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Buyers must build ethical costs into FOB

Retailers must build compliance costs into the Free On Board (FOB) price of garments if they are committed to ethical trading, delegates at the Drapers Global Sourcing Summit were told this week.

Ethical Trading Initiative director Dan Rees said suppliers were being asked by buyers to do more for less money, while also being asked by ethical retailers to pay a living wage to their workers. "Suppliers are under huge pressure. The lack of integration between buyers and senior management is the Achilles heel of ethical sourcing," he said.

One supplier to Marks & Spencer and Tesco said he was tired of dealing with the contradictory nature of ethical trading. "It's a two-headed monster. Compliant heads of businesses are backing ethical trade in a big way, yet 90% of business is done with buyers who are under pressure to deliver on price."

Rees added that FOB prices for knitwear in Bangladesh had fallen 33% in the past year, while demands on product quality and reliability had increased.

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