Fashion Transparency Index Mexico 2021 by Fashion Revolution

FASHION INDEX 2021 EDITION A review of 31 of the biggest Mexican fashion brands and retailers, ranked according to the information they disclose about their social, enviromental policies, practices and impacts.

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

CONTENTS 1.

PREFACE

EXECUTIVE SUMMARY

The final scores Quick overall findings Average score across the sections

About Fashion Revolution and Arlenica About the Fashion Transparency Index How the index has change this year Key findings Key results 3.

1. POLICIES AND COMMITMENTS • Viewpoint Patricia Carmona 2. GOVERNANCE

ABOUT THIS INDEX

3. TRACEABILITY IN THE SUPPLY CHAIN

Fashion Revolution´s Theory of Change The changes we want to see Our role inside within and outside of the industry The role of transparency in achieving change The role & aims of the fashion transparency Index How the transparency index drives change Case studies, transparency in action 4.

• Case studies, transparency in action 4. DUE DILIGENCE (KNOW, SHOW, FIX) • Viewpoint Ivette González, Poder AC 5. SPOTLIGHT ISSUES • • • •

METHODOLOGY & SCOPE OF THE RESEARCH How brands are retailers are selected A-Z brands The scope of our research About the research project About the methodology Methodology advisory committee Limitations of the research How we calculated the findings Weighting of the scores A guide to the final scoring

FULL RESULTS & DETAIL ANALYSIS

Interview, Carlos Lara Article Aleyda Hernandez Viewpoint Cynthia Gómez Viewpoint, Bolfy Cottom

FINAL THOUGHTS AND RECOMMENDATIONS

TAKE ACTION ON TRANSPARENCY

THANK YOU • • • •

Annex 1: References Annex 2: Definitions and abbreviations Disclaimer Donation campaign

The content of this publication can in no way be taken to reflect the views of any of the funders of Fashion Revolution. © Fashion Revolution CIC 2021. All rights reserved. This document is not to be copied or adapted without permission from Fashion Revolution CIC.

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

PREFACE

CARRY SOMERS FOUNDER AND DIRECTOR OF GLOBAL OPERATIONS FASHION REVOLUTION

One Christmas, two brothers ask for a rowing boat. Every Wednesday, while their parents are at the cinema, they let the light flow out to a depth of four hand spans and learn to use a sextant and compass as they navigate around their fifth floor apartment in Madrid. This adventure was the result of a frivolous remark in response to one of the brothers, Toto, asking why light comes out at the flick of a switch. ‘Light is like water. You turn on the tap and out it comes.’ Months later, they win a school prize and are rewarded with diving outfits.

My favourite short story is “La Luz Es Como el Agua”, Light Is Like Water, by Gabriel Garcia Marquéz. The following wednesday, they turn on so many lights that the apartment floods. When the firemen finally force open the door, household objects are flying through the skies of the kitchen, but the brothers are still navigating towards the lighthouse.

Transparency is like water. After the Rana Plaza factory collapsed in Bangladesh in 2013, it was barely a trickle. Slowly, it began to flow, to overspill into new places, bubbling up through the timehardened cracks. Now it is starting to seep into the very darkest corners, permeating the fabric of the industry. The Fashion Transparency Index is like the light switch—it opens the current to help drive this change. Over 100 of the world’s largest fashion brands are disclosing their supplier lists, compared to just 5 when we published our first global index. This year’sFashion Transparency Index Mexico results show very clearly that, while the light bulbs of transparency may be permanently set to the ‘on’ position, it is not yet flowing into every nook and crevice. There are still too many dark places. Water is powerful and so is transparency. Before long, this slow moving stream of change will become a flood as more and more citizens, activists, experts, worker representatives, organisations,

policymakers and investors use this information to scrutinise brands’ behaviour and demand greater accountability. Transparency is power. As the landscape changes, those brands who know how to use the tools of transparency to navigate a new course will be the ones who will survive. These are the companies who are managing and mitigating the risks that may lead to human rights and environmental abuses. The brands that are still sitting complacently in their armchairs in the fifth floor apartments, the ones who haven’t yet learnt how to sail on the tide of transparency, need to get going. The wave is coming; now is the time to get ahead of the curve.

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

EXECUTIVE SUMMARY

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

ABOUT FASHION REVOLUTION Fashion Revolution is a global movement with presence in more than 100 countries and whose mission is to create a fashion industry that conserves and restores the environment and values people above growth and profits. We believe that transparency will allow us to generate better accountability mechanisms to propose systemic changes in the way industry-related clothing, shoes and accessories are produced and marketed. We address citizens, designers, brands and retailers to be aware of the implications of the fashion industry through two basic questions; #WhoMadeMyClothes and #WhatsInMyClothes. With these campaigns we propose that citizens have the possibility to ask their favorite brands about the processes behind the production of their garments and about the people who are part of the supply chain. For Fashion Revolution Mexico, fashion is not a product but an identity that is built with the effort, skills and creativity of many people throughout the supply chains. A great challenge in the industry is to generate sustainable policies and actions to improve the conditions in which it develops, and we want to be a catalyst to achieve this.

Fashion Revolution Mexico is taking actions to radically change the forms of management of these organisations and must work to partner with fashion brands that have taken measures to raise consumer awareness about their internal policies and actions, both internally and along the supply chain. Alliances must also be formed with other organisations with a similar mission worldwide to expand the impact on the situation. Today's challenges include consumer change, sustainability and digitalisation. Today's consumers have a wide range of information about the production process, fashion brands and the changes that are occurring in the industry. We want to identify ways we could be more efficient at spreading the message across the country while also including other experts and change agents.

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

ABOUT ARLENICA Arlenica is a civil society organisation committed to commited to contribute with the reduction of the normalisation of violence, in its different contexts, through the development of capacities and the generation of knowledge about the causes and effects of normalisation. For Arlenica, the normalisation of violence consists of accepting violent behaviors as a valid resource in social interaction, either as a method of conflict resolution or as a mechanism to obtain some benefit. This normalisation, medialised, has transformed the patterns of behavior of people and has negatively altered aspirational archetypes. Talking about violence becomes fundamental in an industry as feminized as fashion, where 6 out of 10 workers are women. Specially when there still happens unfortunate events where thousands of women dedicated to making garments lose their lives, such as the collapse of the building located at number 150 of San Antonio Abad, in Mexico City, caused by the 1985 and 1995 earthquakes, which revealed the deplorable and unsafe conditions in which they worked; or 30 years later, the collapse of the garment factory in Chimalpopoca, also due to another earthquake, which showed that CANDOR: Fer, Art Direction and Design © José Reyes

ARTE, LENGUAJE E INVESTIGACIÓN PARA EL CAMBIO SOCIAL, A.C. unsafe conditions of exploitation, abuse and misery for women workers continued to prevail in the garment sector. In sectors with large and complex supply chains, such as the fashion industry, violence is internalised in such a way that it could be normalised, making it complex to identify, diagnose and avoid or repair any situation related with direct, cultural or institutional violence. The only way to reduce it is to work from the root, starting by making visible those violent behaviors that we already normalised, culturally and institutionally. That is why we liaise with Fashion Revolution since last year, to develop the Fashion Transparency Index in Mexico, an initiative that allows us to raise awareness among large brands and retailers about their importance as agents of change and make visible the problem of structural violence that exists in the industry to, therefore, promote the necessary actions that can help us to solve, repair and avoid it.

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

ABOUT THE FASHION TRANSPARENCY INDEX IN MEXICO

The Fashion Transparency Index in Mexico is an initiative that analyses how much information is disclosed by the 31 largest fashion and footwear brands in our country (by large we mean those with the highest annual turnover) about their social and environmental commitments, practices and impacts in their own operations and along their supply chain. It aims to contribute to improving the quality of life of workers involved in the industry by increasing accountability and, therefore, stimulating safety, traceability and social and environmental justice.

It ranks brands based on a questionnaire comprising 239 indicators across 5 key sections: 1. Policies and Commitments 2. Governance 3. Traceability 4. Know, Show and Fix (Due-Diligence) 5. Spotlight issues, that this year are: •

Decent work, which encompasses the response to Covid-19, living wages, purchasing practices, unionisation, collective bargaining and employee development.

•

Gender and Race equality.

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Projection of culture or recognition of collaborative work with native and Afro-Mexican communities.

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Sustainable sourcing and materials.

Previously, the Fashion Transparency Index has been published for six consecutive years on a global scale and three in Brazil, incentivising hundreds of the world's largest brands (with a combined turnover of billions of dollars) to disclose more information, ultimately increasing accountability and driving positive change. The Fashion Transparency Index in Mexico 2021 is a pro-fashion tool that can be used by anyone interested -consumers, organisations, journalists and governmentin knowing what brands are doing to improve labour and environmental rights along their value chain. We focus on the largest, most profitable brands and retailers because they are the ones that have the greatest impact on workers along the supply chain and the environment; hence, have a greater responsibility to change and be accountable.

Sadly, much of the fashion value chain remains opaque while exploitation thrives with impunity. Therefore, transparency is essential to achieve systemic change; it is a first step that we should not confuse with sustainability or with the ethical conduct with which companies should act. However, we believe that if there is no transparency it is impossible to achieve the changes that the fashion industry requires to be more sustainable, responsible and fair. This evaluation is carried out for the second consecutive year in Mexico and the organisations in charge of the study are Arlenica, Arte, Lenguaje e Investigación para el Cambio Social and Fashion Revolution México.

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

HOW THE INDEX HAS CHANGED IN THIS YEAR Incentivising action over discourse One of the findings of the first edition of the Mexico Fashion Transparency Index is that brands and retailers reveal more information about their values and policies than about the way in which they are put into practice. This led us to think that, in many cases, the creation and publication of processes, procedures, or a Code of Conduct or Ethics does not necessarily mean their operationalisation. Sometimes these documents remain only as expressions of good intentions. Policies and commitments are only as strong as they are upheld and put into practice. In the interest of prioritising action rather than institutional discursive lines, this year we halved the weighting of scores in Section 1: Policies and Commitments and have given more weight to indicators that focus on implementation and results on issues related to our featured topics, such as living wages, purchasing practices, gender and racial equality, and data on climate and water consumption in the supply chain. Our intention with this change is to encourage brands to report more on what they do and the results of their actions.

The proactive response of companies to the Covid-19 pandemic

The social and economic crisis caused by COVID-19 and the impact it has had on the fashion industry has exposed the unfair business models under which large fashion brands continue to operate and which value profit over the well-being and safety of workers and the environment.

Due to this, this year we include indicators related to the issue of COVID-19 to understand the transparency around the measures and provisions that brands and retailers have implemented to protect both their direct workers and workers in their supply chains.

We credited disclosure of information on:

•

The changes that brands have made in purchasing practices or in agreements with suppliers as a result of the economic pressures derived from the pandemic.

•

Support beyond the legal requirements offered to direct employees and their families who fell ill with the COVID-19 virus (for example financial assistance, enhanced sickness leave, private health insurance).

•

Support they have offered to work safely from home, such as checking ergonomic conditions in homes, making available chairs, computers and other work tools, as well as

evidence of compensation for Internet expenses, electricity, etc. and policies around flexible working hours. •

Protective measures implemented in corporate offices or stores to prevent transmission of the virus, for example, enhanced cleaning procedures in the workplace, requirement of wearing face masks, availability of hand sanitizer, rotation of employees and/or rotation between different teams.

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

Making the work of the original communities visible This year, the Mexican Index has added an indicator on demonstrating respect for the intellectual property of indigenous and Afro-Mexican communities' culture and heritage through consent, credit and compensation. For example, we look for design practices that take into account issues such as obtaining consent and providing credit and compensation to indigenous and Afro-Mexican communities for any design practices or craftsmanship used in the retailer's designs. This is an important issue for the Index and the Mexican market, given the rich contribution

of indigenous and Afro-Mexican communities to the creation of textiles and apparel inside and outside of Mexico. Most indicators remain unchanged from last year to allow direct comparison and track year-on-year progress. This includes the indicator on employee development, which credits the disclosure of information on employee career development programmes or activities focused on helping employees acquire skills, move to higher positions and increase their salaries.

It is critical that any findings of the Mexican Fashion Transparency Index, including a brand’s individual score or ranking, are communicated accurately and in context. This year, we have issued Communications Guidelines to brands, which can be read here, to ensure that brands communicate their results accurately, avoiding confusion and greenwashing. Full information about the communication guidelines and other queries are addressed in the Q&A’s

Photos: Segunda Piel

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

KEY FINDINGS

throughout their value chain. Their level of turnover suggests that they have the necessary resources to generate change on a national and global scale.

The Mexico Fashion Transparency Index 2021 After a year of work, we are pleased to present the second edition of the Fashion Transparency Index in Mexico, an initiative that seeks to incentivise major brands of clothing and footwear in our country to disclose information about their human rights and environmental policies, practices and impacts. This Index is a tool that seeks to promote a culture of transparency in the fashion industry in Mexico, to tap into the competitiveness of companies in the national and global environment; and to be a catalyst for social and environmental wellbeing. We want transparency to be the value that brands share and the value that inspires them to carry out better practices in favor of a fairer, safer and more regenerative fashion industry.

90% of brands do not disclose information about changes to purchasing practices or supplier agreements as a result of economic pressures of Covid-19

We focused on the major brands and retailers because of the important role they play in the industry. As they have the highest annual turnover and are the best known among consumers, they have a responsibility linked to the scope of their operations and the social and environmental impact they generate

This year’s Index captures 31 brands and retailers, 12 more brands in addition to the 19 analysed in 2020. Of this group of brands, 28/31 are nationally owned and 3/31 are international. Of the total, 23% belong to the footwear sector and the remaining 77% to the apparel sector.

Progress in the transparency levels of the 31 brands evaluated continues to be very slow. Following an analysis of the amount of information they publish, an overall average score of just 6% was achieved. In this edition, as in 2020, international brands maintain better levels of transparency than national brands: C&A (58%), Levi's (46%) and Zara (38%). The Illusión brand, which for the first time participated in this analysis, is in fourth position (15%), followed by Liverpool and El Palacio de Hierro (9%) and Flexi (6%).

Mexican brands show slight advances, although there is still a significant difference with the international brands scores. Brands that show slight progress in terms of the information they publish, compared to the results they obtained

in the 2020 Index, are: Oggi Jeans (3%) and Coppel (4%) with 3 percentage points increase (0% and 1% respectively in 2020) and the footwear brand Andrea (2%) and Liverpool (9%) with two percentage point increase (0% and 7% respectively in 2020). 52% of Mexican brands do not disclose any data or information related to the indicators established by our methodology. This is particularly relevant in the current context, where the effects of the COVID-19 pandemic have highlighted the need for a change in business models and in the way the industry develops. The economic and social impact on the lives of millions of workers who make their living in the sectors that make up this industry, which already suffered from unfavorable conditions for decent work, makes it imminent that major brands and retailers take steps forward for safety, health and an economic and social reactivation that puts workers, including those at the bottom of the supply chain, at the center. We know that during the contingency there were companies that made a turnaround to produce materials for the health sector; but we know little about what they did to support their own workers and supply chains. For example, only 3/31 brands (10%) disclose evidence of changes in purchasing practices or supplier agreements as a result of Covid-19 economic pressures. More details on brands' response to COVID-19 on page 82 of Section 5 on Spotlight.

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

58% of the 31 brands evaluated in the Mexico Fashion Transparency Index 2021 do not disclose their policies and commitments to improve labour rights and environmental issues along their value chain. In this second edition of the Mexico Fashion Transparency Index we considered that policies do not always accurately reflect how a business is run, and this year we wanted to put greater emphasis on business action. To do this, we halved the weighting of the scores in Section 1: Policies and Commitments and gave more weight to indicators which focus on implementation and outcomes on issues such as supplier audits, living wages, purchasing practices, gender and racial equality and climate and water data in the supply chain.

29% of brands disclose Health & Safety employee policies

Despite this change in methodology and scoring, like last year, Policies and Commitments section has the highest percentage of disclosure of all the sections that make up the Index with 13% among the 31 brands evaluated. International brands are at the forefront: C&A (93%), Levi's (90%) and Zara (89%). The national brands with the highest percentage are Ilusión (32%), followed by El Palacio de Hierro (27%), Liverpool (24%), Coppel (19%) and Oggi Jeans (17%). While 18/31 brands (58%) do not disclose any information in this section.

The 19 brands assessed since 2020 had an increase in their disclosure levels of 2 percentage points in the Policies and Commitments section (15% in 2021 vs. 13% in 2020). The topics that present the most information are the brands' policies related to their own operations on: Health & Safety and Community Engagement with 9/31 brands (29%); Anti-Corruption, Bribery and Presentation of False Information, Discrimination, Harassment and Violence with 8/31 brands (26%). Diversity & Inclusion with 7/31 brands (23%); Wages & Benefits, Biodiversity & Conservation and Energy & Greenhouse Gases with 6/31 (19%); followed by Pay Equity, Waste & Recycling (Packaging/ Offices/Retail) and Water Consumption

13% of brands disclose how put into practice Health & Safety Policies

with 5/31 brands (16%); Mental Health & Wellbeing, Freedom of Association and Waste & Recycling (Product/ Textiles) with 4/31 brands (13%). However, these topics have a lower and less detailed level of disclosure when we look for whether these policies apply to their suppliers and whether there is information on how they are put into practice. This is something that also happens in the international Index , where brands tend to have higher percentages in the disclosure of their policies than in the processes that account for how they are implemented. At the international level, the transparency of 250 brands is evaluated and only 84% publish a policy on freedom of association and collective bargaining in the supply chain, but less than half (42%) disclose how this policy is implemented. In the case of Mexico, we found that 9/31 brands (29%) publish a policy on Health and Safety and only 4/31 brands (13%) disclose how they implement it.

90% of the brands evaluated do not disclose information related to policies suppliers on working hours and rest breaks, overtime pay and wages and financial benefits. The issues that remain totally absent for 28/31 brands (90%) are policies for their suppliers related to labour rights, such as wages and benefits, overtime pay, and working hours and rest breaks.The lack of information on these issues is of great concern because, for example, in relation to working hours, the garment and apparel industry has systemic issues with overworking and excessive hours. This includes working hours of 10 to 12 hours a day, and when large orders are delivered, employers often require workers to work up to 14 hours a day. In addition to such long working hours, the International Labour Organisation

of brands disclose an annual sustainability report audited by an independent third party

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

(ILO) reports gender inequality - that women's wages in the textile, clothing and footwear industries are lower than those of men. In Europe, for example, men working in these industries earn wages that are 30% higher than those of women.

3/31 brands (10%) disclose information on subcontracting, outsourcing and homeworking. This year's methodology includes an indicator on homeworking, where we found that only 3/31 brands (10%) have a policy for their suppliers that regulates this and only 1/31 brands (3%) show how this policy is upheld in practice. We hope that with the recent updates to the Federal Labour Law, which establishes regulations for home-based work and outsourcing, brands will improve conditions for all homeworkers, including workers who are in small home-based workshops, without protection or social security.

Corporate governance remains opaque; however the direct contact data of the Corporate Social Responsibility teams is the most disclosed governance data point.

As last year, the governance section has the second highest percentage of disclosure: 9%. However, only 7/31 brands (23%) disclose any data on their corporate governance: C&A with 77%, followed by Levi's and the Spanish brand Zara with 62%, Liverpool 31%, Ilusión 23% and Coppel and El Palacio de Hierro with 15%. The remaining 77%, or 24/31 brands, do not disclose any governance information. 6/31 brands (19%) disclose direct contact details such as the email address and/ or phone number of the Sustainability or Corporate Social Responsibility team and 4/31 brands (13%) publish a description of how management accountability is applied. This represents a growth of 3 percentage points, compared to 2020 (10%). Of the Mexican brands, only Ilusión and Liverpool disclose the person on the Board of Directors or Executive Board is responsible for social and environmental impacts but only Liverpool discloses how accountability is implemented at Board or Executive Board level. Greater disclosure of governance data helps to hold those responsible for these issues accountable, as anyone can examine whether they have the expertise to address human rights issues in a comprehensive and timely manner.

Traceability remains one of the weakest sections among the brands evaluated. Only 5/31 brands (16%) disclose any traceability information. Global Compact, UNECE and other international organisations have emphasised the importance of traceability in the industry to guarantee the rights of all people involved in the supply chain and care for the environment. This year, unfortunately, the results of the Supply Chain Traceability section continue to show very low levels of disclosure. The average for the section is 5%, one percentage point lower than in 2020 (6%). It is important to note that 26/31 brands (84%) do not disclose any information on the subject. The topics that are absent in this section, with 0% disclosure, are those related to unionisation, gender breakdown of workers and number of migrant workers working for their suppliers at all three levels of the supply chain (tier one factories, processing facilities and raw material). These three topics are extremely important for Mexico given the dramatic stories of the lack of union rights in the country and the violations of rights that this entails.

In addition, women and migrants are vulnerable population groups that require substantive improvements in their working conditions.

Lack of transparency of information on the main suppliers of the brands. In terms of publicity around the suppliers of the companies studied, 4/31 brands (13%) C&A, Flexi, Ilusión and Levi's publish their first-tier suppliers and the address where they are located but only 2/31 brands (6%), C&A and Levi's, publish a list of their first-tier suppliers in a machine-readable format.

19% of brands disclose contact details for the company department that has responsibility for human rights and environmental issues Having access to machine-readable lists means that the information is much more usable by a wider range of stakeholders, rather than having to laboriously trawl through and reformat the data to make use of it.

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

3/31 brands (10%), C&A, Flexi and Levi's, publish the type of products or services they purchase from their first-tier suppliers; only 2/31 brands (6%), Flexi and Ilusión, disclose what certifications, if any, the facility has. At the second tier of the supply chain, processing facility level (such as ginning and spinning, knitting, dyeing and wet processing, tanneries, embroidering, dye-houses, laundries, etc.) only 2/31 brands (6%), C&A and Levi's, disclose the address, type of products or services, number of workers, whether their supplier list is in machinereadable format and whether the list has been updated during the last six months. Regarding raw material suppliers, 1/31 brands (3%), C&A, disclose information on the percentage of their raw material suppliers and information on the updating of the list during the last 12 months. The problem of the lack of transparency in supply chains lies partly in the fact that companies have not yet fully internalised that they are actors with a clear responsibility for the impacts of their operations on the entire supply chain. The findings related to the Due Diligence section where policies and their application to Know, Show and Fix Human Rights and Environmental impacts and violations in the supply chain are sought, show that only 7/31 brands (23%) disclose information on some of the indicators related to this section of the report.

Brands require a greater commitment to their supply chain, and they will need to develop specific due diligence policies and actions that allow a deeper view into the management of their suppliers and, above all, identify areas of opportunity to prevent and mitigate negative impacts on their workers and environmental damage.

International brands lead in the Know, Show & Fix section: publicly discloses human rights and environmental due diligence processes, outcomes and what brand is doing to remediate any issues identified. International brands have more Due Diligence disclosure: C&A (51%), Zara (34%) and Levi's (28%). The national brands with greater scores are: El Palacio de Hierro (13%), followed by Ilusión (2%), Liverpool (2%) and Oggi (2%). It is unsettling to observe that no footwear brand discloses information on Due Diligence. If we consider that according to data from the Chamber of

the Footwear Industry of the State of Guanajuato, Mexico is the ninth world footwear manufacturer in the world, it

is fundamental to promote a greater transparency and commitment to Due Diligence among the brands of said sector. According to the National Chamber of the Textile Industry, women represent 60% of the total number of people who work in the industry. Women workers face gender-specific risks, socially and environmentally, so it is disappointing that no brand discloses how female workers, women's organisations, human rights female defenders and female experts on gender topics participate in all the stages of the due diligence on human rights. We would encourage brands to ensure that the most affected stakeholders, such as women workers and their representatives, are included in any meaningful due diligence process.

Brands typically assess suppliers through social audits to ensure they meet their ethical standards and policies. However, just 4/31 brands (13%) publish a description of how the facility audit process works. In this sense, 3/31 brands (10%) disclose the criteria used to evaluate new facilities before the start of the production to guarantee that there are optimal conditions according to their policies and standards.

13% of brands disclose the address and name the tier one factories

It is crucial that brands acknowledge that an audit process is necessary, but not enough alone to guarantee Due Diligence. If weaknesses are found in these social audit processes and there is no roadmap to correct and strengthen, then due diligence is limited and does not show a real commitment to guarantee better labour conditions. Additionally, brands should include workers and union representatives in their audit processes. This will allow a dialogue with affected stakeholders - people who spend a great part of their time in the production centers and know better the conditions of the facilities. No assessed brand in our research (0%) discloses the number or percentage of workers interviewed as part of an assessment to suppliers, nor the number or percentage of audits that included a union representative.

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

In general, brands remain far stronger at describing their process of supply chain due diligence than they are at disclosing the outcomes. Just 2/31 brands (6%) publish information about their findings in the assessments applied to the first-tier facilities, 2/31 (6%) of the second tier and 1/31 (3%) of the raw materials level. No Mexican brand discloses findings from facilitylevel assessments at any tier of the supply chain. Once the assessment mechanisms are applied to the facilities of the suppliers it is necessary for brands to be transparent with these findings and commit to finding long-term solutions to guarantee they improve the working conditions while respecting human rights and mitigating the environmental effects. This means that brands should not settle with requesting suppliers to correct their mistakes or improve their processes since there is a risk they will develop temporary solutions, without solving the root cause of the problem. In particular, there remains a widespread lack of transparency on

working conditions beyond the first tier of the supply chain – where workers tend to be less visible, more vulnerable and at higher risk of exploitation.

This year, the Spotlight Issues section was strengthened from 49 to 83 indicators to encompass topics that became more relevant in the global and national scenarios. Each year, we explore some key pressing issues in deeper detail. For 2021, our focus covers six strategic areas to align with and support the United Nations’ Sustainable Development Goals (SDGs), which aims to bring nations together to build a better world for people and our planet by 2030. These included; decent work & purchasing practices (including Covid-19 response); gender & racial equality; sustainable sourcing & materials; overconsumption, waste & circularity; climate change & biodiversity. The update made to this section responds to the need of maintaining a dynamic approach on those topics that emerge and become relevant, for example, those derived from the COVID-19 impact; intellectual property of culture and patrimony of indigenous and Afro-Mexican communities gender and racial equality; supply and sustainable materials, as well as topics related to production, waste and circularity and actions to mitigate climate change and maintain biodiversity.

