Abercrombie & Fitch - Recommendation: Bad and Tacky

"In every school there are the cool and popular kids, and then there are the not-so-cool kids. Candidly, we go after the cool kids. We go after the attractive all-American kid with a great attitude and a lot of friends. A lot of people don't belong [in our clothes], and they can't belong. Are we exclusionary? Absolutely. Those companies that are in trouble are trying to target everybody: young, old, fat, skinny. But then you become totally vanilla. You don't alienate anybody, but you don't excite anybody, either."

- Mike Jeffries, CEO, Abercrombie & Fitch. As quoted in “The Man Behind Abercrombie & Fitch”. (2006)

How should we judge A&F’s marketing and advertising approach? Should we judge it at all within the parameters of corporate social responsibility? Many brands use an aspirational marketing approach to sell their products (have you ever seen an “average” looking model in any fashion campaign?). Companies try to sell a “lifestyle”, not a shirt or car or frying pan. A&F says that what it sells is “cool” – not a particular racial prototype. But, their main advertising does not reflect the diversity it has recently committed to – and, probably, does not reflect the diversity of who actually shops in its stores. Is that hypocritical? Of course. But, really, their sexualized, white–bread advertising is not that bad if compared to all the other CSR issues they do not address AT ALL like human rights, child labor, fair wages and the environment to name just a few. (See the full issues template here.)

Perhaps if A&F balanced out some of their more provocative advertising approaches with a commitment to human rights and fair labor, their actions would be more tolerable (look at American Apparel, after all). But, A&F seems to show no social responsibility at all except in the arena of diversity, which was forced upon them by a court order. Call it “diversity-washing.” Granted, there has been some progress on diversity within the company’s operations. The number of people of color enrolled in the retailer’s managers-in-training program has grown by more than 50%. They have partnered with many minority-focused organizations on diversity training and scholarship opportunities. But, in the end, making their advertising more inclusive would probably do more overall for minority teenagers then a few million (if that much) in scholarships. Perhaps it will be a gradual shift. As the company’s staff becomes more diverse (because of the court order), there will be more of an internal push for inclusive advertising.

We will see.

But even if their diversity score increases, their complete inaction on almost all of the other priority issues in our template will not win a “Good” from us. So, in summary, we feel that avoiding Abercrombie & Fitch is probably the best course of action. Score: 1.33.

And the Tacky: Honestly, we think its just so TACKY to wear a t-shirt with an ethnic slur (and to make a t-shirt with an ethnic slur is even worse!) Besides, wearing three shirts all on top of each other? There is very little true style that comes out of A&F. (At least J. Crew, even with its dismal score, cared enough to put some creativity in their designs.)

And not to get personal, but the CEO of A&F is just sort of scary - he is almost over 60, but has invested much money into his artificial appearance (think no wrinkles and lip plumper). Maybe he needs to obsess a little less about the superficial and a little more about the substance.

Abercrombie & Fitch - Template

Indicator	Commitments/Comments		SOI Rank
Environment – Operations
GHG Emissions	No visible involvement.		1
Energy Efficiency	No visible involvement.		1
Air & Water Pollution	No visible involvement.		1
Promoting Employee Enviro. Awareness	No visible involvement.		1
Waste Reduction (Haz & Non)	No visible involvement.		1
Environment – Materials
Use of Toxics in Products	No visible involvement.		1
Use and Promotion Of Sustainable Materials (i.e. organic cotton)	No visible involvement.		1
Social
Workplace Diversity	Fine $40M for discriminatory practices in its stores. Settlement created diversity ensuring structure for internal ops.		6
Unions	No visible involvement.		1
Workplace Safety	No visible involvement.		1
Community Relations	No visible involvement, but website says that information is “Coming Soon”.		2
Strategic Partnerships with NGOs	Partnered with the Anti-Defamation League on campus program to teach diversity-training. Set Up Diversity scholarships with several partner orgs. like UNCF.		4
Animal Welfare	No stated policy, but in 2005 joined PETA's Wool Campaign, setting a new standard for clothing companies by pledging not to use Australian wool in any of its garments until both		2
Human Rights
Operating in Countries of Conflict	No visible involvement.		1
Child Labor	No visible involvement.		1
Forced Overtime	No visible involvement.		1
Indentured Servitude	No visible involvement.		1
Compliance with ILO Standards?	No visible involvement.		n/a
UN Global Compact?	No visible involvement.		n/a
Supplier Management Issues
Code of Conduct	No visible involvement.		1
Fair Wages	No visible involvement.		1
Training	No visible involvement.		1
Environmental Management	No visible involvement.		1
External Verification
Member of FLA?	No		n/a
CSR Reporting Standard?	No CSR report.		n/a
Other			n/a
Demonstrated CSR Leadership Among Peers?		Um, No.

