By
Fibre2Fashion
Published
May 27, 2019
Reading time
2 minutes
Download
Download the article
Print
Text size

Retailers should pay €33 more for jeans pair, says report

By
Fibre2Fashion
Published
May 27, 2019

Retailers should actually pay €33 more for a pair of jeans to take into account hidden costs such as damage to the climate and workers’ rights, encountered during production of jeans, says a report by Impact Institute and ABN AMRO. At present, the costs such as water pollution and water consumption, illicit labour practices, are not currently being paid.



In the report ‘The Hidden Costs of Jeans’, researchers from the Impact Institute investigated a typical production chain for jeans: from cotton plantations and denim weaving mills in India via jeans factories in Bangladesh to transport to the European markets. They calculated the ‘true price gap’: the difference between the purchase price that retailers pay and the actual total production costs, including environmental costs and the impact on (local) society.

The heaviest external costs are caused during the growing of cotton and processing it into denim, according to the report. Over half of the external costs in cotton production are environmental, having to do with the use of scarce water and the pollution of the precious liquid. In the production of denim and of jeans, social external costs are highest. In India, the main cause is widespread forced labour, child labour and underpayment throughout the entire value chain, the report found.

In turn, the production of jeans out of denim in the sewing workshops in Bangladesh entails social costs in the form of intimidation and underpayment of the employees, the report said. Per pair of jeans, these external costs are fairly low due to the limited time spent during this phase of production. Costs of transportation are negligible in the overall picture.

The report makes recommendations so as to make the costs more realistic. ABN AMRO hopes that fashion companies will be encouraged to make the production chain more sustainable by better organising the production processes in the production countries based on a long-term relationship with manufacturers, governments and social organisations.

“True pricing helps retailers to enter into long-term relationships with their producers, to make good agreements together and to ensure that these agreements are complied with, so that a fair purchase price is paid. Consumers want more transparency and the true price method gives them insights with which they can make better choices,” said Henk Hofstede, sector banker retail at ABN AMRO, to local Dutch media.

Copyright © 2024 Fibre2Fashion. All rights reserved.