Episode 329: Ethically Sourced Merch for Socially Responsible Clients (Daniel Cardozo, Ethix Merch)

What does a socially responsible apparel company really look like? What drives their innovation, their mission? And are they activists, entrepreneurs, or both? On today's show, we're exploring this role between ethical garment manufacturers, distributors, and buyers. Welcome to the SkewCast, a podcast for innovators and maverick thinkers in the promotional product space. My name is Bobby LeHew. I'm glad you're here. In 2001, Ben Cohen, co-founder of the ice cream company Ben Jerry's, wanted to create a socially responsible apparel company. Now, Ben Jerry's sold to Unilever in 2000, and from the proceeds of that sale, Ben Cohen created Cohen's Hot Fudge Venture Fund, Inc. In 2002, backed with $1.5 million from Cohen's venture fund, the company SweatX was formed. The LA Times reported then, quote, SweatX plans to raise consumer awareness of working conditions in garment shops while proving to other manufacturers that it's possible to pay a living wage and still earn a profit. End quote. Now, SweatX closed in 2004, but 3 former SweatX leaders were inspired by that experience and formed the company Ethics Merch. In 2007, they hired their first employee who would become the CEO. That employee, our guest today, Daniel Cordoza, activist CEO of Ethics Merch. Ethics is a business whose mission is to connect socially responsible organizations with ethically sourced merchandise. For example, for the readers of our trends newsletter, The Backpack, you might recall a story we highlighted that Ethix was a part of. It was from the organization Climate Town, whose popular video on YouTube was titled Fast Fashion is Ruining Merch. You can find all these links in the show notes, by the way. Ethix helped the creators of Climate Town find merch grown and made in the USA. We'll chat with Daniel about how they do this in just a second. But first, we are facing a bit of a crisis of creative thinking in this industry. It's a crisis because client demand has never been more sophisticated. From trends to design to sourcing, we struggle to think faster and more creatively in a fast-paced, deadline-driven industry. Well, Todd Henry, author of the bestseller, "The Accidental Creative," is one of my favorite influencers around creativity. In fact, Todd has been a major influence to many of the amazing speakers we brought to the stage over the years. At SKUCon on January 12th, Todd will share how to be brilliant at a moment's notice, helping us build the tools for ingenuity. Not only is Todd joining us, but one of the fastest rising experts on the economy, Kyla Scanlon, author of the book In This Economy, will be sharing her insight into the 2025 economic outlook. And don't miss our amazing closing keynote, Ben Higgins from The Bachelor fame, as he shares how to build a generous business. Plus industry pros Sandy Gonzalez, Shelley Stewart, Kate Nash, Mika Sagarwal, Nick Latour, and a few surprise guests too. SKUCon is almost sold out, so if you're thinking about it, act now and secure your tickets today at skucon.com. Today's episode is courtesy of us at Commonsku, the work from anywhere platform that powers your connected workflow, enabling you to process more orders and dramatically grow your sales. To learn more, visit commonsku.com. Now here's my chat with our guest, Daniel Cordoza, CEO of Ethics Merch.

Daniel, welcome to SkewCast. Awesome, happy to be here.

I think it's fascinating to open this conversation with where you met the founders of Ethics Merch. As I mentioned in the intro, you're the CEO of Ethics Merch, and I ask this because your protest story is an interesting entryway into business. It's not a very normal entryway into the business. How did you meet the founders of Ethics?

