Aritzia's Little Secret: Poverty Wages and Hidden Supply Chains by Oxfam Canada

Aritzia’s little secret: poverty wages and hidden supply chains By Nirvana Mujtaba

Rya works 8 to 10 hours a day, and earns $262 CAD per month. Photo: Caroline Leal/Oxfam

ARITZIA’S LITTLE SECRET

Rya has been working in the same garment factory in Cambodia for the past four years. Now forty years old, she has been a garment worker since 2007 and knows firsthand the harsh realities that persist under the shadows of the glamorous fashion brands. Her daily routine involves waking up early in the morning, often as early as 5 am, to prepare food for the busy day ahead. She arrives at the factory at 7 am and works for long hours, often without breaks. When asked about how she feels about her work, Rya expressed exhaustion and frustration, adding that she works long hours often without breaks and that the working conditions in the factory are terrible. Rya works 8 to 10 hours a day and her salary is $262 per month, which isn’t enough to survive. If she works overtime she can make around $354 per month. She will send $197-220 home to her family and keep $131 to pay for everything else – rent, food, utilities1. If it turns out not to be enough, she’ll borrow money from others and when her next pay comes, she’ll pay off some debt, send some home and keep little for herself. The cycle keeps repeating. “We earn so little here compared to other countries. We are all humans; how come we are only scraping by, only able to afford a small rental room to share with others, whereas overseas workers sleep in air-conditioned room”, she said. Rya, conveys a powerful message for everyone: “I have a message for the young people and students who like to buy these branded goods - to please spare a thought for the workers here who work tirelessly, more than workers in Canada, and for a much lower wage. So, they get to have a much better life than us”. Rya’s story is a stark reminder of the extreme disparities that exist in the world. A garment worker in Cambodia works tirelessly and, on average, earns poverty wages of only $262 per month2, struggling to make ends meet. These poverty wages aren’t enough for them to afford decent housing, nutritious food, utilities, education, transportation, healthcare, childcare and saving for unexpected events. The women who make our clothes must be paid at least a living wage that covers a decent standard of living. On the flip side of this grim reality, Canadian fashion brand Aritzia soared to new heights last year, boasting a remarkable $2.2 billion in annual net revenue, and shattering its previous sales records3.

1 Converted from USD to CAD (1 USD = 1.31 CAD) 2 Oxfam Canada’s calculation based on minimum wages paid to garment workers in Cambodia.

3 Aritzia Annual Report 2023, Retrieved from https://s21.q4cdn.com/489771965/files/doc_financials/2023/ar/

Aritzia_Annual_Report_2023_web_FINAL.pdf on September 22, 2023

ARITZIA’S LITTLE SECRET With an over $700 million increase4 from the previous year, this explosive growth highlights the company’s financial strength and growing market position. However, this success comes at a cost – a cost borne by the garment workers in Aritzia’s supply chain. As Aritzia celebrates its financial success, the women who make our clothes in the global South earn between $4-$11 per day5. By contrast, Aritzia’s CEO, Jennifer Wong, was paid roughly $1,8036 per hour last year. A garment worker in Cambodia, where Aritzia sources many of its products, would need to work full time for more than three years to earn what Aritzia’s CEO makes in just one day. The current minimum wage in Cambodia is only 87 percent of what workers should be paid to receive a living wage, which is around $319 per month7. By definition, a living wage should be earned in a standard 48-hour working week and be sufficient to afford a decent standard of living for a worker and their family. Fashion brands in Canada need to stop weaving poverty into the clothes that we wear. Massive pay inequality isn’t the only problem. Aritzia does not publicly disclose crucial information such as their supplier factory names, location, types of products made, breakdown of number of workers by gender and other gender identities of their sourcing factories. General information about their supplier countries, as well as the percentage of finished items sourced from each country, isn’t sufficient. Supply chain transparency is critical for labour and human rights advocates, trade unions and worker representatives, and shows a degree of accountability by major brands and retailers. Brands can benefit from publishing their supplier lists as it allows them to receive timely and credible information from worker representatives which can help mitigate risks of human rights abuse. For instance, if Aritzia discloses its supply chain, workers and their representatives can share timely and credible information with the fashion brand about poverty wages or other labour rights violations. In our view, Aritzia’s public reporting on environmental, social and governance (ESG) issues is lacking compared with many of its industry peers. Here’s a glimpse into Aritzia’s work over the past few years8:

4 ibid 5 Oxfam Canada’s calculation based on minimum wages paid to garment workers in Bangladesh, Cambodia and Vietnam. 6 Oxfam Canada’s calculation based on annual compensation paid to Aritzia’s CEO. Retrieved from https://simplywall.st/stocks/us/

retail/otc-atza.f/aritzia/management on September 22, 2023 7 Oxfam Canada’s calculation based on Anker Reference Value Update, Urban Cambodia 2022. Retrieved from https://

www.globallivingwage.org/wp-content/uploads/2022/10/Cambodia-Urban-Living-Wage-Update-20220926-1.pdf on June 23, 2023 8 Aritzia’s Environmental & Social resources. Retrieved from https://investors.aritzia.com/environmental-and-social/default.aspx on

