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Arcadia Group: almost transparent

By Elaine Cohen (BeyondBusiness) on January 17, 2011 at 09:55am.
Content:

The fourth Responsibility Report for the Arcadia Group, or "RR10", as they call it, is as impressive as it is frustrating. Arcadia is the UKs largest privately-owned fashion retailer with well-known high-street brands (Burton, Dorothy Perkins, Evans, Miss Selfridge, TOPMAN, TOPSHOP and Wallis), which they sell in the UK in more than 2,500 outlets. The group operates in 36 countries in Europe, the USA, the Far East and the Middle East with a further 597 international franchise stores. In 2009, Arcadia integrated the Bhs department store chain into its operations. Arcadia has 41,500 employees and had a good 2009/2010 fiscal year; increasing both revenues and profits. As with many fast fashion retailers, the group outsources all its garment production to 620 suppliers in 1,100 factories primarily located in China, India, Mauritius, Romania and Turkey.

This report is primarily about responsible sourcing and supply chain environmental impacts, with light coverage of employee engagement and community activities. It is split into nine core sections (work-streams) which make up Arcadia's overall responsibility approach, which is branded under the name "Fashion Footprint". There are signs that Arcadia is indeed committed to adopting responsible practices in many areas, and that corporate responsibility is built into work processes. Each of the nine work-streams has its set of targets which are revised each year. All employees, according to the report, have Fashion Footprint criteria in their appraisal, and it is a "key competency for buying, merchandising, design and technical staff". New starter orientation also includes Fashion Footprint education. The Fashion Footprint is led by a Fashion Footprint Advisory Panel, made up of representatives from the different Arcadia business units. The Panel has delivered Fashion Footprint Roadshows around all business units, and the report stresses the onboarding of the new large group of Bhs employees in this programme.

The Arcadia Group claims to be one of the first fashion retailers to introduce a supplier Code of Conduct in 1996 (now replaced by an Ethical Trading Initiative aligned updated version). One nice aspect of the embedding of this Code in the broader supply chain is the newly released Code of Conduct Guidebook, which is a detailed set of rules, procedures and guidelines for all suppliers on all aspects of managing their part of the Arcadia supply chain. Over 200 suppliers have already been trained. The Guidebook is downloadable from Arcadia's website and is an impressive document.

Arcadia's reporting of supply chain aspects includes specific reference to living wage and migrant and home workers. These are important challenges in managing the complex garment value chain and it is good to see both awareness and initiative in these areas. Initiatives to reduce waste and recycle are well scoped out and include several examples of progress.


Communication:


The report is nicely written in an informal style and is easy enough to read. Its format is symmetrical within each of its nine core sections, following four headlines: our approach, progress, challenges and next steps. The final three pages are a summary of progress made and next steps in all sections. There is no index, so looking for specific data requires a PDF search. Stakeholder groups are identified and ongoing relationships described, but there is no evidence of specific stakeholder feedback, nor is there anything which resembles an assessment of material issues. Governance is not referenced, risk management is not addressed and marketing and retail sales practices not disclosed. The report presentation is modest, with a home-design look void of special effects and spectacular graphics, which is a positive aspect, in my view. 18 of the 55 pages are photo shots, with as further 6 pages half-photo, and three pages of performance summary, leaving around 30 pages of text which is not too burdensome on the reader.


Credibility:

For such a significant player in the fashion market, despite the fact that Arcadia is not publicly traded, it might be reasonable to expect a high degree of transparency and perhaps even a glimpse of leadership on key issues. However, although the group demonstrates a structured approach to corporate responsibility, and some impressive achievements, this report is overly selective and a touch superficial. If this report had followed the GRI framework, we would have noticed that very few of the well-established global reporting indicators are actually disclosed. Despite having been reporting now for four years, where data is given, it refers only to the reporting year. This prevents an assessment of how this company is doing in terms of its own sustainable performance progress and denies the reader the benefit of continuity. More importantly, key data elements are missing. Given that Arcadia's entire responsibility programme is branded Fashion Footprint, we might have a reasonable expectation of seeing the Arcadia Group report on their actual environmental or carbon footprint. However, Arcadia report only a carbon emission reduction of over 2,000 tonnes versus the prior year; waste is expressed in amount of tonnes recycled or reduction of tonnes sent to landfill; paper use is expressed as a percentage reduction and so on. Whilst all these numbers are very positive, the long term view is missing as they are not stated against any specific targets and absolute data are omitted. Indeed, whilst Arcadia has established targets for all areas of its Fashion Footprint, most are directional and not specifically quantified.

The Bhs integration must have had its challenges relating to people and possible redundancies, but this is not discussed in the report. RR10 is not assured which further reduces its credibility, countered only by what does seem like a very impressive range of initiatives and the earnest tone that characterizes this report. An example of this tone is the refreshingly honest statement: "Working with and influencing the practices of our suppliers and their factories is one of the most demanding areas that fall under Fashion Footprint." Whilst anyone who knows the fashion industry will readily identify with this statement, and perhaps empathise with Arcadia, I do believe it would be worth Arcadia adding another demanding objective to their core list: deliver RR11 which is significantly more transparent in scope and on core metrics than RR10. Overall, whilst this report is a good round-up of much that Arcadia is doing in terms of corporate responsibility, the sidestepping of key issues and much data is frustrating.


Recommendations:

1.    Report data over a period of years, not just current year, to ensure continuity and assessment of performance progress.
2.    Move to reporting in a more consistent way across all businesses, instead of local anecdotal commentaries about different units. Make an analysis of material issues and focus reporting on these.
3.    Include more data about internal workplace practices.
4.    Index the report (or use the GRI framework) to ensure stakeholders' ability to compare performance to global best practice.

elaine cohen is the Joint CEO of BeyondBusiness Ltd, www.b-yond.biz/en, a leading CSR reporting and consulting firm in Israel, specializing in a wide range of consulting services for the development of social and environmental responsibility of businesses.