Yeah, I guess, well, after college I was sort of in government for a while working for a state assembly member here in California. I wasn't very activist-y in college, just kind of did my own thing. But that experience working for a really progressive state assembly member, plus some union activism that I was doing through the progressive Jewish community, led me into this anti-sweatshop activist work, which is really what lit a flame under me for the first time, really, about anything. I was young and idealistic. And I saw the world kind of crumbling around me. I thought I saw injustices everywhere you look. And it could be overwhelming. So I thought, well, why don't I start as simply as I can, with what I can control, right? So that's the food I put in my body, the clothes I put on my body, right? So starting from there, that really led me into an exploration of the the situation with apparel post, you know, NAFTA. It kind of entered the cultural zeitgeist that sweatshops were an issue right around that time. So I started going through the progressive Jewish community to these national anti-sweatshop summits that were put on by an organization called Sweatfree Communities at that time, trying to mobilize a national response to this issue of More and more of our clothes are going overseas. We don't know what the heck's going on in those factories, and reports are coming back about forced labor and child labor, all kinds of nasty stuff. So this group of activists met once a year to talk about how to respond. So one of the big things was getting governments to pass sweat-free procurement ordinances and try to put some kind of system in place to monitor these factories that were, that were leaving the U.S. and popping up in the in the global south. I met Kevin O'Brien at one of these SweatFree summits, and he is one of the people who was founding ethics, who had just founded ethics after the SweatX experience. And we just had a conversation after one of these meetings. Actually, I needed a pencil to take notes, and he was randomly the person next to me who had a pencil to spare. So that got us in the conversation. He's like, you know, you seem to have a good head on your shoulders. What would you think about doing this from the business side? I know this is a long answer to your question, but I never— it never occurred to me to work on the issue through business. Yeah, interesting. It always occurred to me to, you know, work on the activist side of just finding out who these bad actors were that were creating these sweatshops and, you know, get out on the streets and take them down, you know? Right. But what Kevin said really spoke to me and back to kind of what I thought about myself and my own relationship to this work. It's like, what can I do, right? Well, I can take care of the clothes in my closet, although that's easier said than done, right? But I can also use my skills and my creativity to help create an alternative model to what was quickly becoming pervasive in the industry. It's bringing production back home so that you can keep an eye on it, you know? And that, that's kind of what started, uh, the journey with ethics.

Help those of us not in manufacturing to understand the context that you have and some of us don't have prior to a more conscientious approach to manufacturing. You said bringing it back here to the US. What were normal egregious working conditions that Ethics fights?

So are there still—

is it like most of the apparel made in the US is manufactured in LA, is that correct? For the largest percentage?

The largest percentage, sure. So LA has the largest garment industry in the country, and it's pretty small. There are about 40,000 garment workers in Los Angeles. There are other big garment centers in, in the South, especially in North Carolina. Okay, in Chicago and New York, New Jersey areas. New York's probably the second biggest garment-producing area in the country, but everyone is kind of dealing with the same issues, which is once manufacturing left and now we're at a situation where only 2% of the apparel bought in the United States was made in the United States. Wow. And just about 30 years ago, you know, that was flipped on its head. So Well, the issue that domestic manufacturing is facing is the same issue that global manufacturing is facing, which is just this intense price sensitivity. Yeah, the global brands are pushing a certain product at a certain price, and then you got to compete. And because most of the production is happening outside the United States now, it's not like you can go and produce in the United States and everything's fantastic for workers. Like they're, they're facing that same competition that's resulted from the outsourcing of the, of the industry. So the conditions that, that started to happen during globalization were kind of in contrast to the previous 3 decades of unionization in the apparel industry, really more than 3 decades, since, since really the early part of the 20th century all the way up until the '70s. It's kind of this eventually this golden age for unionizing in the garment sector. Yeah. And so it led to, you know, really strong wages, really good conditions, a lot of oversight. And that, that came crashing down with NAFTA and globalization. And you started to get things like child labor, like forced labor, like wage theft, people being forced to work overtime at the normal rate. And that stuff happens in the US.

Yeah, I think that's surprising and be surprising to folks. Not the fact that it happens, that it possibly— that it happens on a more prevalent level than we realize. Now, ethics was formed to help combat this problem. So like you mentioned, by way of social and economic change. As an example of what you do, so we're fast forwarding now a little bit in your story. You joined ethics, you eventually become the CEO of ethics, and can you share kind of what ethics does by way of a story? Like for example, the UCLA story or any other client story that you want to use?

Yeah, I mean, the mission of Ethixx has always been to seek out, to identify the pockets of manufacturing that are still happening, whether in the United States or abroad, where the workers are being protected. Increasingly, we've added environmental sustainability to the list of our highest priorities, recognizing that true sustainability incorporates both workers and the environment. Ethics doesn't recognize the form of sustainability that's only about environmental protections. Yeah, got to have people and planet considered into the equation for true sustainability. So that's always what we've done is, is try to find the best, most ethical factories and then connect them to buyers. Where, where's the business at? And we've, we've always started with who should be purchasing from these ethical factories. Well, it's organizations that have a strong mission statement. They're, they're there to serve the public, or they have really strong human values behind their organization. So this ends up being universities, governments, cities and states, religious faith-based organizations, unions, nonprofit organizations. These are folks that are kind of in the movement with us for social and economic justice, and oftentimes they just haven't gotten around to getting a handle on their own purchasing for swag. They farm it out to, you know, somebody on their staff who has time for it or doesn't have time for it, and they do kind of the default, which is what's the best product that we can get for the lowest price, right? And what we're trying to do at ethics is disrupt that thinking mechanism and enter values and ethics into, into the equation so that it's on equal footing with price. And that's even with the organizations that have these highest values of good for the community. That's a— it's an uphill climb to just get the attention needed to sit down, crunch the numbers, increase the budgets, and make it work. And that's just— that's what we do all day, every day.