Abercrombie & Fitch - Summary

Summary: Although most people now associate the Abercrombie & Fitch (A&F) name with sexually-provocative young models, A&F actually started out in the late 1800s as a store for outdoor/hunting enthusiasts. It was also the company that supposedly brought the game Mahjong to American and outfitted famous people of the early 20th Century like Charles Lindbergh (for his historic flight across the Atlantic). The company has changed hands several times: bought by Oshman Sports in 1978, then by the Limited Ltd. in 1988, finally becoming totally independent in 1998 and going public that same year.

Some Key Facts: Valued at $5 billion, the company now has revenues approaching $2 billion a year rolling in from 944 stores across four brands: Abercrombie & Fitch, abercrombie, Hollister and Ruehl. A&F sources from vendors in 37 countries and the US. The company sources its merchandise from approximately 258 factories and suppliers, primarily in Southeast Asia, and Central and South America.

A&F has been in the news for a number of issues:

• In 2005, a class action suit was filed against A&F on behalf of employees who alleged that they were wrongfully refused jobs or terminated based on their race, ethnicity, or national origin because they did not promote the "A&F Look." A&F settled with the employees for $40M and was forced to create an Office and Vice President of Diversity (other provisions of the settlement here.)
  
• In 2006, the Securities and Exchange Commission issued a formal order of investigation of the clothing retailer, and the trading in the company’s Class A shares.
• In 2002, A&F was one of 26 retailers to settle lawsuits filed by Sweatshop Watch, Global Exchange, Asian Law Caucus, Unite, and Saipan garment workers that alleged violations of U.S. labor laws and international human rights standards.
• A&F has been the target of boycotts and criticism for selling t-shirts with racist and sexist slogans.
• Nationwide Children’s Hospital in Columbus, Ohio has stated that it plans to rename its emergency room the "Abercrombie & Fitch Emergency Department and Trauma Center" in exchange for a $10 million donation. A letter written by the Campaign for a Commercial-Free Childhood, and signed by over 100 doctors and children’s advocacy groups, urged the hospital not to go ahead with the renaming, arguing that, "Given this company's appalling history of targeting children with sexualized marketing and clothing, no public health institution should be advertising Abercrombie & Fitch."

Ohhhh . . . that is quite an assortment of controversy for one brand. But, maybe these are just the kind of stories that help sell newspapers or attract private donations or build credibility for the organizations on the attack? Maybe A&F is doing a lot of other good things that we don't know about? Well,they are doing . . . something. Read more about it on the Template post and the Recommendation post.

Personally Speaking: I always got a kick of the MadTV A&F spoofs. Check some out here on YouTube, if you like that sort of thing. (Warning: like much of MadTV, they are often politically incorrect.)

H&M - Recommendation: Good

This analysis was difficult. According to the scorecard, H&M ranked a 4.9. With an extra point because we consider them an industry leader in the branded fashion apparel category, the final score was 5.9. This is still not as high as we would have guessed just from reading their CSR reports.

Unfortunately, this is either the strength of the scorecard approach - in that it is able to cut through the company's PR hoopla about certain achievements . . . or, it is the weakness of the scorecard approach - in that most companies, even if they excel in certain areas, will receive a lower score overall because being socially responsible as a large international apparel retailer is hard.

