Archives For Rana Plaza

The True Cost

May 4, 2013 — Leave a comment

How much would you pay for a t-shirt? Five dollars? Ten? Forty?

How much should you pay for a t-shirt? What would it cost to produce a shirt that does no harm to the environment or person? Can clothing even be produced in a sustainable way?

Clothing is the second most chemical intensive industry in the world, after agriculture. Rivers in China run blue with the dye from denim.

Patagonia is, arguably, the most responsible manufacturer of clothes in the world. For the last six years they have been named on Ethisphere’s most ethical companies list (though they were left off this year). Patagonia has served as an industry leader in transparency, and publish information on all of their suppliers and manufactures  Recently they elected to become the first Benefit Corporation in California; this form of corporate structure requires that they put their stakeholders infront of corporate profits (Bloomberg explains the benefits and drawbacks of BCorps here). Recently they’ve partnered with the Nature Conservancy to work with sheep farmers in Patagonia to ensure that the wool they buy does not contribute to overgrazing. Overgrazing has turned 20 million acres of land into desert in Patagonia. On the largest shopping day of the year, Black Friday, they ran an ad telling customers, “don’t buy this jacket.” Instead they asked their customers to try and buy used versions of their product.  All of their cotton is organic, a decision they made when they realized how many chemicals go into growing cotton – they had to find famers to buy organic cotton from directly before there was a market for it.

In light of this, I’d say Patagonia is a pretty good example of what a responsible clothing company should look like.

Patagonia sells many clothing items, among them are t-shirts. The minimum retail price for a Patagonia shirt is $39.00. That is a pretty steep cost for a t-shirt; it reflects the cost of making clothes that do little to no harm to the environment and treat the laborers well.

You can buy shirts for considerably less than forty bucks, but should you? Gap, through Old Navy and Bannan Republic, sells t-shirts ranging from $4.99 to $32.50. Its hard to think how a $4.99 shirt could be made in a sustainable way, even at the high end its questionable. Gap’s CSR policy is as good as most clothing manufacturers, but implementing the policy while maintaining a competitive pricing policy is a hard task to juggle.

Gap manufactures a lot clothing in Sri Lanka, and they promise to maintain a watchful eye on the post war situation. Despite blatant abuses by the government, Gap continues to manufacture clothes here. More prominently, Gap may have been able to prevent the death of over 507 people at Rana Plaza in Dhaka last week.

In 2011 Gap walked out of negotiations which would have implemented extensive fire and building safety standards. This plan would have implemented these regulations outside of the control of the government, with funding by multinational manufactures. The companies would have contributed up to $500,000 a year. PvH (Calvin Klein and Tommy Hilfiger) and German retailer Tchibo signed on to the plan, but the commitment of at least two other firms was needed to implement the plan.

It’s being argued that cheap clothes have helped fuel social revolutions in Bangladesh, but at what point are clothes too cheap? If these reforms had been implemented Gap could have passed the increased cost on to consumers or seen their earnings reduced by 0.0034% (Gap Inc. earned $14.5B in 2012). Instead of moving operations to a higher cost country, with more regulatory burdens, Gap could have taken the charge and led meaningful reforms in Bangladesh.

Keep this in mind next time you’re out shopping.