Corporate Social Responsibility in the Clothing Industry

This research study explores the concept of corporate social responsibility (CSR) in the clothing industry. It discusses the significance of CSR for companies, the challenges faced in implementing CSR, and best practices for ethical and responsible business practices. The study also provides recommendations for firms in the clothing sector to become more socially responsible.

Business ethics, responsibility & sustainability
UGB264
University of Sunderland
Student Number:
Student Name:
Submission Date:

Table of Contents
Introduction................................................................................................................................1
Corporate social responsibility...................................................................................................1
Overview................................................................................................................................1
Significance of CSR for companies.......................................................................................2
Corporate social responsibility and clothing industry............................................................2
Carroll's CSR Pyramid...........................................................................................................3
Key challenges related to corporate responsibility & sustainability..........................................4
Main challenges to CSR in clothing industry.........................................................................4
Best CSR practices within the clothing sector...........................................................................7
Recommending ways to the firms in the clothing sector to become more responsible by
considering global considerations..............................................................................................8
Conclusion..................................................................................................................................9
References................................................................................................................................10
List of Figures
Figure 1: Carroll's CSR Pyramid..........................................................................................................3

Introduction
Behind the fascination, the clothing industry is featured by extended working hours,
hard labour conditions, environmental issues and droning tasks. Because of these working
conditions, there are many serious ethical issues that might take place if they are not
addressed and it is where the corporate social responsibility matters. Presently, all fashion
brands are stepping in the direction of fast fashion (de Abreu, 2015). New trends within the
clothing industry are challenging the way firms manage their requirements as well as the
working environment without causing an ethical issue. Pertaining to this, the main aim of the
current research is to investigate the corporate social responsibility and its key challenges
within a clothing industry. The report will also focus on the best practice that should be
adopted by the firms operating in this sector in order to be ethical and moral. The final
section of the research study will include recommendation pertaining to the ways the business
can be more socially responsible by taking into account the global considerations.
Corporate social responsibility
Overview
Many effects of globalization are visible in this current business scenario.
Globalization is now being considered as a process that helps in increasing the
interdependence amid social, economic and political components of the world. In other
words, the borders and national boundaries of the nations are getting open for all and
increasing the flows of capital, people, technology in international business. Because of this
possibility, there has been an increase in challenges and responsibilities (Ackers and Eccles,
2015). It becomes really essential for the business to manage as it helps in leading them to the
path of success and growth in the international arena. The most vital thing is the effective
method of management. Business corporations which substantially have impacts on various
groups and societies from different sections of the globe are required to consider the method
of management wherein demands of the stakeholders at every level of the activities of the
firm is being considered. In addition to this, there is a requirement to accept all ethical rules
related to varied cultures. Consequently, business operating in any sector have to look for
novel methods of management. One of them is the idea that encompasses corporate social
responsibility as well as sustainable development. Nowadays, societies are growingly getting
aware about the role of business in the environmental issues and resolving the same is also an
1

important factor which is being added to the vibrant development of social responsibility in
the business (Wynder and Dunbar, 2016).
Significance of CSR for companies
Corporate social responsibility is vital for the companies as it impacts all elements of
the operation and stakeholder groups of the firm. It is a challenge for the firm to keep various
groups of stakeholder happy and satisfied with the health of their firm. However, it is not
right to say that unethical firms are unhealthy but corporate social responsibility influence
varied stakeholder which influence significant facets of the firm like sales, reputation and
brand image. Today, customers are getting more aware of the negative influence of the
products being consumed by them. Along with their awareness, demand for the products that
they are consuming is also increasing (Enderle, 2004). Further, they want to purchase them
from sources which are responsible thereby put more pressure on the corporations to perform
in the right manner. Thus, customers are crucial for each and every firm for driving sales and
profits. Another driving force is the suppliers. They are the one which has a direct impact on
supply chain management. Business corporations always desire to work with suppliers for a
longer period of time because of the several benefits like better quality of products, pricing
etc. In addition to this, firms also create a closer relationship with the long term partners
which enables the firms to have greater control as well as impact over them (Harper, 2015).
Talking in relation with the employees, corporate social responsibility impacts their
willingness to perform and retention and at the same time, it also affects the image of the firm
through the ways workers are being treated within the firm. For example, Nike has come
across with a scandal in the year 1990 due to the working conditions of its employees in the
Asian nations. The big giant was accused of unfair practices in regards to their workers such
as child labour, unsafe factories for producing their products and sweatshops etc. for many
years. Nike's reputation and image were completely damaged because of the protests and
boycotts of the consumers. This has majorly affected the sales of the firm. Consequently, it
can be said that CSR is essential for the existence and good health of the firms (Credo, et. al.,
2010).
Corporate social responsibility and clothing industry
It is being grounded on the fact that management can and should move forward from
their regulatory framework. CSR is a strategy which does not emphasize on augmenting the
profits and income of the firm. Rather it encompasses ethical, social and environmental
2