In the end, we feel that, overall, H&M has shown a commitment to doing business in a socially responsibly manner. We were swayed by H&M's efforts on:

• The Environment: We liked that H&M monitors key environmental impacts. Many apparel companies focus their CSR efforts primarily on human rights and labor issues. But, environmental impacts on the local communities where H&M's products are manufactured and the larger, global impacts of energy and water use, are becoming increasingly more important.
  
• Transparency: H&M is a member of the Fair Labor Association. In joining the FLA, H&M commits to a rigorous labor compliance program that includes implementing the FLA Workplace Code of Conduct and conducting monitoring to ensure that any violations are identified and corrected. Member companies also agree to publicly disclose the results of FLA monitoring.
  
• Performance Targets: We liked H&M's publicly available "Global Targets" (with employee names attached to each action).
• Integration: H&M is one of the few apparel companies that recognize that the way the design and procurement process is handled with suppliers is very much connected to various CSR issues (such as forced overtime). CSR can not be an effort that exists in a departmental vacuum, but must be an initiative that is integrated throughout a company's operations. From the CSR report: "Fashion today works in short seasons or cycles. Without responsible buying practices this can result in time and financial pressures on suppliers that can prevent them from safeguarding their employees’ rights. So we must address product development and buying practices in different ways."
  

So, if that little black dress in the H&M window beckons you, go ahead and buy it (especially if it is made from organic cotton or recycled wool!!)

H&M - Scorecard

Indicator	Commitments/Comments		SOI Rank
Environment – Operations
GHG Emissions	Tracks emissions from Energy Use, Goods Transport, Business Travel and Company Cars		6
Energy Efficiency	H&M monitors energy use.		5
Air & Water Pollution	Use a requirement for the quality of discharged water using guidelines developed by a Business for Social Responsibility task force. Monitor waste water by asking suppliers to submit test results.		7
Promoting Employee Enviro. Awareness	Training for employees is part of environmental policy. Nominated as one of “Top 10 Companies with The Most Innovative Internal Sustainability Initiatives” by Ethical Corporation Magazine.		8
Waste Reduction (Haz & Non)	H&M monitor toxics use and wastewater in production. Trains store employees on proper disposal of waste and hazardous materials.		6
Environment – Materials
Use of Toxics in Products	Chemical restrictions policy, last updated 2005. 170 chemicals or categories of chem. are restricted. Examples: cadmium, lead and mercury, certain dyes, PVC, formaldehyde and brominated flame retardants. Regular testing is carried out at external laboratories to ensure that suppliers comply with the chemical restrictions.		4
Use and Promotion Of Sustainable Materials (i.e. organic cotton)	Uses and promotes the use of organic cotton; works to reduce impact of conventional cotton. The goal for 2007 is to use at least 100 tons of organic cotton. Member of Organic Exchange and Better Cotton Initiative.		6
Social
Workplace Diversity	H&M currently formulating policies on diversity and equality. Statement on website: “We aim to be a responsible employer in all countries even where the laws and regulations do not match our own requirements.”		3
Unions	No official statement on Unions. The company has been accused of anti-union actions by the AFL-CIO. but has also been praised by labor leaders for its handling of a unionization effort by employees in Manhattan.		3
Workplace Safety	Included in Supplier Code of Conduct.		4
Community Relations	Very active locally and internationally.		7
Strategic Partnerships with NGOs	Many training initiatives with local NGOS; Also partners with large organizations like UNICEF, Make a Wish Foundation.		7
Animal Welfare	No specific policy; However, recently committed to stop buying merino wool taken from sheep in Australia that had been subjected to what it considered the unacceptable process of "mulesing."		3
Human Rights
Operating in Countries of Conflict	Do not source or operate in countries of conflict.		4
Child Labor	Strong policy for dealing with infractions (but one that does not immediately abandon the factor/children in question).		5
Forced Overtime	Not allowed under Code of Conduct. H&M is very cognizant of the impact is has on manufacturer’s with its ordering cycles, Works not to submit last-minute orders or changes to orders.		4
Indentured Servitude	Not allowed under Code of Conduct.		4
Compliance with ILO Standards?	H&M’s Code of Conduct for Suppliers is based on the ILO Conventions (and is based on the UN Convention on the Rights of the Child).		n/a
UN Global Compact?	Yes, supports the Compact.		n/a
Supplier Management Issues
Code of Conduct	Yes; Enforced; H&M provides limited training to suppliers.		5
Fair Wages	No policy stated specifically. Works with suppliers to make sure an appropriate wage is paid. Has been criticized for allowing suppliers to pay very low wages.		3
Training	Focuses on Training to improve working conditions and livelihoods for employees.		4
Environmental Management	Environmental management targets are included in Supplied Code of Conduct; require wastewater testing from suppliers; work with suppliers that work with dyes to reduce impacts on the environment.		5
External Verification
Member of FLA?	Yes, as of 2005.		n/a
CSR Reporting Standard?	Yes. Starting with the 2007 CSR report, will be reported in accordance with the Global Reporting Initiative’s updated guidelines for sustainability reporting.		n/a
Other	Included in a no. of sustainability indices, including the Dow Jones Sustainability World (DJSE World), FTSE4Good and the Ethical Sustainability Index. Clear performance targets - with responsible parties noted- available publicly.		n/a
Demonstrated CSR Leadership Among Peers?		Yes. (Bonus Point)

