Global Corporate Responsibility 2023 Assessment 2 Case Study Background Darling Dresses is an Australian fast fashion brand that sells trendy clothes with styles that change often. The company started in 2014 and has been growing steadily since then. Darling Dresses has stores in all major cities in Australia and sells its clothes at big retailers such as David Jones and Myer. Darling Dresses has its head office in Melbourne and employs a small team of designers that turn runway trends into ready-to-wear clothing designs. Darling Dresses has a buying team that is responsible for outsourcing and finding suppliers that can produce the designs. Currently, Darling Dresses source clothes from suppliers in Bangladesh, India and Myanmar. Until recently the buying team based their selection of suppliers only on costs and time of production. This fits with the predatory pricing business model in the sector (Anner, 2022). However, five years ago Darling Dresses hired a CSR manager because the CEO and the board felt that the company needed an expert to help the business adapt to increasing expectations from retailers, customers and investors for Darling Dresses to be more socially and environmentally sustainable. One of the first things the CSR manager did was run training sessions for all employees and the board on the UN Guiding Principles on Business and Human Rights (UNGPs). In the training, employees learned that Darling Dresses has a responsibility to respect the human rights of stakeholders throughout its operations and supply chain. They learned that in order to meet this responsibility Darling Dresses needs to undertake human rights due diligence to identify, prevent, mitigate and account for how they address their adverse human rights impacts' (UNGPs, Clause 17). Together with the buying team, the CSR manager developed a screening process for suppliers, which involves all suppliers filling out a Self-Assessment Questionnaire with information about working conditions, health and safety standards and policies around for example minimum wage entitlements, access to leave and labor union representation in the factories. The CSR manager also decided to contract expert teams in each country where Darling Dresses' suppliers are located to visit each factory once a year to inspect and audit how workers' human rights are being respected. For example, the audit team would check that workers are free to join labor unions, that workers are getting equal pay for equal work and that they have access to periodic holidays with pay. For suppliers that do not have adequate processes and practices in place to ensure workers' human rights are respected, Darling Dresses tries to work with the supplier to help them improve. However, if working conditions are not improved, as a last resort, Darling Dresses will stop sourcing from that supplier. Darling Dresses has been praised for their work with their suppliers and received a fashion industry award in 2020 for how they, unlike many other fashion brands, did not cancel orders from their suppliers during COVID so that workers at the factories did not lose their jobs. Management at Darling Dresses are proud of this achievement. Historically, the garment industry for export in Myanmar was growing rapidly, with the country's export value of garment production tripling between 2016 and 2018 as big global brands such as H&M, Zara and Primark started sourcing from the country. At the beginning of 2020, the garment industry employed 700,000 people in Myanmar. Over 90% of the garment workers in Myanmar are women, with the majority being between 16 and 23 years old. Most of them come from rural villages and move to the big cities to work in the garment industry because their families are not able to survive on income from work in the agricultural sector, which is the main type of work families in rural villages can access. As the garment industry grew, more and more women from rural villages became employed in the industry, and more and more families in rural villages came to depend on women's income from the garment industry. The coup and deterioration of the human rights situation in Myanmar On the 1st of February 2021, the military in Myanmar staged a coup and took control of the country. The coup ended the growth of the garment industry in Myanmar which has made life for garment workers and their families unsafe and uncertain. The coup means that Myanmar is now under a military dictatorship and the military has established martial law in neighbourhoods in the capital Yangon that host the majority of garment factories. Martial law means that the military has full control of civil authorities, such as courts and judges, and has unlimited authority to make and enforce laws. With these powers, the military junta has imposed curfews for certain hours of the day and has declared labour unions illegal. The International Labour Organization calls the military regime's approach to unions an "existential threat to the civic space and freedom of association". Both global and local unions have drawn attention to the fact that lack of civil rights and freedom of association exposes workers to risks of human rights violations. Without union representations and civil authorities, workers are not able to raise issues or lodge complaints about unsafe working conditions, unfair or reduced wages and wage theft, unfair dismissal (Business & Human Rights Resource Centre, 2023), or sexual harassment at work, among other issues, without risk of being fired. Additionally, with the military's total control over neighbourhoods where garment factories are located, it is not possible for the auditing teams that fashion brands normally contract to inspect how workers are being treated. Several NGOs and unions are urging fashion brands to stop sourcing from Myanmar as the military junta is not protecting human rights. For example, a report by the NGO Ethical Trading Initiative outlined the specific human rights risks for the garment sector in Myanmar and described how it is nearly impossible for brands to conduct normal human rights due diligence (Ethical Trading Initiative, 2022b). The report drove Primark and Mark & Spencer to make the decision to exit Myanmar. Other brands, such as H&M and the Danish brand Bestseller, are continuing to source from Myanmar. These companies explain their decision to continue to source from Myanmar as driven by their concern for what will happen to workers if they leave. They point to the fact that workers and their families depend on income from employment in the garment industry (OECD National Contact Point, 2022). The last time the military was in power in Myanmar, until 2016, the EU and US imposed sanctions that forced fashion brands based in the EU or US to stop sourcing from Myanmar. This led to half of the country's garment factories closing and some hundred thousand workers losing their jobs. Without income from the garment industry, women were pushed into precarious work and sex work, which led to an increase in HIV in women during the time sanctions were in place. Since the military reclaimed power in 2021, many garment workers have lost their jobs as fashion brands have cancelled their orders from the country. It is estimated that at the end of 2021, employment in the garment industry had decreased by 31 per cent from the beginning of 2020, with 220,000 jobs lost in the industry. Due to low pay in the sector when workers who lose their jobs have few savings to support them and their families, and sometimes do not have enough to eat (Tdt & CARE International, 2022) Journalists at the ABC have recently contacted the CEO of Darling Dresses to ask her to comment on a new report on Australian companies doing business in Myanmar that is being published in a couple Author Sara Tdt, RMIT Business and Human Rights Centre, March 2023 2 of weeks. The report mentions Darling Dresses by name and says that "despite publicly committing to respecting human rights, Darling Dresses are continuing 'business as usual' in Myanmar and do not seem to have taken any extra actions to ensure vulnerable stakeholders in their supply chain are protected as they continue to source from the country". Additionally, on Darling Dresses recent social media posts there are comments saying things like "hypocrites" and "I thought you were better than this". The CEO has now scheduled an all-day meeting with the CSR manager and the buying team to work out what Darling Dresses should do and whether they should keep sourcing from Myanmar or not. Tasks You are the new CSR manager at Darling Dresses. The CEO has instructed you to deliver a report on Darling Dresses involvement in the situation in Myanmar and give recommendations for what Darling Dresses should do to protect vulnerable stakeholders. You need to address the following issues: 1. How is Darling Dresses involved in the situation in Myanmar? 2. Who are the key stakeholders of Darling Dresses in this situation, and how are they impacted? 3. What responsibilities do Darling Dresses have according to the UNGPS, and how do these apply to this case? 4. What other factors should Darling Dresses take into account when evaluating whether to continue to source from Myanmar or exit the country? 5. Do you recommend that Darling Dresses should keep sourcing from Myanmar, or should leave the country? Explain your answer as clearly as possible, including how Darling Dresses can remain a responsible company while acting on your recommended decision. In order to answer these questions you need to consult the resources below. In addition, there are numerous relevant papers included in the course readings, and in the relevant academic journals.