aspects of carrying out the successful business. Its basic element is the flow of information
with the stakeholders like suppliers, community, customers and the whole environment
(Mihm, 2010). Talking in relation to the corporate social responsibility, it is being referred to
as the practice through which firms operating in any sector contributes voluntarily for the
betterment of the society. In regards with the clothing industry, more emphasis, as well as
pressure, is being given so as to make them serious about the issues related to CSR and
sustainability particularly in relation with labour standards (Hemingway and Maclagan,
2004). It has been seen that the clothing sector adopts an effective code of conducts however
in spite of increasing awareness as well as commitment towards corporate social
responsibility, many multi-national retailers and corporations are facing problems in
executing CSR initiatives.
Because of the rising interaction in the global economy as well as globalization, there
has been alteration in the economic relationship amid the nations. Pertaining to this, there has
been an increase in the transfer of production to developing nations particularly in the
clothing industry. Consequently, the risk of infringements is also higher in the field of
environment and in relation to the working conditions. All these factors make the clothing
industry one of the most sensitive industries in relation to the corporate social responsibility
aspects. There are mainly two fields which impact the clothing and apparel industry
exceptionally i.e. impact on the environment and human &worker rights comprising working
settings (Wadham and Warren, 2013).
Carroll's CSR Pyramid
As per Carroll, CSR encompasses the conduct of a business such that attains its
profits, abides by the law, support the society and remain ethical. When talking in relation to
business ethics, socially responsible means, considering profitability as well as obedience to
the law as a foremost condition.
3

Figure 1: Carroll's CSR Pyramid
(Dudovskiy, 2012).
Corporate social responsibility pyramid helps in reasoning how and why firms should
fulfil their social responsibilities. The main features of this pyramid include:
 Corporate social responsibility is grounded by profit
 Further, it includes the need for a business to make sure it abides by all related rules
as well as legislation.
 Prior to considering the philanthropic options of the business, it is vital to fulfilling
the ethical duties (Hart, et. al., 2010)
The very first responsibility of the business as per Carroll is economic responsibility
which means a business should earn reasonable profits to survive and exists in the market.
The second responsibility is related to legal aspects i.e. companies should obey and follow
the rules and regulations specified by the law such as health and safety, employment,
competition etc. The third one is ethical responsibilities which mean to behave in an ethical
manner. These accountabilities are generally expected by society over and above legal and
economic responsibility. The last one is philanthropic responsibility wherein the firm gives
back to the society and focusses on more luxurious things such as improvement in the quality
of life of people and local community (De Neve, 2014).
4