September 21, 2023

ARITZIA’S LITTLE SECRET

Revealing Aritzia's lack of transparency What Artizia says when it comes to living wages: Aritzia says they are reviewing their practices and encouraging two-way dialogue with their suppliers to “collaboratively develop a roadmap toward economic security.”9 In their 2023 ESG report, Aritzia placed high importance to human rights, working conditions & living wages on their materiality matrix10. What we think: There’s a lot missing. Aritzia has not made a credible commitment to paying living wages to the workers within their supply chain. There is no detailed information on their progress made towards workers economic security, how they are implementing wage ladders. In 2021, Aritzia scored amber on making a commitment on the What She Makes brand tracker because the company engages with appropriate stakeholders on economic security for workers but hasn’t made a commitment nor set a timeframe to pay a living wage. Furthermore, Aritzia’s supplier code of conduct (CoC) does not yet align with workers economic security as it only requires adherence to local minimum wage requirements. Unfortunately, these local wage standards are often insufficient, given the competitive environment of sourcing country suppliers striving to attract foreign investment by maintaining low labour costs.

What Artizia says about their data driven approach to information gathering and wage analysis: On Aritzia’s website they mention; “We take a data-driven approach to information gathering and wage analysis, which is part of deepening our understanding of wages throughout our supply chain. With this information, we’re building wage ladders throughout our supply chain and defining next steps11. What we think: Their claim to build wage ladders throughout their supply chain has not followed through their reports or any publicly available resources since 2021, when Aritzia scored amber on the WSM brand tracker on making a commitment to paying living wages.

9’ Advancing economic security’ – Aritzia website. Retrieved on September 22, 2023 from https://www.aritzia.com/en/aritzia/corporate-

hub/community/people-hub/supply-chain-human-rights-working-conditions.html#product_social 10 Aritzia Community ESG Report FY 2023. Retrieved on September 22, 2023 from https://s21.q4cdn.com/489771965/files/

doc_downloads/2023/ARITZIA-COMMUNITY-ESG-REPORT-FY-2023-1.pdf 11 Aritzia, People. Retrieved from https://www.aritzia.com/en/aritzia/corporate-hub/community/people-hub/supply-chain-human-

rights-working-conditions.html on September 22, 2023

ARITZIA’S LITTLE SECRET

What Artizia says when it comes to supply chain disclosure “We understand that a well-managed supply chain is integral to build a stable, successful and sustainable business. With this in mind, we partner with the best-in-class fabric, trim and finished goods suppliers, defined not only by the quality of the product but also how they work.”12 What we think: Aritzia’s claim of partnering with best-in-class suppliers could not be verified since they do not disclose: • names of supplier factories, location and addresses • name and address of parent company (if applicable) • types of product made at each factory • breakdown of workers by gender per factory • the sourcing channel (direct sourcing or through agents) Aritzia reports their sourcing countries for finished goods and fabric suppliers and the percentage of finished goods procured from their sourcing countries. This isn’t enough to validate their claim.

What Artizia says when it comes to human rights impact assessment In 2022, Aritzia said “Over the past year, we conducted a Human Rights Impact Assessment across our value chain, and the findings are being socialized to inform our programming and guide Aritzia as we update our mitigation strategies to focus on addressing the identified priority human rights issues, should they persist.”13. In 2023, Aritzia said; “Over the past year, we’ve conducted a Human Rights Impact Assessment and shared the findings internally. Moving forward, these findings will inform how we review our practice and continue to improve by implementing measures to address any identified issues or risks.”14

What we think: It’s great that Aritzia conducted a human rights impact assessment. However, what were the company’s findings? What are the human rights abuse risks (if any) that they found within their supply chain? What is their risk mitigation strategy? Why is it only shared internally? Why not publicly?

12 Ibid. X. 13 Aritzia Community ESG Report FY 2022. Retrieved from https://s21.q4cdn.com/489771965/files/doc_downloads/2023/05/Aritzia-

CommunityTM-ESG-Report-FY2022.pdf on September 21, 2023 14 Ibid. X

ARITZIA’S LITTLE SECRET

Oxfam Canada acknowledges the historical and ongoing oppression and colonization of Indigenous Peoples, cultures and lands in what we now know as Canada. We commit to acting in solidarity with First Nations, Inuit and Métis peoples in their struggles for self-determination and decolonization. Oxfam Canada’s offices are located on the unceded, unsurrendered traditional territories of the Anishinabe Algonquin peoples. As settlers on these lands, we commit to walking in solidarity with our host nation and according to Oxfam’s values of equality, empowerment, solidarity, inclusiveness, accountability and courage.