H&M - Summary

Summary: Hennes & Mauritz (H&M) opened its first store in the U.S. in 2000. Called by some the "IKEA of specialty retail", the Swedish company has been a hit in the U.S. market, targeting the young and hip with cutting edge design for urban tastes and with affordable prices. H&M carries everything from business attire to casual wear to beach wear for women, men and children. I have been excited to see H&M's organic cotton pieces and their designs that benefit outside causes.

Although H&M is overall a leader in the fashion apparel sector on corporate social responsibility (CSR) issues, their 100% outsourcing of production (they have no factories of their own) presents problems in monitoring and enforcement of CSR commitments. After being criticized by activists in the late 1990s for the the company's lack of attention to labor rights in its supply chain (including a controversial expose on Swedish television), H&M began to actively respond through, among other things, developing a Code of Conduct for its suppliers and a compliance program. However, the company is still targeted for the low wages paid by some of its suppliers and was recently accused of anti-union activities by the AFL-CIO (although, in the end, the company received praise for allowing the workers to organize.)

In 2005, H&M stiffened its CSR inspections among its suppliers by increasing interviews with workers and introducing extra measures to ensure documentation such as time sheets and wage records were correct. The company also improved training for its 40-plus supplier auditing team. In 2006, while implementing this new, more detailed auditing program, H&M uncovered an increase in document forgery and abuses of child labor laws among many of its suppliers.

In 2007, an independent investigation of Indian-based H&M supplier Gokaldas Export (also a supplier for other brands like Marks & Spencer, Mothercare and Gap, Inc.) uncovered many violations of international labor laws, including harassment, forced overtime and wages below the legal requirement.

Some Key Facts:

• H&M is an apparel and cosmetics company headquartered in Sweden, where it was started in 1947.
  
• H&M sells clothes and cosmetics in approximately 1,500 stores in 28 countries, has approximately 20 production offices around the world, and more than 60,000 employees.
• H&M does not have any factories of its own, but instead works with around 700 independent suppliers in primarily Asia and Europe.
• The retailer sources more than 60% of its products in Asia, more than half of which come from China.
• The company is controlled by the family of Chairman Stefan Persson (the billionaire son of founder Erling Persson); they own nearly 37%.

Personally Speaking: I was really excited to find out that H&M was coming to America. While in Europe for work in the late 1990s, I enjoyed browsing the racks of the H&M stores on my travels. I remember visiting that poor first store in NYC soon after it opened to find it looking like it has just been ripped apart by a tornado of fashionistas desperate for cheap Euro-fashion. I like H&M because you can find affordable pieces that are well-made (but also some that are NOT). Although many of the designs are targeted to younger audiences (and cut for the slim slim slim), I can always find something that is a little avant garde, but still appropriate for a professional 30-something.

