Can Fashion’s MSIs Break Out of the ‘Cycle of Exclusion’?

Tricia Carey clocked the problem almost immediately.

Scanning the crowd of 1,500 people at Textile Exchange’s annual conference in Pasadena, Calif., last month, the industry veteran noticed how few manufacturers—bar the biggest, more vertical enterprises, that is—were in attendance. She wasn’t exactly surprised. Flying from Asia, Africa or even South America to the United States can be wildly expensive, let alone staying at a hotel that costs $200-$300 a night for what could easily amount to a week with Textile Exchange’s especially brawny agenda—far from a bad thing in and of itself, but one that requires a bigger buy-in.

“And I questioned, what about the small to mid-size suppliers?” Carey said at a media briefing that Transformers Foundation held last week. “How is their voice coming into these conversations, too, and what can be done? And where do we see the responsibility of those suppliers who do have a seat at the table to properly represent the rest of their group?”

It’s a question that the “unified voice” of the denim industry is attempting to answer in its latest research, which went live on Monday and, like many of its previous papers, isn’t exclusive to jean makers. Fashion’s multi-stakeholder initiatives, or MSIs, aren’t quite living up to the “multi” part of their promise, it said. While different MSIs—of which Textile Exchange is just one—operate differently, manufacturers often feel disenfranchised from the decision-making process due to what they perceive as a strong bias toward brands and retailers.

It’s this “cycle of exclusion,” the report said, that results in “less powerful” parties having to work harder to have their viewpoints considered. As a result, they might feel detached from the strategies and solutions that they feel are neither “shared nor equitable.” Supplier exclusion not only stokes distrust of what some detractors have said is the increasing commercialization of MSIs that “makes money off supply chain contributions,” but the disengagement also undermines these organizations’ efforts to bring together a broad coalition to work toward collective goals, it added.

While other criticism has emerged of MSIs in the past, they remain valuable vehicles for change, said Elizabeth Cline, the Columbia University fashion policy and sustainability lecturer who authored the report, which she gleaned from interviews with suppliers and MSI staffers. MSIs like Textile Exchange, Cascale, the Social & Labor Convergence Program (SLCP) and ZDHC, she said, often coalesce around problems that no one party alone has the capacity, resources or expertise to tackle. But they can also create better solutions if they more effectively connect with their stakeholders instead of surrendering to the internal and external factors that hamper inclusivity.

“Structural factors are systemic issues that exist outside of MSIs that tend to nevertheless influence the resources that stakeholders bring into these organizations, in the culture, in the way that people interact with each other within these organizations,” Cline said, leaning on a typology devised by Ilishio Lovejoy, formerly ESG manager at PDS Limited affiliate Simple Approach, now labor rights program manager at Laudes Foundation. “Functional factors are all of the things that MSIs have within their direct control. So it could be things like how much do you charge people to participate? Where do you host your annual meetings? How do you make decisions? How are your boards of directors structured? So those are kind of the two big ways that we organized our findings.”

To Carey’s point, manufacturers from the global South who are already grappling with the power imbalance that has its roots in colonialism, are entering global North-run MSIs with fewer human resources, less funding and less time to dedicate to activities. The reality, Cline said, is that developing sustainability standards and tools takes a lot of time, which puts manufacturers at a disadvantage when it comes to participating at the same level as brands and retailers. It isn’t for nothing that the manufacturers Transformers Foundation spoke to are worried that MSIs will produce one-sided strategies that favor buyers and that policymakers will codify these same strategies into law.

“We also looked at how implicit bias, racism and privilege manifest themselves within MSIs,” she said. “And I have to say that there were several interviewees who felt that their value or their perspectives in their MSIs was shaped by their position, whether it was their race, ethnicity or geography, and they don’t always feel like they’re being valued or listened to. On top of that, there aren’t always effective systems in place to remediate harms when someone does experience a biased or racist interaction.”

So what’s the solution? One way out of the morass lies in an organizational management theory known as “fair process” that INSEAD professors Chan Kim and Renée Mauborgne developed to promote trust in the existence of a level playing field and inspire voluntary cooperation. Lovejoy first adapted the concept in the context of MSIs, and Transformers Foundation proposes that it be employed to improve supplier engagement and goal achievement.

“There are three key principles of fair process that we are putting forward. They are very interconnected; they really kind of feed into each other,” Cline said. “The first one is the acknowledgment and reduction of bias. The second one is equitable engagement and decision making, and the last one is transparency around the process.”

To break it down, beginning with principle 1: There’s a tendency for MSIs to present themselves as more inclusive as they are, so a first step could admitting any shortfalls and working to address them. Principle 2: It’s not enough for suppliers to be included at the so-called “table.” They must also be involved in equitable decision-making that acknowledges and takes aim at any power imbalances or barriers to engagement. Principle 3: Clear rules and reporting about how decisions are made—and who gets to make them—are essential.

The MSIs named in the report said they welcomed Transformers Foundation’s insights and acknowledged that persistent struggles remain. Cascale said that it recognizes that its engagement efforts have “not always been as effective as they could be” but is taking “concrete steps” to do better as “part of a longer journey.” SLCP, too, said it desires a “more supplier-inclusive approach” despite “unequal power dynamics,” and welcomed Transformers Foundation’s help. Textile Exchange, for its part, said that it’s committed to “continuous improvement” in the way it “invites, creates space for and follows the leadership of those that are the most active at Tier 4.” ZDHC did not respond to a request for comment.

Kim van der Weerd, intelligence director at Transformers Foundation, said that the report seeks not to Balkanize different parts of the supply chain but to rally for the “collective sustainability goals that are at stake here.” She quoted an interviewee, who described the simmering conflict as “not the battle between the brand and the suppliers [but] the battle between the whole [value] chain versus the world. How the world is going to view our act of humanity and our act of good and paying the price.”

“I think that’s just really powerful because, at Transformers, we want people to understand and have insight into these dynamics and the way that manufacturers and suppliers feel about their engagement with various multi-stakeholder initiatives,” van der Weerd said. “I hope we can let go a little bit of this knee-jerk reaction to say, ‘But this is not my intention,’ and to say, ‘How is it possible that despite all of the best of intentions, manufacturers still don’t feel like they have a voice or feel like they’re being included?’”

“Equity and what’s far—that’s important,” she added.