I believe ethical fashion refers to clothing that is socially and environmentally conscious. So this would mean clothes that are not made in sweatshops. Fair trade and fair wages. Clothing which is produced using environmentally low impact means, such as organic cotton, organic wool, etc. One can even go further to vegan fashion, which would shun leather and animal fibers on an ethical basis.
We occasionally buy organic cotton onesies or blankets for the baby, usually online. Amy has a few pairs of yoga pants made from hemp and organic cotton. Around here, there are a few boutiques that offer such clothing, but it tends to come at quite a premium. I rarely buy clothes, but when I do, it's at the mall where it's rare to find organic.