J. Crew Recommendation: BAD

Based on J. Crew's low score of: 1.7, we would recommend that you try your hardest to overlook their bright colors, cute cuts and hot models and buy your little black dress at another retailer . . . until J. Crew becomes a bit more open about what it is doing and develops stronger policies and procedures.

J. Crew - Template

Summary

I chose J. Crew as the first company to evaluate for no other reason than it was part of my list of companies for another research project.

J. Crew has really re-established itself over the last few years as a higher-end fashion company. Gone is the emphasis on Gap-like basics, replaced with bright colors, of-the-moment silhouettes and patterns, but with many pieces still having that classic J. Crew feel. J. Crew went public in 2006.

Perhaps a remnant of its privately-held past, J. Crew does not issue any annual report besides the mandated SEC Filings. Although the filings require an assessment of operations, the company is not obligated to report on any social responsibility issues (i.e., policy on wages paid by foreign suppliers, greenhouse gas emissions). Consequently, it is quite difficult to assess its CSR performance using the template. But, we did our best.

Some Key Facts

J. Crew does not own or operate any manufacturing facilities. In 2007, approximately 85% of J. Crew merchandise was sourced from Asia (with 73% of products from China, Hong Kong and Macau).

Although the company does not state so on its website, the SEC filing shows that J. Crew maintains a Code of Vendor Conduct, which requires that each J. Crew supplier operate in compliance with applicable wage, benefit, working hours and other local laws, and forbids the use of practices such as child labor or forced labor. The Code of Vendor Conduct is currently administered internally by J.Crew employees, including a dedicated J.Crew employee [ed.note: just one??], and two outside compliance audit firms that make periodic visits to the facilities that produce J. Crew goods to monitor compliance. New suppliers are prequalified based on the Code of Vendor Conduct and each existing supplier must execute an annual compliance certification. J. Crew's also works with the Fair Factories Clearinghouse, which is a provider of software to manage factory evaluations.

Here is our evaluation of J. Crew based on the Scale of Involvement:

Indicator	Commitments/Comments	SOI Rank
Environment – Operations
GHG Emissions	No Information available	1
Energy Efficiency	No Information available	1
Air & Water Pollution	No Information available	1
Promoting Employee Enviro. Awareness	No Information available	1
Waste Reduction (Haz & Non)	No Information available	1
Environment – Materials
Use of Toxics in Products	No Information available	1
Use and Promotion Of Sustainable Materials (i.e. organic cotton)	No Information available	1
Social
Workplace Diversity	Generic diversity policy outlines in Code of Ethics	4
Unions	Brief statement on unions in SEC filings. No unions at J. Crew.	2
Workplace Safety	No reference to workplace “safety”; generic statement on workplace “violence” in Code of Ethics.	2
Community Relations	No Information available	1
Strategic Partnerships with NGOs	No Information available	1
Animal Welfare	No Information available; though stopped carrying fur after pressure from PETA.	1
Human Rights
Operating in Countries of Conflict	No Information available	1
Child Labor	Forbidden under Code of Vendor Conduct; no specific procedures discussed.	4
Forced Overtime	Forbidden under Code of Vendor Conduct. No specific procedures discussed.	4
Indentured Servitude	No Information available	1
Compliance with ILO Standards?	No Information available	1
UN Global Compact?	No Information available	1
Supplier Management Issues
Code of Conduct	Yes, though it is not public.	5
Fair Wages	Code of Vendor Conducts states that all vendors must “operate in compliance with applicable wage, benefit, working hours and other local laws”	3
Training	No Information available	1
Environmental Management	No Information available	1

External Verification
Member of FLA?	No.		n/a
CSR Reporting Standard?	No.		n/a
Other	Working with Fair Factories Clearinghouse to share factory data with other brands.		n/a
Demonstrated CSR Leadership Among Peers?		No.

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