But the initial response demonstrates how Australian retailers can use their power to devastate people already living in abject poverty, stated the report.

The study was the first detailed inquiry into the supply chains of ten fashion chains operating in Australia with factories in Bangladesh:

  • Best & Less (owned by Pepkor Holdings Ltd (JSE: PPH))
  • Big W (Woolworths Group Ltd (ASX: WOW))
  • Cotton On
  • H & M Hennes & Mauritz AB (STO: HM-B) 
  • Zara (Industria de Diseno Textil SA (BME: ITX))
  • The Just Group (Premier Investments) 
  • Kmart (Wesfarmers Ltd (ASX: WES))
  • Myer
  • Noni B (Mosaic Brands) 
  • Target Australia (Wesfarmers)

All the companies aside from Myer, Premier and Mosaic had made commitments to pay factory workers a living wage.

Williams said the study was not “an accurate picture” of how Australian retailers operate in Bangladesh.

“The report does not state how many Mosaic suppliers were interviewed and does not reflect the extensive safety and wage auditing processes we have in place in Bangladesh and globally.”

Australians have massive impact on poverty

Oxfam Australia Chief Executive, Lyn Morgain, said purchasing practices heavily favouring Australian retailers forces third-world factories into poor conditions.

“These poor purchasing practices of brands are making it impossible for factories to increase wages, despite many of the same brands making public commitments to ensure the payment of living wages,” she said.

“Instead, wages are trapping workers – mainly women – and their families in a cycle of poverty.”

The study was conducted with Monash University and University of Liberal Arts Bangladesh. It interviewed both retailers and suppliers for their thoughts.

Not surprisingly, the retailers always rated themselves better than what the factories did.

“This may indicate the brands’ failure to fully understand the impact of their purchasing decisions on the factories and the workers in their supply chains.”

Expensive clothing doesn’t always equate to fair working conditions, according to the report.

“Clothing production for some of the world’s most luxurious brands is carried out at factories which pay some of the poorest wages.”

Morgain also called on customers to do their part to pressure retailers into doing the right thing.

“With just one month today until Christmas, shoppers should demand big brands end this cycle and do better in the way they do business… giving real meaning to their commitments to end poverty wages for the women making our clothes.”

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Returns as of 6th October 2020

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. The Motley Fool Australia owns shares of Wesfarmers Limited and Woolworths Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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