0% of brands disclose how many audits included a trade union representative

The indicator with the highest disclosure percentage regarding Covid-19 is related to the hygiene and safety measures implemented in the headquarters, warehouses and stores, with 11/31 brands (35%) disclosing said information. This year, this section obtained a 6% of general disclosure among the 31 assessed brands. 12/31 brands, the equivalent to 39% of the total, disclose information about the topics of this section.

Brands are opaque in disclosing their COVID-19 response. This leads to an incomplete picture of the full social and economic impact workers (both direct employees and supply chain workers) have faced throughout the pandemic.

The health crisis caused by the pandemic decreased the world and national Gross Domestic Product (GDP) and left Mexico with an unemployment rate of 11.7%, according to the ILO. This situation brought great challenges for the fashion industry, evidencing how the last links of the supply chain are the most affected ones when it comes to acknowledging and guaranteeing their human and labour rights. Only 2/31 brands (6%) disclose what types of support, beyond the legal requirements, has been offered to direct employees and their families impacted by Covid-19. The sort of disclosure we are looking for includes provision of medical insurance and psychological support in response to the COVID-19 crisis and related lockdowns. Further, 90% of brands (28/31) do not disclose any changes to purchasing practices or supplier agreements as a result of economic pressures of Covid-19, which is alarming. Cancelled orders have a huge impact on the entire supply chain, and the contracts between brands and their suppliers should have been fully honoured during the pandemic. Millions of garment workers have lost their jobs in Cambodia, Indonesia, Bangladesh and elsewhere. Many reports cite brands cancelled and reduced orders as reasons workers have lost their jobs or been unable to find work since the pandemic. Further evidence suggests that unionbusting has become more prevalent over the past year, where dismissals have been

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

made on the basis of union membership and non-union workers hired in their place. Major brands and retailers should be monitoring and disclosing this data in an effort to be transparent about what impact the pandemic has had on the people making their products.

Projection of culture and collaborative work with indigenous and afro-mexican communities The fashion industry in Mexico has gone through booming moments in the use of crafted textiles and embroideries being integrated into contemporary garments. Entities like Puebla, Oaxaca, Guerrero, Chiapas and Hidalgo, are characterized by a wide textile tradition that places them as states with a big representation of workshops dedicated to the creation of embroideries and textiles. Between 2012 and 2019 at least 23 national and international clothing brands appropriated designs of indigenous communities of Oaxaca, Chiapas and Hidalgo, according to an analysis carried out by the organisation Impacto. Thus, we included an indicator to know whether brands have policies on consent, credit and compensation.

Only 2/31 brands (6%), Zara and El Palacio de Hierro, provide information on how they respect and honour intellectual property, as well as the work carried out by craftsmen and craftwomen. We hope that with the General Law For The Protection Of Cultural Heritage Of Indigenous And AfroMexican Peoples And Communities In Mexico - passed by the Senate of the Republic – brands will disclose the policies on respect and collaboration with the communities of craftsmen and craftswomen located in our country.

35% of brands disclose any protective measures implemented in corporate offices or shops to prevent the transmission of COVID-19 Photo: Consumer

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Decent wages and development of collaborators.

Collective bargaining & unionisation

Manufacturing wages in Mexico are too low, which, for decades, has attracted international companies that look for cheap labour. Thus, it is important to know the role of brands before the problems of poverty and regulation on human and labour rights.

Sólo 2/31 marcas (6%), revelan datos Only 2/31 brands (6%) disclose data on the prevalence of violations to Collective Bargaining and Freedom of Association in the facilities of their suppliers; and only 1/31 brands (3%), Zara, publishes the number or percentage of facilities of suppliers that have independent and democratically-chosen unions.

23% of brands (7/31) – Andrea, C&A, El Palacio de Hierro, Ilusion, Levi's, Liverpool and Zara – publish information on the programmes and activities for the professional development of their direct employees. Yet, regarding decent wages for workers in their supply chain, we found minimum levels of disclosure. The brands C&A and Zara are the only ones that disclose their approach to achieve decent wages for the workers of their supply chain, and only Zara discloses the estimated decent wages that are being used to follow and compare the wages of the workers in its supply chain.

Textil workshop Grupo Jolob de San Andrés Larrainzar, Chiapas © Efraín P. Miranda

100% of brands do not disclose the percentage of workers who receive a wage above the minimum wage, nor a decent wage, not to even mention the percentage paid digitally.

of brands publish a strategy for achieve a living wage for supply chain workers

of brands publish No. of supplier facilities that have trade unions

Zara is the only brand that discloses the percentage of workers in the supply chain who are covered by collective agreements. With 30/31 brands (97%) not disclosing these data, it is clear that the data on Freedom of Association continues to be opaque. With the reforms to the Federal Labour Law and the entrance into effect of the USMCA we foresee a different scenario, with progressive changes that will allow for greater transparency on these topics. One of the agreements set forth by the trade agreement, and that is also promoted by the labour reform, is that at least 30% of workers must have access in a free and secret voting to the union of their preference through a certified assembly.

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

Gender equality Since the fashion industry employs high rates of female workforce, we are interested in knowing the gender-based wage differences and labour violations that are still present in the industry.

Only 1/31 brands (3%), Zara, annually discloses the wage difference between men and women, including the distribution of job positions inside the company and the prevalence of genderbased labour violations in the facilities of their suppliers. The topics that do show an increase of disclosure are annual sex-disaggregated distribution of job roles (e.g. executive level, managers/ supervisors, employees) within the company (head office, retail stories, owned and operated facilities), with 4/31 brands (13%) reporting this information.

Only 3% of brands disclose annual gender pay gap

It is important to put into context that, in comparison with other OECD members, Mexico has one of the widest employment gaps due to gender. Out of the women who do work, almost 60% have informal jobs, with low social security, high insecurity and low remuneration. The aforementioned constitutes the third lowest female employment rate of the OECD, only above Turkey (28.7%) and Greece (41.7). Mexican men, in exchange, continue to have an employment rate of 78.5%.

Sustainable sourcing & materials Materials can play a key role in the potential transformation of the textile and fashion industries. We must consider, too, that they represent a substantial element in the products of this sector.

10%

Only C&A explains what tool or process they use to define a ‘sustainable material’. 10% of brands (Zara, Levi's and C&A) disclose a strategy on the use of sustainable materials with a determined and measurable term, as well as their annual progress towards achieving their objectives of conventional or virgin materials vs. sustainable materials. No Mexican brand discloses this information. Overconsumption, waste and circularity The concept of circular economy in the textile and fashion industry is imperative given the excessive production volume and the generation of waste that do not have a socially feasible and environmentally responsible way of being disposed of.

of brands publish a time-bound and measurable sustainable materials strategy

From the 31 assessed brands, 3/31 brands (10%), C&A, Levi's and Zara, are the only ones that disclose take-back schemes and to take responsibility for their post-consumption waste. Only Zara (1/31 brands, 3%) discloses the number of products annually produced. The lack of transparency from the rest of the brands (28/31) in relation to the basic indicators of circularity evidences the need to go deeper into the meaning of a circularity model, as well as its benefits. This includes: reducing costs and saving money through prevention, reuse and responsible design; avoiding losses during the production of goods; and using the lowest possible amount of energy during the elaboration of products, thus making it possible for them to be renewed and used for other purposes.

Climate change and biodiversity During 2020 and 2021 different topics, such as natural resource management, the climate emergency and its relation to world and human health and its economic impact, became more important due to a noticeable international pressure. This scenario gave way to an increase in communications from the private and public sectors regarding actions to mitigate the effects of climate change.

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

From the 2020 edition, where only 2/20 brands (10%) published their carbon footprint or greenhouse gas emissions (GHG) in their own facilities or the facilities operated by the company, there was an increase to 5/31 brands (Zara, Levi's Strauss Mexico, C&A, Liverpool and Ilusion) in 2021, accounting for a 16%. Mexico has big objectives to fight climate change and one way to achieve them is to integrate clean energies to the national energy grid to come closer to achieving the international commitment acquired with the Paris Agreement and the provisions of the General Law on Climate Change, then bringing back the Energy Transition Law. The Mexican brand Ilusión is the only one out of the 31 brands that discloses data on its use of renewable energies in the manufacturing and processing facilities at the fiber production level.

No brand (0/31, 0%) discloses information regarding their environmental impact

mapped to their financial statements, nor about their practices related to zero deforestation, which represents a big area of opportunity for them and their regulatory framework. In conclusion, the Mexican brands show that they are in a primary stage in their approach to a global agenda for sustainability and the mitigation of the impacts of our economic development. Ilusión, Liverpool and Flexi are starting their journey towards transparency and giving public visibility to their practices, and, even though they have lower scores in comparison with global brands, they can be an example for other national brands to follow the same path. The road to sustainability is not linear and responding to the problems associated with industrialisation and the production systems of the sector requires more training, availability, regulation and auditing. For that, we need to adopt a systemic approach and achieve cooperation among the parties involved in the supply chain, from the producer to the end consumer.

Workshop: San Cris

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

KEY RESULTS

overall average score of the 31 brands assessed in 2021

overall average score of the 19 brands assessed since 2020

6 HIGHEST SCORES1 (%) C&A

Aldo Conti Brantano

Levi Straus De México

Zara

Ivonne

Dorothy Gaynor Julio

Ilusión

Liverpool

Flexi

POLICIES AND COMMITMENTS

13%

16 BRANDS WITH ZERO POINTS (%)

Charly

El Palacio de Hierro

AVERAGE SCORE IN EACH SECTION

9 6

1. The order of the companies is based on the scores obtained, including up to one decimal, although for ease of reading, in this document the figures are rounded.

Long Beach Polo Club Mariscal Marsel Men´s Fashion Price Shoes Quarry Sexy Jeans TT Blues Jeans Verochi Yale de México

GOVERNANCE

TRACEABILITY

SPOTLIGHT ISSUES

INCREASED MOVEMENTS (% CHANGE SINCE 2020) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

KNOW-SHOW AND FIX

DECREASED SCORES (% CHANGE SINCE 2020)

Oggi Jeans

C&A

Coppel

Levi Straus De México

Liverpool

Verochi

Andrea

Prices Shoes

Sears

Cklass

2. To avoid distorted variations by the comparison of near-zero data, for the calculation of this percentage growth rate, only brands that obtained at least 1% in 2020 have been taken into account.

Percentage of brands publishing supplier lists 2020

2021

First Tier

3% 13% Processing facilities

2% 6% Raw material suppliers

1% 3%

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

ABOUT THE INDEX

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

OUR THEORY OF CHANGE

THE CHANGES WE WANT TO SEE

At every level, from field to factory, fashion supply chains are both a major contributor to, and impacted by, the climate crisis. The global fashion industry currently relies on extracting finite natural resources, and this contributes significantly to environmental degradation and biodiversity loss.

At Fashion Revolution we campaign for a global fashion industry that conserves and restores the environment, and values people over growth and profits.

The fashion industry is also a major driver of human rights abuses around the world, affecting workers and their communities throughout global value chains. Entrenched imbalanced power dynamics between global buyers, their suppliers and their workers often threaten working conditions, livelihoods and health of the people who make our clothes. Fashion supply chains are highly globalized, deregulated, complex and opaque. Business relationships are murky, and outsourcing is common. This obscures responsibility and accountability when things go wrong, as they so often do. The lack of transparency means we cannot easily see and take swift and appropriate action on environmental and human rights abuses. Without transparency, we cannot protect vulnerable people and the planet. Therefore, transparency underpins systemic change.

You can read the complete manifesto here

A manifesto for a fashion revolution

Manifesto Point Fashion is transparent and accountable. Fashion embraces clarity and does not hide behind complexity nor rely upon trade secrets to derive value. Anyone, anywhere can find out how, where, by whom and under what conditions their clothing is made.

We work for a culture of transparency and accountability throughout the value chain; a global fashion industry in which brands take responsibility for their social and environmental impact and in which no time is wasted trying to "demonstrate" responsibility and chains of custody. The Fashion Transparency Index is one of the tools to achieve this vision, and is part of point nº 8 of our manifesto. From Arlenica, we seek to promote tools that, first, can help to make visible the normalisation of violence in the various cultural and institutional spheres and, second, can contribute to producing changes within the strategic actors to reduce said normalisation. We consider that the Fashion Transparency Index in Mexico is the appropriate tool for these necessary changes and for them we are committed to its implementation in our country.

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

OUR ROLE INSIDE WITHING AND OUTSIDE THE INDUSTRY

Fashion Revolution occupies a unique position both inside and outside the fashion industry. We work to achieve change in three main ways: political change, cultural change, and industry change.. Working "within" the system means committing to a system that is deeply unsustainable, extractive and unjust. Participating in a system with which we disagree does not mean approving it. In fact, it is quite the opposite: an attempt to fundamentally disrupt and dismantle the structures that sustain injustice and exploitation. This includes opaque supply chains that allow human rights and environmental abuses to be concealed and hide who has responsibility for redressing them. We engage in an unfair system because doing so is effective in driving change,

even if it is sometimes frustratingly slow and continual. We work for the transparency and accountability of the entire industry, which is deeply rooted in the entire value chain. This can only be achieved by involving the main players in the sector, such as the brands and retailers analysed in this Index, because they are responsible for both positive and negative impacts and have the resources to counter the problems they have caused and continue to perpetuate. To learn more about how we select the brands and retailers we include in this Index and why we

don't assess smaller brands, which are typically more transparent and aware that positive, systemic change needs to be driven, read our Q&A at this link . Simultaneously, we work "outside" the system to educate and mobilize citizens, as well as to advocate for political changes in government and legislation. Generally speaking, we consider industry change to be a job "inside" the system, and cultural and political change to be a job "outside" the system.Transparency is fundamental to achieve all the changes that Fashion Revolution works for: in politics, in culture and in the industry. Arlenica is a non-profit organisation dedicated to understanding the structural reasons and the political and social contexts that cause the normalisation of violence in individuals and diverse social spheres -from families and companies to governments and states themselvesand generating proposals for action to contribute to people bringing, personally and collectively, behavioral changes in the way we live and react to violence. Confección Región: Sandra

Within the industry, we support the various processes of Fashion Revolution, adapting them to the Mexican context and bringing companies closer to the paradigm shift with respect to their role in the supply chain of the fashion industry and their possibility of assuming themselves as agents of change to lead the process of transparency in this industry. From the outside, we build alliances and strengthen inter-institutional and intersectoral cooperation to contribute to building a movement for transparency in the policies and processes of companies in the fashion industry, involving citizens, civil society organisations, academia and other strategic external actors.

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

POLICY CHANGE In the medium and long term, we seek to promote policy changes and influence governments, and particularly the Mexican government, to play a more active role in law enforcement and industry regulation.

CULTURAL CHANGE Work "outside" the traditional fashion system

Work "within" the fashion system.

Raise public awareness and educate people about the social and environmental challenges facing the global fashion industry.

Conduct research on the social and environmental impact of the fashion industry and leverage competitive brand trends to drive faster change.

Bring people from around the world together to take collective action

FOR EXAMPLE

Promoting policies that recognise the importance of the fashion industry's contribution to the Mexican economy, and contribute to its durability. Collaborating with allies across civil society to lobby the Mexican Government to pass new legislation to hold brands accountable for the environmental and social impacts of the fashion industry, and to reduce their negative impacts. Strengthening existing environmental and labour rights regulations to reduce the negative social and environmental impacts of the fashion sector. Lobby for tools to identify non-compliance and for sanctions to be imposed where brands break the rules. Lobbying for a regulatory framework with the capacity to mandate transparency and shine a spotlight on the Human and Environmental risks within the supply chains of the manufacturing industry in general, and of clothing and footwear in particular.

INDUSTRY CHANGE

FOR EXAMPLE

Nurturing our student ambassadors network through our Network of University Ambassadors programme. Support our ambassadors to engage and educate their peers and local community in conversations on the impacts of our clothes. Amplifying the #WhoMadeMyClothes and #WhatsInMyClothes campaigns to start conversations about the implications of clothing production and consumption. Leveraging connectivity from the various digital platforms to share information from verifiable sources on the social, economic and environmental impacts of the industry.

Approaching academic institutions to update and adjust study programmes related to textile and apparel production so that new generations of designers are agents of change that transform the fashion industry. Cultural change is a work that engages and mobilizes citizens to take collective action. The goal is to remove barriers between consumers and producers and inspire people to consume less, value quality, take better care of their clothes and use their voices to bring about change.

Promote collaborative work between brands, designers and artisans to promote the preservation of artisanal textile production techniques through their application in the design and manufacture of garments. FOR EXAMPLE

Publishing the Fashion Transparency Index in Mexico on an annual basis and increasing the number of brands captured in the research year-on-year. Running webinars and training sessions about all issues covered in the Mexican Index for the brands captured in the research. Showcasing, mentoring and championing smaller, innovative brands and designers through the Informative Directory of National Brands and Suppliers. Advocating for business incubators to facilitate knowledge-sharing and collaboration between entrepreneurs (like emerging designers) and micro, small and medium enterprises (MSMEs) Collaborating and strengthening relationships between the business chambers of the textile-clothing and leather-footwear chains to advocate for transparency and accountability across the industry.

Industry change is related to transforming from the inside out the current unjust and exploitative system. We do this by demanding faster progress from larger players and supporting smaller but responsible brands and designers. This change can only be achieved by involving the most important players in the industry, those who bear the greatest responsibility and go the furthest. The Fashion Transparency Index is one way to do this.

To learn more about the work that Fashion Revolution does, click here

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

THE ROLE OF TRANSPARENCY IN ACHIEVING CHANGE

WHAT IS TRANSPARENCY? For Fashion Revolution: The public disclosure of credible, comprehensive and comparable data and information about fashion’s supply chains, business practices and the impacts of these practices on workers, communities and the environment..

For Fashion Revolution and Arlenica, transparency is the public disclosure made by brands about their policies and commitments, practices and processes in a way that is reliable, complete and comparable. This important disclosure about human, labour and environmental rights covers both the brand itself and its suppliers in the supply chain, as well as the repercussions of these practices on workers, communities and the planet.

When we talk about transparency we are referring to the information that large brands and retailers should publish about those practices and actions they promote to improve the working conditions of both their direct employees and their suppliers. We are also referring to both what they are doing today and their future plans to prevent and mitigate the environmental and social impacts generated by their operations. Transparency includes issues of governance - including who in the company is responsible when things go wrong and what will be done to provide remedy for affected stakeholders. Governance also includes the disclosure of accessible feedback and whistleblowing mechanismscommunication channels where employees and supply chain workers can report a violation of their rights and transparency of purchasing practices information across the whole supply chain, from farmer to spinning mill worker, through factory worker and all stages in between.

Transparency means that there is information available to be consulted by all parties involved and in this way they see and understand what is happening and who is responsible. Transparency allows the public to scrutinize what brands claim to be doing to address human rights and protect the environment. Crucially, transparency also allows affected stakeholders and civil society organisations on the ground to scrutinize and verify whether claims in policies and commitments are upheld in practice. Transparency allows information to be available so that consumers, investors, legislators, journalists, NGOs, unions and workers themselves can know what brands do or do not do and, in this way, there is the ability to demand accountability and the necessary changes to be carried out to transform the paradigm of fashion production and consumption.

transparency scrutiny responsibility change

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

THE ROLE & AIMS OF THE MEXICO FASHION TRANSPARENCY INDEX Fashion is one of Mexico’s largest industries, with wide-ranging impacts on the environment and the lives of the people who make our clothes. However, we know very little about what the industry does to cease, prevent or mitigate these negative impacts. The Fashion Transparency Index in Mexico was created with the purpose of brands reporting on the social and environmental repercussions generated by their operations. The Index is a tool that serves as a practical roadmap that incentivises brands to start their journey towards full transparency and accountability. Firstly, it exposes brands’ areas of improvement by identifying blindspots in their own sustainability strategies, and secondly, building on their efforts to improve their level of disclosure and transparency year-on-year. The Index incentivises brands to disclose and share information about good practices and this is information that other brands can learn from and replicate. We seek to generate a multiplier effect where transparency in human rights and

environmental information is considered pre-competitive among peers, to contribute to an industry-wide culture of transparency and accountability.

The Fashion Transparency Index in Mexico seeks to: •

Highlight the importance of transparency as a first step towards a fairer, safer and more sustainable fashion industry.

•

Raise the political and social agenda for the need for greater accountability of companies and fashion brands in Mexico.

•

Increase transparency, scrutiny, accountability and positive change in the fashion industry.

•

Provide a general analysis of the level of transparency of brands, including their year-on-year progress,with respect to each of the dimensions measured by the Index and globally.

•

Have more information about the conditions in which people in the sector work.

•

Highlight important issues to the Mexican national industry and measure brand disclosure and transparency on these important issues.

•

Lobby for new public policies and legislation that requires and generates systemic change in this industry to improve the quality of life of employees, reduce environmental impacts and encourage more responsible consumption.

Photo: Segunda Piel

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

CASE STUDY:

TRANSPARENCY IN ACTION

STEERING GROUP OF SAVE THE CHILDREN: FOR A LABOUR-FREE CHILDHOOD The ILO defines child labour as "all work that deprives children and adolescents of their childhood, their potential and dignity, and is detrimental to their physical and psychological development."

The starting point with the private sector was the creation of a Steering Group comprising some of the main brands, chambers and leaders in the clothing sector in Mexico to develop strategies and raise awareness on the harmful effects of child labour as well as the importance of preventing it by working hand in hand with the stakeholders in the companies.

According to the National Survey on Child Labour 2019 of the National Institute of Statistics and Geography (INEGI, Spanish acronym), the national rate of child labour in Mexico is 11.5%, with some states like Oaxaca reaching up to 21.5%. The main sector employing girls, boys and adolescents under 18 is agriculture, followed by manufacturing, mainly of textiles, footwear and leather. To respond to SDG 8.7 aimed at child labour eradication by 2025, and in its capacity of leading organisation in childhood protection and assistance, Save the Children started a 2020 project aimed at implementing comprehensive measures along with the government, civil society, companies and public at large to prevent and eradicate child labour.

Results of Stages 1 and 2: •

Two chambers joined the Declaration: the Chamber of the Footwear Industry of the State of Guanajuato (CICEG, Spanish acronym) and the National Chamber of Textile Industry (CANAINTEX, Spanish acronym).

•

Seven companies joined: four from the clothing sector - El Palacio de Hierro, C&A, Grupo Diltex (owner of the brand Ilusión) and Berrendo.

•

One international body joined: Alliance for Integrity of the German Corporation for International Cooperation (GIZ, German acronym).

•

Toolkit: Code of Conduct, Supplement to Code of Conduct, Self-assessment Tool on Child Labour for SMEs, Selfassessment Tool on Adolescent Labour for SMEs and Self-assessment Tool on Childhood Protection for SMEs.

•

Monthly newsletters for the team and suppliers of the Steering Group with information about the prevention and eradication of Child Labour.

During 2021, the Steering Group worked on a toolkit to introduce companies and workshops of different sizes to the prevention of child labour in the operation of their own supply chains. The toolkit will be uploaded to a Save the Children website specifically designed to provide information for the prevention and eradication of child labour.

On June 10th, Save the Children organised the virtual webinar "Challenges of the Private Sector to Eliminate Child Labour" in conjunction with the Mexican Centre for Philanthropy. Reflections and the cases of three companies that carried out actions to prevent and eliminate child work from their supply chain were presented in the forum. The Steering Group presented the Declaration to Prevent and Eliminate Child Labour and Protect Legal Adolescent Work, and also invited other companies, chambers and relevant players to adhere to it. The toolkit's tools are not only elements that companies can adopt, but also a way to exemplify the minimum practices needed to improve business relationships and respect for human rights, including and beyond the prevention of child labour. Placing a code of conduct at the core of actions to prevent child labour encourages companies and workshops to understand the importance of having this at the core of their operations, and to join the current trends of having more transparent practices, resulting in beneficial processes for their stakeholders.

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

CASE STUDY:

TRANSPARENCY IN ACTION

BORDANDO ALIANZAS The Mexican garment industry is embedded in an international context that demands that production costs are kept down to stay competitive against other industries worldwide, such as the Asian ones. With that in mind, this industrial sector constantly resorts to practises and production models that contravene human labour rights just to keep their production costs low. In the state of Jalisco (western Mexico), three big issues related to this sector were identified: 1) harmful supply chain dynamics, 2) working conditions that jeopardise workers’ safety, and 3) poor conditions for collective negotiations. Given that labour conditions are getting worse, and informality is on the rise, there isn't a real possibility of integrating into the formal sector of the economy, as workers suspect they won’t get any stable income, work stability, or social security. Outsourcing, subcontracting, and other illegal practices allow employers to avoid their obligations at the same time that they adopt authoritarian attitudes. As a result, poor relations are generated between workers, middle

management and employers, all of which are aggravated by the perception that the unions do not speak for workers and the lack of knowledge on the institutions to which they can turn to demand their labour rights. As a response to this preliminary diagnosis, Bordando Alianzas was born as an inter-institutional, multisector and multi-actor initiative to create innovative solutions for improving labour conditions in Jalisco's clothing industry. These solutions seek to involve every stakeholder in the system, to be measurable and easily replicable, and to be attractive to public and private funding. The project was executed through a three-party collaboration between the Centre for Reflection and Labour Action (CEREAL-Spanish acronym), the C&A Foundation (now called the Laudes Foundation), and ITESO University’s Centre for High Impact Social Innovation (CISAI-Spanish acronym). These three institutions were involved in the provision of funding, material and human resources and institutional infrastructure to run the project. © Bordando Alianzas

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

Using Community Based System Dynamics, and Collective Impact methodologies, a 10-stage process was designed. The first five stages focused on literature review, integrating committees and workshops, on-site visits to interview workers, and a training programme for industry workers. The last five stages are comprised of analysis sessions and the creation of innovative solution prototypes. The foregoing resulted in the involvement of 87 key local and national actors in the process, and 19 industry workers improved their skills to stand up for their labour rights. In addition, three solution prototypes were created to work on three areas which were considered to need critical intervention: A Labour Justice Online Platform, a Human Labour Rights Index, and an Empathy Lab. The first prototype seeks to increase stakeholders’ knowledge and competencies regarding human labour rights in the industry through an interactive, multichannel platform. The second one is a certification instrument for workshops and companies to promote improvements in labour conditions. The last one focuses on setting up forums designed to raise awareness between workers and employers where collective negotiation is encouraged and new forms of relationships in the workplace are promoted.