Key challenges related to corporate responsibility & sustainability
Main challenges to CSR in the clothing industry
There are many challenges linked with being socially responsible was recognized
earlier and one of the biggest among them was implementing corporate social responsibility.
It is very complex in the clothing industry to make sure that corporate social responsibility is
suitably executed, as these multinationals have trivial supply chains and they have extended
operations as well (Bhardwaj and Fairhurst, 2010). But, from many years, firms are now
stepping forward from vertical integration and are now outsourcing their products from
different suppliers who are located in varied regions all around the world. Some of the
challenges of social responsibly and sustainability are as follows:
 Geographical distance – The main obstacle to make the clothing industry more
responsible is nothing but the distance amid the place of manufacturing of clothes and
the parent company. For developing a company which is socially responsible, it is
necessary to have influence as well as cooperate of the activities at all the levels of the
firm. Because of this distance, it becomes impossible for the managers to have control
of activities, conditions and operations. In the clothing industry, manufacturing of
apparel as well as textile is transferred in the developing economies for maximizing
profits and thus, they are discouraged to take care about the working conditions and
salaries of the workers (Chandler and Werther, 2014). The main challenge of the
companies here is to identify ways to increase control in the factories.
 Profit maximization – According to Carroll's CSR pyramid, the fundamental
responsibility of the company is to attain higher profits or economic prosperity. Other
than this, the concept of fiduciary capitalism, as well as shareholder theory, also
identifies that all types of firms generally have only one responsibility i.e. utilization
of the resources and engaging in the operations which are being designed for
increasing profits for shareholders. It is necessary for existence as well as the survival
of the companies. The clothing industry is also not different from other sectors in
relation to the generation of profits. For example, Hennes and Mauritz (H&M), which
is a Swedish multinational clothing retailer, operates in a market which is highly
competitive in nature and thus, there is a constant exploration of such methods which
are cost-effective (Haynes, Murray and Dillard, 2012). Thus, to minimize the costs of
producing its products, the company does not own any factories and rather source
their products from many factories in different parts of the world.
5

 Conflicts of interest – In recent years, there has been an increase in the emergence of
articulated view on the relations amid the community and businesses. In this rising
level of globalization, organizations are now becoming more transparent mainly due
to the presence of social media as well as the internet. Even customers are now
demanding a new kind of responsibility from the businesses. Further, they want
companies to move forward from their minimum standards needed by the legislation
for performing responsibly along with addressing environmental as well as social
issues. In addition to this, consumers also demand value for their money being paid
for the products and services other than demanding firms to behave in a socially
responsible manner. This actually helps in determining the purchase decisions of the
people (Vigneau, Humphreys and Moon, 2015). It is very vital for the businesses to
satisfy the demands of all the stakeholder such as business partners, external influence
and authorises and balance the expectations of these stakeholders.
 Local and international legislation – Global firms engaged in the clothing industry
are facing numerous challenges because of the varied stakeholders from different
nations being involved. They come with different cultural background, legal standards
and norms. For instance, the production of clothes and other materials of H&M as
well as Gap happens in the nations which are less developed where legal requirements
in relation with the child labour, health and safety, working time, work conditions and
human rights are generally insufficient and outdated. So, as per Carroll’s CSR
pyramid, it is the responsibility of the business to abide by the law while carrying out
their business activities (Raciniewska, 2014). But, it does not clearly stipulate the type
of laws to be followed. Therefore, it can be said that for the firms who are operating
in different nations of the world where requirements related to rights of workers are
minimal, firms are not allowed to go beyond those mentioned requirements. In such a
scenario, they should follow the guidelines being mentioned by OECD. But, the
majority of the firms consider those conventions as standards to aspire and are not
completely endorsed (Lowson, 2003).
 Application of code of conduct – In order to set the difference amid global as well as
local regulations and to impact the working conditions in the foreign factors,
companies engaged in the clothing industry such as H&M and Gap executes business
code of conduct. Further, they are also very dedicated to self-regulate their activities
of the business. Speaking about the code of conduct, they are considered as voluntary
commitments being made by the firms in order to lay down some principles for the
6

