This post was originally published on Good on You
Small, independent labels don’t have the same impact as behemoth brands like H&M, which often produce on a vast scale, and wield huge financial power and influence over their supply chains. So when Good On You rates brands, we first distinguish their size in order to assess each brand’s actions proportionately. Here’s why that matters, and how we work it all out.
Small and large brands are determined by their annual turnover
We determine a brand’s size classification as large or small based on its annual turnover—or that of its parent company—using the European Commission’s definition of small and medium-sized enterprises (SMEs).
Under this definition, micro enterprises are those with fewer than 10 employees and a turnover of €2m or less. Small enterprises have, at most, 50 employees and a €10m turnover. And for medium enterprises (included in the small category under our methodology), it’s a maximum of 250 employees and a turnover of €50m or less—or a balance sheet of €43m.
Most major brands are therefore classified as large ones—including the likes of H&M and all its subsidiaries (COS, Arket, Monki, Weekday, & Other Stories), and luxury superbrands such as Kering’s Gucci, or Dior.
Good On You rates brands relative to their size
Much of our methodology is the same for small and large brands, but we use these size classifications to help weight the issues that businesses should be tackling, and for larger brands, the additional issues that they should be addressing.
That means our ratings assessment is relative to these brands’ overall impacts and what is considered best practice. This is particularly important for small brands that have access to fewer resources and have less influence on their supply chains.
Good On You’s ratings methodology also reflects the different types of small brands to ensure that even those with the smallest output can still achieve a good rating. We assess these brands on a wide range of key issues but acknowledge that they may face limitations when addressing these issues, such as the ability to enforce payment of a living wage amongst their suppliers, or reducing deforestation in regions where they source materials. We also acknowledge that figuring out where to start with sustainability disclosures can be a challenge for small brands, and we offer some guidance to those who are concerned about their rating.
When Good On You was established, we prioritised rating the most popular brands that people were buying from—now we’ve rated over 6,000, and we’re turning our attention to the opportunity to rate much smaller brands. There are so many tiny brands that we can’t wait to rate and display in our directory, and we know there are so many brilliant, more sustainable brands that we haven’t yet gotten to. We have a long waitlist of user-requested brands to rate, and we’re continually working to expand our capacity to rate these brands in addition to regularly reviewing the ratings of larger brands to ensure the information you have about them remains accurate.
Large brands can—and should—be doing the most
Large brands have more influence, resources, and control over their supply chain, and our methodology reflects this. We expect large brands to address a broader range of sustainability issues, like deforestation, biodiversity, and climate change targets. And given the resources available to most large brands, we also expect them to publish more detailed sustainability data across more issues—ideally in the form of an annual report.
One of the clearest examples of the disproportionate influence of large fashion businesses was the impact of major brands cancelling supplier orders during the coronavirus pandemic. Some of the world’s biggest mass-producing brands abruptly cancelled big orders with their factories—many of which relied on such orders as a key part of their business, and as a result of the loss, were forced to cut working hours and pay for their garment workers, or even go out of business altogether. The purchasing power of small brands just isn’t on the same level that it could force the closure of a factory, and it’s vital that we hold larger brands accountable when they use their power to exploit others in the supply chain.
If you’re keen to learn more about Good On You’s ratings, have a look at our How We Rate page, read our explainer on the importance of publicly available information, and browse our directory to see how your favourite brands rate.
The post The Biggest Brands Should Be Doing the Most: Why We Rate Large and Small Brands Differently appeared first on Good On You.