The prototypes were presented in an Online Forum at the beginning of 2021. During this multi-actor dialogue, it was acknowledged that a gender perspective was necessary to improve the conditions of the clothing industry. Further, creating collective, evidence-based solutions, and looking for new ways to face the challenges from the COVID-19 pandemic are critical to its success. The greatest challenge is designing and implementing new collaborative ways to undertake the challenges arising from the emergence of new business models, and ensuring labour human rights remain central, and are not compromised by financial advantages.

Confección Región: Rosalba

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

METHODOLOGY & SCOPE OF THE RESEARCH

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

HOW BRANDS AND RETAILERS ARE SELECTED This year’s Mexican Fashion Transparency Index reviews and ranks the amount of information disclosed by 31 of the most important and influential fashion brands in our country. The inclusion of brands is determined by a range of factors: •

We consider annual turnover levels and select brands with the highest turnovers of all brands in Mexico.

•

How well known and represented the brand is in the national market, including the number of stores in Mexico.

•

Brands that are perceived as favourites in the minds of Mexican consumers.

We select brands according to their level of turnover and because most do not publish financial reports, we turn to third-party sources such as the Euromonitor platform, market analysis tool and generation of statistical data. This year we built on the original 19 brands from the Mexican Index by adding a further 12.

This brought the total number of brands captured in the 2021 index to 31 brands. We know that the sample is not enough to represent the size of the Mexican fashion market, but we have chosen brands from some of the most important segments in the sector. Of the group assessed, 7/31 brands (23%) are footwear brands, 5/31 brands (16%) are department stores with at least one brand of clothing of their own. 3/31 brands (10%) primarily produce denim garments and the others represent segments of men's clothing, women's clothing and casual fashion. Conducting the Index on an annual basis with an increasing number of brand participants builds an evolving picture of the Mexican fashion industry. It also allows year-on-year comparison for brands captured in the Indices.

they have the most significant negative impacts on human rights and the environment and the greatest responsibility as well as capacity to develop transformational change. As the brands captured in this research are so large and profitable compared to the rest of the industry, with some of their wealthiest owners and CEOs in the country at the helm, they have the resources and moral imperative to take meaningful action, not just on transparency, but on improving human rights and environmental impacts at the very heart of their business models.

We focused on the largest brands because we believe they have the greatest responsibility to drive ethical business practices. As the consumer brands analysed in this Index - the largest and most powerful in our country's apparel and footwear industry-

3. Last year 20 brands were analysed, but due to the concreteness of the purchase of the company Suburbia by Liverpool, this brand was excluded since its information report is now identical to that presented by its parent company. In that sense, 19 of the 20 brands analysed in the first year were maintained and 1 was added this year. 2 more brands, making a total of 31 brands studied.

H OW M A N Y B R A N D S PA R T I C I PAT E D T H I S Y E A R ?

87%

13%

of brands did not participated

of brands participated by supplementing their questionnaires

Active participation means that the brand engages with the research process by supplementing our pre-populated questionnaire to flag to us any relevant disclosure that our researchers have missed.

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

A- Z OF BRANDS • Aldo Conti

• Ivonne

• Quarry

• Andrea

• Julio

• Sears

• Brantano

• Levi Strauss de México

• Sexy Jeans

• C&A

• Liverpool

• TT Blues Jeans

• Charly

• Liz Minelli

• Verochi

• Cklass

• Long Beach Polo Club

• Yale de México

• Coppel

• Mariscal

• Zara

• Dorothy Gaynor

• Marsel

• El Palacio de Hierro

• Men´s Fashion

• Ferrioni

• Milano

• Flexi

• Oggi

• Ilusión

• Price Shoes

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

THE SCOPE OF OUR RESEARCH Our research is focused on transparency, understood as the public information that brands make available to any person that wants to know about the social and environmental impacts caused by their operations and those of their supply chain. We focus on transparency because it influences two of the paths required to foster the changes that the Mexican fashion industry needs. On the one hand, it lets us know how engaged brands are with the care for the environment and the improvement of labour conditions and human rights of their workers and those involved in their supply chains. This leads to scrutiny of the disclosure by experts and affected stakeholders, which drives accountability and positive change. And, on the other hand, transparency promotes the right of consumers to know how, where, by whom and under what conditions their clothes were made. Only by having a clear idea of how the fashion manufacturing cycle actually works, from the manufacturing of fibres up to the final product, its use and disposal, will we be able to bring change. We cannot approach social or environmental exploitation unless we see it. If we cannot see it, we cannot fix it. We want to generate a connection between the people who make our clothes and the people who wear them.

What it does measure? The Fashion Transparency Index Mexico 2021 measures what brands know and disclose about the impacts of their supply chains on human rights and the environment. Information/data on policies, procedures, actions and progress made by big brands in relation to human rights and the environment all throughout their supply chain. Information/data publicly disclosed in the website of the brand or the parent company.

Information/data must be publicly available from one the following places:

What it does not measure? The Fashion Transparency Index Mexico 2021 does not verify the statements on sustainability made by brands, nor does it assess whether one brand is more ethical or sustainable than another. The scores obtained by brands do not attest good practices. Fashion Revolution and Arlenica have not verified, validated or audited the data gathered in the final report. The Fashion Transparency Index Mexico 2021 is not a shopping guide. We do not recommend nor back any of the brands and retailers, regardless of their score. We hope people will use the results of the Fashion Transparency Index Mexico to make activism possible.

We do not count the following information sources:

Microsites on sustainability/CR, as long as there is a direct web link from the website of the brand or parent company.

Product labels and tags, or information disseminated physically at stores.

In annual reports or sustainability annual reports (only if they are dated January 2019 or after) published on the website of the brand or parent company.

Smartphone applications.

In any other document that is publicly available and that can be freely downloaded from the website of the brands or parent company.

A third-party website or document that does not contain the weblink of the brand or parent company, including news and press releases.

Through third-party websites, provided there is a direct web link from the website of the brand or parent company to the third-party website.

Downloadable documents that do not have a weblink in the website of the brand.

Information disseminated through social media, such as Instagram.

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

ABOUT THE RESEARCH PROCESS December 2020 - February 2021 Methodology updates: Aligning the methodology of the Mexican Index with the global methodology. Adapting the questionnaire to the Mexican context; including new indicators derived from the assessment of spotlight issues for the Mexican industry, with the support of our Advisory Committee. Selection of 12 additional brands to be included in the 2021 Index.

September - October Reviewing answers and quality control: Our research team reviews responses and awards additional points where sufficient disclosure has been made. The research team carried out several quality control rounds on the data before assigning the final scores.

March 2021 Press conference: Communicating to the media the changes to the methodology and the group of brands to be assessed in 2021.

August Brands complete their questionnaires: Brands that choose to participate are given approximately one month to fill in the gaps on their brand questionnaires, alerting us to information our researchers may not have found.

October - November Data is compiled, analysis completed, and report prepared: Data from each brand questionnaire is collated into one large complete dataset, which is used to analyse final results, determine year-on-year progress and pull-out interesting findings.

April - Beginning of May 2021 Researching the selected brands and retailers: The team of researchers at Arlenica and Fashion Revolution Mexico reviews the public information available in the website of each brand, pre-populates the questionnaires and assigns preliminary scores according to the methodology. Each indicator is peer-reviewed by at least one other lead researcher from our Global FTI team for accuracy and consistency across all 31 brand questionnaires in the Mexico Index, and consistency to the Global and Brazil Indicies.

End of May - July Brands received their pre-completed questionnaires to supplement the information: The brands were given approximately one month to complete their questionnaires with the information that our researchers did not find available.

Mid-December Publishing the Fashion Transparency Index Mexico 2021: Shortly Before the publication of the report, brands are notified about their final results. The full report is published in the website: www.fashionrevolution.org www.arlenica.org/indice_moda_MX20

May 2021 Brand workshops: Virtual workshops were given in coordination with the representatives of the selected brands to explain the methodology.

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

ABOUT THE METHODOLOGY The methodology of the Fashion Transparency Index 2021 was developed by Fashion Revolution and adapted by Arlenica for its application in Mexico. Brands get higher scores if they provide more transparency and disclosure on human rights and environmental issues across 5 key areas: 1. Policies and commitment 2. Governance 3. Traceability 4. Know, show and fix (due-diligence) 5. Spotlight issues Which this year include: •

Decent work (including Covid-19 response, living wages, purchasing practices, unionisation, collective bargaining and welfare of workers)

•

Gender equality

•

Projection of culture and collaboration with indigenous and Afro-Mexican populations

•

Supply and sustainable materials

•

Excessive consumption and business model

•

Waste and circularity

•

Water and chemicals

•

Climate change and biodiversity

Each of these sections has indicators that cover some of the most important issues in that theme.

Brand Questionaire template The assessment questionnaire contains 239 indicators. This means that, for this research, we have reviewed around 7,409 pieces of data from the 31 brands that are part of the 2021 edition. If you want to see the assessment questionnaire, click here to download the template.

We have also strived to align the methodology, so far as possible, with existing international standards and frameworks such as Open Data Standard, UN Guiding Principles, SDGs,OECD Due Diligence Guidelines and the relevant ILO conventions, as well as other benchmarks and initiatives including ACT, CHRB, Know The Chain, Transparency Pledge and several others. In addition, we align with national Mexican laws and standards, such as the Federal Labour Act, the Federal Act to Prevent and Eliminate Discrimination, the General Law on Women's Access to a Life Free of Violence, the Immigration Law for Foreigners, the

Regulation for Occupational Safety Health,& Environment, and National Mexican Standards NOM-002-STPS-2010 on Safety Conditions - Fire Prevention and Protection in the Workplace, NOM-030STPS-2009 on Occupational Preventive and Safety Services in the Workplace, and NOM-035 on Occupational Psychosocial Risk Factors, among others. The Fashion Transparency Index was designed in 2017 through a four-month consultative process with a variety of industry experts and stakeholders from academia, the trade union movement, civil society organisations, socially responsible investment, business consulting and journalism. The Index methodology is reviewed and updated every year, in consultation with our Committee. This year, significant updates have been made to the methodology in consultation with our pro-bono advisory committee, which included more than 20 experts and organisations such as:

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

METHODOLOGY ADVISORY COMMITTEE Dr. Mark Anner

Kristian Hardiman

Associate Professor and Director of the Center for Global Workers' Rights at Penn State University

Head of Ratings at Good On You

Eloisa Artuso

Aruna Kashyap Senior Adviser at Human Rights Watch

Director of Fashion Transparency Index Brazil

Neil Brown

Kate Larsen Human Rights and Business Consultant

Head of Equities at GIB Asset Management

Maddy Cobbing

Emily MacIntosh Policy Officer for Textiles at the European Environmental Bureau

Detox My Fashion Campaign from Greenpeace

Gary Cook

Francois Souchet Lead of "Make Fashion Circular" at the Ellen MacArthur Foundation

Global Climate Campaigns Director at Stand.earth

Joe Sutcliffe Subindu Garkhel Senior Cotton and Textiles Lead at the Fairtrade Foundation

Fiona Gooch

Senior Adviser on Dignified Work at CARE International

Ben Vanpeperstraete Supply Chain Consultant

Private Sector Policy Adviser at Traidcraft Exchange

Christina Hajagos-Clausen Director of Textile and Garment Industry at IndustriALL Global Union

Kate Larsen Business & Human Rights Consultant

Hester Le Roux Senior Economic Advisor, Policy & Advocacy at CARE International Maya Rommwatt Fashion Climate Campaigner at Stand.earth

This year we added an additional 19 indicators compared to last year. The weighting of the scores is designed to incentivise detailed and granular public disclosure and to put the greatest emphasis on results, outcomes, impacts and the most actionable data that can be used by external stakeholders to hold brands to account.

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

THE METHODOLOGY OF THE MEXICAN INDEX A JOINT VISION BUILT WITH EXPERTS . When we decided to implement in Mexico the Fashion Transparency Index, we decided to create an Advisory Committee with experts who’s profiles and areas of expertise, linked either directly or indirectly to fashion, would contribute to strengthening and updating the methodology. The knowledge and vision of this group of experts allowed us to analyse and identify the issues that need to be included in the assessment questionnaire and to adapt the global indicators so they respond to the specific needs and realities of the Mexican fashion context. The participation of our Advisory Committee has been a great support to give visibility to the Index and the topics it covers. Through panels and webinars, we have been able to know their vision on highly relevant topics for the fashion industry, including (but not limited to) the challenges brands face as a result of the pandemic and the labour reforms, as well as the enforcement of the USMCS, which provides new dispositions for companies on the topics of unionisation, collective labour agreements, and gender equality violence in the workplace. As of today, our Advisory Committee is made up of representatives of business chambers from the textile, footwear

and garment sectors. Members of the Advisory Committee have a range of qualifications and experience, including: holding degrees related to fashion and textile design from some of the most prestigious universities in

Mexico; being members of international bodies and civil society organisations focused on human and labour rights; independent consultants with expertise on environmental and cultural topics.

The Advisory Committee of the Index in Mexico is integrated by: Abril Appel

Humberto Muñoz

General Director of the National Chamber of Textile Industry (CANAINTEX, because of its initials in Spanish)

Director of the PhD in Corporate Social Responsibility at the Anahuac University

Alejandro Gómez

Ivette González

Executive President of the Chamber of the Footwear Industry of the State of Guanajuato (CICEG)

Specialist on Human Rights and Companies, Proyecto sobre Organización, Desarrollo, Educación e Investigación® (PODER)

Annett Castro

Cynthia Gómez

Head of Operations of the National Chamber of the Clothing Industry (CANAIVE, because of its initials in Spanish)

Academic Coordinator of Fashion Design and Sustainable Textiles of the Design Department at the Universidad Iberoamericana

Anabelle Sulmont

Marisol Conover

Coordinator of the Project Public Policies with a Focus on Human Development and Inclusion of the United Nations Development Program, UNDP

Director of the Master's Degree in Fashion, Anahuac University

Carlos Lara Founder of Artículo 27 A.C.

Mónica Salazar General Director, Dignificando el Trabajo, A.C

Monserrat Messeguer Director of Fashion Group International Mexico

Federico Arce Professor in Environmental Law, Professor at the National Autonomous University of Mexico (UNAM, because of its initials in Spanish)

Lorena Ríos Director of the Di Moda Burgo Institute

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

Indicators for Mexico For this second edition of the Mexican Index, we decided to include topics that, along with the vision of our expert advisers, we deem of the utmost importance. These include, the effects and response of some brands to the Coronavirus pandemic. As one of the greatest crises humanity has faced since the Second World War, according to the World Bank, the global Gross Domestic Product (GDP) fell by 3.5% last year; in Mexico it plummeted by 8.5%, its greatest fall since 1932, according to the INEGI. In one of the strongest recessions of the last decades and under a wave of uncertainty, at the most critical point of a pandemic that affected all links in the supply chains, brands started to cancel orders to their suppliers. The devastating effects that workers faced included: reduced wages, loss of labour benefits (such as social security and housing credit), and, in many cases, the inevitable loss of their job. In the Mexican footwear sector, 13 thousand workers have not been able to recover their job, according to Alfredo Padilla Villalpando, President of the Chamber of the Footwear Industry of Guanajuato, CICEG because of its initials in Spanish. As a result, this research included indicators on the changes made to purchasing practices or to the agreements made with suppliers as a result of the Workshop: San Cris

economic pressure of the pandemic, as well as the support brands gave to direct employees and families who got sick. Also, we included indicators on the provisions offered to workers so they could work safely from home (such as computers and work tools to cover electricity and Internet expenses), and health and safety measures implemented in headquarters, warehouses and stores to prevent the transmission of the Covid-19 virus. Another topic that we decided to include has to do with giving visibility to the collaborations made by brands with indigenous communities with the purpose of knowing whether they have a policy that proves consent, credit and fair compensation for the design or making of garments that come from an ethnic group. This is because, in spite of their cultural wealth and artistic heritage, indigenous communities in Mexico live in extreme poverty. Most artisans lose between 25 and 30% of their incomes due to haggling made by both consumers and international firms that have used the iconography of Mexican indigenous peoples in the design of their garments, without the creators receiving one single dime for their work, effort and creativity.

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

LIMITATIONS OF THE RESEARCH

HOW WE CALCULATED THE FINDINGS

Data is only current as of August 2021. Brands may disclose more information or have retracted information since this cut-off date.

All scores were calculated with two decimals (in the complete dataset) and were then rounded to the closest whole percentage point (as shown in this report).

In most cases, the year-on-year differences in scores are described as the change in percentage points, i.e., the actual amount of change, rather than the percentage(unless stated otherwise).

To calculate the total score of each brand, we added up the scores obtained by the brand in the five sections. Each section has a different weight, and some sections are worth more points than others. The highest possible score a brand can obtain is 250 points

For example, if a brand had a score of 30% one year and 45% the next, we tend to report that the brand went up by 15 percentage points (45-30=15), instead of saying that it went up by a 50% change rate (45/30=1.5).

•

The changes made to the 2021 methodology may affect the yearon-year comparability of the results. The research process was carried out by our group of experts with the utmost thoroughness, detail and precision. Nevertheless, the research is not exempt from human error and there may be overlooked information. The verification of brands’ claims are beyond the scope of this research. Only stakeholders on-the-ground and experts can hold brands accountable when their practices and impacts do not stand up to their claims.

We acknowledge that all processes can be improved and we are open to continuous improvement, which is why we want to know your opinion. If you wish, you can send us an email to: mexico@fashionrevolution.org mfranco@arlenica.org

Section 1 accounts for Section 2 accounts for Section 3 accounts for Section 4 accounts for Section 5 accounts for

33 / 250 13 / 250 74 / 250 47 / 250 83 / 250

All averages in this report represent the mean. The overall average score of the 31 brands is computed by taking the average of the total individual scores of all brands, instead of the average of the average scores per section of the methodology.

When a score may have been rounded off to the closest percentage point in previous editions, we are calculating the year-on-year difference according to the rounded figures rather than to the exact decimal points.w For example, when an average score in a specific section is 17.74%, we round it to 18%. If in last year's report the average score for that section was 12.41%, we rounded it to 12% in the report. Therefore, the yearon-year difference is technically 5.33 percentage points, but if we follow the rounding, it is 6 percentage points.

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

WHO COLLABORATED WITH THIS RESEARCH

This research is the result of a joint collaboration among Fashion Revolution, Fashion Revolution Mexico and Arlenica. The effort came from the joint effort of the following team:

Fashion Revolution

Fashion Revolution Mexico

Arlenica

Carry Somers

Efraín P. Martínez

Lorena Cortés

Global Operations Director

Ciara Barry Policy and Research Coordinator

National Coordinator

Executive Director

Mireille Acquart

Magali Franco

Strategic Alliances Coordinator

Project Coordinator

Liv Simpliciano

Julio Martínez

Policy and Research Manager

Researcher

Lourdes Nava Researcher

Eduardo Patricio Design Coordinator

Abraham Maldonado Designer

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

WEIGHING OF THE SCORES

POLICIES AND COMMITMENTS

GOVERNANCE

This section explores brands’ social and environmental policies for both their own employees and workers in the supply chain, how these policies are implemented, if it has relevant goals and targets it has in place and if brands are reporting annual progress against these targets. For this year’s Index, available points in this section were halved to place more emphasis on outcomes and impacts.

TOTAL POSSIBLE POINTS (250) WEIGHING (%)

Here we look at who on the executive board has responsibility for social and environmental performance, how this is implemented, how social and environmental improvements are linked to employee, CEO and supplier performance, and whether the relevant department can be easily contacted by the public. This year we also looked to see whether there is worker representation on the board.

TRACEABILITY In this section we expect brands to publish supplier lists at three levels: manufacturing, processing facilities and mills, and raw materials. We also look for extra details such as supplier address, number of workers, gender breakdown, number of migrant workers, union representation and when the list was last updated.

KNOW, SHOW AND FIX (DUE-DILIGENCE) Here we review what brands disclose about their due diligence processes, how they assess suppliers against their policies, what are the results of these audits and assessments, what brands do when problems are found, how workers can file complaints and how these are addressed.

SPOTLIGHT ISSUES In this final section, we have increased the weighting significantly compared to previous editions (up from 19.6% last year) in an effort to push harder for disclosure on the most urgent and difficult problems facing the industry. In this section we look at what brands disclose on a number of issues, including of Covid-19 response, living wages, purchasing practices, unionisation, gender equality, collaborative work with indigenous and Afro-Mexican communities in the design and making of garments, overproduction, waste and circularity, sustainable materials, water and chemicals, as well as weather and deforestation.

13.2%

5.2%

29.6%

18.8%

33.2%

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

A GUIDE TO THE FINAL SCORING

0-5%

6-10%

11-20%

There are 250 total possible points. Final scores have been converted into percentages and rounded to the nearest whole number. Please focus on the range in which brands score rather than their individual scores as this gives you a truer reflection of the level of transparency across these large global brands.

21-30%

31-40%

41-50%

51-60%

61-70%

71-80%

81-100% TRANSPARENCIA

Brands scoring between 0-5% are disclosing nothing at all or a very limited number of policies, which tend to be related to the brand's hiring practices or local community engagement activities.

Brands scoring between 6-10% are likely to be publishing some policies for both their employees and suppliers. Those closer to 10% are more likely to be publishing a basic supplier code of conduct, some information about their procedures and limited information about their supplier assessment process.

Brands scoring between 11-20% are likely to be publishing many policies for both employees and suppliers, some procedures and some information about their supplier assessment and remediation processes. These brands will most likely not be publishing supplier lists and won’t be sharing much information, if anything, about our Spotlight Issues.

Brands scoring between 21-30% are likely to be publishing much more detailed information about their policies, procedures, governance, social and environmental goals and supplier assessment and remediation processes. These brands may be publishing a basic list of manufacturers only containing the factory name and address. These brands are unlikely to be sharing information about the outcomes of their supplier assessments or grievance channels. These brands will not be disclosing information on all of the Spotlight Issues but may touch upon a few. No brand in this edition is within this range.

Brands scoring between 31-40% are typically disclosing their first-tier manufacturers as well as detailed information about their policies, procedures, social and environmental goals, governance, supplier assessment and remediation processes. These brands are also more likely to be disclosing partial information on a few of the Spotlight Issues such asT carbon emissions, gender equality, sustainable sourcing of materials and energy, Covid-19 response, as well as professional development plans for their direct employees.

Brands scoring 41-50% are likely to be publishing more detailed supplier lists, many will be publishing processing facilities as well as manufacturers, in addition to detailed information about their policies, procedures, social and environmental goals, governance, supplier assessments and remediation processes and some supplier assessment findings. These brands are also more likely to be addressing some Spotlight Issues, such as carbon emissions; gender equality; sustainable sourcing and materials; energy use, waste and circularity; decarbonisation; water and chemicals.

Brands scoring 51-60% are disclosing all of the information already described in the other ranges and will be publishing detailed supplier lists. These brands will be disclosing most human rights and environmental policies, procedures, social and environmental goals and information about their governance and due diligence processes. They will likely be publishing some detailed information about the findings of their supplier assessments. These brands will be addressing many of the Spotlight Issues such as such as carbon emissions; gender equality; sustainable sourcing and materials; energy use, waste and circularity; decarbonisation; water and chemicals; living wages; waste and circularity in their own operations and supply chains. In Mexico, these brands typically will also be addressing processing facilities and disclosing some suppliers of raw materials such as cotton, wool or viscose and some Spotlight issues such as the Covid-19 response.

No brands score 61-70%, but if they did these brands would be disclosing all of the information already described in the other ranges and will be publishing detailed supplier lists across their entire supply chains.. These brands will also be addressing most of the Spotlight Issues explained in previous ranges as well as racial equality; overconsumption; deforestation and regeneration; purchasing practices; unionisation and collective bargaining.

No brands score 71-80%, but if they did these brands would be disclosing all of the information already described in the other ranges and will be publishing detailed supplier lists for manufacturers. These brands will be publishing detailed information about their due diligence processes and outcomes, supplier assessments and remediation findings. These brands will be sharing comparatively more comprehensive and detailed information and data than other brands in the Index on the Spotlight Issues but still missing significant disclosures on outcomes and impacts.

No brands score above 80% but if they did these brands would be disclosing all of the information already described as well as publishing detailed information about supplier assessment and remediation findings for specific facilities. They would also be sharing detailed supplier lists for at least 95% of all suppliers from manufacturing right down to raw materials. These brands would be mapping social and environmental impacts into their financial business model and disclosing ample data on their use of sustainable materials and would provide the gender breakdown of job roles within their own operations and in the supply chain. We would be able to find detailed information about the company’s purchasing practices, the company’s approach and progress towards living wages for workers in their supply chain. These brands would be disclosing their carbon emissions, use of renewable energy and water footprint from their own operations right down to raw material level. For more information on what a score of 100% means, see question 8 in our Q&As see this link.

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

FULL RESULTS & DETAILED ANALYSIS To access the complete data set click here

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

THE FINAL SCORES

0—5%

6—10%

Coppel

Oggi

Andrea

Cklass

Sears

Aldo Conti

Brantano

Charly

Dorothy Gaynor

Ferrioni

Ivonne

Julio

Liz Minelli

Long Beach Polo Club

Mariscal

Marsel

Men´s Fashion

Milano

Price Shoes

Quarry

Sexy Jeans

TT Blues

Verochi

Yale de México

11—20%

Flexi

El Palacio de Hierro

Liverpool

Ilusión

21—30% 15

31—40% Zara

41—50% Levi’s Strauss de México

*Brands ordered by score of a maximum of 250 points in rounded percentages. When multiple brands obtained the same score, they are listed alphabetically.