successful operation of their business. Nevertheless, companies cannot compel their
suppliers to follow their code of conduct. For instance, H&M does not own any
factories from which their products are being sourced and thus, they can only
recommend the ways business should be carried out. Thus, it can be said that having a
code of conduct does not simply means that the suppliers will follow the set
guidelines (Sharp, and Zaidman, 2010).
Best CSR practices within the clothing sector
CSR practices are vital for the companies operating in the clothing industry as it
impacts all elements of the operation and stakeholder groups of the firm. It is a challenge for
the firm to keep various groups of stakeholder happy and satisfied with the health of their
firm. There are many best practices of corporate social responsibility that corporations can
consider in the clothing sector and these are as follows:
 Setting measurable goals – It is always complex to measure the return on investment.
For achieving this in the CSR policy, small changes should be executed within the
firm such as making improvement in the employee policy that helps in decreasing
turnover, reducing waste and effective utilization of resources (Waldman, Siegel, and
Javidan, 2004). The overall corporate strategy should be supported by the
sustainability efforts of the company.
 CSR Reporting – From the past few years, there has been an increase in the corporate
social responsibility reporting because of the increase in the regulations of the
government along with self-regulation by the firms who think forwardly. It is very
vital for the firms to make sure that their base of consumers gets the latest and greatest
efforts of the firm but it should not minimize what the firm is doing. Corporations
should post their CSR reports on the website as it is the quite simple and
environmentally friendly approach. Further, feedback from the stakeholders can be
asked from this platform.
 Sustainability Branding – Focusing in relation to sustainability branding, transparency
is being regarded as the main key for this. All practices within the company should be
clear and transparent (Crane, et al., 2004). Transparency supports in the development
of trust between the firm and its customers.
Talking about the giant and unquestionable leader in the fast fashion industry Hennes
and Mauritz (H&M), it has around 155 stores both in Europe and the US. Furthermore, the
7

sales of the firm are more than 13.1 billion USD in the year 2007. Moreover, the sales of the
firm crossed figure 12 billion USD in the year 2016. Since H&M operates in the fast fashion
industry, corporate social responsibility plays a very crucial role in maintaining its brand
image as well as reputation. Articulating about the best CSR practices within H&M, it has
seven general commitments towards their stakeholders and these are:
 Offering fashionable clothes and apparels to customers who are quite fashion
conscious
 Selecting and rewarding business partners who are responsible
 Remaining ethically correct
 Be climate-smart (H & M Hennes, and Mauritz AB, 2010)
 Reducing, recycling and reusing
 Utilizing the available natural resources responsibly
 Strengthen the local communities and societies
Being an apparel company, Hennes and Mauritz are deeply engaged towards
protecting the environment and natural resources. They consider the needs of all the
stakeholders. The firm makes use of fashionable items of high quality which are reasonable
to buy and is also sustainable in nature as they are being sourced from sustainably sourced
materials such as recycled glass, recycled denim, rhinestones, organic cotton etc. Even H&M
also offers the best working condition to its workforce with equal respect to all human rights
all throughout its value chain (H&M Hennes, and Mauritz AB, 2015).
Recommending ways to the firms in the clothing sector to become more
responsible by considering global considerations
In this globalized world which is witnessing various economic as well as social
changes, there is a need for all the organizations in the clothing sector whether big or small to
change their management approach. Specifically, attention should be given to the
management at the international level. It is vital for the firm operating at the international
level like H&M, Gap, M&S and many others to take into account global considerations to
become more socially responsible. It is highly recommended to the businesses to consider
some important aspects while addressing CSR strategy at the global context (O’Higgins,
2010). The very first is culture if the firms are planning for global expansion than it is vital
for them to operate in the context of national as well as regional cultures of another nation.
Further, the firm should also apply ethical as well as moral standards for addressing the
difference in the culture in regards to corporate social responsibility. The second vital aspect
8

is the global standard. Over the years, numerous standards have been developed such as ISO,
social accountability, the United Nation declaration on human rights, OECD etc. Companies
operating at the international level can voluntary implement these guidelines in relation CSR
for the purpose of having sustainable and responsible development.
Conclusion
Consequently, from the above study it can be said that with the rising social as well as
economic modifications in the world, there is a requirement of alteration in the management
approach. Considering the structure of the clothing industry all across the world, CSR is
specifically a critical and most sensitive issue. Further, it was explored that principles of CSR
offer an ethical approach of carrying out work activities and business. It also encompasses
social as well as environmental needs as well. There are many challenges being faced by
multinational firms with respect to CSR which needs to be dealt with effective strategies.
9

