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.

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.

Due to some technical difficulties, links are not working right now, but will be added soon.

Issues Template

Template
The Issues Template is used to summarize the key issues that are being evaluated for each company. Some might say that apparel companies should focus their efforts on issues that are most relevant to their business operations - mostly labor issues, wage issues, worker training, product safety/quality, etc. However, I have added environmental issues into the mix for several reasons. Environmental issues, like climate change and water pollution, are growing in importance to society at large and companies should at least, at this point, be getting a sense of their impacts. Personally, I also see this as a differentiation marketing strategy and as a way to be prepared for any potential legislation on the environment. In addition, negative public opinion can adversely affect sales, and the public is calling for more environmental awareness on the part of companies.

Sorry, you will have to click on the image above to get a better view of the template.

Definitions

GHG Emissions: Is the company tracking its emissions from its operations? This does not have to include supplier emissions, but should include all stores, offices, distribution networks (from warehouse to stores, stores to outlets, etc.)
Air and Water Pollution: Is the company tracking its air and water pollution?
Employee Awareness: Is the company doing anything to make its employees aware of environmental issues? Educating employees is a incredibly effective way for a company to have a position environmental impact.
Waste Reduction: Does the company track waste (both hazardous and non.)?
Toxics in Products: Does the company do anything to reduce the use of toxic chemicals in their products?
Promotion of Sustainable Materials: Is the company doing anything to use more organics or other sustainable fibers/materials?
Workplace Diversity: Does the company seek to promote a diverse workplace (this does not include suppliers, but does include stores, admin. offices, warehouses, etc.)?
Unions: What is the company's position on unions?
Workplace Safety: Again, not including suppliers.
Community Relations: How does the company work with the communities that are touched by its business? This can include communities surrounding suppliers, if the company sources a large percentage of its product from that one supplier.
NGOs: Does the company try to work with NGOs to address issues or create opportunities?
Animal Welfare: Is there any action to promote humane treatment of animals if the company uses leather, fur, etc.?

[Note: many of the "Human Rights" issue categories are aimed at determining how companies work with their suppliers in other countries, rather than how it treats its own employees in the country of origin.]

Countries of Conflict: Does the company operate or use suppliers from countries of conflict where their business activities are promoting adverse impacts on the population or environment of that country?
Child Labor: What does the company do/say about child labor?
Forced Overtime: This is when employers force employees to work more than whatever the accepted standard is. In the US, it is 40 hours per week or, sometimes, 8 hours per day.
Indentured Servitude: An indentured servant is a laborer under contract of the employer for some period of time, usually three to seven years, in exchange for such things as ship's passage, food, land and accommodations. And believe it or not, it still happens fairly often in some countries.
Compliance with ILO standards?: "Since 1919, the International Labour Organization has maintained and developed a system of international labour standards aimed at promoting opportunities for women and men to obtain decent and productive work, in conditions of freedom, equity, security and dignity." (from here) Read more here.
UN Global Compact: "The Global Compact is a framework for businesses that are committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labour,the environment and anti-corruption ."
Code of Conduct: Does the company have a Code of Conduct that must be adhered to by suppliers?
Fair Wages: What does the company do to ensure that its suppliers are paying "fair" wages to workers producing the brand's products?
Training: Does the company do any training for suppliers on improving efficiency, operations management, employee management, environmental management, etc.?
Environmental Management: Does the company do anything to track the environmental impacts of its suppliers.?
Member of FLA?: The mission of the Fair Labor Association (FLA) is to combine the efforts of industry, civil society organizations, and colleges and universities to protect workers’ rights and improve working conditions worldwide by promoting adherence to international labor standards. The FLA conducts independent monitoring and verification to ensure that the FLA’s Workplace Standards are upheld where FLA company products are produced. Through public reporting, the FLA provides consumers and shareholders with credible information to make responsible buying decisions. More here.
CSR Reporting Standard?: Disclosure and transparency are very important. There are number of different reporting standards (i.e., AA1000, Global Reporting Initiative, find more examples here) that a company can use to make its reporting more organized, more substantial/comprehensive and more credible.

Closing Thoughts
Although I think that this list of issues is actually larger than it necessarily needs to be, it does not mean that a company needs to focus on every specific issue listed. However, I do feel like the majority of these issues represent real operational risks (whether from public opinion, the legal perspective or operational efficiency) that companies need to start getting their heads around.