Forced Labor Risk Hits No. 6; Cotopaxi Repays Taiwan Mill Fees

For supply chain and logistics leaders, the Cotopaxi case exposes how forced labor liabilities can hide deep in the bill of materials. Nine Taiwan-based Tier 2 and Tier 3 textile suppliers with evidence of labor abuse were linked to more than 40 global buyers, and forced labor now ranks No. 6 among U.S. fashion companies' concerns. Procurement strategies must map labor practices beyond finished-goods factories.

Cotopaxi, the outdoor apparel and accessories brand, is repaying workers at two fabric mills in Taiwan for predatory recruitment fees, a remediation effort tracing back to labor abuse indicators uncovered in 2024. The repayments mark a tangible response to findings by human rights investigation nonprofit Transparentem, which interviewed more than 90 migrant workers employed by Taiwanese textile suppliers in 2024 and identified forced labor indicators tied to predatory recruitment practices. Cotopaxi's 2024 Impact Report acknowledged that the brand was one of more than 40 buyers linked to nine Tier 2 and Tier 3 Taiwan-based suppliers with evidence of labor abuses. The International Labour Organization defines predatory recruitment as including workers being charged recruitment fees, debt bondage linked to repayment of those fees, and deception about the nature and conditions of work.

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For supply chain and logistics leaders, the Cotopaxi case exposes how forced labor liabilities can hide deep in the bill of materials.

The case illustrates the expanding risk surface for U.S. fashion companies. Managing forced labor risks has become a top sourcing and trade compliance priority. According to the 2026 Fashion Industry Benchmarking Study published by the U.S. Fashion Industry Association, forced labor ranked as the No. 6 top concern among survey respondents, up from 10th in 2025. That four-spot rise underscores how investor, regulatory, and consumer pressure has intensified. The industry has seen repeated problems: in 2023 U.S. senators probed Shein over whether its goods were made using forced labor; in 2024 Shein reported two cases of child labor in its supply chain, suspending orders and launching investigations; and a Skechers supplier was accused of forced labor in the same year. Taiwan's textile sector is particularly relevant because it supplies multiple global brands at Tier 2 and Tier 3 levels, where visibility has historically been weaker than at finished-goods factories.

For Cotopaxi, the repayment program is part of a broader compliance architecture. The company maintains third-party audits of all Tier 1 and Tier 2 suppliers and conducts "numerous" onsite visits, according to its 2025 ESG report. Yet the 2024 Transparentem findings exposed that even brands with audit programs can be connected to abusive recruitment through shared lower-tier suppliers. The challenge is structural: migrant workers in Taiwan are often recruited through brokers who charge fees that create debt bondage, and buyers may not see these broker relationships in standard factory audits. Cotopaxi's decision to reimburse workers directly addresses the financial harm but also carries reputational benefit, positioning the brand as accountable rather than defensive.