Uniqlo Owner’s ESG Supply Chain Strategies

April 10th, 2024
8:47 AM

Uniqlo owner Fast Retailing is taking steps to embed its environmental, social and governance (ESG) standards throughout its supply chain. Yukihiro Nitta, group executive officer for sustainability, tells Drapers how.


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27 MARCH 2024

Uniqlo owner Fast Retailing held a sustainability roundtable discussion at its UK headquarters on London’s Regent Street – including an annual update on its sustainability targets and milestones.

As well as details on activities such as fabric innovations, upcycling and resale – Uniqlo has now reached 8.5% recycled materials throughout its collection, for example – the retailer presented information on the work it is taking in its supply chain.

This included improving working conditions, monitoring spinning mills and building greater traceability.

Fast Retailing is also tightening standards regarding the treatment of migrant workers – last year it identified 14 factories in violation of what it calls “zero-tolerance evaluations”, for example, and says it has taken action here, even terminating relationships with some.

Fast Retailing’s group executive officer for sustainability, Yukihiro Nitta, tells Drapers more about these efforts deep down in the supply chain.


What work has been done with your spinning mills? Fast Retailing created a Production Partner Code of Conduct with spinning mills for Uniqlo cotton products in spring 2023 and began regular audits of major spinning mills in August 2023.

We also identified key spinning process suppliers [with whom] we could build trusted, long-term relationships with for Uniqlo cotton products [retail prices range from £9 for kids' T-shirts up to £49.90 for a women's cotton blend drawstring jacket] – several criteria are considered in identifying these, including scale, quality, stability and environment/worker-rights standards.

With strong and long-term partnerships we can better manage the entire chain, directly applying our own quality, procurement, production, environment and workers’ rights standards across all production stages.

Along with unannounced audits by third-party entities, we use the assessment tool of the Social and Labor Convergence Programme, an industry-wide framework, as well as audits under the Better Work system, a program managed jointly by the International Labor Organisation and the International Finance Corporation [an international financial institution and part of the World Bank, that offers investment, advisory and asset-management services to encourage private-sector development in less developed countries].

By combining these methods, we evaluate the working environments at factories against our own standards and engage in improvement activities.

Moving forward, Fast Retailing plans to extend a similar initiative for spinning process suppliers of other materials [other than cotton].

By combining these methods, we evaluate the working environments at factories against our own standards and engage in improvement activities.

Moving forward, Fast Retailing plans to extend a similar initiative for spinning process suppliers of other materials [other than cotton].  

How are improvements made?

To ensure compliance with our code of conduct, we regularly monitor supply chain labour conditions. We regularly engage in workplace monitoring in the supply chain and provide results and feedback to our production partners.

We ask factory management to resolve any identified issues, also providing support for improvement. If any extremely serious issues are uncovered, such as child labour or forced labour, we take appropriate action. Such action may include reducing our business volume or ceasing our relationship with the partner.

The sustainability update said Fast Retailing has tightened standards regarding treatment of migrant workers – what steps have been taken?

In the supply chain, migrant workers are especially vulnerable to discrimination in the recruitment process. Committing to respect the International Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families [a United Nations multilateral treaty governing the protection of migrant workers and families], we monitor [our supply chain] carefully to ensure workers are treated fairly during the recruitment process and during employment.

We also enforce training for primary employers of migrant workers in the apparel sector, such as garment factories and fabric mills, in areas including local fire safety standards, new local law requirements, and good practices of health and safety management.

Examples of zero-tolerance evaluations include cases where a job advertisement contains an age restriction without a valid reason. In these cases, job descriptions and requirements were corrected.

In another case, migrant workers were required to pay a recruitment fee [to the factory], which is against our Responsible Recruitment policy. In this case, the factory reimbursed the migrant workers in accordance with our policy and with the relevant local processes.

As a result [of monitoring], the number of zero-tolerance evaluations rose to 14 factories [in 2023]. We agreed on improvements with these factories and confirmed implementation at 10 factories by the end of February 2024. Of the four remaining factories, two factories are still working on the improvements, while Fast Retailing has terminated business with the two remaining factories.


How are you increasing traceability in the supply chain?

Fast Retailing is working to establish a system of end-to-end management of its supply chain, which will enable greater visibility and control over environmental and workplace factors throughout the entire supply chain and post-purchase phases.

The transformation enables us to directly apply our own quality, procurement, production, environment and worker-rights standards across all stages of production. This includes specifying raw materials and fabrics from sewing stage back to raw-materials procurement.

A unique point of difference for Fast Retailing is that relative to other apparel companies, we have far fewer production partners, and most of these can be described as very long-term partners. Our number of production partners is in the hundreds as of FY2023. This is a fraction of the number engaged by similar large global apparel brands in our industry. [H&M Group, for example, uses 1,183 factories, while Zara-owner Inditex uses 8,271 factories].

Our industry faces increasing and tightening regulation around the world. These changes aim to protect people and the environment, and we recognise their potential to benefit society. Accordingly, we are generally supportive of aims of EPR [extended producer responsibility – a regulatory mechanism that places responsibility for products' end of life on manufacturers] and similar proposals. We work with industry stakeholders and policymakers to clearly understand the requirements and engage in the process as required.

In the case of EPR in France, for example, there has been no request from policy makers to actively engage in the process. However, our position is that we are generally willing to cooperate and engage with governments and policy makers to the extent that they require on such initiatives.

Above all, we are committed to full compliance with the local laws in all places we operate.

When do you think this “system of end-to-end management” will be fully in place?

Transforming our supply chain in this way is unprecedented for our industry. Although we are unable to specify a timeline for completion, the process is already underway.

We aim to complete the system as soon as possible – over just a few years.