51—60% C&A

61—70%

71-100%

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

QUICK OVERALL FINDINGS 24 Brands (77%) score 0-5% No brand esceeds el 60%

3 Brands (10%) score 6-10%

NO. OF BRANDS

1 Brand (3%) score 51-60% 1 Brand (3%) score 41-50%

1 Brand (3%) score 31-40%

1 Brand (3%) score 11-20%

0-5

6-10

11-20

21-30

31-40

41-50

51-60

61-70

71-80

81-90

91-100

FINAL SCORE (%)

TRANSPARENCY

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

AVERAGE SCORES ACROSS THE SECTIONS

13% 1.

9% 2.

5% 3.

4% 4.

6% 5.

POLICIES AND COMMITMENTS

GOVERNANCE

TRACEABILITY

KNOW, SHOW AND FIX

SPOTLIGHT ISSUES

The Policy & Commitments is the section where major brands are most transparent again this year. In this section, the international brand C&A obtained the highest scores, with 93%, followed by Levi's and Zara with 90% and 89%, respectively. This means that they publish almost all their social and environmental policies, covering their own operations and supply chains. Additionally, they disclose how they implement most of the policies, as well as their objectives on human rights and environmental sustainability.

77% (24/31) of the brands, score 0% in the Governance section, disclosing no information about their corporate governance. C&A occupies scores highest in this section, with 77%; Levi's and Zara come in joint second place, with 62%; Liverpool has 31%; Ilusión, 23%; and Coppel and El Palacio de Hierro have 15%, which means that these brands disclose some governance information - typically the board member accountable for human rights and environmental issues, contact details for the department with responsibility for human rights and environmental issues, and/ or how board level accountability on social and environmental issues are implemented in practice

C&A scores highest in Traceability with 65%, followed by Levi's with 43%. Both brands disclose information about their second and third tier suppliers, but lack disclosure on specific items, such as total number of workers, breakdown by gender, migrant workers, a list of suppliers publicly available as a csv or Excel spreadsheet to facilitate the use of this information by trade unions and NGOs, (if any) for deeper levels of the supply chain (processing facilities and raw material suppliers).

This is the section with the lowest level of disclosure in this second edition of the Mexican Index. Just one brand, C&A, scored over half (51%), followed by Zara, with 34% and Levi's, 28%. El Palacio de Hierro is the brand that ranks the best among Mexican brands, with 13%. Three brands – Ilusión, Liverpool and Oggi Jeans– obtained 2% and the 24/31 remaining brands do not disclose information that for this index is considered of relevance on due diligence in their supply chain, such as information on supplier audits and corrective actions to remedy non-compliances or worker complaints.

All brands obtained a score under 50% in this section, which means that there is a lack of transparency on issues that are considered of timely importance, such as purchasing practices, decent wages, unionisation, gender and racial equality, the use of sustainable materials, waste and circularity, water and chemicals, climate change and deforestation. We observe that national brands report more about their answer to Covid-19, but only in terms of protective measures implemented in corporate offices or shops to prevent the transmission of COVID-19. Mexican brands also score higher in disclosing information on employee career development focused on helping employees acquire skills, move to higher positions and increase their salaries.

From the national brands, those that scored well in this section are Ilusión, with 32%, El Palacio de Hierro, with 27%, Liverpool, with 24%, and Oggi Jeans, with 17%. Typically, these brands disclose most of policies on labour and environmental rights in their own operations, some of the supplier policies, and limited information about how they implement these policies in practice. 5/31 brands score within the range of 1-3%: Andrea, Ferrioni, Flexi, Liz Minelli and Milano. This means that they publish very limited information on health and safety, community engagement in sourcing countries, and some of the hiring and employee policies, such as working hours and benefits under the law. 18/31 brands scored 0%, which means that they do not disclose information about their policies and procedures. As was previously explained, we have halved the possible points in this section in comparison with last year to give a more weight to those sections related with results, outcomes and impact.

Although International brands score relatively well in Governance, no brand (0%) discloses that they have worker representation on the corporate board of directors. This is striking as these same International brands have supplier codes of conduct that they require worker representation within supplier facilities. Worker representation at supplier level is beneficial because it allows workers within supply chains to negotiate and give feedback directly to management. Brands should hold themselves to the same standard to ensure representation of their workforce at the highest level of decision-making, given that their decisions have a direct impact upon their workers.

In this section, two national brands, Ilusión (19%) and the footwear brand Flexi (16%) rank, for the first time, ahead of an international brand Zara. Zara is distinctly opaque on Traceability, scoring just1% in the Traceability section. It is encouraging to see Mexican brands Ilusión and Flexi disclose information on their first-tier factories, providing name, location, certificate (if any), and type of supplies used for manufacturing. The remaining 26/31 brands scoret 0% in the Traceability section.

The international brand Zara obtained the highest percentage of disclosure for this Spotlight Issues section, with 49%, followed by C&A, with 40%, and Levi's, with 37%. The brand Ilusión and the department store Liverpool obtained 12%, followed by El Palacio de Hierro with 6% and Andrea, with 5%; Coppell, Flexi, Oggi Jeans and Sears obtained 2% for disclosure and the 19/31 remaining brands remained at 0%.

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

POLICIES AND COMMITMENTS

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

1. POLICIES AND COMMITMENTS APPROACH What human rights and environmental policies and procedures do major brands and retailers publicly disclose?

In this section we reviewed what policies and procedures brands disclose both at company level (as related to the company’s own operations in head offices, stores, warehouses, and owned production facilities) and at supplier level (Code of Conduct or supplier guidance document).

We looked at the following issues: •

Animal Welfare

•

Foreign & Migrant Labour

•

Annual leave & Public Holidays

•

Anti-bribery, Corruption & Presentation of False Information

Freedom of Association, Right to Organise & Collective Bargaining

Wages & Benefits (including social security, insurance, pension, bonus)

•

Harassment & Violence

Waste & Recycling (Packaging/Paper)

•

Biodiversity & Conservation

•

Health & Safety

•

Waste & Recycling (Product/Textiles)

•

Child Labour

•

Homeworking

•

Water Effluents & Treatment

•

Community Engagement

•

Living Conditions/ Dormitories

•

Water Consumption

•

Contracts & Terms of Employment

•

Working Hours & Rest Breaks

•

Discrimination

Manufacturing Restricted Substances List (MRSL)

•

Diversity & Inclusion

•

Maternity Rights / Parental Leave

•

Energy & Greenhouse Gas Emissions

•

Mental Health & Wellbeing

•

Overtime Pay

•

Equal Pay

•

Restricted Substances List (RSL)

•

Forced & Bonded Labour

•

Subcontracting

Social and environmental priorities and measurable, long-term goals We looked to see whether brands are publishing their goals or a strategic roadmap for improving social and environmental impacts across the value chain. We only counted these goals if they were time-bound, measurable and set for 2021 or later. We also awarded points if brands are reporting on annual progress towards achieving these goals. And finally, we checked to see if the annual sustainability report (or relevant data within the annual report) was audited by an independent third party.

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

1. POLICIES AND COMMITMENTS RESULTS

0-5%

6-10%

11-20%

21-30%

31-40%

Andrea

Coppel

El Palacio de Hierro

Flexi

Oggi

Liverpool

Liz Minelli

Ferrioni

Milano

Sears

Aldo Conti

Brantano

Charly

Cklass

Dorothy Gaynor

Ivonne

Julio

Long Beach Polo Club

Mariscal

Marsel

Men´s Fashion

Pices Shoes

Quarry

Sexy Jeans

TT Blues

Verochi

Yale de México

Ilusión

*Brands ordered by score of a maximum of 250 points in rounded percentages. When multiple brands obtained the same score, they are listed alphabetically.

41-50% 32

51-60%

61-70%

71-80%

81-90%

91-100%

Levi’s Strauss de México

Zara

C&A

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

1. POLICIES AND COMMITMENTS FINDINGS HOW MANY BRANDS MAKE THEIR POLICIES KNOWN Discrimination

Commitment to the community

Energy and greenhouse gas emissions

Water consumption

Animal well-being

Equal pay

5 4

Freedom of association, unionisation and collective bargaining

Waste and recycling (products/textiles)

3 2

Forced labour and bonded labor

Maternity rights and parental leave

Mental health and well-being

Biodiversity and conservation

Restricted substances list (RSL)

Harassment and violence

(for example, bonuses, insurance, social security, pensions)

Foreign and migrant workers

Health and safety Wages and benefits

8 6

Diversity and inclusion

Vacations and holidays

Waste and recycling (containers/office/retailer)

Bribery, corruption and submittal of false information

Working and rest hours

4 3 3

4 1

Water treatment and discharge

Child labor

Work contracts and conditions

(previous notices, dismissals and disciplinary measures)

Home office

Life conditions/dormitories

Manufacturing restricted substances list (MRSL)

Overtime pay

Outsourcing

4 5

1 Company policies

2 4

Supplier policies Procedures

2 3

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

1. POLICIES AND COMMITMENTS FINDINGS

CHILD LABOUR

13%

Disclose how policies are implemented

BIODIVERSITY AND CONSERVATION

19%

Publish company policies

10%

Disclose how policies are implemented

Publish company policies

DISCRIMINATION

16%

Publish company policies

10%

Disclose how policies are implemented

DIVERSITY AND INCLUSION

23%

Publish company policies

16%

Disclose how policies are implemented

WAGES AND BENEFITS

HEALTH AND SAFETY

29%

The following charts show the difference between the number of brands that disclose their policies and those that disclose the way in which they are implemented. This information is relevant since it shows the consistency (or lack thereof) between what brands say they do and what they disclose about implementation.

EQUAL PAY

19%

Publish supplier policies

Policy Implementation

13%

Disclose how policies are implemented

19% Publish company policies

10% Disclose how policies are implemented

26%

Publish company policies

10%

Disclose how policies are implemented

VIOLENCE AND HARASSMENT

26%

Publish company policies

13%

Disclose how policies are implemented

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

1. POLICIES AND COMMITMENTS FINDINGS

The data on the Annual Progress of brands do not reflect a direct comparison since the 2020 Index assessed 20 brands, while the 2021 Index has a sample of 31 brands

ANNUAL PROGRESS

EQUAL PAY

UNIONISATION

MATERNITY RIGHTS & PARENTAL LEAVE

WAGES AND FINANCIAL BENEFITS

CHILD LABOUR

19 16

15 13 10 33

2020

2021

% that publish employee policies on Equal Pay

2020

2021

% that publish employee policies on Freedom of Association, Right to Organize and Collective Bargaining

2020

2021

% that publish employee policies on Maternity Rights & Parental Leave

2020

2021

% that publish employee policies on Wages and Financial Benefits (e.g. bonuses, insurance, social security, pensions)

2020

2021

% that publish supplier policies on Child Labour

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

1. POLICIES AND COMMITMENTS ANALYSIS Policies and Commitments continues to be the section with the highest levels of disclosure from brands among all the topics assessed by the Index This year the Index methodology changed. We decreased the score of this section to give more weight to procedures, which is the way in which brands apply their policies and the plans they have to progressively achieve and improve their objectives and commitments on labour, human and environmental rights. When workers are aware of both the policies and procedures, it is less likely accidents or incidents will happen in the workplace. Setting forth procedures in an clear and well-structured manner will support the operations and the way in which the brands respond to crises. By having a well-integrated process management, brands can quickly detect early warning sights, alert employees of the consequences that could be generated, and take the necessary measures to minimise them. This year we found that this section, Policies and Commitments, is the one that reaches the highest percentage in all the sections of the assessment questionnaire, with an average of 13% among the 31 assessed brands. The leading brands

are C&A with 93%, Levi's with 90%, Zara with 89%, followed by the national brands Ilusión with 32%, El Palacio de Hierro with 27% and Liverpool with 24%. We found that the 19 brands that have been assessed since the first year of the Index had an increase of two percentage points in their levels of disclosure in this section (15% in 2021 vs. 13% in 2020). We were pleased to see a significant increase in the levels of disclosure of the national brands Coppel and Oggi Jeans, with a 19% and 17%, respectively, compared to the 5% and 0% of last year. It is worth highlighting the case of the brands Ilusion and Oggi Jeans, which at the beginning of the process had minimal policy disclosure on their websites. By actively engaging with the process and participating, attending to several talks that we gave regarding the Index methodology and use, they achieved significant growth in their levels of disclosure. Ilusion, for example, obtained 32% in this section. In the case of the international brands that have been assessed since last year, like C&A and Levi's, they show slight year-onyear variations in their levels of disclosure. For example, this year C&A did not publish its annual, up-to-date disclosure of progress towards achieving the company's human rights commitments, targets or goals, nor an annual sustainability report that is audited or

verified by an independent third party.. This year Levi's stopped publishing translations of the supplier Code of Conduct in the local language of sourcing countries.

Policies on Labour and Human Rights We see most policy disclosure at company level (related to their own operations) on Health and Safety and Community Engagement, with 9/31 brands (29%); followed by policies on Anti-bribery, Corruption, & Presentation of False Information, Discrimination, Violence & Harassment with 8/31 brands (26%). Diversity and Inclusion with 7/31 brands (23%); Wages and Benefits, Biodiversity and Conservation of Energy, and Greenhouse Gases with 6/31 (19%); followed by Equal Pay, Waste and Recycling (packaging/offices/ retail) and Water Consumption with 5/31 brands (16%); Mental Health and Well-being, Freedom of Association, and Waste and Recycling (product and textiles) with 4/31 brands (13%). Unlike last year, when no brand reported about their wages and benefits, this year 6/31 brands (19%) disclosed said information: Andrea, Ferrioni, Levi's, Liverpool, Oggi Jeans and Zara. Regarding equal pay, we found that five brands (16%) showed evidence of having policies on the matter: C&A, Levi's, Zara

and the Mexican brands Coppel and Liverpool, unlike last edition when only one brand published said information. The National brands, comprising 90% of the sample, do not disclose information on supplier policies related to freedom of association, right to organise & collective bargaining, wages and benefits, overtime pay, and working hours and rest days. Our data 2021 findings reflects a situations known to have affected the working class for years: lack of knowledge on collective bargaining; leaving to the employers' discretion topics like wages, working hours and working conditions. According to the statements of the Ministry of Labour and Social Welfare between 80 and 85 percent of all union contracts in Mexico were executed without the approval of employees," Luisa María Alcalde, February 2020. According to the Federal Labour Law, in Mexico it is the right of all unionised workers to know the content of their collectively bargained work contracts and to democratically elect their union representatives. Both unions and brands have an obligation to inform workers about the agreements made that set the labour conditions.

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

Regarding unionisation and collective bargaining, we found that 4/31 brands (13%) disclose a policy on freedom of association, unionisation and collective bargaining, as well as how the policy is implemented in their own operations. Nevertheless, this topic continues to lack transparency, which may indicate that the labour conditions of companies and unions are being agreed without workers' knowledge or active engagement in the negotiations.

Regulating Homeworking According to the International Labour Organisation (ILO), in 2019 there were 260 million people working from home in the world, which accounts for 7.9% of world employment. This figure corresponds to a period previous to the Covid-19 pandemic, which has accelerated working-from-home significantly. It is estimated that the current figures far exceed those of 2019. The increase could include direct employees of brands, who can do office work from home, and supply chain homeworkers. In light of this, this year we included an indicator on supplier homeworking,where we observed that only 3/31 brands (10%) have a supplier policy on homeworking, but only 1/31 brands (3%) disclose how the policy is carried out. We hope that given the recent reforms done to the Federal Labour Law, which regulates outsourcing, brands will increase their disclosure and regulation

of outsourcing. Doing so would benefit more than 4 million Mexican workers who, according to the National Institute of Statistics and Geography (INEGI, because of its initials in Spanish), are homeworkers. The garment and footwear industry in Mexico is still developed in a traditional way, with small family workshops outsourced by suppliers who, in turn, work for big brands.

Environmental Commitments and Achievements This year we observed slight progress in the disclosure of brand commitments to decrease the environmental impact of their operations. 5/31 brands (16%) disclose information on Waste & Recycling (Packaging/Office/Retail), and 6/31 brands (19%) disclose Energy & Greenhouse Gas Emissions policies, followed by 3/31 brands (10%) disclose their policies by Restricted Substances List. The progress observed in waste and recycling could be linked to the recent modifications on the Law for Solid Waste of Mexico City, which prohibited the use of plastic bags in 2020. Nevertheless, the international brands C&A, Levi's and Zara, and only one national brand, Ilusión, are the ones that disclose annual, up-to-date disclosure of progress towards achieving the company's measurable, time-bound and long-term environmental commitments.

Similarly to the Global Index, this Index finds that brands reveal more about their policies than about the way in which they put them into practice and the outcomes of their efforts to approach social and environmental matters.

Percentage of Brands Disclosing Company Policies 2020

2021

Percentage of Brands Disclosing Suppliers Policies 2020

Wages and Financial Benefits 19%

2021

Child Labour 19%

Freedom of Association, Right to Organise & Collective Bargaining

15%

Community Engagement

16%

10%

Waste & Recycling (Packaging/Office/ Retail) 13%

Contracts & Terms of Employment 19% 10%

Health and Safety

Health and Safety 29% 25%

23% 15%

Does the company publish whether the policy (or policies) is part of the purchase agreement or if a supplier signature is required? 26% 15%

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

VIEWPOINT: ARROPA INITIATIVE

FOR A SYSTEMIC CHANGE IN THE GARMENT INDUSTRY

PATRICIA CARMONA PROGRAMME MANAGER OF FUNDACION AVINA

Work is central to human life, not only because it provides a living, but because of its implications to the growth and wellbeing of communities and society in general. In the current system, it works as a key that gives us access to many other rights. In the current economic system, the pursuit of maximizing profits in a hypercompetitive market framework provides incentives to breach labour rights. The clothing industry in Mexico reflects the consequences of this economic model all throughout its value chain: low wages linked to production capacity; non-specialised workforce that lack a guarantee about due working conditions, and other violations of labour rights. Avina Foundation firmly believes that the best way to face this challenge is from a care paradigm, which for the clothing industry means facing the harmful effects of clothing manufacture and consumption with innovative strategies to protect the environment and, above all, to take care of people, i.e., female and male workers.

This should be done by promoting plans that bring together a full exercise of rights and income generation, showing that it is possible to move to a just and regenerative economy.

Our times are marked by labour reform and the United States-Mexico-Canada Free Trade Agreement (USMCA) which brings us the opportunity to promote this change. How are you taking part?

This interest gave rise to the Arropa Initiative, in which the Avina Foundation and its partners implement projects, like the Fashion Transparency Index Mexico, that seek to achieve a systemic change in the industry to transform business practices, on one side, and the public action in favour of decent labour, on the other.

To know more, visit

Yet, to achieve and maintain business practices that respect labour rights and legislation that protects decent labour over time, it is necessary to have a reinforced ecosystem for the defense of labour rights in which all stakeholders – civil society organisations or collectives, private sector, government, academia, media, workers' organisations – actively taking part in a collaborative process focused on appraising work and protecting labour rights.

https://iniciativa-arropa.avina.net

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

GOVERNANCE

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

2. GOVERNANCE APPROACH

Who in the company is responsible for social and environmental impacts? In this section, we wanted to understand who in the company is accountable for social and environmental performance and impacts. First, we looked to see if brands publish direct contact details for a relevant department, such as the sustainability or corporate responsibility team. We also looked for the name of a board member who is responsible for social and environmental issues and how this oversight is implemented. This year we have added two new indicators looking at disclosure on: •

Worker representation on the corporate board of directors

•

Financial investments in sustainability efforts as a percentage of total budget or revenue

We looked to see if brands are disclosing how their employees beyond the sustainability team (e.g. designers, buyers, sourcing managers and so on) are incentivised (via performance reviews or bonuses) to achieve improvements in social and environmental impacts. We looked for the same information to be shared linking CEO and executive level pay and incentives to social and environmental impacts.

Finally, we also looked to see if suppliers’ incentives are linked to improvements in human rights impacts and environmental management. The types of incentives we were looking for included brands committing to long-term contracts, increased order size, price premiums and reducing the number of audits.

CANDOR: Juan Carlos, Maestro Tejedor © José Reyes

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

2. GOVERNANCE RESULTS

0-5%

6-10%

11-20%

21-30%

Aldo Conti

Coppel

Andrea

El Palacio de Hierro

Brantano

Charly

Cklass

Dorothy Gaynor

Ferrioni

Flexi

Ivonne

Julio

Liz Minelli

Long Beach Polo Club

Mariscal

Marsel

Men´s Fashion

Milano

Oggi Jeans

Price Shoes

Quarry

Sears

Sexy Jeans

TT Blues

Verochi

Yale de México

Ilusión

31-40% 23

Liverpool

*Brands ordered by score of a maximum of 250 points in rounded percentages. When multiple brands obtained the same score, they are listed alphabetically.

41-50% 31

51-60%

61-70%

71-80%

Levi’s Strauss de México 62 Zara

C&A

81-90% 77

91-100%

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

2. GOVERNANCE FINDINGS HOW EASY IS IT TO CONTACT A BRAND ON SUSTAINABILITY ISSUES?

19%

Publish direct contact details for sustainability department

HOW MUCH DOES THE BRAND SPEND ON SUSTAINABILITY?

BOARD LEVEL ACCOUNTABILITY:

16%

Publish board member responsible for human rights and environmental issues

13%

Publish how board accountability is implemented

Worker representation on the corporate board of directors

ARE INCENTIVES TIED TO ENVIRONMENTAL AND HUMAN RIGHTS PROGRESS?

10%

Disclose amount spent on sustainability efforts as % of overall budget

Disclose employee incentives linked to human rights and environmental impacts

Disclose executive pay/bonuses linked to human rights and environmental impacts

Description suppliers incentives linked to working conditions and environmental impacts

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

2. GOVERNANCE ANALYSIS The adverse economic environment derived from the pandemic has left serious impacts on the manufacturing industry in general and in the textile industry, in particular, with a loss of over 26 thousand jobs, according to the

President of the National Chamber of the Clothing Industry (CANAIVE,

because of its initials in Spanish), and over 13 thousand lost jobs in the footwear industry during April last year, according

to the President of the Chamber of the Footwear Industry of the State of Guanajuato (CICEG, because of

its initials in Spanish). Because of this situation, the directors of the big brands are currently facing strong external pressure demanding for change in the business models and in the relation they have with their different stakeholders - workers, suppliers, consumers and the community where they operate. The commitment brands currently reside in having a corporate government that goes from focusing on shortterm financial results to the creation of long-term value. Governance is the starting point that gives direction to the company, and it is the single most important factor to make it possible for a brand to be responsible for the impact of their decisions and activities.

Worker Representation and Investment in Sustainability

initiatives (0/31) it is not possible for us to scrutinise these statements.

This year the Governance section includes two new indicators: one related to knowing whether workers are represented in the Boards of Directorsof the brands and, the other disclosure of the percentage of total budget or revenue spent on sustainability. We observed that 0/31 brands (0%) show information on these two new indicators.

Like last year, the Governance section is the second one with the highest disclosure percentage, 9%. Nevertheless, only 7/31 brands (23%) show data on their corporate governance: C&A with 77%, followed by Levi's and the Spanish brand Zara, with 62%, Liverpool with 31%, Ilusión with 23%, and Coppel and El Palacio de Hierro with 15%. The other 77%, i.e., 24/31 brands, do not disclose Governance information we are looking for.

Brands should guarantee the representation of workers at the highest decision-making level since these decisions impact workers directly. It is disappointing to see that 0/31 of the brands included in this research show transparency regarding such an important matter. This is striking as some of these brands have supplier codes of conduct that require worker representation within supplier facilities. Worker representation at supplier level is beneficial because it allows workers within supply chains to negotiate and give feedback directly to management. Brands should hold themselves to the same standard to ensure representation of their workforce at the highest level of decision-making, given that their decisions have a direct impact upon their workers. Similarly, many fashion brands (including the brands assessed in this research) state that sustainability is an absolute priority; nevertheless, none of the 31 brands show transparency regarding the amount of money they invest in sustainability

Communication & Whistleblowing Channels 6/31 brands (19%) disclose contact details for the department the company that has responsibility for human rights and environmental issues, and 4/31 brands (13%) publish a description of how board level accountability on human rights and environmental issues is implemented in practice. From the Mexican brands, only Ilusión and Liverpool discloses name of board member responsible for human rights and environmental issues in the business, but only Liverpool publishes description of how board level accountability is implemented in practice. According to the Mexican Association of Online Sales (AMVO, because of its initials in Spanish), in 2020 e-commerce showed a growth of 81%. Even though

brands could use this to focus on transparency and provide consumers (and any stakeholder) with communication channels t with the people in charge of human rights and the environment, we continue to observe that their websites are mainly purchasing channels. The "Customer Experience Excellence Report" carried out by the consulting firm KPMG, for which 5000 Mexicans were interviewed between April and May 2020, after the pandemic started, showed that 56% of national consumers look for brands with social and environmental awareness. We hope that every year brands will use the competitive advantages that come with technology to turn transparency and accountability into a culture that allows them to give visibility to their corporate social responsibility actions and, thus, have a greater connection with all stakeholders.

Incorporating human rights and environmental performance into purchasing practices This year, Levi's shows progress in its disclosure levels for this section by disclosing how employees beyond the sustainability team’s incentives are tied to improvements in human rights impacts and environmental management. This represents an increase of 12 percentage points for the brand, compared to the results it had in the 2020 Index (62% in 2021 vs. 50% in 2020).

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

T R A N S PA R E N C Y Only the international brands (C&A, Levi's and Zara), i.e. 3/31 (10%) assessed brands, disclose how executive (e.g. CEO, CFO, president) pay, bonuses and/ or performance reviews are tied to improvements in human rights impacts and environmental management. Even fewer, just 2/31 brands (6%) describe how suppliers incentives are tied to improvement in good labour practices and environmental management (for example, long-term commitments to purchase, longer contracts, increased orders, price premiums, fewer audits). Many of the main clothing and footwear brands in Mexico are family businesses. With this Index this includes: Flexi, Charly and Ferrioni. One of the main challenges faced by family companies is to guarantee that any family member who has a position in the company is fully competent for the role and has the required technical and managerial skills, showing that those skills, rather than being related to the owners, are strategic for the business. A study carried out by the New York University Stern Center for Sustainable Business (Stern) revealed that the Boards of Directors of companies lack experience on environmental, social and governance topics. Only 6% of the members of the boards of directors of the Fortune 100 have experience on environmental matters.

