transparency and accountability
What is transparency?
There's a lot of talk in the industry about transparency. And while we believe in transparency - much of the conversation revolves around a system where brands are separate from production, and a brand's ability to be sustainable is based on its ability to effectively police its supply chain. As a brand and a manufacturer, we are trying to push back on the dominant notion that the work of garment makers and factories being inherently less valuable than the work that brands primarily do, which is design, sales and marketing. That notion is based in racist and colonialist ideologies and is prevalent across both mainstream and “ethical/sustainable” labels.
Simply put - it should go without saying, that any ethical brand should pay fair wages, and tonlé does that, but we really believe that is the bare minimum for any brand to call itself "ethical" or "fair trade." Many of the ways brands talk about their work are more about marketing than doing right by their people, and as a brand and a manufacturer that is really and truly centered around people, we've struggled with the right ways to tell our story without perpetuating white savior marketing schemes or portraying garment workers as victims.
Read more: Treating Symptoms vs. Systems Change
So to add nuance and clarity to what we do and don’t do at tonlé, we’ll be sharing a series of posts around transparency, how we see it, why we think it’s important, how we do things differently to the mainstream fashion industry. Core to all of this is that as both a brand and manufacturer, running a business model where production and sales are integrated creates a very different set of incentives. Many of the questions we are routinely asked about our business model hinge on the fundamental assumption of brands being separate from production. There are some great brands and designer maker labels who are also vertically integrated - and there are some smaller independent brands which have sought to form more equitable partnerships with their makers/suppliers - but they are honestly few and far between. That’s why we are adamant about celebrating the fact that we are a brand and a manufacturer - because it has certainly been hard but, the most rewarding path, and has helped to incentivize a more equitable distribution of resources across our business model.
Read more: 2020 transparency and accountability post: How we paid everyone and stay afloat during a pandemic.
Our transparency series, which is still evolving, will address some pressing questions like, how much are people actually paid to make this piece? How much do brands mark up their products? What steps go into making a garment? What does our ownership structure look like? Do you have any third party certifications? Can we verify we’re doing what we say we’re doing? We'll start with third party certifications first.
Read more: Sharing the risk and reward in a vertically integrated fashion business
What are third party certifications?
Third party certifications - like Fair Trade, Organic, and B-corp (among many) are often seen as ways for a brand to provide evidence they are doing what they say they are, and these certifications are the gold standard for transparency. The essence of the question being asked is, how can you trust a brand is doing what they say they are doing? (We know we can’t, as evidence of the last 100 years of fashion manufacturing has clearly demonstrated.) But usually, the responsibility of both paying the fees to these 3rd-party certifiers, documenting and reporting, as well as actually improving and investing money to meet these standards, falls on suppliers. 3rd party certifications and other “compliance” oriented tactics become a tool to punish and blame suppliers who do not “behave” instead of investigating the practices of the brands themselves which incentivised suppliers to operate this way, starting with outsourcing their production in the first place. To make matters worse, once a supplier has has done the work and invested money to improve and “prove” that they have done it, the brand gets the credit for having a sustainable supply chain, gets to put these labels on their products, and in many cases, can even make more profit because of those labels. We acknowledge this is somewhat over-simplified because not all 3rd party certifications are the same. But this broad pattern holds up across the industry.
So do 3rd party certifications make sense for a vertically integrated brand where the incentives are completely different? We’ve struggled to find one that would actually demonstrate accurately what we do at tonlé.
The most aligned is B-corp, because it demonstrates a business's commitments across the board in how they operate, not just in regards to supply chain “compliance.” But B-corp too is a lengthy and expensive process, one we haven’t been able to undertake yet. (We are legally registered as a Benefit Corporation in the state of California though - which allows us to bake a more fair distribution of profit and resources into our company documents and set other goals beside purely being for-profit.)