What was it UCLA was wanting in particular? How did that particular project enter the story, and, and how did you approach them to solve a problem, very similar problem they were having?

Yeah, so because this is so hard and people are doing their own thing and they don't always have the time to sit and focus on the ethics of their, of their merchandising, we have to look for creative ways to have our voice heard and to enter into the conversation. So we've started doing a lot of work in the LA garment industry to actively certify factories, proactively certify factories. So much of what goes on in monitoring of standards in the global apparel industry happens after an abuse. Like, there, there's a very small percentage of factories that get actively sort of investigated on a regular basis. And then once abuses are found, some kind of remediation unfolds, at least in theory, right? So what, what we want to do and what we want to be a part of is proactively certifying factories through a worker-led model where we can ask the factory what they're doing in support of workers in the environment, and we can put that up against what the workers are actually seeing out on the factory floor on a regular basis. Wow. So UCLA is the biggest university institution in Los Angeles. So we thought if there's anyone who should support an Ethically Made in LA merch program, it should be UCLA, right?

That's— yeah.

That's kind of where it happened. And so we just found a way to approach them and got a meeting with the head of their— what's interesting about UCLA is that their bookstore program is actually run by the students, technically, Associated Students of UCLA, which is pretty new and interesting. It's not corporate run. Yeah, very interesting. So that was one way that we were able to get this meeting because theoretically the bookstore is not for profit. It's to help the interests of the students and the university. So we had this meeting and the head of ASUCLA was intrigued and set us up with the director of licensing and the director of the bookstore. And that led to a series of meetings where we were able to demonstrate to them eventually that the excitement of an ethically made in USA, ethically made in LA project outweighs the risk of using unknown vendors who potentially haven't been in university procurement and merch before. And also the increased price, you know, we're asking them to set aside part of their really awesome, professional-looking, best-in-its-class bookstore for this made-in-LA, you know, risky project. And so we went through a lot of iterations of different prototypes and factories, and eventually they gave us the green light to go ahead and apply for that license with UCLA for collegiate apparel. And that's, that's where we are in the process right now.

That's very cool.

How does Buy Your Values fit into this, your partnership with Labor 411?

Yeah, so we're looking at this very holistically. Like, the last thing we want to do is to bring in really awesome, made-in-LA, super ethical and sustainable merchandise in the bookstore and for it to gather dust because nobody knows about it, right? Right. So we're thinking ahead, and this is one of the lessons that we learned with SweatX. I wasn't around for SweatX, but I've learned— I've heard a lot from the owners directly about what went wrong with the SweatX experiment. And, and part of it was there was just too much pressure because there was a factory and there were workers who needed to work right away. So we're doing things in a different way now where we are not relying on business to support an entire factory, right? We're looking at business to start to contribute to a factory's overall success. And then gradually build that up until these factories are able to support themselves just with these ethical buyers who are able to provide that higher price needed to provide the living wages and the sustainable production values, right? A-Ramp is the birth of a new chapter for ethics. And it goes back to something that I said earlier in the conversation about how Made in USA is not necessarily the same standard that it used to be because of the global pressures on production. And so made in, made in USA, made in LA, it might be fantastic, but it might be a factory that just sprung up and then doesn't pay its workers. And then before you're able to nail them down through, through government officials they just spring back up under another name, right? There's all kinds of nefarious practices that happen here in the USA with workers. Another thing that happens is that here in LA, a lot of the workforce is undocumented. And so factory owners can leverage that by paying less than the minimum wage, for example. There's awesome laws on the books in California to protect garment workers, like the Garment Worker Protection Act. But if workers aren't able or are too afraid to stand up for their rights, then those laws don't trickle down to them. It doesn't, doesn't impact them. So ARAMP is about adding teeth to the Made in USA standard, starting with a pilot in Los Angeles. So it stands for the Alliance for Responsible Apparel Manufacturing and Purchasing. And where I think the big innovation here is, is in purchasing. There's lots of organizations out there, lots of attempts to monitor factories. Right, but where it, where it kind of falls flat is you ask the factories to do all these things, to jump through all these hoops, right? But you're not necessarily connecting them with a business that allows them to sustain themselves after having made those investments. Wow. Yeah, so the purchasing part is absolutely essential. And so half of what we do is we go out to these institutional buyers like UCLA, City of LA, the Olympics are coming to LA, so we're working on a Made in LA line of Olympics merch, right, that hopefully you'll see in the, in the coming years. Awesome. But that's the, that's the trick to A-Ramp, is finding out the best actors who are being kind of hidden. Uh, you can't find them. Only, only garment industry insiders know the people who are paying the real living, you know, who are investing in environmentally responsible production, who are not, you know, being predators towards undocumented immigrants, right, who, who are doing proper ventilation in their factories. And it's about lifting up these factories and connecting them to sustainable inflow of business.

