“We aspire to become the worlds most sustainable retailer," says M&S CEO Marc Bolland

“We aspire to become the world's most sustainable retailer," says M&S CEO Marc Bolland

UK retailer Marks & Spencer has described its efforts to ensure workers in the factories it sources from are paid a fair living wage is an "ever-moving feast". But it is making progress, as executives explained during an update to the group's Plan A sustainability initiative. 

Earlier this month, M&S unveiled the latest step towards its goal of becoming the world's most sustainable major retailer, with an update to its celebrated Plan A sustainability strategy.

'Plan A 2020' comprises 100 new, revised and existing commitments the retailer has pledged to meet by the end of the decade and, for the first time, incorporates the group's international operations.

"We can only do so much but we can try and be an accelerator," chief executive Marc Bolland said yesterday (24 June). "We aspire to become the world's most sustainable retailer. Is that too ambitious? Well we were two years ago the most sustainable retailer, so it's just making sure we stay sharp and get there in 2020 and don't fall back."

Commitments that made the Plan A 2020 list spanned climate change, waste, and natural resources, in addition to the fair living wage issue.

Fair living wage
M&S plans to implement a process to ensure clothing suppliers its sources from in least developed countries are able to pay workers a fair living wage - starting with Bangladesh, India and Sri Lanka by 2015.

The retailer says it has already developed and used a buying tool allowing it to take into account a fair living wage when it sets the cost price for products. That said, this hasn't automatically resulted in factories paying a fair living wage, so M&S is now involved in a number of collaborative programmes to address the issue.

Krishan Hundal, director of general merchandise, said the wage issue was one of its most challenging and suggested it will also be an ongoing one for the retailer.

"The first thing to say is this is absolutely still a very important part of what we do. I wouldn't want anyone thinking there has been a deterioration in terms of our effort. It's a very complex area and I think our journey has been a very, very positive one so far."

When M&S began to look at the issue six years ago, Hundal said the minimum wage in Bangladesh was BDT1,662 per month. It is now BDT5,320.

"We started in 2008, we did a couple of pilots in Bangladesh and through two years of learning we came up with a process we believed could be applied to our factories around the world and particularly in Bangladesh," Hundal explained.

"It was a three-stage process and the first was to identify what we believed was a fair living wage in the countries we source from." This was completed two years ago and has been implemented in 12 countries to date.

It was also essential, he added, that the retailer ensures its cost prices reflect the right amount, so that a living wage can be paid to factory workers.

"We've developed a cost model [that] splits our direct labour costs and those cost prices, and those labour costs have to reach a certain threshold by country. It gives us the confidence that our supply base can then pay the right amount as far as wages are concerned. That's been done. It started off being done in the UK and has migrated out to the regional offices. That model has taken time but it's implemented and it's working well."

Finally, Hundal said the third - and ongoing - element, is that once M&S has paid its cost price, how does it ensure those wages are then paid to workers? This is the area he says is the most challenging, and ultimately comes back to productivity and efficiency.

"In Bangladesh and India, we've trained industrial engineers to support our factories in improving their efficiency. That's worked really well and has driven wages up. But there's more to be done there and it's an ever-moving feast."

Hundal told attendees that a year and a half ago its workers in Bangladesh were being paid what M&S deemed to be living wage.

"We have just reviewed it and had to change it," he added. "We can't review the living wage every year, it takes a long time to do. We are doing it probably every two years. As we do that, we then go back into the cost model and then we work with our suppliers."

Hundal said he couldn't put an exact number on the percentage of workers in Bangladesh that are being paid a minimum wage but pointed to reports claiming around 20-30% of factories still weren't.

However, he emphasised: "What I can say is that with the minimum wage increase to BDT5,300, all of our factories absolutely pay that as a minimum, and the vast majority pay more."

Cotton initiative
Of the retailer's other initiatives, M&S has pledged to procure 50% of its cotton from sustainable sources by 2020. This has been updated from its previous commitment of 25% by 2015, which Hundal says is on-track to be achieved.

"It's going really well. It's now targeted at 50% by 2020 and 25% by 2015 so we're very confident we'll get to our first marker by 2015.

"We're looking at all aspects of sustainability, so we're using recycled, we're using Fairtrade, we're using organic cotton, and we think that's important. It's not right to commit yourself to one type of sustainable cotton, it's about using the right cotton for the right product. We've been really pleased because we've seen exponential growth in the use of sustainable cotton in the last three years and we're on track to grow that."

Indeed, this year around 20% of the cotton M&S sourced came from the Better Cotton Initiative, Fairtrade, organic or recycled sources. This has almost doubled from 11% last year.

Digital moves
M&S was also keen to offer some case studies of the work it has achieved to date. One of those was its work on compliance and auditing of its supplier factories.

The format for audits, Fiona Sadler, head of ethical trading for clothing & home, told attendees, has not changed in many years.

"[Audits] are still tick-sheet paper-based audits, done once a year. More recently they have included worker interviews but due to time limitations this means it's only a sample of workers and not all workers in factories. So we know an audit is only the tip of the iceberg."

How then does M&S monitor conditions for the other 364 days of the year?

Sadler told attendees that M&S needs to have more effective measurement of factory social KPIs, and more regular worker feedback. "Digital technology is the way forward to do this," she adds.

Last year, M&S was the first UK retailer to partner with data firm Good World Solutions for worker feedback. The retailer is now operating a new initiative - Labour Link - through which workers can place a free anonymous call using their mobile phones, answering questions with their keypad. Responses are captured by a central server and the data is aggregated and analysed. 

"In the last ten months we've surveyed over 72,000 workers in five countries. We are now taking it further and doing a compliance trial in China. It gives you more accurate answers and these surveys can be done throughout the year so that suppliers and factories can have information on the go."

Sadler says M&S is now also developing an ethical trading app.

Transparency
But it is transparency that Mike Barry, director of Plan A, emphasises is becoming an ever more important issue for M&S.

"What does it mean for the customer? Risk is changing...and we are now dealing with a much more complicated scenario where [supply chain] risks mix with each other. We absolutely believe the world is changing and we have to be more transparent."

Its response includes publishing an annual list of its active clothing suppliers across the world. This, M&S says, will be achieved by 2016.

Patrick Bousquet-Chavanne, executive director of marketing and business development, added: "Following Rana Plaza, it is time for greater transparency. The speed of communication around the world no longer allows you to hide and not answer a consumer concern.

"It is important to them and it is clearly expected every day and our stance on transparency is clear. It's about allowing the consumer to understand the brand as more candid and transparent. It's about being clear about what we stand for."