Covid-19 has proven the need for solid governance in critical times. Brands are not disclosing the information required to hold the corresponding parties accountable when problems arise. The impact of Covid-19 on workers and the climate crisis pressure indicate that we do not have time to lose by trying to "prove" responsibility to hold a brand to account. A greater disclosure of the governance data will help for people in charge of said topics to be held accountable since anyone would be able to evaluate whether they have the required experience and/or act to approach the human rights problems in a comprehensive and timely manner.

FAIR TRADE WE L L - B E I N G LIVING WAGES EMPOWERMENT GENDER EQUALITY BUSINESS ACCOUNTABILITY SUSTAINABLE LIVELIHOODS GOOD WORKING CONDITIONS ENVIRONMENTALL SUSTAINABILITY

A CLEAN, SAFE AND FAIR FASHION INDUSTRY

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

TRACEABILITY

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

3. TRACEABILITY APPROACH What is the supply chain of the brand? Where are they located, what materials are supplied – from cotton to the factories where garments are manufactured – and under what conditions do people work? This section focuses on whether brands are publishing supplier lists from manufacturing to raw material level and what level of detail brands are disclosing about these suppliers.

We looked for supplier lists at three different levels:

What level of detail is provided? Are brands sharing information such as:

•

Are brands disclosing the factories where their clothes are made, often referred to as the first-tier or tier 1 manufacturers — in other words, the facilities with which brands have a direct relationship and typically do the cutting, sewing and final trims of products?

•

Name of parent company

•

Address of the facility

•

Products/services

•

Approximate number of workers

•

Gender breakdown of workers

Are brands disclosing processing facilities further down the supply chain — knitting, weaving and spinning mills, wet processing, embroidery, printing and finishing, dye-houses, tanneries and laundries?

•

% of migrant or contract workers

•

If the facility has a trade union

•

If the facility has an independent worker committee

•

Certifications the facility holds, if any

Are brands disclosing their suppliers of raw materials — primary materials such as fibres, hides, rubber, chemical and metals?

•

If the list includes at least 95% of its supply chain

•

If the list is in machine-readable format (csv, json, xls)

•

If the list was updated within the past 6 months

•

Disclosing factories, processing facilities and raw material suppliers.

•

We also checked whether brands disclose information about tracing at least one raw material supply chain such as viscose, cotton, wool or leather.

New for this year, we added an indicator on whether or not brands disclose what relevant certifications, if any, manufacturers and processing facilities may hold. At the raw material level, we added an indicator on the name of the specific facility or farm.

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

3. TRACEABILITY RESULTS

0-5%

6-10%

11-20%

21-30%

Zara

Ilusión

Aldo Conti

Flexi

Andrea

Brantano

Charly

Cklass

Dorothy Gaynor

El Palacio de Hierro

Ferrioni

Ivonne

Julio

Liz Minelli

Liverpool

Long Beach Polo Club

Mariscal

Marsel

Men´s Fashion

Milano

Oggi

Price Shoes

Quarry

Sears

Sexy Jeans

TT Blues

Verochi

Yale de México

31-40%

*Brands ordered by score of a maximum of 250 points in rounded percentages. When multiple brands obtained the same score, they are listed alphabetically.

41-50% Levi’s Strauss de México 43

51-60%

61-70% C&A

71-80% 65

81-90%

91-100%

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

3. TRACEABILITY FINDINGS DISCLOSING FIRST-TIER MANUFACTURERS

13%

Publish a list of their first-tier manufacturers

Include the address

Include whether the factory has a trade union

Publish at least 95% of their manufacturers

PROCESSING FACILITIES

6% What certifications the facility holds

RAW MATERIAL SUPPLIERS

Publish processing facilities beyond the first tier

Include the address

What certification the facility holds

List is publicly available as a csv or Excel spreadsheet in order to make this informatio easy to use for trade unions and NGOs

3% Publish selected raw material suppliers

0% Disclosure covers more than one raw material type

10% Disclose that brand is tracing at least one raw material supply chain

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

3. TRACEABILITY ANALYSIS Complex, opaque supply chains and their impacts For a piece of garment to reach the store window, it needs to go through a long process of creation, which goes from cropping the cotton, spinning the fibers, knitting and pre-treating the fabric (washing, bleaching, removing the fat of natural fibers, dyeing and printing, finishing, design and manufacturing), up to distributing from the factory of the brand to retailers. This whole process gives an account on how wide and complex supply chains are in the fashion industry. A piece of garment we see at the store may have been made with cotton cropped in Mexico or India and manufactured in a country in Asia. Fashion’s comlex value chains are linked to a high carbon footprint, an intense use of water and chemicals. As well as a significantenvironmental impact, there are serious labour violations, such as illegally low wages, child exploitation and child labour, unsafe workplaces, excessive working hours and a lack of labour benefits such as pension and social insurance contributions.

Most fashion brands do not have factories of their own and their business models consist of outsourcing suppliers, who, in turn, hire others. Nevertheless, it is the brand’s responsibility to know and, most of all, publicly disclose all the suppliers that participate in their supply chain. Demanding greater transparency in the supply chain is essential, since it allows brands to identify, assess and mitigate real or potential adverse impacts on human and environmental rights. According to the Compact of the United Nations and other international organisations, traceability in the fashion industry is a condition required to reduce its environmental footprint.

Traceability data remains far too low Unfortunately, this year the results for the section on Traceability in the Supply Chain continue to show very low levels of disclosure. The section average is 5%, one percentage point lower than in 2020 (6%). The brands that disclose traceability data are: C&A (65%), Levi's (43%), Ilusión (19%), Flexi (16%) and Zara (1%). The other 26/31 brands (84%) had a percentage of 0% in the Traceability section. 4/31 brands (13%), C&A, Flexi, Ilusión and Levi's, publish their first-tier suppliers and their address. 3/31 brands (10%), C&A, Flexi and Levi's, the type of products or services they procure from their first-tier suppliers. Only 2/31 brands (6%), Flexi and Ilusion, have a certification.

Only 2/31 brands (6%), C&A and Levi's, publish a list of their first-tier suppliers as a csv or Excel spreadsheet in order to make this information easy to use for trade unions and NGOs. A machinereadable format is vital for stakeholders (i.e., labour rights groups, NGOs, etc.) to be able to access and scrutinise the information without having to trawl through and reformat the data to make use of it, or without going through long extraction processes. By having access to machine-readable lists, information is easier to consult for a larger number of stakeholders. Again, only 2/31 brands (6%), Ilusión and C&A, disclose the percentage of first-tier factories included in their list of suppliers and whether the list covers more than 95% of their suppliers. Another relevant consideration is how often updated supplier lists are published, since supply chains are constantly changing. Only 2/31 brands (6%), C&A and Levi's, disclose whether the list has been updated in the last six months. As we go deeper into the second and third-tier suppliers, which include processing facilities (ginning and spinning, knitting, outsourcing, dyeing and wet processing, tanneries, embroidery, etc.) and those who supply raw materials, such as fibers, leather, rubber, dyes, metals, etc., the level of detail and disclosure decreases and is more limited.

In the second tier of the supply chain only 2/31 brands (6%), C&A and Levi's, disclose the address, type of products or services, number of workers, whether their list of suppliers is in machine-readable format and whether the list was updated in the last six months. Transparency decreases even more at raw materials supplier level. Only 1/31 brand (3%), C&A, discloses the percentage of their suppliers of raw material list covers, and whether the list has been updated in the last 12 months. Disclosure on traceability of suppliers of raw materials is generally low; 3/31 brands (10%) make a follow-up of at least one raw material, among them are C&A, Levi's and Zara. We want this level of disclosure to urgently increase, especially among Mexican brands, since we know that forced labour occurs more frequently at the deepest levels of supply chains, such as cotton fields, where workers are more hidden and are more vulnerable. A research carried out by the BBC in the Uyghur region of XUAR, located in Northeast China, which generates 85% of the cotton of said country and 20% of the cotton of the world, reveals the confinement conditions in which thousands of workers live, being forced to collect cotton and work in the textile factories. As a response to said situation, some international brands set forth policies to demand that no article that came from China used cotton from XUAR.

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

The lack of unionisation in Mexico and the invisibility of vulnerable groups, such as women and migrants, demonstrates the relevance of traceability in the supply chain No brand captured in this Index is disclosing detailed traceability data at all stages of production, such as: the number of migrant or contract workers, sex-disaggregated breakdown of workers, whether the facility has a trade union The above information is critical, since, due to the recent reforms made to the Federal Labour Law and the enforcement of the United StatesMexico-Canada Agreement (USMCA) the topics of freedom of association, collectively bargained contracts and discriminiation and violence in the workplace )including gender inequality) became especially relevant due to the integration of provisions that companies must comply with. These issues need to be urgently addressed. Despite the increase in the number of Mexican women in the workforce, their economic participation continues to be lower than that of men. The economic participation rate for men (after 15 years old) is 77.1%, while that for women is 44.9% (INEGI, 2019), below the average of 50% in Latin America and the Caribbean (ILO, 2018).

Taller: Larrainzar

Conclusion One issue with the lack of transparency in fashion supply chains is that it means brands are not immediately accountable, with a clear responsibility for their impact on direct operations and the entire supply chain. Arlenica and Fashion Revolution wish to contribute through initiatives such as the Fashion Transparency Index, to promote and increase transparency and traceability across fashion’s entire supply chain. We know that full traceability and transparency are important since it is in the deepest levels of the supply chain when the greater injustices prevail.

We hope that the National Human Rights Program 2020-2024, issued by the Ministry of the Interior, which in its section 3.6.5. sets forth the promotion of due diligence on human rights in public business activities, whether private or mixed, transparency and accountability in value chains, will be the starting point for the change in paradigms that we want to see in the fashion industry in our country.

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

CASE STUDY:

TRANSPARENCY IN ACTION Community Engagement as a Transformation Model One of the most pressing problems in the fashion industry is the insatiable thirst for change and novelty. It is no secret that fashion is seen as a shortlived phenomenon with a shelf-life in these fleeting trends and dynamics. With time, this fully influences consumption habits, which result in bad practices and the devaluation of work, in unethical commerce, overproduction and the lack of awareness of circular and sustainable fashion. This ecosystem may seem pessimistic; yet, nowadays, there are several initiatives that offer a positive alternative not only to the fashion industry, but to handmade work. One is Viernes Tradicional (Traditional Friday), an initiative founded in 2014 by NGO impacto, whose purpose is to create paths towards fair trade, the valuation of handmade work and the awareness about a respectful use of traditional textiles. In an effort to uphold the crafts sector, since its creation in 2014, Viernes Tradicional worked on the prevention of bad practices, such as cultural appropriation, but also on

providing a space and a platform that amplifies the voices of craftsmen and craftswomen and creating dialogues on innovation, empowerment and the valuation of handmade work. By acknowledging that ancient knowledge is passed from one generation to another, Viernes Tradicional is a collective movement integrated by members of the crafts sector, as well as by stakeholders and agents of change interested in the topics approached by this movement. We seek to share experiences, information and, above all, knowledge about handmade work, from the use of certain techniques to the follow-up of cases of cultural appropriation. By applying a collective communications strategy designed under a multidisciplinary approach, Viernes Tradicional promotes, values and provides information and the use of handmade textiles as a way to transfer culture. This has given rise to synergies among people, achieving a diverse ecosystem in the wide sense of the word, where each voice contributes to the project and makes it better.

Viernes Tradicional: Emiliano Villalba

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

Thanks to the research and direct contact work made between 20 active artisan groups collaborating with NGO impacto, as well as with indigenous people who use Viernes Tradicional, the project has collected valuable and defining information to document, disseminate, give visibility and appreciate the collective knowledge. This will also allow innovation and the migration of culture to new spaces that are just as valuable to the artisan communities of Mexico.

Francisca and the VT team created digital material that allowed for the valuation of the origins of the bag, instead of the brand just appropriating the design and culture. Other empowering initiatives have emerged from NGO impacto; specific examples include: •

One example of collaborations is the work done this year with Francisca Pérez Gómez, a craftswoman of San Andres Larrainzar, to overcome cultural appropriation that the firm Marni made of the hammock bags designed by her in 2010. With an approach based on respect, trust and knowledge-sharing,

•

Erika Raquel @erika_entre_hilos_de_colores

A series of talks carried out in 2020 titled Intertwining Voices. The purpose was discussing and generating critical thinking on good practices and commercial collaborations in the handmade textile sector. Indigenous people, academics, people with experience on fashion brands and the public took part in all five talks of Intertwining Voices. The outcome of this was the Decalogue of Handmade Textile Knowledge; which presents 10 key points to collaborate in a respectful and horizontal way with the craftsmen and craftswomen of the country. By applying the Decalogue, NGO impacto has promoted the first social venture called Juxta Nation, an e-commerce platform that seeks to empower and foster visions of craftswomen through a fair and ethical trade. It is differentiated by the fact that artisan cooperatives themselves are the founding partners and owners of the project, which means that it will promote, in the long term, the free determination of communities, and will be managed by the women themselves.

•

A mapping of cases of cultural appropriation, which is fed with complaints from the community and which works as a registry to observe and monitor the most affected communities. The tool has registered over 50 cases of cultural appropriation between 2014 and 2021, which suggest that dissemination, valuation and awareness continue to be critical to stop the problem.

In this sense, the projects and initiatives of NGO impacto -which now has a community of almost 50 thousand people in social networks -raises awareness through horizontality, respect and harmony to fight and resist overconsumption, such as haggling and cultural appropriation, which are the by-product of a massive and impersonal consumption structure that is even harmful to the environment. Thus, we call on everyone to share their pictures with the hashtags #ViernesTradicional, and to get involved in the process of creating pieces and asking about their origins, so we can generate direct knowledge from the craftsmen and craftswomen of the country. By using the hashtags #ElOrigenSíCuenta (#OriginsDoCount) or #QuiénHizoMiRopa (#WhoMadeMyClothes) not only do we start to raise awareness about the origins of the garment pieces, but we acknowledge the other person and we create a deeper link with what we wear.

Damián Gerardo

@damisen

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

KNOW, SHOW, FIX

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

4. KNOW, SHOW, FIX APPROACH

What do the main brands and retailers communicate about their due diligence on human rights and environment?

How do they assess compliance with standards by suppliers? This year we strengthened the requirements for the indicators on due diligence processes, giving points only when it covers both human rights and environmental risks. We did not assign any point for disclosing risks or actions implemented to address risks unless the due diligence process itself was previously disclosed.

KNOW

FIX

We measure disclosure on human rights and environmental due diligence to understand what steps are being taken by brands to identify risks, impacts, and environmental and human rights violations in their supply chains. We also look for information on how brands assess their suppliers to guarantee that they comply with their Codes of Ethics and policies (generally, through audits to factories). This year, we added for the first time an indicator to measure the number of audits that included a union representative.

We analysed what is published by brands on how they remediate the environmental and human rights violations that occur across their supply chain. We also verified if brands publish an anonymous claim mechanism, both for their employees and the workers in the supply chain, and if they disclose the results of their efforts to remediate violations and complaints. This year we adjusted the indicator which asks if brands report their supplier exit strategies to include whether or not the exit strategy also included an assessment of possible adverse impacts on human rights.

SHOW We assessed whether brands disclose the results of their supplier assessments, either as a summary of the issues found in the factories or at a more detailed level (for example, with the findings in individual factories).

In this section, we awarded points if brands disclose information such a: •

How the brand works to identify and address both human rights and environmental risks, impacts and violations in its supply chain (its approach to conducting due diligence)

•

How workers, unions and other affected stakeholders are involved in the due diligence process

•

How suppliers are assessed against the brand’s policies

•

The process for taking on new suppliers

•

The process for exiting a supplier

•

If brands conduct supplier assessments beyond the first tier

•

If supplier assessments include off- site worker interviews and, if so, how many workers are interviewed

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

4. KNOW, SHOW, FIX RESULTS

0-5%

6-10%

Ilusión

Liverpool

Oggi

Aldo Conti

Andrea

Brantano

Charly

Cklass

Coppel

Dorothy Gaynor

Ferrioni

Flexi

Ivonne

Julio

Liz Minelli

Long Beach Polo Club

Mariscal

Marsel

Men’s Fashion

Milano

Price Shoes

Quarry

Sears

Sexy Jeans

TT Blues Jeans

Verochi

Yale de México

11-20% El Palacio de Hierro

21-30% 13

Levi’s Strauss de México 28

31-40% Zara

*Brands ordered by score of a maximum of 250 points in rounded percentages. When multiple brands obtained the same score, they are listed alphabetically.

41-50% 34

51-60% C&A

61-70% 51

71-80%

81-90%

91-100%

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

4. KNOW, SHOW, FIX FINDINGS KNOW: DUE DILIGENCE PROCESSES

10% Describe their human rights and environmental due diligence process

KNOW: SUPPLIERS ASSESSMENT

13%

Disclose how the affected stakeholders are involved in the due diligence process.

Disclose the outcomes of steps taken to address violations

Describe the process for assessing conditions in supplier facilities

Discloses the percentage of announced, semi-announced and unannounced audits.

Discloses how many audits included a trade union representative.

10%

Disclose the process for supplier remediation

Publish a confidential grievance mechanism for supply chain workers

SHOW: PUBLISHING AUDIT RESULTS

Discloses a summary of the findings in the first tier

Discloses a summary of the findings at the raw materials level

FIX: REMEDIATION ISSUES

6% Disclose the selected audit findings by named first tier facilities

Publish data about the number of grievances filed, addressed and resolved in the supply chain

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

4. KNOW, SHOW, FIX (DUE-DILIGENCE) ANALYSIS Major brands included in the Index continue to lack transparency around their due diligence processes and procedures Due diligence is a process through which companies identify, prevent, mitigate and repair their real and potential adverse impacts. Due diligence can be included in wider corporate risk management systems, as long as it goes beyond a simple material risk identification and management for the company itself and includes the problems that arise all throughout the supply chain, focusing on the identification of risks with greater impact for workers, farmers and other stakeholders. According to the guide of the

Organisation for Economic Cooperation and Development (OECD) on due diligence for responsible supply chains in the dressmaking and footwear industry, the measures taken by a company to carry out due diligence must be proportional to the probability and seriousness of the damage. The operations of the companies in the sector should be aligned with government policies so as to strengthen the mutual trust between companies and communities where they operate.

In the section Know, Show, Fix we want to know what efforts are the brands applying in their supply chain to identify, prevent and mitigate impacts and risks that may violate human and environmental rights throughout the supply chain, beyond the first and second tiers. In Mexico, it is necessary to increase the efforts towards Due Diligence if we consider that our country entered the international system of protection to human rights by signing and ratifying different agreements mainly resulting from the Universal Declaration of Human Rights (1948), which works as the foundation to consolidate international instruments that oblige states to respect the universally acknowledged human rights (OHCHR, 2003). Simultaneously, Mexico is committed to compliance with the Paris Agreement on Climate Change, which has the objective of working ambitiously, progressively and transparently to maintain global temperature below 1.5 ºC. It is necessary for major brands and retailers to build relationships with their suppliers beyond a business transaction. This way, mutual trust can be established that will help achieve the objectives related to the mitigation of environmental and human rights impacts."

Our findings reveal that, with an average score for the Know, Show, Fix section of only 5%, brands lack transparency on their due diligence. 27/31 brands (87%) had a score under 10%, which means they disclose little to no information on due diligence to identify and remediate violations to human and environmental rights in their supply chains. International brands have the highest scores. The brand C&A had a score of 51%, followed by Zara with 34% and Levi's with 28%. It is worth mentioning that the brands C&A and Levi's show a decrease in their scores, from 8 and 15 percentage points, respectively, when compared to the results they obtained in the 2020 Index (C&A, 59% and Levi's, 43%). This responds to the changes made to the methodology for this section. The Mexican brand with the highest score, for the second time, is El Palacio de Hierro, with 13%, an increase of 3 percentage points when compared to the results obtained in the 2020 Index (10%). Through a Code of Ethics and Conduct for suppliers, it discloses the guidelines to set forth a business relationship. Besides, it publishes a complaint mechanism and the way in which it is applied to its own employees and suppliers.

Regarding the approach of brands to carry-out due diligence on human and environmental rights in their supply chain, we found that only 3/31 brands (10%), C&A, Levi's and Ilusión, disclose this information. Significantly, none of the 31 brands assessed disclose how female workers, women's organisations, human rights female defenders and female experts on gender topics participate in all the phases of due diligence on human rights. This is particularly relevant in the Mexican context where, according to the INEGI, 45 out of every 100 women have been victims of violence, discrimination or harassment in the workplace. We encourage brands to disclose this information so that laggards can learn how to properly implement inclusive due diligence processes that put women and other vulnerable groups at the center.

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

KNOW Due diligence can be included in the entrepreneurial risk management systems as long as it includes the issues that arise in the supply chain. For that, it is important that companies have a Code of Conduct or Ethics that sets forth the guidelines for trade interactions with suppliers. It is necessary that brands publish a description of the functioning of the audit process for the facilities of their suppliers. By considering a visit previous to the hiring of a service or the beginning of the operations to guarantee that the working conditions are optimal and safe, it is necessary to set forth revision criteria that not only consider the state of machinery or tools, but that information is gathered directly from workers. In the results of this report, we found that 4/31 brands (13%), C&A, El Palacio de Hierro, Levi's and Zara, publish their policies related to audit processes. Only the international brands, 3/31 brands (10%) disclose the criteria to inspect processing facilities before the start of the activities, and 2/31 (6%) disclose the percentage of audits announced or unannounced to suppliers. A revealing piece of data is that none of the 31 assessed brands reports on the percentage of audits in which there was a union representative. It is important that this information is disclosed as it allows concerned stakeholders to

understand what percentage of audits included worker voice, which the union representative provides. Mexican brands must track this data and publicly disclose it to help worker rights groups on the ground and other concerned stakeholders to access remediation and justice.

SHOW In the chart shown in this subsection we can see, in general terms, that 2/31 brands (6%) disclose a summary of the findings from their audit processes in their first-tier facilities. Likewise, 6% show the results of audits applied to processing centers beyond the first tier factories. Only 1/31 brands (3%) discloses the results of audits made to their raw materials suppliers. We can observe that over 90% of the assessed brands do not disclose information on their auditing processes. If brands do not disclose this information, it means that stakeholders cannot scrutinise the scope of the methodology and identify gaps in the assessment. Companies need to strengthen their audit mechanisms with the purpose of finding areas of opportunity to improve the workplaces of facilities across their supply chains. If brands show the audit mechanisms and their results, actions can be designed to mitigate environmental, labour and health risks for workers. Disclosing relevant information on the matter makes it easy to generate

new policies based on verifiable indicators that allow an improvement in the labour conditions and mitigate environmental and health impacts.

Major brand disclosure supply chain audit result. At tier level Beyond first tier (processing facilities and textiles mills) Raw materials level

Summary of audit findings -without naming facility: 6% 6% 3%

Facility-level rating by named facility: 0% 0% 0%

Selected audit findings by named facility: 6% 3% 0%

Full audit reports by named facility: 0% 0% 0%

FIX Once brands carry out their audit processes, they must use the findings to develop a corrective action plan. t The commitment should not be on the short term and audits should not be sporadic, but continuous, in order to be able to follow-up and guarantee that the working conditions are improving in line with recommendations and that actions are implemented to achieve better practices that mitigate the environmental impacts. In this subsection we continue to find that international brands, C&A, Levi's and Zara, are the only brands disclosing information on the reparation process when lack of compliance is observed in the facilities of suppliers. For example, corrective action plans that include warnings to interrupt work, warning letters, supplementary training and policy review. Disclosure is lower, with 2/31 brands (6%) showing how workers, producers, unions and any other strategic allies are involved in the development and implementation of corrective action and remediation plans. This year we decided to include indicators related to the exit strategy for suppliers. This means that we are interested to know the processes for ending business with a supplier, including an assessment on the impacts to human rights and the certainty that a timely notice of termination is provided to the supplier.

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

According to data from the National Chamber of the Clothing Industry (CANAIVE), in March 2020, the textiledressmaking industry suffered a drop of 80% in sales and stores. Clothing orders from the sector were cancelled, thus factories closed or there were technical stoppages in a brief period of time as a result of Covid-19. The decision made by brands to cancel orders resulted in workers of the industry having to accept the conditions imposed by their employers in order to keep the lights on in their factories and to help garment workers to keep their jobs. Thus, according to data gathered by the organisation Centro de Apoyo al Trabajador (CAT), weekly wages of workers in maquilas were reduced up to 50%, going from $800 to $400 per week as an effect of the cancelling of orders by brands. Brands have complete control over their purchasing practices, which have great influence on suppliers’ ability to pay their wages and on time. As the data from CAT suggests, cancelled orders had an impact on suppliers paying workers the amount of wages they are normally due. With this we can see how important it is for brands to have policies related to the exit or contract termination processes with the suppliers in the supply chain of brands. These actions will help safeguard workers from experiencing negative impacts from last-minute decisions to cancel orders.

In the results of this research, we found that only 1/31 brands (3%), C&A, have policies for gradual exit during a period of six months when there is lack of compliance with the Code of Conduct. Likewise, we look for anonymous grievance mechanisms when there are irregularities or complaints from workers, both direct, head office employees and workers in the supply chain. In this section we found that 6/31 brands (19%), three national ones –El Palacio de Hierro, Liverpool and Oggi Jeans – have an internal grievance mechanism that may consist of a form in a website, e-mail or hotline. Nevertheless, only 4/31 brands (13%) disclose information on how the whistleblowing or grievance mechanism is implemented, i.e. how the company responds to complaints and/or reported violations of policies and standards. And we observe that only 3/31 brands (10%) disclose if the whistleblowing procedure or grievance

During the pandemic and due to the cancellation of orders, the weekly wages of the workers of the maquilas were reduced by up to a

50%

mechanism is included in the supplier/ vendor policies e.g. Code of Conduct. We hope that in the future we can find more brands developing and disclosing information on their grievance mechanisms for workers so that their needs are heard and addressed appropriately. By sharing these experiences, the mechanisms can be replicated not only among the companies in the dressmaking industry, but in the rest of the maquiladoras.

