Investors want Zara owner Inditex to follow rivals H&M and Primark in making its full list of suppliers public so they can better assess any supply chain risks.
Inditex is an outlier among big clothing retailers in not publishing which factories it sources from. Regulators and investors want greater transparency and better disclosure from companies. Clothing retailers, in particular, are under pressure to prove that there is no forced labour in their supply chains, and that garment workers are paid decent wages.
Chinese fashion group Shein has come under scrutiny from U.S. lawmakers over supply chain risks ahead of plans for a U.S. listing.
In the European Union, disagreements have stalled proposed rules that would require all big companies to disclose whether supply chains harm the environment or use child labour. Proposed sanctions for not complying could include fines of 5% of revenue.
Fashion brands and retailers, including Adidas, H&M, Hugo Boss, M&S, Nike, Primark, and Puma, already publish detailed supplier lists, including factory names and addresses. Inditex publishes annually the number of suppliers it sources from in 12 core countries, but gives no information on individual factories.
Inditex, set to publish annual results on March 13, declined to comment on investors' demands for it to publish its full supplier list. "Inditex has a deep commitment to maintaining high standards in its supply chain, and believe that our industry-leading traceability system, which gives us maximum visibility of the supply chain, is key to this," an Inditex spokesperson said.
Inditex has an agreement with global trade union federation IndustriALL under which it provides it with its full list of suppliers. But IndustriALL wants wider disclosures from all companies, including Inditex, it said. Know The Chain, a benchmarking initiative for companies and investors to address forced labour in supply chains, gave Inditex a lower overall score in its 2023 assessment than its 2021 assessment.
"The company is encouraged to strengthen its supply chain transparency by disclosing a full, rather than partial, list of its direct suppliers," Know The Chain said.
Inditex's published supply chain figures since 2019 show the company has cut suppliers in China and increased them in Bangladesh and Morocco. But it gives no details on the amount of products it buys from those suppliers.