I love that. That's the missing piece. I can see that, that now you've got a revenue center to support all of these initiatives. That's fantastic. For the longest time, sustainability— sustainable promo products were not financially viable in the race-to-the-bottom world. I mean, it just, just, it seemed to be these incongruous paths or desires that we wanted. We wanted cheap product forever, and we also wanted to do good for the planet. But in an interview, you said now buyers are committing to higher standards by prioritizing workers in the environment. And you even challenge clients by asking, does our organization— speaking like the client— does our organization actually want to be a force for good?

If so, what can we do about it?

Are you seeing this change now? You seem like maybe 5 years ago, 3 years ago, you didn't see this acceptance. Are you seeing now where people are like, I actually do want to use purchasing as a way to change the world?

Yeah, little by little. But I don't, I don't think the problem has been desire. The problem has been people aren't being asked in a coherent, meaningful, persistent way to align their values with their purchasing. It's just, it's just not something that, that people talk about a lot. You'd think labor unions would be, for example, right on the forefront of purchasing goods that were made under worker-friendly conditions, right? I was just on a call with the president of a union who said, you know, of course we support union-made products. And I was like, well, actually, the majority of unions, including yours, will buy a made-in-USA t-shirt, for example, use a union shop for the print, and then you have the union bug on it, but you're not actually supporting unions for the cut sew of the garment, right? And he's like, is that true? There's another staffer on the call who said, yeah, you I wouldn't be surprised. So why now? That's the situation, is merch is just not high up on people's priority list in terms of aligning their values with their, with their organization's activities. Yeah. So I guess what I'm, what I'm getting at here is that what's missing is not some sort of like global awakening of consciousness. I think, I think people understand that garment manufacturing is a problem. You know, in the back of their heads they understand. The problem is there has been no concerted campaign to reach into those organizations and, and do the bureaucratic, uh, tilting at windmills that you need to do over and over again until you finally get the— you get to yes, you know? Yeah, because the problem is these organizations, like you take UCLA or you take a a giant progressive nonprofit, let's, let's call it the Red Cross or something. Everyone you talk to about ethical procurement and purchasing, they're going to be like, oh my God, you're totally right. Like, this is right in line with our values, right? How can we do this? Yes, let's set up a meeting for 3 months from now, you know, and then we'll get to the next— we'll really get down to brass tacks around it. And so they will yes you to death until it never happens, right? And so this alignment that ethics has with nonprofit organizations And movement insiders like the Garment Workers Center and the Sweat-Free Purchasing Consortium is not going to let these institutions off the hook. They're not going to be able to yes us to death. We're going to, we're going to get them to sign on the dotted line to change their purchasing practices.

In a sense, you decided to cross the protest line and protest from within the capitalist system, if you will. You've adopted a more progressive attitude that sort of amplifies your ability through commerce to affect change. But in, in, I can see in many ways Ethics has come in to fill a gap where a traditional distributor— so I, as you know, I used to be a distributor— we're not doing a really good job mapping values from a customer to their purchasing process. Like, we get their value, sometimes we even support their values, or we agree or we assent to their values, and we want to support those through maybe merch that helps lift up their values, but we don't actually map it to the supply chain in, in a sense, in many ways. And you've filled this gap. But what advice would you give for distributors listening right now who want to make a more concerted effort in their sourcing to impact their communities through this sort of, if you will, I don't know if you like this term, conscious capitalism?

