Investors Urge Zara Owner Inditex to Disclose Supplier List

Investors push for Inditex, Zara’s parent company, to follow industry peers like H&M and Primark by publicly disclosing its full list of suppliers, aiming to mitigate supply chain risks and ensure ethical sourcing practices.

Lack of Transparency Raises Concerns:

Inditex stands out among major clothing retailers for not disclosing its factory sources, prompting regulatory and investor scrutiny as stakeholders seek greater transparency and accountability in supply chain management.

Clothing retailers face increasing pressure to address concerns regarding forced labor and fair wages within their supply chains, highlighting the need for comprehensive transparency to uphold ethical standards.

Shein’s Scrutiny and Regulatory Landscape:

The scrutiny faced by Shein underscores the growing attention to supply chain risks, particularly in anticipation of its U.S. listing. In contrast, disagreements over E.U. regulations underscore the global push for enhanced supply chain transparency.

Leading fashion brands such as Adidas, Nike, and H&M have already disclosed detailed supplier lists, setting a precedent for transparency and accountability within the industry.

Investors, including Dutch asset manager M.N., advocate for Inditex to disclose its supplier list to better assess supply chain practices and conduct due diligence. This action reflects broader investor initiatives to promote responsible investment practices.

Institutional Engagement for Ethical Labor Practices:

M.N. leads the dialogue with Inditex on behalf of Platform Living Wage Financials (PLWF), a coalition of institutional investors advocating for fair wages in the garment industry, emphasizing the importance of transparency in achieving ethical labor practices.

Despite investor demands, Inditex declines to comment on disclosing its supplier list, citing its commitment to maintaining high standards in the supply chain. The majority stake held by founder Amancio Ortega underscores the company’s shareholder dynamics.

Investor Position and Engagement:

With combined assets worth billions, Inditex investors express concerns over supply chain transparency but currently refrain from divestment, indicating ongoing engagement with the company to address ethical sourcing issues.

M.N.’s divestment from TJX highlights investor actions in response to inadequate human rights due diligence, illustrating the importance of investor engagement in promoting responsible business practices.