None of the brands discloses information on the participation of female workers, women's organisations, human rights female defenders and female experts on gender topics participate in all the phases of due diligence. This is one of the most surprising takeaways of research this year. Now that we understand this, it is important to identify concrete actions related to the commitment of brands to the protection of women and to guarantee their human and labour rights. In Mexico, the government committed to eradicate discrimination against women in the workplace, promoting the ratification of the USMCA, which specifically mentions the topic in three of its chapters on gender: Chapter 23 on labour prohibits discrimination in the workplace and sets forth the commitment to promote gender equality in the workplace; Chapter 25 sets

forth the obligation of signing countries to collaborate in activities to promote SMEs owned by women in the supply chains; Chapter 26 on Competitivity sets forth the creation of a Trilateral Committee that shall develop cooperation activities to foster the production in the region and the companies owned by underrepresented groups, including women, indigenous peoples, youth and minorities. The brands in the Mexican fashion industry must take measures to include women in the due diligence processes so as to know first-hand the conditions under which they work and to involve organisations of women, who may help in the creation of strategies to protect them all throughout the supply chain. The USMCA represents a form of pressure on the industries that benefit from it and it should also represent an opportunity to improve the processes towards the social welfare of women in Mexico and the world.

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

VIEWPOINT: THE IMPORTANCE OF DUE DILIGENCE AS A MECHANISM TO PROTECT HUMAN LABOUR RIGHTS IN THE APPAREL INDUSTRY.

IVETTE GONZÁLEZ SPECIALIST ON HUMAN AND BUSINESS RIGHTS PROYECTO SOBRE ORGANIZACIÓN, DESARROLLO, EDUCACIÓN E INVESTIGACIÓN® (PODER)

Fashion brands need to be transparent with all stakeholders: trade unions, workers, members of the affected communities, reporting authorities, benchmarking agencies, international bodies (for example, ILO, OECD, UN), customers, consumers and suppliers in the value and supply chain, local and national governments, human rights institutions, and investors.

The UN acknowledged that Mexico has

COVID-19 shed light on the conditions of workers and environmental impacts of the textile industry. This watershed moment is key to bring about changes and modifications that allow for greater transparency and accountability from fashion brands as to their impacts on human rights and the environment, as well as the data and non-financial information that allow the identification of abusive behaviours, effective trends to avoid them and opportunities to prevent them.

an entrepreneurial tradition that lacks transparency, especially when it comes to its negative impacts. One way of generating and analysing data is to implement a human rights due diligence process. Due diligence is a continuous management process used by companies that helps them identify, prevent, mitigate and respond to the negative consequences of their activities. The process includes an assessment of the real and potential impact of their activities on human rights, conclusions, and actions taken, as well as monitoring of the responses and communication in the same way as it is done when there are negative impacts.

Regulatory mechanisms and public policies that enforce human rights and environmental due diligence processes that are constant, recurring, transparent and involve prevention and compensation actions, rather than corporate commitments or policies on human rights, pave the way towards the systemic changes needed to implement more sustainable and fair practices. This is especially relevant in the countries of the Global South, like Mexico, where big brands outsource their production to facilities with poor working conditions. 75% of the 60-70 million workers in the garment industry are women. Thus, parent companies are the ones immediately in charge of guaranteeing that value and supply chains follow a gender-based due diligence. This involves taking into account the specific impacts on working women, girls, boys and adolescents and the impacts related to age groups, plus the topics of health and work security, the beginning and end of work, hiring practices, sexual and labour harassment in the workplace, ethnic identity and gender expression.

A corporation engaged in transparency and awareness, and which integrates environmental, social and governance (ESG) topics and takes all of the above into account will go over and beyond the mandatory processes and limitations that trade and investment agreements may pose. The big textile firms with long supply chains can promote processes within the apparel industry that integrate the specificities of their sector, allowing comparison and collaboration with similar suppliers, and giving space to join these global trends that foster decent work, and respect environment and human rights, operate sustainably and invest in the long term. This also contributes to an international agenda where the Mexican state takes part to guarantee the principles of respect, as well as to promote and protect human rights in the business sector.

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

SPOTLIGHT ISSUES

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

5. SPOTLIGHT ISSUES APPROACH Each year, we explore some key pressing issues in deeper detail. For 2021, our focus covers six strategic areas to align with and support the United Nations’ Sustainable Development Goals (SDGs), which aims to bring nations together to build a better world for people and our planet by 2030. Every year we select the Spotlight Issue topics and formulate the indicators in consultation with industry experts and stakeholders. We look for information on the following topics:

DECENT WORK AND PURCHASING PRACTICES

GENDER AND RACIAL EQUALITY What are major brands and retailers doing about gender and racial equality? We looked at: • Gender inequality in the company and supply chain • Gender pay gap • Cultural Projection (respect for the intellectual property of the culture and heritage of indigenous and AfroMexican communities). SUSTAINABLE SOURCING & MATERIALS

What are major brands and retailers doing to improve conditions for workers within the company and their supply chains? Specifically, we looked at:

What are major brands and retailers doing to increase the use of sustainable materials and reduce the use of virgin plastics and microfibre shedding? We looked at:

• Covid-19 and how brands responded to the pandemic

• Tools and processes to define ’sustainable’ materials

• Living wages and wage data in the supply chain • Brands’ purchasing practices • Unionisation and collective bargaining • Employee development

• Strategies and progress on the switch to more sustainable materials

OVERCONSUMPTION, WASTE AND CIRCULARITY What are major brands and retailers doing to address overproduction, minimise waste and move towards circularity? Here we looked specifically at: • How many items were produced in the reporting period • How much textile waste is generated and how much was destroyed or recycled • Strategies and progress on reducing pre-consumer waste and recycling post- consumer waste • Strategies for take- back schemes and clothes longevity • Investments in textile- to-textile circular recycling

WATER AND CHEMICAL What are major brands and retailers doing to reduce the use of hazardous chemicals and minimise their water footprint? Here we looked at: • Strategies and progress on reducing the use of hazardous chemicals • Water footprint in direction operations and in the supply chain • Water risk assessments CLIMATE CHANGE & BIODIVERSITY What are major brands and retailers doing to combat the climate crisis and mitigate their environmental impacts? Here we looked at whether brands publish: • Decarbonisation targets • Science Based Targets • Commitments and progress towards zero deforestation • Carbon footprint in owned facilities and in the supply chain • Absolute energy reduction • R enewable energy use in owned facilities and in the supply chain

• Strategies and progress on the reduction of the use of virgin plastics • What the brand is doing to minimise the impact of microfibres

Workshop Mixe Región: Queta

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

5. SPOTLIGHT ISSUES RESULTS

0-5%

6-10%

Andrea

Cklass 2%

Coppel 2%

Flexi 2%

Oggi 2%

Sears 2%

Aldo Conti

Brantano

Charly

Cklass

Dorothy Gaynor

Ferrioni

Ivonne

Julio

Liz Minelli

Long Beach Polo Club

Mariscal

Marsel Men´s Fashion

Milano

Price Shoes

Quarry

Sexy Jeans

TT Blues Jeans

Verochi

Yale de México

El Palacio de Hierro

11-20% 6

21-30%

31-40%

41-50%

Ilusión

C&A

Liverpool

Levi’s Strauss de México 37

*Brands ordered by score of a maximum of 250 points in rounded percentages. When multiple brands obtained the same score, they are listed alphabetically.

Zara

51-60% 49

61-70%

71-80%

81-90%

91-100%

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

5. SPOTLIGHT ISSUES FINDINGS - DECENT WORK & PURCHASING PRACTICES COVID-19 RESPONSE

10%

Discloses any changes to purchasing practices or supplier agreements as a result of economic pressures of Covid-19

Discloses what type of support, beyond the legal requirements, has been offered to direct employees and their family members affected by Covid-19

Discloses any support or equipment offered to employees during Covid-19 which enabled them to work safely from home where possible

LIVING WAGES

Disclose approach to achieving living wages for supply chain workers

EMPLOYEE DEVELOPMENT

3% Publishes time-bound, measurable roadmap / strategy for how it will achieve a living wage for all workers across its supply chain

35% Discloses any protective measures implemented in corporate offices or shops to prevent the transmission of COVID-19

UNIONISATION & COLLECTIVE BARGAINING

23%

Discloses information on employee development

Publish no. of workers covered by collective bargaining agreements

Publishes data on the prevalence of violations to collective bargaining rights and freedom of association in the facilities of the suppliers

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

5. SPOTLIGHT ISSUES FINDINGS - DECENT WORK & PURCHASING PRACTICES GENDER EQUALITY

CULTURE PROJECTION

13%

Publish gender breakdown of job roles in the company

Publish the company’s gender pay gap

Demonstrate that it respect the intellectual property of the culture and heritage of indigenous and Afro-Mexican communities

PURCHASING PRACTICES

Publish policy to pay suppliers within 60 days

Publish average no. of days suppliers are paid after delivering orders Workshop Mixe Región: Ricardo

FASHION REVOLUTION | FASHION TRANSPARENCY INDEX MEXICO 2021

5. SPOTLIGHT ISSUES ANALYSIS - DECENT WORK & PURCHASING PRACTICES This year, the Global Transparency Index 2021 and the Index for Mexico strengthened the Spotlight Issues section, going from 49 to 83 indicators. This was due to the inclusion of indicators that gained relevance in the global and national scenarios. We were capturing disclosure on: 1.

Brand response to the Covid-19 pandemic, in their own operations and supply chain

Respect for the intellectual property of the culture and heritage of indigenous and Afro-Mexican communities

Diversity and Inclusion - including gender and racial equality Water and chemicals - including water consumption and pollution, as well as reduction of harmful chemicals. (This increased from an indicator in 2020 to a whole section in 2021)

The average score across all 31 brands in Spotlight Issues was just 6%. Of all five sections of the report, the average score in the spotlight section ranks third. Unfortunately, this year the average score for this section was only 6%, which continues to show a very low level of

disclosure on these spotlight issues. We discovered that 12/31 brands (39%) disclose information in this section. This accounts for a growth in comparison with the 2020 Index, where only 6/20 brands (30%) did. The international brands obtained the highest scores. In first position is Zara, with 49%, C&A with 40% and Levi's with 37%. In the subsequent spots are the Mexican brands Ilusión and Liverpool, with 12%, El Palacio de Hierro with 6%, Andrea with 5%; and 5/31 brands (16%) obtained 2%, Cklass, Coppel, Flexi, Sears and Oggi Jeans.

DECENT WORK AND PURCHASING PRACTICES, THE RESPONSE OF BRANDS TO COVID-19 The health crisis caused by the Covid-19 pandemic decreased the world gross domestic product (GDP) by 3.5% last year, according to the World Bank. In Mexico, the GDP fell by 8.5%, its biggest drop since 1932, according to the National Institute of Geography and Statistics (INEGI). And, by the end of last year it left an unemployment rate of 11.7%, according to the ILO, which is the equivalent to 6 million Mexicans. This situation brought huge challenges for the manufacturing industry – one of the most affected ones since it is not considered an essential activity – but, in particular, for the fashion industry. The

deepest levels of fashion’s supply chain continue to be the most affected ones, still opaque, with workers hidden and vulnerable, without the acknowledgement of human and labour rights. In order to know the response that brands and retailers gave to these devastating effects, we decided to include detailed indicators on the support brands gave to their direct workers and their family members if they got sick. We found that only 2/31 brands (6%), Levi's and Liverpool, disclose this information. Liverpool disclosed the provision of private hospital insurance and coverage, which benefited more than 10 thousand workers that did not have medical insurance and also provided workers with access to a psychological help line, available 24/7. With the closing of offices and headquarters to avoid the transmission of the virus, a regional study points out that 68% of Mexicans started to work remotely, while before the pandemic only 34% of people worked under this model. Because of this, we wanted to know if brands disclose any support or equipment offered to employees during Covid-19 which enabled them to work safely from home where possible. We found that only 1/31 brands (3%), Levi's, disclose this information.

With the reforms to the Federal Labour Law passed in December 2020 -which seek to, among other issues, regulate remote work and set forth the obligation of employers to cover costs of working from home (such as part of the electricity bill) and guarantee the right of workers to disconnect- we hope that increasingly more brands comply with this provisions and show evidence of doing so on their websites. 11/31 brands (35%) disclosed any protective measures implemented in corporate offices or shops to prevent the transmission of COVID-19, the highest scoring indicator in the Covid-19 section. Unfortunately, transparency on Covid-19 to suppliers continues to be opaque, since only 3/31 brands (10%) discloses any changes to purchasing practices or supplier agreements as a result of economic pressures of Covid-19 28/31 brands (87%) do not disclose any data we measure on Covid-19 response, which is alarming after we learned that in response to lockdowns, there was a trend for fashion brands to cancel orders and delay payments, even in spite of what this meant for the workers in their supply chain.

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A study carried out on March 27th by the Center for the Global Workers' Rights (CGWR) and the Worker Rights Consortium (WRC) on the impact of Covid-19 in Bangladesh, reported that, out of the 316 Bangladeshi suppliers who answered the survey, over 95% said that brands and retailers refused to contribute with the cost of partial wages of the workers who were temporarily dismissed, or of the severance pay of those who were fired. Big brands and retailers have a direct control on their purchasing practices. The cancelled orders have a tremendous impact on the entire supply chain, and the contracts between brands and their suppliers should have been fully respected during the pandemic, in the understanding that brands are in a comparatively more powerful position from the financial point of view, and their purchasing practices create a domino effect on suppliers and workers all throughout their supply chains.

PROJECTION OF CULTURE AND COLLABORATIVE WORK WITH INDIGENOUS AND AFRO-MEXICAN COMMUNITIES Mexico is a multicultural society where we can find Mayan, Tzotzil, Mazahua, Otomi, Purepecha and many other communities in different states of the Republic. Their traditional attire is a meaningful reflection of their culture, traditions, beliefs and lifestyle.

The fashion industry in Mexico has gone through periods where the use of crafted textiles and embroideries being integrated into contemporary garments is extremely popular and trendy. These include 1940 Mexican Indigenismo, 1970 -under the Echeverria administration- and currently, according to experts, there is a recognition and empowerment of the "Mexican" concept as a differentiator among brands and designers, especially local ones. According to the National Cultural Consumption Survey (ENCCUM, because of its initials in Spanish), in Mexico, over 12 million people make crafts in entities like Puebla, Oaxaca, Guerrero, Chiapas and Hidalgo, characterised by a wide textile tradition with a high number of workshops dedicated to the creation of embroideries and textiles. Therefore, strengthening the capacities of artisans is essential to achieve a more fair and competitive market where artisans learn and are empowered to fairly value their work. Further, education is necessary for consumers and big brands

+12 millions people make handicrafts in entities such as Puebla, Oaxaca, Guerrero, Chiapas and Hidalgo

to collaborate and acknowledge the development of these communities, who often live in extreme marginalization.

The recent General Law For The

Data points out that between 2012 and 2019, at least 23 national and international clothing brands appropriated designs of indigenous communities from Oaxaca, Chiapas and Hidalgo, according to an analysis carried out by the organisation Impacto, which until now has registered 39 cases of plagiarism. Just some brands involved in these cases include: Zara - a brand assessed by the Index-, Mango, Rapsodia, Christian Dior and Carolina Herrera, who have reproduced Indigenous embroideries without credit, compensation and consent from the community itself.

by the Senate of the Republic- sets forth the request for authorisation to the holder (Indigenous communities or peoples) of the artisan or popular-art (literary or artistic) and the obligation to give credit to the original holder by mentioning the community to which it belongs. We hope that this law will encourage brands to comply with said provisions and disclose the policies on respect and collaboration with the communities of craftsmen and craftswomen located in our country.

We included the topic this year because of these incidents of undue cultural appropriation, with the purpose of knowing whether brands respect the intellectual property of the culture and patrimony of indigenous and AfroMexican communities. We were assessing disclosure of a policy that seeks consent, credit and fair compensation. We found that only 2/31 brands (6%), Zara and El Palacio de Hierro, publish information on how they demonstrate that it respects the intellectual property of the culture and heritage of indigenous and AfroMexican communities - through a policy that shows consent, credit and compensation. Unfortunately, the disclosure of the only 2/31 brands that did give credit is limited and lacks detail.

Protection Of Cultural Heritage Of Indigenous And Afro-Mexican Peoples And Communities In Mexico -passed

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INTERVIEW TO CARLOS LARA FOUNDER OF ARTÍCULO 27 A.C.

CARLOS LARA FOUNDER OF ARTÍCULO 27 A.C.

How can we achieve a true separation between an inadequate use of Traditional Cultural Expressions (TCEs) and the use thereof as a source of legitimate inspiration? CL: More than thinking about separating them, I would talk about a conjunction based on the commercial use of the elements of cultures, not in an exploitative way where only one side wins. Do you think the commercial exploitation of cultural goods perpetuates the structural economic inequalities that exist between groups of power and racialised collectives? CL: Exploitation, not commercial use, is what generates and perpetuates inequalities in the communities where these elements are generated. If there are profits, the fair thing to do is to pay retribution.

In the face of certain loopholes and disagreements around regulations and intellectual property that prevail when addressing the topic, is it possible to achieve consensus based on private policies on legislation, compliance and jurisdiction? CL: There are no legal loopholes. What does exist is a lack of understanding about copyright, which is an individual, not a collective, right. Collective rights cannot belong to the copyright system. Therefore, what is left is to work on commercial use models. One example is the dispute between Liverpool Group and the government of Queretaro on the Lele dolls. What initiatives should brands and designers promote to achieve balanced and regulated relations with indigenous communities? What is an example of good practices? CL: Within actions, there is rapprochement, consensus and commercial agreements with workshops and communities, taking sales into consideration, but also retribution, in terms of the SDG.

Regarding the intellectual property rights of indigenous peoples and communities and their traditional knowledge, the Federal Copyright Law (LFDA, Spanish acronym) sets forth the request for authorisation to the holder (indigenous communities or peoples) of the artisan or popular-art (literary or artistic) works for their exploitation and points to the need of mentioning the community to which he/she belongs. If the community or people for which the authorisation is to be requested is unclear, the stakeholder shall request the Ministry of Culture to identify the holder. If identified, the stakeholder shall submit the necessary paperwork to request authorisation. Should it not be possible to identify the Ministry shall have the power to grant it. Do you think the law provides the legal means for indigenous communities to exercise effective control over their cultural expressions? CL: That reform was challenged because it was unjust and ineffective. Additionally, copyright is individual. The amendment seeks to forbid Mexican artisans to be entrepreneurs. If a company is interested in A SPECIFIC DESIGN that an artisan has specifically registered before the National Institute of Copyright (INDAUTOR, Spanish acronym) they will request authorisation to use it, as it is A SPECIFIC DESIGN. This is what lawmakers and government officials involved with these issues need to understand.

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LIVING WAGES & EMPLOYEE DEVELOPMENT We were pleased to see that in this subsection 7/31 brands (23%), Andrea, C&A, El Palacio de Hierro, Ilusión, Levi's, Liverpool and Zara, publish information on programmes or activities for the employee development, focused on helping them to acquire different professional skills and be promoted to higher positions and increase their wages.

Disclosure of data on Living Wages remains scarce Even though 23% of brands disclose their employee development programmes, the disclosure of data on living wages continues to lag behind the expected. Only 2/31 brands (6%), the international brands C&A and Zara, disclose the company's approach to achieving the payment of living wages to workers in the supply chain, and only 1/31 brands (3%), Zara, publishes time-bound, measurable roadmap/strategy for how it will achieve a living wage for all workers across its supply chain. Zara is also the only brand out of the 31 that reports on annual, measurable progress towards paying living wages to workers in the supply chain.

The 31 brands analysed in the index do not disclose the percentage above the minimum wage workers are paid in the brand’s supply chain, nor the number of workers in the supply chain that are being paid a living wage rate, nor the percentage of workers that are receiving wage payments digitally. This is disappointing given that the research shows that the digital payment of wages promotes a greater inclusion and financial security, which is especially beneficial for vulnerable workers. Data transparency on digital wages is essential to assess the methods for wage payment of brands and make them accountable on the matter. Manufacturing wages in Mexico are too low to live on. They range between 1 to 1.50 dollars per hour, with an average of 1,982 annual dollars. For decades, this has attracted international companies that look for a cheap workforce. According to data from the Organisation for Economic Cooperation and Development (OECD), we are one of the countries with the lowest performance on wages from member countries, below countries like Chile or Turkey, which have similar economies to Mexico. A study carried out by Fondo Semillas that assessed more than 68 collective work contracts of the dressmaking industry shows that the wage benchmarks assessed indicate the type of role and corresponding wage, but do not specify the number of people who receive this wage. The persistence of low paying the

sector correlates with our findings of little or no transparency on living wages, both in this Index and last year’s.

forth decent, equitable and fair working conditions for the millions of workers in our country who are part of a union.

UNIONISATION & COLLECTIVE BARGAINING

With the reforms to the Federal Labour Law and the entrance into effect of the USMCA we foresee a different scenario, with progressive changes that will allow for greater transparency on these topics. One of the agreements set forth by the trade agreement, and that is also promoted by the labour reform, is that at least 30% of workers must have access to anonymous voting to freely elect a union representative. Likewise, it mandates employers to provide a free copy of the printed version of the collectively bargained work contract and provide mechanisms aimed at guaranteeing reparation in case of a denial of rights (freedom of association, minimum wage, etc.), which will be resolved through a panel that will verify and issue a resolution. Sanctions for non-compliance may include negative impacts to tariff benefits, fines and even the elimination of the possibility to export due to lack of compliance.

According to the registries of the Ministry of Labour and Social Welfare, there are more than 45 thousand workers affiliated to different unions of the textile and footwear industry located in Mexico City. Despite this, only 2/31 brands (6%) disclose data on the prevalence of collective bargaining and freedom of association related violations in supplier facilities; and only 1/31 brands (3%), Zara, publishes the number or % of supplier facilities that have independent, democratically elected trade unions. Similarly, Zara is the only brand that discloses the number or % of workers in the supply chain that are covered by collective bargaining agreements. With 30/31 brands (97%) not disclosing this data, it is clear that the data on Freedom of Association continue to be opaque. The so-called employer protection contracts, which are collectively bargained work contracts executed between the brand and the union without the knowledge of workers, have for years negatively affected the working class of our country. We have a long-lasting tradition of corrupt unioinisation, which on several occasions has only looked for its own interests, not for those of its members. Authentic collective bargaining allows setting

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GENDER EQUALITY According to an analysis carried out under request from the Red de Mujeres Sindicalistas, with the support of the Friedrich Ebert Foundation, power imbalance, gender pay gap, discrimination and violence against women are still prevelant in the labour market. In comparison with other OECD members, Mexico has one of the widest employment gaps due to gender. Out of the women who do work, almost 60% have informal jobs, with low social security, high insecurity and low remuneration. As a result, Mexico has the third lowest female employment rate of the OECD, only above Turkey (28.7%) and Greece (41.7%). Mexican men, by contrast, continue to have an employment rate of 78.5%.

enable in-depth scrutiny of what really happens inside fashion’s supply chains. Unfortunately, similarly to last year, we observed that the gender equality topic still lacks disclosure since only 1/31 brands (3%), Zara, publishes annual gender pay gap, including by distribution of job roles, within the company. Meanwhile, for 30/31 brands (97%) do not disclose this information. The indicator that shows an increase of disclosure are annual sex-disaggregated distribution of job roles (e.g. executive

level, managers/supervisors, employees) within the company (head office, retail stories, owned and operated facilities) with 4/31 brands (13%) reporting this information, unlike 2020, when only 1/20 brands (5%) showed said piece of data. However the annual sex-disaggregated distribution of job roles (e.g. employees such as helpers, machinists verses supervisors/managers) in supplier facilities has lower levels of disclosure with only 2/31 brands (6%) displaying this information.

Regarding gender equality and the rights of women in the workplace, the USMCA is again seen as an opportunity for things to change. Its proposal has two guidelines: non-discrimination and attention to cases of violence in the workplace. Both of these principles are also acknowledged by the Constitution and the national legislation. Nevertheless, according to the document USMCA, Labour Reform and Gender Equality, "a deep change is needed in the social structure of gender, which is based in a sexual division of labour (men in the production of goods, women for human reproduction), a persistent wage gap between men and women, a lack of acknowledgment of house and care work, among other factors of the same nature to which we must give visibility and that go beyond the scope of the USMCA." (Aleida Hernandez, 2020.)

This Index is a tool to highlight the problems surrounding the fashion industry, increase accountability and promote changes for the most vulnerable groups of the population, such as women and children. Since the fashion industry is predominantly a female workforce, we are interested in knowing the gender-based wage differences and labour violations that are still present in the industry. Promoting the necessary changes requires transparency on topics on gender equality (such as data on genderbased wage gap and the disclosure of continuous gender violence) to

Región Workshops: Jasiel,José y Carmen

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ARTICLE: THE COMMITMENTS MADE BY MEXICAN COMPANIES TO MEXICAN WOMEN, AN UNFINISHED AGENDA

ALEYDA HERNÁNDEZ FULL TIME RESEARCHER AND LECTURER AT THE CENTER FOR INTERDISCIPLINARY RESEARCH IN THE SCIENCES AND HUMANITIES OF THE NATIONAL AUTONOMOUS UNIVERSITY, PART OF THE NATIONAL SYSTEM OF RESEARCHES, LEVEL 1

Mexican fashion brands have important commitments to women on equality, especially if they operate under the United States-Mexico-Canada Free Trade Agreement (USMCA). The amendment published on May 1st 2019 to the Federal Labour Law sets forth a series of obligations and commitments that employers, unions and government have to Mexican female workers. This amendment came with agreements made through the USMCA on equality and non-discrimination.

