Arc’teryx in Myanmar

The Rohingya crisis in Myanmar has been a difficult ethical debate and a high priority sourcing question within Arc’teryx for over a year. Given recent attention to the ongoing and unresolved human rights violations in the country, we want to outline our point of view.

Below outlines our approach to the issue to date, the progress we’ve seen on our actions, and our evolving response to the situation.

Our point of view

The treatment of the Rohingya people by Myanmar’s military and government is deplorable. Many of their actions defy expectations of a responsible government: the violence and the serious human rights violations taken by government security forces, the subsequent refusal to acknowledge or take responsibility, and the broad refusal to recognize the rights of the Rohingya ethnic group.

This violence and these attitudes triggered a debate within Arc’teryx about whether we should continue to partner with factories located in the country.After careful consideration, we agreed to keep a close watch on the situation, remain nimble in order to respond to the changing political climate, and make values-based decisions over the aspects we have control of.

History of Arc’teryx production in Myanmar

Our presence in Myanmar dates from 2014, when two of our existing manufacturing partners (ZKG and Takashima) announced plans to open facilities in the country as it became open to western markets. Although Myanmar had drawn criticism for past human rights abuses, increased trade was linked to the transition of the country’s government. As an organization we respect the choice the European Union took to offer preferred trade access to Myanmar as long as 15 fundamental UN and International Labour Organization (ILO) conventions were respected. Our manufacturing partnerships in the country marked an opportunity to be part of liberalizing a previously isolated country, and Myanmar showed promise for a strong apparel production future.

We worked closely over the three following years to develop high quality production capabilities involving training modules, quality systems, and proprietary machinery. At the same time, our supply chain sustainability teams engaged on the social and environmental practices in the new facilities. These activities included completing social compliance audits, identifying priority issues for resolution, training the facilities on the Higg Index Facility Environmental Module, and developing action plans for improving practices and impacts. Both facilities were making progress and had moved from very basic garment production with limited social or environmental capabilities, to producing highly technical goods at very strong quality levels while meeting requirements and showing progress on our sustainability metrics.

The Rohingya crisis

In August 2017, global attention turned to the Rohingya crisis. Any human rights abuses in a country where we produce is a major red flag. Our sustainability and development directors traveled to Myanmar to meet with the facility owners and management to better understand the issue’s local context. In addition, we met with the Myanmar Centre for Responsible Business, founded by the globally respected Institute for Human Rights and Business. In those conversations we became aware of the complexity of the issue and the challenge in finding simple and effective solutions.

It was apparent how little influence a western brandhas on the actions and attitudes of an autocratic government. We recognized that dialogue and pressure on the Burmese government was most effective coming from governments, including Canada’s who had recently appointed a special envoy to address the topic, and the EU’s, whose trade commissioner has directly engaged on the trade status of the country.

We decided to assess what we could control, namely the status and future of our production in the country and the practices at our partners. We confirmed that both of our facility partners and factory locations are not owned or managed by entities linked to the government. We also learned that both were under tax holidays since they opened so were not financially supporting the regime. Additionally, we came to understand how previous periods of sanctions had led to greater isolation of the country and to economic hardship felt most directly by workers. The outcomes related to suspending trade seemed neither positive nor useful, including the resulting unemployment of many of the workers who we had partnered with and trained.

We have actively followed the reports of UN’s Human Rights Council which appointed a fact finding mission on the Rohingya crisis. As part of their recommendations, the report clearly states:

“The Mission does not support general economic sanctions on Myanmar. It is concerned that such sanctions in the past may have contributed to the impoverishment of the Myanmar people generally while having little impact on those most responsible for serious human rights violations. The Mission supports continuing efforts to reduce the poverty in which most people in Myanmar live, through increased economic engagement and development assistance, provided that the engagement and assistance is carefully targeted to avoid any benefit to the Tatmadaw (the military) generally or to its leaders individually or to others responsible for serious human rights violations.”

Source: paragraph 1668 of

Our response

After discussing the option of pulling production from the country entirely, we decided to keep the existing business in the country and to engage more directly on the social and environmental impacts at the two facilities. We saw greater opportunity in influencing the development of the apparel sector in the country by continuing to build on our partnerships than we did in pulling out and removing ourselves from the conversation.

To that end, over the past year we have launched two programs at both facilities. The first, SMART Myanmar, is an EU-funded production sustainability training program, where factory managers attend education on best practices on topics including energy efficiency, environmental management, and human resources. The second program is called HER Project, run by Business for Social Responsibility. In this program, we’ve worked with local partners to lead health education for the women in the two factories (both of which have predominantly female workforces). Both programs are ongoing and we are eager to assess their effectiveness over time (future blog post will give detailed account of these programs).

Going forward, working with our parent company we are developing a new approach to assessing the human rights and geopolitical risks in countries we source from. This approach, while still preliminary, marks an important and proactive step in future such assessments.

Moving forward

From the start of the crisis, we’ve asked ourselves: what line would need to be crossed for us to pull production and leave the country?

Our hope in keeping production in Myanmar and investing in programs is based on the belief that the country is in a challenging transition from military control to better governance. At this time our choice to stay feels like the better of two options in a bad situation; however, the human rights abuses that we continue to see do not show encouraging signs about this transition actually happening.

We have returned to our question: is there real progress being made in regards to the Rohingya crisis and to the government’s actions? We continually assess whether pulling out of the country is the smartest path. While we do not want to give up on the progress we’ve made with the employees and facilities nor on the social impact projects that we’ve led, we also do not want to support the actions of the government or its neglect of human rights.

For now, we have stopped moving any new production into Myanmar. At this point in time we are continuing with our previous manufacturing and the sustainability programs. However, without forward progress from the government, the future of our manufacturing in the country is in doubt. For the time being, we are actively monitoring potential trade sanctions by the EUagainst Myanmar as an escalation of their current targeted approach. In the case of the suspension of Myanmar’s GSP preferred status on the basis of human rights abuses, we would defer to the assessment of the EU and withdraw Arc’teryx production from the country. In February 2019, the Ethical Trade Initiative released a four point planfor responsible business response to the crisis Myanmar. We respect ETI’s work and are using this plan to continue to review our past decisions and to assess future operations in Myanmar. As changes occur, we will continue to provide updates on this difficult situation.

Learn more about Arc’teryx’s global manufacturing policies HERE.