In lieu of 3rd party certifications, we’ve asked several of our partners, team members, collaborators, and external experts who have visited our workshop and can speak to what we do - to write about how they view what we do at tonlé. While we wait for the perfect 3rd party certification to be developed, we hope these testimonials will add some outside and inside perspective to our work.
tonlé testimonial 1: Kim Van Der Weerd, former tonlé operations manager and co-host of Manufactured Podcast
"When I think about the tonle workshop, I think of community. I think of the smiles that greeted me every morning... usually followed by some animated recounting of the day's gossip. I think of Ming Tola, a sewing operator whose life was infinitely harder than mine, pulling me aside to express concern that I was working too hard. I think of Ming Eng's wry sense of humor. I think of the time I came back from lunch to find the workshop inexplicably full of mattresses (a salesman had been by and given the staff a group discount). I think of Ny's head peering out from a pile of scrap, announcing triumphantly that we had enough to fill the order. I think the team's warm affection for my extended family. I think of Srey Oun, firmly bossing people around while somehow retaining their love and respect. I think of Rachel, insisting that the team needed a retreat to Siem Reap even though we had basically no cash on hand. I think of the hustle and the strength of my former colleagues, but equally, the humbling optimism and empathy for one another.
Tonlé is often asked for third party certification to "prove" that it's operating in a responsible way. While I understand the impulse for external verification, it's worth pointing out that this model for responsible business conduct is a direct response to the fact that most brands do not do their own production. In the wake of the sweatshop scandals in the nineties, brands, because they outsourced production, needed a way to reassure the public that they knew who their business partners were. It's also worth pointing out that nobody is asking brands to hold up audits of their own practices (though perhaps they should.) In other words: the assumption underpinning certification schemes is 1) that production is not being done by the brand itself and 2) that suppliers are unruly, out to make a quick buck, and must be kept in check. They enable brands to claim a moral monopoly: when a supplier is "exposed", a brand is only implicated insofar as they've failed to effectively "police'' their supply chain.
Because tonlé is both a brand and a manufacturer, its situation is unique. tonlé management is intimately familiar with where its products are produced, and the people making them. When sales are slow, it's Rachel who must nevertheless find a way to make sure her staff are paid - and she has sometimes done so at great personal sacrifice. Unlike most brands, she can't cope with slow sales by refusing inventory from her suppliers, canceling orders, or asking her suppliers for discounts - all things that in conventional supply chains play a central role in the exploitation of the most vulnerable.
So it's hard not to think: how could a social compliance audit ever do justice to the tonle community? Because the ultimate testament, the ultimately proof, of tonle's responsibility and authenticity, is its community. That's the thing about tonle: the community is for tonle, by tonle. It's not a performance for someone else's benefit, it wasn't designed to tick a box (though boxes it certainly does tick). Tonle marches to the beat of its own drum, one where integrity comes first and appearances come second.”
Who owns tonlé?
What you see today as tonlé has taken many forms. The first iteration of our business started in 2008 - a collaboration between 5 women who primarily worked from home to create unique pieces out of second hand clothing in Phnom Penh. Since then the business has taken many different forms and evolved to meet the changing goals of the growing team.
On paper, our business has taken many different forms as well. Initially envisioned as a cooperative model, then a non-profit, then a small business registered in Cambodia, then as a Cambodian based company and then as a US and Cambodian based company functioning as one unit, so too, has the funding needed to keep this business running over time changed.
As a business with high monthly fixed costs and seasonal sales cycles, some capital has become required to grow especially as we were dealing with more and more upfront costs to buffer each month. And such we’ve raised some funding over time, and have been lucky to do that with investors who support some of our unconventional methods, people who truly align with our mission and values. The majority of our investment has come through loans and convertible debt, which means some of the investors may become partners in the future.
Tonlé co-creators who own part of the company include Rachel Faller, Sokpriya Yan, and Kim Van Der Weerd. As the company grows and becomes less financially risky, our goal is for more partners and co-creators to earn equity as well.
But as to the question - “who owns tonlé,” There is the way our business is structured for legal purposes and there is the way we function as a team, which is much harder to put a label on. There isn’t a business structure that perfectly defines what we do. We are a group of people who work together for a common goal - but our main goal isn’t making profit for owners. “Owners” in tonlé are often buffering risk rather than just raking in a reward. We have to make this business financially stable through healthy profits, but at the same time are focused on distributing wealth to everyone who contributes to our success. We believe in sharing both the risk and reward of running this type of business more equitably than in a traditional capitalist system.