Gender equality is both a right and a principle. As the former, it is the right to equality and non-discrimination that all people have, women, men, girls and boys, to the same conditions, opportunities and results to exercise their rights notwithstanding their sex and gender identity. It is also a principle because it must guide legislative decisions, rule in jurisdictional venues and create public policies that achieve substantial equality between women and men. In this sense, gender equality comprehends three dimensions, as set forth by the Convention on the Elimination of all Forms of Discrimination Against Women (CEDAW) in its Recommendation 25: 1. Formal equality. Meaning women are equal before the law, this is to say, there is no direct or indirect discrimination. This proposes equality before the law, equal rights, equal treatment. 2. Substantive equality. Means a de facto equality, since an equal treatment is not enough, the physical differences and those resulting from structural conditions (social, economic, political, etc.) must be taken into account. This requires measures to carry out structural, legal and public policy changes to guarantee a de facto equality, including special temporary measures (e.g., positive discrimination). 3. Equality of results. It involves the obligations of States (Parties) to provide the necessary means to achieve equality of results.

The notion of gender equality started to gain ethical, legal and political strength once the historical inequality between women and men, caused by structural conditions of discrimination against women was acknowledged. In this sense, to eradicate the discrimination women endure, as well as the gaps between men and women, it is necessary for States, companies and unions to carry out a series of actions and measures that tend to level the playing field between them, since even discrimination against women may be aggravated by intersections like age, race, class, sexual preference, and ethnicity. In Mexico, with the amendment made to the Labour Law in 2012, progress was made in some relevant aspects on equality and no discrimination against women in the workplace: 1. Substantive equality, by eradicating discrimination against women in the workplace. 2. Including the definitions of harassment and sexual harassment in the terminology of the area. 3. Considering harassment and/or sexual harassment by employees, employers and their family members and legal representatives a cause to terminate employment. 4. Substantive equality as a principle for labour conditions.

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In this path towards the consolidation of equality and no discrimination against women in the workplace, the labour amendment of 2019 advanced important aspects, as we can see next:

training and professional development plans of the Federal Centre for Conciliation and Labour Registration. Additionally, it requires the conciliator to have knowledge on gender perspective.

1. In relation to the demand of eradicating discrimination and addressing violence against working women in the workplace. Addressing these two principles, the labour amendment RL2019 set forth the obligation for all employers to approve, along with workers, a protocol to look into discrimination, violence and harassment events in the labour administrative procedures of each work centre (Article 132 Section XXXI of the Federal Labour Law).

4. It forbids requiring proof of not being pregnant to obtain or stay in a job position or be promoted, and firing a worker because she is pregnant or has to take care of her children.

2. As to the demand to democratise trade unions, it prohibits acts of violence, discrimination, harassment or sexual harassment against the members of a union. In turn, the procedures to elect Boards of Directors shall consider the principle of gender equality, and union Boards shall have proportional representation by gender. 3. As per access to justice, it was set forth that conciliation is not mandatory in cases of discrimination and violence against women, which is relevant since an important international standard is entering the amendment, and it integrates gender perspective to the

Companies are bound by the Federal Labour Law, the ILO mandates on Decent Work (and if they operate under the USMCA, they have reinforced commitments on the matter) in at least three aspects: 1) creation of a protocol in all work centres to look into discrimination, violence and harassment events in the labour administrative procedures of each work centre; 2) generating a work environment free of discrimination and violence against women, 3) equal pay between women and men. While progress has been made in the legal and regulatory framework, the results of the Fashion Transparency Index Mexico 2021 show that there is little visible evidence of the commitment of companies to significantly decrease the gender gap: • 1/31 brands (3%) publish annual gender pay gap, including by distribution of job roles category, within the company.

• 1/31 brands (3%) publish data on the prevalence of gender-based labour violations in supplier facilities (e.g., sexual harassment and other forms of gender-based violence; treatment and firing of pregnant workers; maternity pay; bathroom breaks during periods, etc.; women in supervisor/middle management roles; gender pay gap; women on Worker Participations Committees and in unions; etc.) • 2/31 brands (6%) publish annual sex-disaggregated distribution of job roles (e.g., employees such as helpers, machinists versus supervisors/ managers) in supplier facilities • 4/31 brands (13%) disclose annual sex-disaggregated distribution of job roles (e.g., executive level, managers/ supervisors, employees) within the company (head office, retail stores, owned and operated facilities) • 31/31 brands (100%) do not disclose the number of women workers, women's organisations, women human rights defenders and gender experts in all stages of human rights due diligence This last piece of data is quite revealing since it may mean that women are still not fully recognised as subjects of rights, with the capacity to participate and generate concrete proposals to decrease inequalities

and increase the respect and promotion of the human rights of female workers in companies. Fashion brands that are committed to female workers and gender equality must integrate these obligations to their labour practices and policies in a permanent and daily manner and implement instruments that verify their efficiency and impact. Substantial equality between women and men in the labour world cannot wait anymore and, in this objective, companies play a key role.

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5. SPOTLIGHT ISSUES FINDINGS - USE OF MATERIALS, EXCESSIVE CONSUMPTION AND WASTE SUSTAINABLE MATERIAL USE

6% Disclose breakdown (% or tonnes) of types of fibres sourced annually (i.e. the fibre mix)

BUSINESS MODEL AND CONSUMPTION

10% Discloses that offers permanent, year-round take-back schemes/in-store recycling

PLASTICS

10% Disclose a time-bound and measurable sustainable materials strategy

WASTE AND RECYCLING

10%

Publish annual progress on achieving sustainable material targets

Publish targets to reduce the use of textiles deriving from virgin fossil fuels

Publish targets to reduce the use of packaging deriving from virgin plastics

Explain what the brand is doing to minimise the shedding of microfibres

WATER USE AND HAZARDOUS CHEMICALS

CARBON FOOTPRINT

10%

13%

16%

Explain how they’re working to develop textile-to-textile recycling solutions

Publish annual water footprint in company’s own facilities

Discloses measurable progress towards eliminating the use of hazardous chemicals

Publishes annual carbon footprint or GHG emissions in owned and operated facilities (e.g. head office, retail stores, distribution centres, warehouses, transport and mail orders, etc.)

10% Publishes annual carbon footprint or GHG emissions in the supply chain

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5. SPOTLIGHT ISSUES ANALYSIS - USE OF MATERIALS, EXCESSIVE CONSUMPTION AND WASTE SUSTAINABLE SOURCING & MATERIALS Materials can play a key role in the potential transformation of the textile and fashion industries. And while sustainable materials alone will not constitute behind the construction of a socially and environmentally responsible brand, we must consider that they are a substantial element in the products of the sector. Today, more than ever, due to the climate crisis and growing scarcity of natural resources, the aesthetic enjoyment that a textile can provide –one of the elements that backs the existence and success of the fashion industry – is not enough anymore. According to Amanda Johnston, curator of the Future Fabrics Expo, an annual exhibition of sustainable materials by The Sustainable Angle, the selection of materials for a piece of garment can represent up to 95% of the environmental and social footprint of a product. Thus, it is necessary to consider and carry out an analysis of the lifecycle of the product and choose based on a planning that gives visibility to all corners of the impact of its supply, production, consumption and final disposition. It is important to mitigate the social and environmental impact of a product through the design and selection of materials.

From the 31 assessed brands, only 1 brand, C&A, explains what tool or process they use to define what is considered a 'sustainable' material, such as certified organic cotton (Organic Cotton Standard, OCS or Global Organic Textile Standard, GOTS), cotton ordered under the Better Cotton Initiative (BCI), viscose from the Canopy Style Initiative, certified recycled polyester (Global Recycled Standard, Recycled Claim Standard or equivalents), procured under the Responsible Down Standard (RDS), etc. It is worth highlighting that sustainability is more than a static concept and it has multiple operational dimensions. This is why the Index has an indicator that asks brands to disclose their definition of "sustainable material", avoiding misunderstandings or misinformation that may be interpreted as greenwashing. Co-Secretary of the UN Alliance for Sustainable Fashion, Michael StanleyJones, stated that "the promise of only using sustainable fibers should be celebrated..." While this may be true, it is urgent for big brands and retailers to support innovation in materials that reduce the dependence on nonrenewable sources, as well as the carbon footprint. The subject must be approached comprehensively and it should not be assumed that the selection of so-called sustainable materials alone will be

enough to reduce the environmental footprint of the industry, even though they do have a key role to play. The Spanish brand Zara and the Dutch brand C&A are the only 2/31 brands (6%) that publish the annual progress on the reduction of textiles deriving from virgin fossil fuels. The Index also shows that 3/31 brands (10%), Zara, Levi's and C&A disclose a time-bound and measurable sustainable materials strategy, roadmap or targets, and publish the annual progress on achieving these sustainable material targets. The 28/31 of the Mexican brands (90%) obtained a score of zero in this subsection. While these brands may be internally working on supply and sustainable materials strategies the lack of transparency on it means that these efforts cannot be assessed by stakeholders and used to hold brands accountable. Such is the case of the brand Oggi Jeans, which implements its "Repreve" production as part of its sustainable sourcing strategy, but does not disclose relevant information that would gain credit in our Index. Other brands may keep silent because they are not working on sustainable materials and sources.

OVERCONSUMPTION, WASTE AND CIRCULARITY The concept of circular economy in the textile and fashion industry is critical given fashion’s overproduction and waste crises.. Every year, 92 million tonnes of textile waste is generated, from which between 75% and 85% is burned or ends up in landfills since, according to the report A New

Textiles Economy: Redesigning Fashion's Future, the UN states that

consumers purchase more clothes than in 2000, but that it is kept for half of the time, a fact that proved the need to have production and consumption systems based on circularity. Circular economy principles are based on the importance of keeping the value of materials and products as long as possible, avoiding waste at its maximum. It works by keeping a continuous (circular) flow of resources, even when the materials or products have reached the end of their shelf life, in such a way that they can still be used, thus adding value. The textile system has operated in an almost fully linear manner for the last 50 years: big inputs of materials are used – many of which are nonrenewable – to manufacture clothes. Many of these garments are often used

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for a short period of time and, when consumers no longer want them, they end up in landfills or being incinerated. In both cases, there are significant environmental and economic costs.

of the fact that this will show their real impact on the planet." Overproduction and surplus stock result in unsold wasted clothing that is discarded, which inevitably impacts the environment.

Because of this, it is important to include indicators to assess whether brands are transparent about the important measures on overconsumption, waste and circularity. We looked for disclosure on brands offering permanent, yearround take-back schemes/in-store recycling, as well as evidence of the development of circular solutions that allow textile recycling beyond its reuse and downcycling.

The lack of answer from the rest of the brands 28/31, (90%) in relation to the basic indicators of circularity evidences the need to go deeper into the meaning of this model, as well as its benefits. This includes: reducing costs and saving money through prevention, reuse and responsible design; avoiding losses during the production of goods; and using the lowest possible amount of energy during the elaboration of products, thus making it possible for them to be renewed, not discarded, and used for other purposes.

The 10%, which accounts for 3/31 brands (C&A, Levi's and Zara) disclose in-store take-back schemes and responsibility for their post-consumption waste. Only Zara, 1/31 (3%), discloses the number of products annually produced. As Liz

Ricketts from The OR Foundation states, "all companies in the world know how many products they manufacture, so there is really no excuse to not disclose this information. This says a lot about the fact that brands are scared

Workshop: San Cris

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VIEWPOINT:

REDUCTION OF WASTE THROUGH THE REDESIGN OF THE TRADITIONAL SYSTEM

CYNTHIA GÓMEZ RAMÍREZ FASHION DESIGN AND SUSTAINABLE TEXTILES COORDINATO, UNIVERSIDAD IBEROAMERICANA, MEXICO CITY

According to the UN Conference on Trade and Development (UNCTAD), the fashion industry is one of the most polluting industries in the world. It uses 93 billion cubic meters of water and half a million tons of microfibres are produced annually, so the fashion production system currently operating in the industry has a high impact on climate change and global warming. Companies have supplied consumer demand through a linear economy model where environmental and social exploitation has prevailed, without considering where the generated waste ends up, not only from the fabrics that become obsolete, but with the losses of unsold merchandise and garments that consumers quickly dispose of. This increase in fashion consumption has caused an overproduction problem of low-cost and poor-quality garments,

which turns them into disposable clothing of low durability, both in its manufacture and emotionally speaking. Studies show that buying clothes causes temporary excitement in people, generating little attachment or significant value for the garments. Therefore, discarding clothes is a common practice, worldwide, every second, the equivalent of a truck full of clothes is incinerated or sent to a landfill, which is equivalent to 73% of the materials used in the textile industry. According to the Ministry of Environment and Natural Resources (SEMARNAT, Spanish acronym), in Mexico 37,000,000 tons of urban solid waste are generated per year, equivalent to filling the Azteca Stadium 231 times. It is estimated that 1% of this waste is textile. In Mexico, 0.5% of the textiles that are thrown away per year are recycled, that is, if each person on average throws away 3 kg, only 15 grams are recovered. In this sense, it is a priority to reverse the negative impact caused by textile waste that ends up in landfills or is incinerated by industrialists. Therefore, we need to bring to the table a gradual regenerative development that takes us along several paths to achieve a favourable and sustainable impact on the industry, from the productive chain to post-consumption. In order to do this, it is necessary to approach the proposal

differently, re-thinking and re-designing the traditional system, changing a linear economy for a circular economy, from the conceptualisation of garments, improving production, marketing and post-consumption, in order to develop innovative business models that are sustainable and manage to close the fashion cycle, through a circular system. In this sense, there are different proposals such as the circular economy, which seeks to extend the life cycle of products, making the most out of the material resources needed for the manufacture and minimising the waste that is produced. This model helps to rethink the supply chain and production processes and develop proposals for post-consumption, through theories such as the 3 Rs: Reuse-Repair-Recycle. By doing so, we can find proposals in each of these approaches, as in the case of the supply chain, in which sustainable raw materials and dyes can be used to extend the durability of the products. In relation to production, the reduction of waste is favoured by the use of systems that help to significantly eliminate losses in cutting such as Zero Waste or the use of software that helps to optimise fabric waste in laying. Additionally, there are companies that have generated a circuit

of post-consumption garments, where garments are repaired or recycled by the same company, generating added value in the purchase. In the last decade we have seen an increase in strategies that seek to give a second life to garments through reuse, such as the emergence of thrift stores, businesses that are dedicated to the swap of garments in good condition or rental models to extend the life of the products. In this sense, large marketing companies have found in repairing another way out of the demand of consumers, including mending centres or personalisation of garment services in the stores to favour the attachment and the significant value of clothes. Companies are increasingly questioned about their responsibility towards the environment and climate change, which adds up to the creation of strategies to reduce waste. However, we cannot leave all the responsibility to the companies. From our perspective, as consumers, we must make a conscious purchase, consuming less and better quality so that this has an effect on the productive chain, reversing consumerism and social pressure to buy and replace.

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CLIMATE CHANGE AND BIODIVERSITY During 2020 and 2021 mounting international pressure around the urgent climate crisis shone a spotlight on a range of environmental issues, such as natural resource management, the climate emergency and its relation to world and human health and its economic impact. This scenario gave way to an increase in communications from the private and public sectors regarding actions to mitigate the effects of climate change.This section analyses the availability of public information from brands regarding their carbon and water footprint, use of renewable energy, regenerative agriculture and commitment to zero deforestation. According to the Ellen MacArthur Foundation, every year, more than 500 billion USD are lost on environmental costs as a result of the production and commercialisation of this sector. And while it is estimated that the production of clothing and footwear produces 8% of the greenhouse gases (UN News), the trends point to the fact that impacts are increasing substantially. In relation to the previous edition, the 2021 edition saw a positive change in brands. In the 2020 edition only 10% of the 20 assessed brands published annual carbon footprint or GHG emissions in owned and operated facilities (e.g. head office, retail stores, distribution

centres, warehouses, transport and mail orders, etc.), in comparison with this year, when 16%, 5/31 brands (Zara, Levi's Strauss Mexico, C&A, Liverpool and Ilusion) already measure and publish this data. However, we know that the largest carbon footprint by far is in the supply chain and at raw material level (Scope 3 emissions). This research calls on all brands to urgently measure, disclose and reduce their emissions not just in their own operations but across their supply chain and at raw material level also. It is worth mentioning that last year C&A, Levi's Strauss Mexico and El Palacio de Hierro published the percentage of energy use coming from renewable sources in the company’s owned and operated facilities (e.g. head office, retail stores, distribution centres, warehouses, etc.) Nevertheless, this year C&A and El Palacio de Hierro stopped publishing this piece of data and Zara entered the group of brands that disclose said information. Mexico has big objectives to fight climate change and one way to achieve them is to integrate clean energies to the national energy grid. In four years, from 2008 to 2012, it went from generating only 3.9% of its electrical energy from renewable sources to generating 18.9%. By the end of 2015 the installed capacity to generate energy from clean sources had increased by 6.6% in relation to 2014, according to the report Renewable

Energy Prospects 2016-2030 from the Ministry of Energy. With this, the

purpose is to get closer to try to get 35% of the energy generated from clean sources by 2024 as an international commitment made before the Paris Agreement and under the provisions of the General Law on Climate Change, then bringing back the Energy Transition Law.

Andrea are starting their journey towards transparency and giving public visibility to their practices, and, even though they have lower scores in comparison with global brands, like C&A, Levi's or Zara, they can be an example for other Mexican brands to follow the same path.

When it comes to the use of energy that comes from renewable sources in the supply chain, the Mexican brand Ilusión, part of the Diltex Group, is the only one among the 31 brands that discloses data on its use in manufacturing and processing facilities at the fiber production level.

The road to sustainability is not linear and responding to the problems associated with industrialisation and the production systems of the sector requires more training, availability, regulation and auditing. To achieve substantial progress on this matter, we need to adopt a systemic approach and achieve cooperation among all stakeholders involved in the supply chain, from the producer to the end consumer.

Regarding regenerative agriculture practices, only one brand, C&A, discloses evidence of implementing regenerative farming practices in one or more raw material sources A relevant piece of data is that none of the 31 brands (0%) publish a report that maps environmental impacts directly to financial statements (e.g. Environmental P&L), nor discloses evidence of implementing regenerative farming practices in one or more raw material sourcesThis indicates that investment in regenerative practices are a great and largely untapped opportunity for brands and the economy. In conclusion, Mexican brands show that they are in a primary stage in their approach to a global agenda for sustainability and the mitigation of the impacts of our economic development. Ilusion, Liverpool and

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VIEWPOINT: CHALLENGES IN THE FIELD OF CULTURE

BOLFY COTTOM NATIONAL INSTITUTE OF ANTHROPOLOGY AND HISTORY (INAH) - HISTORICAL STUDIES HEADSHIP

There is no doubt we live in a globalised world. Both losses and gains have been reported and acknowledged. One of the strongest criticisms voiced relates to the paramount market position as a form of world influence, where the biggest capital forces impose rules to small and medium companies, and by the same token, to entire governments, including the modest economies of communities or peoples that have been historically marginalised from local and international development plans and have had to subject themselves to these rules whether they want them or not. It is undeniable that one of the positive aspects of globalisation is the wide knowledge and dissemination of human rights. In their modern stage, they have been increasingly integrated into International Law instruments to which national governments and big corporations, including companies, have had to adhere to. There are also several national and international agencies that receive complaints on violations to the rights set forth in the international codes, some of which are: the Universal Declaration of Human Rights of December 1948, the Charter of

the Organisation of American States of 1948, the American Convention on Human Rights of 1969, the International Covenant on Economic, Social and Cultural Rights of 1966 and, particularly, the well-known Convention 169 of the International Labour Organisation (ILO) executed in 1989, among many others mostly related to literary and artistic property and copyright. This legal scaffolding involved long processes of social fights and, most of all, the acknowledgment of the selfdetermination of indigenous and tribal communities and peoples set forth in Convention 169 of the ILO. Our Constitution and its corresponding legislation also acknowledge autonomy and Cultural Rights which are also included in the general and local laws passed on the topic. Due to all this staging, indigenous peoples and the AfroMexican communities have reinforced their demands for their rights, among which are rights related to intellectual property, also known as copyright. One of these demands is related to the scandals or controversies arising from the use of patterns by global fashion design houses without "the owners of

the designs" -i.e., indigenous peoples or first nations - gaining any financial profit whatsoever, while big fashion brands increase their income. In the case of Mexico, the behaviour of design brands, in general, has adhered to the federal legislation on copyright; even though, oftentimes this has not been the case and there has been a constant de facto robbery of designs from ancient cultures. In reality, it doesn’t matter whether brands comply with the law, because the propriety legislation only requires brands to give credit to the community, group or region of origin. The Federal Copyright Law has now been amended, according to Article 28 of the General Constitution of the Republic, to protect the original and collective literary, artistic, folk and craft works derived from popular cultures or from the manifestations of traditional cultures, from the pluricultural composition of the Mexican state, through which the peoples and communities express the elements of culture and identity referred to in Article 2 of the Constitution, and the Law appoints them as the rights holders.

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We know that it is virtually impossible to achieve fully original cultural creations. Rather, new cultural expressions are born from what others created before us. This is because, historically, all cultures have adopted elements from other cultures to build their own creations, such as in the case of food, clothing, work tools, etc. This is especially true nowadays in a world where we have access to knowledge from other cultures thanks to the technological development of communications in general. Therefore, not only is it “normal,” but unpreventable to see the cultural exchange of many cultural creations. Yet, it is different when creations are intentionally exploited for economic purposes to obtain significant profit and wealth without acknowledging and remunerating the original authors. This not only accounts for a violation to basic codes of ethics, but currently it also accounts for a crime: in this case, prejudice of the peoples and cultures from which the designs were obtained. Fashion, understood as a custom or habit linked to taste, characteristic of a group in a determined period of time and place, is a cultural creation integrated by a collection of merging elements that brings together multiple social sectors from all around the world. Thus, its design and products provide the building blocks of an identity and a social convention for

all those who experience and promote it. In this sense, because it is a form of identity in which people with a will and memory of their own intervene, they need to interact with those peoples and cultures that have accumulated knowledge, ideas and creations throughout hundreds or thousands of years. But this interaction must be respectful and fair; otherwise, it becomes a colonial and imposing behaviour resulting from the power granted by money.

Such is the value and relevance of the Fashion Transparency Index in Mexico, since it represents a type of observatory that strives for a more humane, fair, honest and respectful (culturally and economically) fashion industry, in addition to encouraging all brands to contribute to the development of the marginalised areas from where they obtain their designs.

This means that the ideas, creations or designs from said cultures and peoples can be used and marketed as long as their creators consent to it, the procedure set forth by law is complied with, and the corresponding remuneration is provided to said peoples, under previous agreement executed with them.

Obtaining large profits without granting recognition and without paying the original authors means, not only the violation of elementary codes of ethics, but now it would mean committing crimes.

Because of these reasons, if a brand does not comply with its duties and obligations, and is not transparent about its behaviour in relation to labour rights,environmental rights, the use of protected cultural elements, and, above all, its compliance with the rights of ancient peoples and cultures, it will be declared unethical. This is because the brand would be infringing collective and subjective human rights and therefore becoming liable to being reported for violations of legal provisions. This could be the case for most Mexican brands that are not transparent with their information on said topics.

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FINAL REFLECTIONS AND RECOMMENDATIONS

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In 1997, John Elkington wrote the book "Cannibals with Forks. The Triple Bottom Line of 21st Century Business” He suggests having 7 revolutions, which are required for companies to guide the capitalist system towards a system that respects sustainability and planetary boundaries and that contributes to, and even guides, the journey (Elkington, 1997). These 7 revolutions include transparency. To attain it, we need a shift of paradigm, where companies, instead of considering transparency as an uncomfortable duty imposed by legal frameworks or by a group of customers, see it and promote it from the inside and assume themselves as agents of change in the industry. In particular, we ask for human rights and the rights of nature to be respected by all stakeholders, including fashion brands. Fashion is transparent and accountable. Fashion embraces clarity and does not hide behind complexity nor rely upon trade secrets to derive

value. Anyone, anywhere can find out how, where, by whom and under what conditions their clothing is made.

This second edition of the Fashion Transparency Index Mexico shows that most Mexican companies assessed are still far from understanding their role as agents of change in the paradigm shift, which is underpinned by transparency. In the Policies and Commitments section, 18/31 brands (58%) do not score any points as they do not disclose any information we are looking for on Policies and Commitments. 28/31 brands (90%) do not disclose the policies the index consideres on Animal Welfare, Maternity Rights and Paternity Leave, nor do they show an annual, upto-date disclosure of progress towards achieving the company's measurable, time-bound and long-term human rights commitments, targets or goals. In general the brands continue to be opaque in terms of the transparency of the information they publish according to the sections and indicators covered by the Index methodology. In the Traceability section, 26/31 brands (84%) score zero. 24/31 brands (77%) of the sample score zero in the section,

Know, show, Fix, and similarly 77% score zero in section 2, Governance. Lastly, in the section on Spotlight Issues, 19/31 brands (61%) score 0%. This level of opacity demonstrates the urgent need for transparency among large fashion brands and retailers in Mexico. Mexican consumers have the right to know, how, where, by whom and under what conditions their clothes are made. Mexican brands have a responsibility to be transparent and accountable with this information and Mexican legislators have a responsibility to demand transparency so that brands that do not voluntarily disclose this information are legally obliged to do so. In the Spotlight Issues section, we have identified several areas of opportunity for greater transparency. No brand (0/31, 0%) was transparent about the volume of post-production/pre-consumer waste generated annually, the % of products that are designed to allow closed loop or textile-to-textile recycling at end-oflife or the volume of textiles destroyed during the annual reporting period. This research urgently calls for more disclosure on these important indicators. As implementers in Mexico, we invite all brands to participate in workshops and activities that introduce them

to the methodology so they see it as a tool to strengthen their practices on transparency. In this second edition, 4/31 brands (13%) actively participated in the process. We hope to welcome more Mexican brands in future years to support brands as they increase their transparency. We want to highlight the case of two national brands, Oggi Jeans and Ilusión, thatafter actively participating in our workshops have increased their transparency. The brand Ilusión, being evaluated for the first time by the index, went from disclosing no information regarding the indicators of our methodology, to obtaining a final score of 15%, placing itself in the fourth position among the brands with the higher scores and the first from all 28 national brands. Oggi Jeans presented a progress of 3 percentage points in its level of disclosure, in comparison with the 0% it had in the 2020 Index. This makes a strong case for brands engaging with the Fashion Transparency Index through participation and attending our workshops - it increases their year-on-year transparency, overall scores and their rankings.

