FASHION SYSTEM

INVESTORS PUSH ZARA TO DISCLOSE ITS SUPPLY CHAIN

FASHION SYSTEM
Disagreements within the European Union have impeded the advancement of proposed regulations that would compel large companies to disclose potential environmental impacts or child labor within their supply chains. Non-compliance could result in fines equivalent to 5 percent of revenue.

Numerous fashion brands and retailers, including Adidas, H&M, Hugo Boss, M&S, Nike, Primark, and Puma, already furnish detailed supplier lists, outlining factory names and addresses. However, Inditex, encompassing Zara, annually discloses only the number of suppliers sourced from 12 core countries, omitting details about individual factories.

Shareholders of Inditex were surveyed by Reuters to gauge their expectations for enhanced disclosure. Dutch asset manager MN, representing the Platform Living Wage Financials (PLWF), a coalition of 20 institutional investors overseeing assets totaling €6.58 trillion ($7.16 trillion), stressed the significance of disclosing both a list of suppliers and their geographical locations. MN, managing Dutch pension fund assets, urged Inditex to emulate industry peers like H&M and Primark by publicly releasing its comprehensive supplier list to evaluate potential supply chain risks.

Scheduled to unveil annual results on March 13, Inditex refrained from commenting on investor calls for full supplier list disclosure, citing its dedication to upholding high supply chain standards. Inditex founder Amancio Ortega, holding a 59 percent stake, and daughter Sandra Ortega, with a 5 percent stake, collectively valued at about $69 billion, remain major stakeholders.

While five Inditex investors, possessing a combined stake valued at approximately $2 billion, voiced concerns, they have not contemplated divestment. MN, which previously recommended clients divest from TJX, highlighted minimal improvement in human rights due diligence within TJX's global supply chain over a three-year period.

In response, TJX stated that it has bolstered its vendor code of conduct and expanded its factory auditing program in recent years.