Fanatics Brands' journey to secure workers rights could benefit the company long term

• Sports apparel company Fanatics received accreditation by the Fair Labor Association in 2021.
• The FLA holds its partners accountable to standards like health and safety and nondiscrimination.

The apparel industry has long faced scrutiny over its environmental and human toll, including poor working conditions and low wages. Fanatics Brands, a producer of licensed sports fan apparel, has stated its commitment to improving the labor ecosystem across its supply chain.

In 2021, the company received accreditation by the Fair Labor Association (FLA), an organization that promotes workers' rights and improves working conditions through partnerships with companies, colleges and universities, and civil society organizations.

Fanatics Brands is a division of Fanatics Inc, headquartered in Jacksonville, Florida. The parent, as reported in the Wall Street Journal has raised $1.5 billion from investors, pushed into the NFT market with Candy Digital, is gearing up a sports-betting offering, and acquired Topps trading cards in January, 2022.

The WSJ reports, "The company has said an IPO is likely but it remains focused on building the business and hasn't provided an update on timing."

Sustainability credentials, including investing in workplace safety and equity, become important for companies that are thinking of going public — both in terms of potential risk factors and in brand-building differentiation.

"Pre-IPO companies need to ready themselves for the kind of scrutiny they are going to receive," said Martin Whittaker, CEO of JUST Capital. "There's also a strong demand by investors for companies to show they can create value through the stakeholder model. That's going to make them more attractive to the marketplace."

Partnerships help companies set their labor benchmarks

The decision to work with FLA was a "no brainer," Michaela Hepburn, Fanatics sustainability senior director, told Insider.

"We take our commitment to mitigate labor impacts along our supply chain very seriously, and the accreditation signals this commitment to our stakeholders," she said, adding that fair labor, including safe working conditions and suitable wages, is a key part of the organization's sustainability goals.

Fanatics Brands is among 30 other FLA-accredited organizations, including Adidas, Nike, New Balance, and Patagonia. Several others are working toward the designation.

FLA helps fashion and apparel companies embed International Labour Organization standards — such as workplace health and safety, nondiscrimination, and fair compensation — into their own corporate governance practices. The association ensures they fulfill these commitments, Sharon Waxman, president and CEO of FLA, told Insider.

"We give accreditation to the companies that have demonstrated that they meet those standards and continue to make progress," she said. "This is not a one and done — it's a journey."

Global supply chains can be complex and navigating various international laws and standards related to worker safety and pay can be daunting, Waxman said.

Wages are especially complicated. Waxman said some countries don't have a minimum wage and others have a minimum wage that's below the poverty line. FLA offers a Fair Compensation Dashboard, allowing companies to upload their wage data to compare to other organizations and make more informed compensation decisions.

FLA's participating companies must commit to providing fair compensation, and the data help drive conversations internally and with manufacturers and labor groups about pay standards.

Accreditation is a multi-year process to ensure company supply chains comply with the FLA Workplace Code of Conduct, which is based on international labor law and best practices around employee relationships, nondiscrimination, compensation, anti-abuse or harassment, child labor, and collective bargaining.

FLA assesses a company's principles of fair labor, responsible sourcing, and responsible production, including adopting and communicating workplace standards, training staff at all levels to recognize and resolve non-compliance issues, performing internal assessments, and offering workers ways to report problems confidentially.

Ongoing performance evaluations ensure companies are moving toward their goals, Waxman added.

Fanatics Brands' accreditation was based on several factors, including its social compliance program, which includes 11 global staff members. The company also publishes its labor commitments online, has an extensive social compliance training program for employees, conducts social compliance audits at contract facilities, and is progressing in its offering of living wages across its supply chain.

Accountability and expectations

According to FLA's external accountability report, Fanatics Brands, which began its affiliation with FLA in 2016, has more than 90 factory locations (both contracted and owned) globally, with the highest numbers in the US and Thailand.

The report includes a checklist of accreditation requirements that include making internal and public commitments to standards, social compliance staff training, and union consultation. Fanatics Brands met the majority of baseline requirements, with a few noted as "in process of implementing baseline requirements by the disclosed timeline."

One area "in progress" relates to governance policies. "The new governance work includes the inclusion of sustainability in the charter of the current board-level compliance committee, and the integration of sustainability KPIs into Fanatics' management audits", read the report.

FLA's remit is to track and confirm progress is made towards those goals. "We follow through to make sure and confirm that the commitment is actually being embedded into the way the company does business," Waxman said. "It's not enough to just say they're doing X, Y, or Z."

Still, she emphasized that FLA is not a "gotcha organization." It's expected that companies will identify labor challenges in their supply chain — what's equally important is that they create a system to solve the problems.

People are the most valuable resource at any company, she said, "It's in any company's self-interest to have a system and standards that ensure that their workers are treated right."