Fashion companies seeking an A+ grade in ethics now need to take the environmental impact of their business into account.
The Ethical Fashion Report run by Tearfund, now in its sixth year, seeks to expose harmful business practice as well as guide consumers on where to shop if they care about where their clothes come from.
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This year, 130 companies were assessed, with just seven achieving an A+ grade and 17 given an 'F'.
Education and advocacy manager Claire Hart said including a new environmental section was a no brainer.
"From carbon emissions all the way through water use and into waste.
"When there is poor environmental management by a company, the people who are most affected by that are those same garment factory workers. That's when you'll see slums along the sides of polluted rivers and that sort of thing."
Among the top grades were Kowtow, AS Colour and Icebreaker and at the bottom The Baby Factory, Trelise Cooper and Farmers - but none of these companies participated in the report.
Tearfund education and advocacy manager Claire Hart Photo: RNZ / Dan Cook
Ms Hart said the report showed that higher price tags did not necessarily mean ethical manufacture.
"So your Glassons, Cotton On all of those ones that everyone buys the odd garment from, I think everyone will be happy that those guys have rated well.
"I think people are always surprised when your high fashion brands rate poorly. There's often a correlation between the higher the price of a garment the more ethical it's going to be."
The Warehouse was handed a B- grade, and K-Mart a B+.
A quarter of companies approached did not take part in the report. Many explained to Tearfund that the collation of information was too big a task.
Designer Kate Sylvester, who did not participate, said while she said the report was valuable, it had limitations for small boutique businesses.
However Ms Hart said all companies had a responsibility to know where their materials came from.
"Our survey's designed to be applicable to all companies regardless of its size or business model."
Ms Sylvester told RNZ's Jesse Mulligan last month it was extremely difficult for a small companies to prove its fabric was ethically sourced.
She, along with other New Zealand companies, recently announced they would look into collective fabric and materials purchasing, ultimately giving them better leverage and putting them in a position to demand more information.
"When you're only ordering 100 metres of fabric here or there, trying to get the information of 'what farm did the cotton come from?' it's incredibly hard," she said.
"When you're ordering thousands and thousands for a multinational, you can threaten that you need traceability or you'll pull my orders."
The Baby Factory said the same in its rationale to Tearfund.
Photo: RNZ / Dan Cook
"Because we are such a small company operating in predominantly one small market, and our clothing volumes are small, we only use overseas and local agents to source our clothing, which comes predominantly from China . Manufacturers do not wish to deal with is directly."
"We are therefore unable to obtain the information you have requested," a statement said.
Tracking the supply chain remained a key challenge for the industry with 92 percent of companies simply not able to confirm where all their materials had come from and therefore unable to guarantee they were sourced ethically.
Another issue was ensuring workers' well-being and safety, especially when production was outsourced offshore.
Kathmandu, who achieved an A grade, put in a QR scan code in all its China factories so that workers could lay a complaint, in their own language - which goes straight to the head office in Christchurch.
Social responsibility manager Gary Shaw said it had been in place one year.
"Previously, like most companies we ticked the box in terms of having a grievance mechanism but it was an email and it was in English and while that worked for us ticking the box, it wasn't effective."
He said workers have since been able to raise serious concerns, including a report of illegal outsourcing and sexual harassment.
"A line supervisor was behaving inappropriately towards some women so we were abel to alert the management. They did their own internal investigation and a week later he was dismissed.
The report also commended the Australian Modern Slavery Act which asks all companies turning over more than $100 million a year to report back on how it was managing any forms of slavery in its supply chain.
Ms Hart said New Zealand should look to adopt something similar.
Read the full report: