Despite Nixing $150M in Garment Orders, Kohl’s Deemed ‘Most Ethical’



By Arthur Friedman

Feb.28.2021 Sourcing journal


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A select group of fashion firms from the apparel, retail and textile sectors was named to Ethisphere’s “World’s Most Ethical Companies in 2021,” which included 135 honorees representing 22 countries and 47 industries, on Tuesday.

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This is the 15th annual recognition of companies that have demonstrated a commitment to ethical business practices through programs that positively impact employees, communities and broader stakeholders, and contribute to sustainable and profitable long-term business performance. In 2021, nine companies were first-time honorees, while six have been recognized 15 times–every year since the awards inception in 2007. Grounded in Ethisphere’s proprietary Ethics Quotient, the World’s Most Ethical Companies assessment process includes more than 200 data points on culture, environmental and social practices, ethics and compliance activities, governance, diversity and initiatives to support a strong value chain. The process serves as an operating framework to capture and codify the leading practices of organizations across industries and around the globe. This year, the process was streamlined, and the question set expanded to gauge how applicants were adapting and responding to the global health pandemic; environmental, social and governance factors; safety; equity and inclusion, and social justice. The list included 135 honorees representing 22 countries and 47 industries. VF Corp. and Hanesbrands Inc. were chosen in the apparel field. VF has been recognized for the past five years. “This recognition demonstrates the deep commitment of our associates around the world to lead with integrity and transparency,” said Steve Rendle, chairman, president and CEO of VF, which recently announced sustainable packaging plans. “As we continue to transform our business to be a more consumer-minded, retail-centric and hyper-digital organization, we’ll also maintain our relentless focus on managing our global operations with the highest ethical standards.”

For Hanesbrands, it was the first time it had applied to Ethisphere for recognition. “We have a strong commitment to acting responsibly and we’re very proud to be recognized by Ethisphere,” Hanesbrands CEO Steve Bratspies said. “This honor is the result of 61,000 employees around the world committed to operating our business in the right way. Consumers can be proud that when they choose our apparel, they are choosing a company deeply committed to sustainability.” The company was also recently named one of the 100 most sustainable companies in the nation for the second year by Barron’s and earned a leadership level A score in the CDP 2020 Climate Change Report. In October, Hanesbrands announced wide-ranging 2030 global sustainability goals that include a commitment to science-based environmental targets, a goal of improving the lives of at least 10 million people, and addressing the use of plastics and sustainable raw materials in products and packaging. The goals were launched via a new sustainability website, designed to increase company transparency and reporting on key metrics, including diversity, human rights benchmarks and risk assessments for investors. One of the companies recognized since the inception of the award is textile and chemical company Milliken & Company.

“Each year we have received this honor is a significant milestone for our company,” Halsey Cook, president and CEO of Milliken, said. “This recognition is an endorsement of the way we do business, with our purpose and values at the heart of our work. 2020 brought unique challenges and we congratulate our Milliken associates for doing the right things during difficult times.” Milliken, a materials science company with a portfolio of textile, chemical, healthcare and floor covering innovations, said that in a year marked by pivots, its impact was significant. The company’s divisions developed new products and retooled existing products critical in meeting the needs of the ongoing pandemic, made significant foundational progress toward achieving company sustainability goals, and approximately 8,000 associates across the world displayed teamwork and resiliency in bolstering company operations.

In fashion retailing, Kohl’s Corp. was the lone designee. In its third year of recognition, Kohl’s is one of only three honorees in the retail industry, which also included Starbucks and Best Buy. “Kohl’s is honored to be recognized for the third consecutive year as one of the World’s Most Ethical Companies, which is supported by our values-based culture and the way our associates strive to act with honor and integrity each day,” Steve Thomas, Kohl’s chief risk and compliance officer, said. “This recognition demonstrates Kohl’s strategic integration of ethics and governance throughout our organization and our ongoing commitment to environmental, social and corporate governance stewardship.” The retailer noted that is committed to progress in its diversity and inclusion pledges, and the company’s environmental, social and corporate governance (ESG) stewardship. Of note, Kohl’s reportedly cancelled roughly $150 million worth of garment orders from South Korea and Bangladesh last year, shortly before paying out $109 million in shareholder dividends. “While addressing the tough challenges of 2020, we saw companies lead–above all other institutions–on earning the trust of stakeholders through resilience and a commitment to ethics and integrity,” Ethisphere CEO Timothy Erblich said. “The World’s Most Ethical Companies honorees continue to demonstrate an unwavering commitment to the highest values and positively impacting the communities they serve.” “We continue to be inspired by the actions and initiatives of the World’s Most Ethical Companies honorees,” Erblich continued. “Leadership by this group of companies is a reason that business, above all other institutions, was most trusted during the challenging times of 2020. Honorees integrate ethics and values with corporate strategy. They speak up, are transparent, take action and look for innovative ways to make a difference. We congratulate their efforts.”

Ethisphere’s 2021 Ethics Index, a collection of publicly traded companies recognized as recipients of this year’s World’s Most Ethical Companies designation, outperformed a comparable index of large cap companies by 7.1 percentage points over the past five calendar years. The outperformance, which it refers to as the “Ethics Premium,” has remained consistent since the organization began tracking the equity performance of honoree companies. “We believe this outperformance is the result of the kinds of practices that lead a company to be on our list, practices that demonstrate investment in their people, in their culture and in their communities,” Erblich added. “We see in this data that those practices, over time, lead to stronger financial performance. As evidenced by this continued outperformance, ethics is good for business.” The Ethisphere Institute specializes in defining and advancing the standards of ethical business practices that fuel corporate character, marketplace trust and business success. Ethisphere honors superior achievement through its World’s Most Ethical Companies recognition program and provides a community of industry experts with the Business Ethics Leadership Alliance.

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