Two-thirds of fashion supply chain risks are social: Report

Two-thirds of global fashion supply chain risk incidents over the last five years are linked to social issues, according to a new report by Zurich-based ESG data science company RepRisk.

The report, titled "Anatomy of Supply Chain Risks", highlights human rights abuses and poor working conditions as the primary drivers of social risk in the global fashion sector.

These include poor employment conditions, forced labour, lack of freedom of association, discrimination, child labour, occupational health and safety violations, and corporate complicity. Such incidents have doubled since 2020 and increased by 22 per cent in the last year alone.

Published in August, the report underscores the urgent need to address the "S" in ESG --environmental, social, and governance -- emphasising the role of social factors in measuring long-term sustainability and ethical impact.

Between May 1, 2020, and April 30, 2025, RepRisk recorded 16,556 supply chain risk incidents globally. The surge in social risks within fashion supply chains serves as a wake-up call for industry players to reassess sourcing practices and supplier relationships.

The report found that over 5,000 ESG-related incidents involved companies headquartered in the United States, followed by Germany (2,079), and significant numbers tied to firms in France, the UK, China, and Japan.

Environmental concerns, particularly product-related health and environmental damage, were most prevalent in the fast fashion segment, accounting for 13 per cent of incidents, compared with 7.0 per cent in premium

brands and just 1.0 per cent in the luxury tier. The report attributes this to fast fashion's focus on rapid production, low costs, and high volumes.

RepRisk also notes regional disparities: European companies are more than twice as likely to be linked to labour-related incidents in Asia than in Europe, reflecting Asia's central role in global supply chains and its higher exposure to business conduct risks.

With escalating legal and reputational threats, climate change, and geopolitical tensions, the report urges fashion companies to prioritise transparency and ethical practices. Proactive engagement with suppliers, regular audits, and the use of AI-powered monitoring can help mitigate risks and strengthen sustainability credentials.

Philipp Aeby, CEO and co-founder of RepRisk, said: "Fashion's supply chains have never been easy - and today's global pressures make them even tougher. It is time for transparency!"

"Daily monitoring powered by data that effectively combines human intelligence with AI enables fashion companies to build resilient value chains, maintain stakeholder trust, and drive long-term performance," he added.

munni_fe@yahoo.com