Yeah, I think about this a lot because everyone in our industry wants to do the right thing. You know, we're all, we're all good people. We don't want to be a part of exploiting workers in the environment. Yeah, we are. We are anyway. Like, ethics is no exception. We're trying to do better, but we're still We're still involved in this morass of way too much merchandise, way too much unsustainable merchandise, way too much unethical practices going on, right? So it's not a matter of values or reaching deep or doing what you have to do to sleep at night. I think the difference is education. When I talk to people who are distributors and they've been distributors for decades, sometimes they say, man, it was awesome. We used to know the manufacturer. We used to know the workers who made these promotional products, and that's all completely out the window. And they look at me almost like deer in headlights, like, I mean, what am I going to do? I got to sell the stuff that the customer wants and it's all, it's all out there. I don't really know what's going on and that sucks. And so what I say to those people and what was the answer for me is education. So the— I would say join the family of people who are working on this, of organizations who are working on this. Go to the Clean Clothes Campaign. Go watch The Story of Stuff again. Go to the International Labor Rights Forum website. Go to Human Rights Watch. Go to the United Nations website. The more you learn, the more you'll be able to talk fluently with your customers from a standpoint of power and education and knowledge rather than from this sort of, well, it's a problem, but I don't know what to do about it perspective. And once you're empowered with that knowledge, people start to trust you their hidden, untalked-about fears about supporting, you know, exploitative labor practices in the environment, and then you can kind of build off of that.

I love that. That helps us not adopt helplessness as a form of, you know, of really latent giving up in a sense. Let me ask you this real quick. When did Commons come into the picture for ethics?

Yeah, about 5 years ago. Thank goodness we were using some other platforms You know, we found them to be real clunky, real clunkers. And so Commonsku was a, was a real godsend for us, in particular being able to add products from the outside, outside of Sage and ESP, especially for like a super ethically minded company like us. Sometimes we'll bring in people who are outside the system. So that's super easy to do that, which is awesome. All the tools that you guys are putting together that are attractively laid out that we can just show directly to the client. Like, those are amazing time savers. We have an artist on staff, but we can have our artist focus on designs rather than focusing on making the presentation look for the client, look good for the client, because you guys are already doing that. Awesome. And just, you know, it works. And there's a community of people talking to each other about products and a community of people on your guys' end helping to make the product better and better all the time. So just couldn't be happier with Common Ski.

That's cool. Thank you, thank you for that, Daniel. Last question is that you mentioned educating ourselves, and we could talk for a very long time. I have a lot more questions for you. We'll have to save that for another day. But is there a book or article or interview or piece of content that's really made an impact on you recently, or perhaps one that's kind of formed the way you think about who you are today?

Yeah, so when I was a little tyke in high school, I read Ishmael, which differentiates The World Between the Leavers and the Takers. That's a great— it's a great book for high schoolers to introduce the topic of inequality and environmental destruction to them in kind of a gentle way, an inspiring way. Like, a little bit further down the road, I saw Story of Stuff, which I, which I mentioned. Just a real eye-opener in terms of people, you know, you go to the grocery store or you go to, go to the mall and you pick something off the shelf, you have no idea what all goes behind that, that's just devastating for people on the planet. And then I would just add a, it's, it can't just be the problem, right? And so one of the things that's been huge for me is, is not getting stuck in my ego, not getting stuck in a holier-than-thou attitude. And so I would recommend a book like Siddhartha, which is about releasing the ego. It's the story of the Buddha, right? Because we're not going to get anywhere yelling at each other. And that leads to the last recommendation I have, which is the 2004 Democratic Convention speech by Barack Obama, where he introduced the concept of there not being red states and blue states, but there's the United States of America. And in terms of inspiring, like, I think about it every day. I've got Obama's hope poster, the Shepard Fairey poster over my desk. Because this division in the United States that's political is preventing us from growing together and solving big problems as a country. Like, for example, the fact that manufacturing left and now we have all these service jobs in the United States. It's red states and blue states yelling at each other about this, and we're not getting anywhere.

So fantastic, Daniel. Those are great lists.

Thank you.

Is that a Hermann Hesse book, by the way? Siddhartha? Is that the one? That's awesome. I love it. So good. Thank you for joining us today on the SkewCast. I want to have a part 2 at some point down the road. You guys are doing some amazing work. We've highlighted some stories of yours in our newsletter, The Backpack, but let's do round 2 when we get a second so we can unpack even more.

Anytime, Bobby.

Thanks so much.

You bet.