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Zara owner Inditex under pressure to disclose full supplier list as investors push for transparency

Zara Supplier List

Inditex, the owner of high street fashion brand Zara, has been urged to provide a full public list of its suppliers to help better assess supply chain risks as investors become increasingly nervous.

Peers such as Adidas, Primark, Nike, Marks & Spencer, Puma, Hugo Boss and H&M currently publish extensive supplier lists online in a bid to improve transparency – but Inditex remains an outlier.

Fashion brands and retailers are under increasing pressure to provide detailed information about their suppliers, in order to prove that their garment workers are fairly remunerated and that there is no forced labour in their supply chains. 

In the European Union, proposed rules that would require all big companies to disclose whether their supply chains harm the environment or use child labour have been gathering steam but have recently been stalled by disagreements. Failure to comply could see companies hit with fines of 5 percent of their revenue.

Currently, Inditex – the Spanish company who also owns Bershka, Pull&Bear, Massimo Dutti, Oysho and Stradivarius – releases an annual list of the suppliers it uses in 12 core countries but fails to provide factory names and addresses unlike competitors.

Reuters asked investors what they wanted to see from the company in regards to improved disclosure.

Dutch asset manager MN said, “In our engagement with Inditex, one of the things we ask is if they could disclose a list of their suppliers and the geographical location.

“Even though Inditex assures us that they have this data available, up until now Inditex is not willing to disclose this information unlike some industry peers who publish extensive supplier lists.”

MN leads the Inditex dialogue for Platform Living Wage Financials (PLWF), a group of 20 institutional investors with combined assets under management of 6.58 trillion euros. It works to promote higher income for garment and footwear industry workers.

All five of the investors Reuters spoke to – who hold a combined stake worth of around $2 billion in the company, whose current valuation is about $140 billion – expressed similar sentiments but none are considering divesting from Inditex.

Grace Su, portfolio manager at Clearbridge Investments who hold shares with Inditex, said that she has also asked for more detailed information on suppliers.

“It’s very important because of all the scrutiny around ESG, and labour, and inputs. They claim to be a leader in this so it’s really important for them to actually have that level of disclosure.”

While Inditex failed to comment on the growing pressure from its investors, a spokesperson told Reuters, “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.”

Supply chain figures published by Inditex since 2019 reveal that it has cut suppliers in China, instead increasing them in Bangladesh and Morocco. However, no further information was supplied on the amount of products it buys from said suppliers.

Swetha Ramachandran, portfolio manager at Artemis Investment Management in London, wants to know what share of Inditex revenues is manufactured in each different supplier country, according to Reuters. 

“It would help us determine their supply chain resilience,” she said.

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