References
Ackers, B. and Eccles, N.S. (2015). Mandatory corporate social responsibility assurance
practices: The case of King III in South Africa. Accounting, Auditing & Accountability
Journal, 28(4), pp.515-550.
Bhardwaj, V. and Fairhurst, A. (2010). Fast fashion: response to changes in the fashion
industry. The international review of retail, distribution and consumer research, 20(1),
pp.165-173.
Chandler, D. and Werther, W.B. (2014). Strategic corporate social responsibility:
Stakeholders, globalization, and sustainable value creation. Thousand Oaks,
California: Sage.
Crane, A., McWilliams, A., Matten, D., Moon, J. and Siegel, D.S. eds. (2008). The Oxford
handbook of corporate social responsibility. Oxford Handbooks.
Credo, K.R., Armenakis, A.A., Feild, H.S. and Young, R.L. (2010). Organizational ethics,
leader-member exchange, and organizational support: Relationships with workplace
safety. Journal of Leadership & Organizational Studies, 17(4), pp.325-334.
de Abreu, M.C.S. (2015). Perspectives, Drivers, and a Roadmap for Corporate Social
Responsibility in the Textile and Clothing Industry. In Roadmap to Sustainable Textiles
and Clothing (pp. 1-21). Springer, Singapore.
De Neve, G. (2014). Fordism, flexible specialization and CSR: How Indian garment workers
critique neoliberal labour regimes. Ethnography, 15(2), pp.184-207.
Dudovskiy, J. (2012) Carroll’s CSR Pyramid and its applications to small and medium sized
businesses [Online]. Available from: . [Accessed: 30th April 2018].
Enderle, G. (2004). Global competition and corporate responsibilities of small and medium‐
sized enterprises. Business Ethics: A European Review, 13(1), pp.50-63.
H & M Hennes and Mauritz AB (2010) H&M Conscious Actions – Sustainability Report
2010 [Online] Available from: . [Accessed: 28th April 2018].
10

H & M Hennes and Mauritz AB. (2015) H&M Conscious Annual Report 2015 [Online]
Available from: . [Accessed: 28th April 2018].
Harper, C. (2015). Organizations: Structures, processes and outcomes. Routledge.
Hart, K., Laville, J.L. and Cattani, A.D. (2010). The human economy (p. 371). Cambridge:
Polity Press.
Haynes, K., Murray, A. and Dillard, J. eds. (2012). Corporate social responsibility: A
research handbook. Routledge.
Hemingway, C.A. and Maclagan, P.W. (2004). Managers' personal values as drivers of
corporate social responsibility. Journal of Business Ethics, 50(1), pp.33-44.
Lowson, R.H. (2003). Apparel sourcing: assessing the true operational cost. International
Journal of Clothing Science and Technology, 15(5), pp.335-345.
Mihm, B. (2010). Fast Fashion in a Flat World: Global Sourcing Strategies [Online]
Available from: . [Accessed: 27th April 2018].
O’Higgins, E.R. (2010). Corporations, civil society, and stakeholders: An organizational
conceptualization. Journal of Business Ethics, 94(2), pp.157-176.
Raciniewska, A. (2014). Ethics in fashion: Ethical fashion in Poland. International Journal of
Fashion Studies , 1 (2), pp.165-184.
Sharp, Z. and Zaidman, N. (2010). Strategization of CSR. Journal of Business Ethics, 93(1),
pp.51-71.
Vigneau, L., Humphreys, M. and Moon, J. (2015). How do firms comply with international
sustainability standards? Processes and consequences of adopting the global reporting
initiative. Journal of Business Ethics, 131(2), pp.469-486.
Wadham, H. and Warren, R. (2013). Inspiring action, building understanding: how cross‐
sector partnership engages business in addressing global challenges. Business Ethics: A
European Review, 22(1), pp.47-63.
Waldman, D., Siegel, D. and Javidan, M. (2004). CEO transformational leadership and
corporate social responsibility. J. Manag. Stud, 43, pp.1703-1725.
11

Wynder, M. and Dunbar, K. (2016). Ethical values in the evaluation of corporate social
performance. Managerial Auditing Journal, 31(2), pp.180-196.
12