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As it has been mentioned several times throughout the report, the garment sector is still being negatively impacted by the Covid-19 pandemic. But this also represents an opportunity. There has been an exponential increase of e-commerce, which has brought consumers to the websites of brands, which, without any doubt, are the main tool to disseminate information among consumers and stakeholders. Therefore, this situation is a great opportunity for brands to increase their transparency. We recommend brands accelerate the strategic disclosure of information contained in their websites and to take advantage of the proximity with their customers to provide them with transparency . The process of making information transparent is not yet something that comes naturally to Mexican companies. Active citizens need to keep raising their voices to show the increasing importance of the participation from companies in the transparency revolution.They can do this by asking #WhoMadeMyClothes? #WhatsInMyClothes? and #WhatsInMyFabric? As consumers learn and demand more from brands, it will become evident that those brands that wish to be successful must take into account that their role in the market and the society goes well beyond selling products. Workshop: Larrainzar

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TAKE ACTION ON TRANSPARENCY WHAT NEEDS TO HAPPEN NEXT? Anyone anywhere should be able to find out how, where, by whom and at what social and environmental costs their clothes are made. This requires greater transparency across fashion’s global value chain. By working together, as one collective voice, we must demand that companies become more transparent and that governments must require transparency from the brands we buy. We want to see an industry where transparency and accountability are so deeply embedded across the entire value chain that the Fashion Transparency Index is no longer needed. However, greater transparency is only the first step towards making change in the global fashion industry and, unfortunately, a first step that is still very much needed across much of the industry. Ultimately, transparency will help us to create a global fashion industry that conserves and restores the environment and values people over growth and profits.

So, our call to you is this – do not use this Index to inform your shopping choices but rather use these findings to inform your activism. Scrutinise the major brands and hold them to account on their claims.

For individuals, this means calling on: Major brands and retailers to be more transparent on all the issues included in the Fashion Transparency Index - get in touch with brands and ask them #WhoMadeMyClothes? #WhatsInMyClothes? and #WhoMadeMyFabric? Policymakers to create legislation that holds big brands accountable for human rights and environmental impacts the length of the value chain Shareholders and investors to use their power to influence big brands to be more transparent and do better for the planet and the people who make our clothes Civil society, such as trade unions and NGOs, to ensure that brands’ policies and practices translate into positive outcomes in the places where clothes are made

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For major brands and retailers, this means: Publish your supply chain right down to raw material level as soon as possible, doing so in alignment with the Open Data Standard for the Apparel Sector Be completely transparent on all the topics covered in the Fashion Transparency Index, continuously updating public disclosure in response to evolving risk Implement robust due diligence on human rights and environmental risks and publicly evidence the outcomes and impacts of your effort Work collaboratively on due diligence with your peers, especially when they operate in the same facilities, and with rights holders, especially women workers and trade unions, and then share these efforts publicly Support legislation that requires greater transparency and corporate accountability on environmental and human rights issues in the global fashion industry

For policymakers, this means: Support better regulations, laws and government policies that require transparency and corporate accountability on environmental and human rights issues in the global fashion industry Support better enforcement of existing laws, including sanctions, on social and environmental issues that relate to the global fashion industry Be more proactive at responding to ‘red flags’ and risk factors associated with labour exploitation and environmental damage in the global fashion industry

For investors and shareholders, this means: Ask major fashion brands and retailers for clear governance and accountability on human rights and environmental issues Ask for board level accountability on human rights and environmental issues and demand that executive pay is tied to improved impacts on these issues Demand that the board has expertise on the complexities and nuance of human rights and environmental issues Prioritise meaningful and credible environmental, social and governance (ESG) factors into your investment strategies Call for mandatory transparency and corporate accountability legislation on environmental and human rights issues in the global fashion industry Read and listen to the viewpoints of workers and communities affected by the global fashion industry, see pages 25, 26, 53, 66, 75, 83, 86, 91, 93, to inform your policymaking activities

For civil society, journalists and academics this means Use this data and our findings, available in this report, to scrutinise and verify the public claims made by brands and hold them to account Raise the flag when brands make public claims that do not reflect the reality on the ground Use this data to collaborate with other stakeholders and brands themselves to address issues found in supply chains and prevent them in the future Stand together in calling for mandatory transparency and corporate accountability legislation on environmental and human rights issues in the global fashion industry

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THANK YOU! We extend the utmost gratitude to our global pro bono consultation committee – Dr. Mark Anner, Neil Brown, Ian Cook, Subindu Garkhel, Kristian Hardiman, Christina HajagosClausen, Aruna Kashyap, Kate Larsen, Dr. Alessandra Mezzadri, Katie Shaw, Francois Souchet, Joe Sutcliffe and Ben Vanpeperstraete. An absolutely enormous thank you to all the others who provided informal feedback on the methodology and report.

and Business Specialist, Project on Organisation, Development, Education and Research® (PODER). Cynthia Gómez, Academic Coordinator, Fashion Design and Sustainable Textiles, Department of Design, Universidad Iberoamericana. Monserrat Messeguer, Director of Fashion Group International Mexico, Lorena Ríos, Director of the Instituto Di Moda Burgo, the Advisory Committee in Mexico and those who wrote viewpoints in the report.

We would particularly like to thank Abril Appel, General Director, National Chamber of the Textile Industry, CANAINTEX. Alejandro Gómez, Executive President of the Footwear Chamber of the State of Guanajuato, CICEG. Anabelle Sulmont, Coordinator of the Project Public Policies with a focus on Human Development and Inclusion of the United Nations Development Programme in Mexico, UNDP. Carlos Lara, Founder Artículo 27 A.C.

To those who contributed to this analysis with their insights and case studies: Bolfy Cottom, Carlos Lara, Cynthia Gómez, Aleyda Hernández, Patricia Carmona, Emiliano Villalba, Cecilia López, Ivette González, Paloma Sotelo, etc. Thank you for enriching the content of this report. We would also like to acknowledge the work of Fundación Avina for their financial support and Laudes Foundation has given support to Arlénica AC and Fashion Revolution UK which, in turn, have funded the research for this Index. The content of this publication is the sole and exclusive responsibility of Arlenica AC and Fashion Revolution UK.

Federico Arce, Master in Environmental Law, Professor at UNAM. Humberto Muñoz, Director of the Doctorate in Corporate Social Responsibility, Universidad Anáhuac. Marisol Conover, Director of the Master’s Degree in Fashion, Anáhuac University. Mónica Salazar, General Director, Dignificando el Trabajo, A.C. Annett Castro, Operational Director of the National Chamber of the Apparel Industry, CANAIVE. Ivette González, Human Rights

We would also like to thank the representatives from the brands and retailers who participated in the Fashion Transparency Index Mexico 2021. We know that brands receive frequent requests for information from civil society and NGOs,

and it’s difficult to respond to them all and still get work done. Your participation is both vital and appreciated. This report has been designed by Emily Sear, Head of Design, with support from Bronwyn Seier, Social Media Manager & Designer (who are both part of the Fashion Revolution global team), and was adapted by Abraham Maldonado and Eduardo Patricio Saavedra (who are both part of Arlenica). The document was written by Lorena Cortés, Magali Franco, Efraín Martínez, Mireille Acquart with support from Carry Somers, Ciara Barry, Liv Simpliciano and Delphine Williot (members of the Fashion Revolution global team). The English version of this report was translated by Arlenica with the support of translator Valeria Lara.

Fashion Revolution’s Fashion Transparency Index has led the way in increasing transparency across fashion brands' supply chains, while pushing the industry to be more accountable. With your support we can keep calling on brands to be more transparent as an essential first step towards a better and fairer industry, while advocating for a more dignified quality of life for the people who make our clothes. Please support us to continue to carry out this crucial work in creating a fashion industry that is more transparent and accountable by becoming a regular supporter or making a oneoff donation here.

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ANNEX 1 REFERENCES International Fashion Transparency Index 2021. Fashion Revolution https://issuu.com/fashionrevolution/docs/ fashiontransparencyindex_2021 Working hours and overtime: 96-hour workweeks. Clean Clothes Campaign https://www.fashionrevolution.org/donate/ de 96 horas. Clean Clothes Campaign https://cleanclothes.org/issues/working-hours Global employment levels in textile, clothing and footwear industries holding stable as industries relocate. ILO. (October 2000) https://www.ilo.org/global/about-the-ilo/newsroom/ news/WCMS_008593/lang--es/index.htm Federal Labour Law http://www.diputados.gob.mx/LeyesBiblio/ pdf_mov/Ley_Federal_del_Trabajo.pdf A Guide to Traceability: A Practical Approach to Advance Sustainability in Global Supply Chains. Global Compact. (2014)https://www.unglobalcompact.org/library/791 Traceability for Sustainable Garment and Footwear. UNECE https://unece.org/trade/traceabilitysustainable-garment-and-footwear OIT publica un análisis del impacto de la COVID-19 en México [ILO publishes analysis of the impact of COVID-19 in Mexico] https://www.ilo.org/mexico/ noticias/WCMS_757501/lang--es/index.htm IMPACTO. Viernes Tradicional http://viernestradicional. impacto.org.mx/historia-de-casos-deapropiacion-cultural-a-textiles-tradicionales/ Bill to carry a decree to issue the Law for The Protection of Cultural Heritage of Indigenous and Afro-Mexican Peoples and Communities in Mexico. (December 2019) http://sil.gobernacion.gob.mx/Archivos/ Documentos/2019/12/asun_397933 1_20191210_1575988616.pdf

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de-artesanias-a-indigenas-un-lucro-millonarioque-la-ley-no-logra-frenar-en-mexico.html Hasta 85% de los contratos colectivos existentes se firmaron a espaldas de los trabajadores: Alcalde [Up to 85% of the Existing Collective Agreements Were Executed Behind Workers: Major] Website of El Financiero (January 2020) https://www.elfinanciero.com.mx/economia/hasta85-de-los-contratos-colectivos-existentes-sefirmaron-a-espaldas-de-los-trabajadores-alcalde/ Working from home: From invisibility to decent work, ILO https://www.ilo.org/wcmsp5/groups/ public/---ed_protect/---protrav/---travail/ documents/publication/wcms_765898.pdf Economic Census 2019, INEGI https://www.inegi.org.mx/contenido/productos/ prod_serv/contenidos/espanol/bvinegi/ productos/nueva_estruc/702825198671.pdf Law for Solid Waste of Mexico City http://www. paot.org.mx/centro/leyes/df/pdf/2019/LEY%20_ RESIDUOS%20_SOLIDOS_25_06_2019.pdf La industria del vestido en México, dañada por la pandemia [The Garment Industry in Mexico, Damaged by the Pandemic] El Heraldo de Mexico (June 2021) https://heraldodemexico.com.mx/ economia/2021/6/7/la-industria-del-vestido-enmexico-danada-por-la-pandemia-303952.html Lenta recuperación en el sector calzado, siguen perdidos más de 13 mil empleos [Slow Recovery in the Footwear Sector, Still Over 13 thousand jobs at loss]. La Silla Rota. (July 2021) https://guanajuato.lasillarota.com/ estados/lenta-recuperacion-en-el-sector-calzadosiguen-perdidos-mas-de-13-mil-empleos/542474 Comercio electrónico creció 81% en 2020, asegura AMVO; un regreso a 2016, según datos de la Asociación de Internet [E-Commerce Grew 81% in 2020, Says AMLO; A Return to 2016 According to the

Internet Association]. El Economista (January 2021) https://www.eleconomista.com.mx/empresas/ Comercio-electronico-crecio-81-en-2020-aseguraAMVO-un-regreso-a-2016-segun-datos-de-laAsociacion-de-Internet-20210127-0081.html Customer Experience Excellence. KPMG https://www.delineandoestrategias.com.mx/ excelencia-en-experiencia-del-cliente?__hst c=214917896cef269b29a3f5e6f15c25ad7aa083e 5c.1635346500774.1635346500774.1635346500774.1&__ hssc=214917896.12.1635346500775&__hsfp=966270377 U.S. Corporate Boards Suffer from Inadequate Expertise in Financially Material ESG Matters New York University Stern Study. https://papers.ssrn. com/sol3/papers.cfm?abstract_id=3758584 Textile Guide, Chem Sec https://textileguide. chemsec.org/find/get-familiar-withyour-textile-production-processes/ Recommendation No. 46: Enhancing Traceability and Transparency of Sustainable Value Chains in the Garment and Footwear Sector. UNECE. https:// unece.org/sites/default/files/2021-04/ECE_ TRADE_C_CEFACT_2021_10E_Rec46-Textile_0.pdf El algodón "manchado" de China: la nueva evidencia de trabajo forzoso en el corazón de la industria global de la moda [The "Stained" Cotton from China: The New Evidence of Forced Labour in the Heart of the Global Fashion Industry]. BBC News (December 2020) https:// www.bbc.com/mundo/noticias-internacional-55312190 National Human Rights Program 20202024 https://dof.gob.mx/nota_detalle.php? codigo=5607366&fecha=10/12/2020 OECD Due Diligence Guidance for Responsible Business Conduct https://mneguidelines.oecd. org/Guia-de-la-OCDE-de-debida-diligencia-parauna-conducta-empresarial-responsable.pdf

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Universal Declaration of Human Rights https://www.un.org/en/about-us/universaldeclaration-of-human-rights Se desploman 80% de ventas en la industria textil [Fall of 80% of Sales in the Textile Industry]. El Economista (March 2020) https://www.eleconomista. com.mx/empresas/Se-desploman-80-ventasen-la-industria-textil-20200331-0029.html Worker Support Center http://apoyoaltrabajador.org.mx/ Chapter 23 Labour. USMCA https://www.gob.mx/cms/ uploads/attachment/file/465805/23Laboral.pdf Chapter 25 Small and Medium-Sized Enterprises. USMCA https://www.gob.mx/cms/uploads/ attachment/file/465805/23Laboral.pdf Chapter 26, Competitiveness. USMCA https:// www.gob.mx/cms/uploads/attachment/ file/465808/26ESPCompetitividad.pdf Workers in Crisis in the Garment Industry in Mexico: A Conversation with the Worker Support Center. Maquila Solidarity Network. (March 2021) https://www. maquilasolidarity.org/es/trabajadoras-en-crisisen-la-industria-de-la-confeccion-en-mexico Falta transparencia empresarial en México, advierte ONU [Mexico Lacks Business Transparency, Warns the UN]. La Jornada Baja California. https://www. jornadabc.mx/tijuana/06-09-2016/falta-transparenciaempresarial-en-mexico-advierte-onu Women's Global Leadership. Garment Worker Sector Focus. Global 16 Days Campaign. (March 2019). https://16dayscampaign.org/campaigns/garmentworker-sector-focus/#:%7E:text=There%20are%20 currently%2060%E2%80%9370,worldwide%3B%20 75%25%20are%20women.

January 2020 Global Economic Prospects: Slow growth, policy challenges. World Bank (January 2020) https://www.bancomundial.org/es/news/ feature/2020/01/08/january-2020-global-economicprospects-slow-growth-policy-challenges Press Release. 2020 Gross Domestic Product. INEGI (February 2021) https://www.inegi.org. mx/contenidos/saladeprensa/boletines/2021/ pib_pconst/pib_pconst2021_02.pdf México se apuntala como el país de AL que más apoya la dinámica de trabajar en casa [Mexico Places Itself as the Latin-American Country that Most Supports the Work from Home Dynamic]. Forbes (August 2020) https://www.forbes.com.mx/ mexico-se-apuntala-como-el-pais-de-al-quemas-apoya-la-dinamica-de-trabajar-en-casa/ Fired, then Robbed: Fashion brands’ complicity in Wage Theft during Covid-19. Worker Rights Consortium. 2021https://respect.international/ fired-then-robbed-fashion-brands-complicityin-wage-theft-during-covid-19/ Encuesta Nacional de Consumo Cultural ENCCUM (2012) [National Survey of Cultural Consumption. ENCCUM (2012) https://www.gob. mx/cms/uploads/attachment/file/201779/ Las_artesani_as_en_la_ENCCUM_con_imagen.pdf México el país con peor desempeño y a la zaga salarial de los integrantes de la OCDE [Mexico, the Country with Worst Wage Performance among OECD Members]. National Minimum Wage Commission 2019 https://www.gob.mx/conasami/prensa/mexico-elpais-con-peor-desempeno-y-a-la-zaga-salarialde-los-integrantes-de-la-ocde?idiom=es OECD Economic Surveys Mexico 2017. (May 2019) https:// www.oecd.org/economy/surveys/mexico-2017-OECDEstudios-economicos-de-la-ocde-vision-general.pdf

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Situación de los Contratos Colectivos en la Industria de la Indumentaria en México [Situation of Collective Agreements in the Garment Industry in Mexico]. Fondo Semillas. https://semillas.org.mx/pdf/ ResumenContratosColectivos.pdf Associations Registry. Ministry of Labor and Social Welfare http://www.stps.gob.mx/02_sub_ trabajo/03_dgra/ent_distritofederal.htm A fiber made of recycled plastic bottles, giving a second life to manufactured materials. Forbes Content, OGGI Jeans: An Ally for a Cleaner and Greener Plant along with the USCTP (May 2021) https://www.forbes.com.mx/ ad-oggi-jeans-aliado-por-un-planeta-mas-limpio/ Moraleda, Alba, El timo de la ropa eco: así te convencen las marcas de que tu ropa es buena para el planeta [The Eco-Clothing Scam: This is How Brands Convince You Your Clothes Are Good for the Environment], in El Español Digital, (October 2019) https://www.elespanol.com/ciencia/medioambiente/20191005/timo-ropa-eco-convencenmarcas-buena-planeta/434207050_0.html The Sustainable Angle https://thesustainableangle.org/ Fast Fashion: From your Closet to the Landfill. Greenpeace Mexico https://www.greenpeace. org/mexico/blog/9514/fast-fashion/ Semarnat (2010) Directory of Recycling Centers for Materials that Come from Waste in Mexico https:// www.semarnat.gob.mx/archivosanteriores/ transparencia/transparenciafocalizada/residuos/ Documents/directorio_residuos.pdf FashionNetwork.com MX. (n. d.). México desperdicia más de 200 toneladas de ropa al año [Mexico Wastes over 200 tones of Clothes per Year]. FashionNetwork. com. FashionNetwork.com. (September 2021) https:// mx.fashionnetwork.com/news/Mexico-desperdiciamas-de-200-toneladas-de-ropa-al-ano,10075

Kreutzfeld, F. Dressmaking Waste: 4 Ways to Fight the Problem. Delta Maquinas Textiles. (September 2019) https://www.deltamaquinastexteis.com.br/es/ confeccion-textil/desperdicio-en-la-confeccion/ Villemain, C. The Environmental Cost of Staying Fashionable. UN News (September 2021). https:// news.un.org/es/story/2019/04/1454161 Throwing your Clothes Away Is Not Fashionable. Chilango Magazine (April 2021) https://www.chilango.com/ shopping/cuanto-contamina-la-industria-textil/ A New Textiles Economy: Redesigning fashion’s future. Ellen MacArthur Foundation https://ellenmacarthurfoundation. org/a-new-textiles-economy The Environmental Cost of Fashion. UN News https://news.un.org/es/story/2019/04/1454161 Energy Prospectives and Renewables 2016-2030 https:// www.gob.mx/cms/uploads/attachment/file/177622/ Prospectiva_de_Energ_as_Renovables_2016-2030.pdf

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ANNEX 2 DEFINITIONS & ABBREVIATIONS

Auditing is the process of reviewing a company's finances, working conditions, and environmental practices. It uncovers risks to workers' safety and opportunities to improve working conditions. (Source: Walk Free Foundation)

Freedom of Association is the right of individuals and workers to form and join groups of their own choosing in order to take collective action to pursue the interest of the members of the group. (Source: ILO)

Circularity (or Circular Economy) is an alternative to a traditional linear economy (make, use, dispose) in which we keep resources in use for as long as possible, extract the maximum value from them whilst in use, then recover and regenerate products and materials at the end of each service life. (Source: WRAP)

Forced labour is any work or service which people are forced to do against their will, through the use of violence or intimidation, or by more subtle means such as accumulated debt, retention of identity papers or threats of denunciation to immigration authorities. Forced labour is the most common element of modern slavery. (Source: ILO and Anti-Slavery International)

Collective bargaining is a process where employers and unions negotiate to determine fair wages and working conditions. (Source: OIT)

Gender pay gap is defined as the difference in median pay between men and women. . (Source: Office for National Statistics)

Due diligence is a process through which companies assess their impacts on human rights and the environment and then take actions to reduce any negative impacts: (Source United Nations Global Compact)

Grievance mechanism is a complaint process that can be used by workers, allowing them to voice concerns about working conditions without fear of punishment or retribution. (Source: Verité)

Downcycling is to recycle something in such a way that the resulting product is of a lower value than the original item. Examples include recycling textiles into building insulation, rags, or carpet underlay. (Source: Merriam Webster)

Living wage is a wage a worker earns in a standard working week that is enough to provide for them and their family's basic needs - including food, housing, clothing, education and healthcare. (Source: Clean Clothes Campaign)

Equal pay means that men and women in the same employment performing equal work must receive equal remuneration. This applies not only to salary, but to all contractual terms and conditions of employment, such as holiday entitlement, bonuses, pay and reward schemes, pension payments and other benefits (Source: Equality and Human Rights Commission)

Materiality Assessment is an exercise designed to gather insights on the relative importance of specific environmental, social and governance (ESG) issues. The insight is most commonly used to inform sustainability reporting and strategic planning. (Source: Greenbiz) Microfibres are fibres that are shed from clothing during production, consumer use, or end of

life, and end up as pollution in the environment. Microfibres from synthetic clothing (such as polyester) are the largest source of primary microplastics polluting our oceans. Microplastics are any plastic particles smaller than 5mm. (Source: IUCN) Pre-consumer waste is generated by textile and clothing manufacturers during any stage of the production of clothing. Pre-consumer wastes include textile scraps after the cutting of garment pieces, leftover textile samples, selvedges, end-of-roll wastes, damaged materials, part-finished or finished clothing samples from the design and production department. (Source: Dobilaite et al., 2017) Purchasing practices refers to a company’s process of buying goods and services. This might include activities such as planning and forecasting, design and development, cost negotiation, sourcing and placing orders, production management and payment and terms. (Source: Better Buying) Remediation is the action of fixing something, particularly reversing or stopping environmental damage or human rights abuses. (Source: ETI Norway) A Corrective Action Plan is an agreement with a supplier on what needs to be remedied, when it is to be done, and who is responsible for which tasks. (Source: ETI Norway). Restricted Substance List sets out the specific chemicals substances that are not allowed to be used in products or manufacturing processes. Typical hazardous substances that are restricted include lead, AZO

dyes, DMF, PAHs, Phthalates, PFOS, the nickel release and so on. (Source: CIRS-REACH) Sex-disaggregated data is information which is measured and separated according to gender. It allows comparisons on outcomes between women and men on specific topics and brands measuring and providing it will increase the visibility of women and the issues they face across supply chains. (Source: BSR) Supply chain / value chain refers to all the steps it takes to produce and sell a product, from farm to closet. (Source: OECD) Wet processing facilities are involved in the production of clothing whose activities typically involve rinsing, bleaching, dyeing, printing, treating or coating fabric and laundering. (Source: Garment Merchandising blog)

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DISCLAIMER The Fashion Transparency Index Mexico is made available on the express request that it will be used only for general information purposes. Readers are encouraged to form their own views and opinions on each of the brands mentioned in this Index. All content in the Fashion Transparency Index is not to be construed as connected to or relating to any form of legal, governance, regulatory, research or investment advice nor any other specific or general advice on buying, selling or dealing in any way with the brands mentioned in this Index. This Index has not been prepared to any specific or general investment objectives. Before acting on anything inspired by anything contained in this Index, you must consider whether it is suitable to your circumstances and, if necessary, seek professional advice. No representation or warranty is given that the material in this Index is accurate, complete or up-to-date. The material in this Index is based on information that we have found in the public domain and reasonably consider correct at time of publication. Fashion Revolution has not verified, validated or audited the data used to prepare this Index. The assessment of fashion brands has been carried out solely according to the new Fashion Transparency Index methodology and no other assessment models used by any of the project partners or our analyst team. Any statements, opinions, conclusions or recommendations contained in this Index are honestly and reasonably held or made at the time of publication. Any opinions expressed are our current opinions based on detailed research as of the date of the publication of this Index only and may change without notice. Any views expressed in this Index only represent the views of Fashion Revolution CIC and Fashion Revolution Mexico, unless otherwise expressly noted. The content of this publication can in no way be taken to reflect the views of any of the funders of Fashion Revolution CIC, Fashion Revolution Mexico, Arlenica or the Fashion Transparency Index Mexico. While the material contained in this Index has been

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This work is owned by Fashion Revolution CIC (Company number: 8988812) and has been written and researched by Lorena Cortés, Magali Franco, Lourdes Nava, Efraín Martínez, Mireille Acquart with further support from Carry Somers, Liv Simpliciano, Ciara Barry, Delphine Williot on the Policy & Research team at Fashion Revolution CIC. Between January 2021 and November 2021. It has been designed by Eduardo Patricio and Abraham Maldonado.

The Fashion Transparency Index is licensed under a Creative Commons Attribution-NonCommercial 4.0 International (CC BY-NC 4.0). It is not a Free Culture Licence. Please see the link for more information: https://creativecommons.org/ licenses/by-nc- nd/4.0. For the Raw Data File we make available we are not granting any licence for you to use the Raw Data, which we have compiled to produce this Index. You are only permitted to view the Raw Data File.

The Avina Foundation funded Fashion Revolution CIC to carry out the research for this Index. Laudes Foundation is an independent foundation and part of the Brenninkmeijer family enterprise, alongside COFRA Group businesses, and the family’s other private philanthropic activities, including Porticus, Good Energies Foundation and Argidius Foundation. The Foundation is independent from the Group and works to influence all of the garment industry, including the COFRA group businesses which includes C&A.

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