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March to Sustainability 2010

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The 1990s was about the march towards manufacturing quality as the textile industry worldwide raced to adopt lean manufacturing and ISO driven quality practices. The 2000s were about ensuring ethical …

The 1990s was about the march towards manufacturing quality as the textile industry worldwide raced to adopt lean manufacturing and ISO driven quality practices. The 2000s were about ensuring ethical sourcing and labor practices. The coming decade is going to be about sustainability and optimally using natural resources to generate value in the textile supply chain.

In this report we talk about this new dimension on the cusp of being rolled out throughout the supply chain: Environmental Sustainability. Progressive brands and retailers have been exploring sustainability initiatives since the middle half of the last decade: testing initiatives first internally and now considering roll-out through their global supply chains. This report attempts to paint a picture of what the next few years are going to look like and inform industry practicioners on the shift that is afoot.

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  • 1. Pho to cour te sy: htt p: //w w w.f l i ck r. com/photos/ta na k w ho 2010 Exporting Textiles: March to Sustainability Preview of the coming decade: Textile Supply Chain Sustainability Plans by Brands and Retailers Getting Manufacturers to Create Business Value through GHG (Energy), Water and Waste Conservation REPORT EXCERPT
  • 2. R e po r t b yT h e 1 9 9 0 s wa s a b o u t t h e m a rc h towa rd s m a n u fa c-t u r i n g q u a l i t y a s t h e tex t i l e i n d u st r y wo r ld w i d era c e d to a d o pt l e a n m a n u fa c t u r i n g a n d I S O d r i ve nq u a l i t y p ra c t i c e s . T h e 2 0 0 0 s we re a b o u t e n s u r i n get h i ca l s o u rc i n g a n d l a b o u r p ra c t i c e s . T h e co m i n gd e ca d e i s go i n g to b e a b o u t s u sta i n a b i l i t y a n d o pt i-m a l l y u s i n g n at u ra l re s o u rc e s to ge n e rate va l u e i nt h e tex t i l e s u p p l y c h a i n . T h i s re p o r t p rev i ews a c t i v-i t i e s a l re a d y u n d e r way t h at a re h a r b i n ge rs o f t h i sco m i n g m ove m e nt . S u ppo r t e d b y 3
  • 3. Co n t e n t02 P r e fa c E06 C r e ati n g S u sta i n a b l e S u pp ly C h a i n s i n t h e T e x ti l e I n d u st r Y10 I n Fo c u s : A c ti v it y S n a ps h ot o f T e x ti l e B r a n d s a n d R e ta i l e r s 18 Adidas 20 GA P, I n C 22 H&M 24 I K EA 26 L e v i S t r a u ss & Co . 28 M a r ks & S p e n c e R 30 Nik e 32 O tto 33 Carrefour 34 Wa l m a r t 37 Co n ti n e n ta l C l ot h i n G40 B r a n d s a n d r e ta i l e r s w i t h s u p p ly - c h a i n i n i t i at i v e s i n p l a n n i n g 41 P h i l l i p s - Va n H e u s e n 42 T h e T im b e r l a n d Compa n Y 43 I n d it e x 44 G r u po Co r to f i e l 44 P r im a r k 45 J o h n L e wis Pa r t n e r s h ip 46 Li n d e x 47 Tesco50 S ta n d a r d s a n d C e r ti f i c atio n s 51 S ta n d a r d s f o r r e po r ti n g a n d c a pt u r i n g e missio n s b y c ompa n i e s 51 I S O 14000 52 GHG P r oto c o l 53 GR I R e po r ti n g F r a m e wo r k 54 PA S 2050 55 P r o d u c t S ta n d a r d s a n d c e r ti f i c atio n s 57 G l o b a l O r g a n i c T e x t i l e S ta n d a r d ( GOTS ) C e r t i f i c at i o n 58 B l u e si g n60 I n d u st r y I n iti ati v e s 61 B S R W o r ki n g G r o u ps 62 O u t d oo r I n d u st r y Asso c i atio n 64 M a d e-By 64 T e x CU T S 65 B e tt e r Cotto n I n iti ati v e66 P r e d i c tio n s a n d P l a n n i n g A h e a d68 G l oss a r y a n d R e so u r c e s 69 D ata so u r c e s f o r t h e r e po r t 69 R e so u r c e s 5
  • 4. P������ “ F O O D, C L O T H I N G , S H E LT E R ” “ROTI, KAPDA, MAKAAN” “NOURRI, LOAGÉ, BLANCHI” ...6
  • 5. For centuries, these three have defined our basic human needsacross all cultures around the globe.Of these three, however, only textiles are both non-perishable andeasily transported. Thus, textiles have been part of a global marketsince the days of the Silk Road. This market has continually evolvedover time, and just as the mills of Manchester and Leeds radicallychanged the way textiles were produced and distributed over a cen-tury ago, rapid shifts are continuing in the way textiles are producedand supplied. Yet just as in centuries past, much of the productionis based in Asia. Today it is difficult to go shopping anywhere in theworld and not find goods made in China, India, Bangladesh, Vietnam,Cambodia, etc.As the textile supply chain has evolved to meet changing price andquality demands from the global marketplace, so has the sophistica-tion of buyers in tracking their suppliers. In the mid-1990s, buyersadded a new dimension to their requirements, and began making de-mands regarding health, safety and labour conditions. Global manu-facturing centres have increasingly had to respond not only to localrequirements but also to global ones.In this report we talk about a new dimension on the cusp of beingrolled out throughout the supply chain: Environmental Sustainability.Environmental Sustainability takes into account the use of water, en-ergy, and natural resources, and seeks to minimize negative impactsto the environment in the production of textile-based goods, as wellas in their use by consumers. The long term goal of such initiativeswould be complete sustainability.Progressive brands and retailers have been exploring sustainabilityinitiatives since the middle half of the last decade: testing initiativesfirst internally and now considering roll-out through their global sup-ply chains. This report profiles such firms and what they are doing.Sustainability is about doing ‘more with less’, which means findingsavings and creating business value in addition to having a positiveimpact on the environment. For the purpose of this report, we arelooking at aspects of sustainability which concern the textile supplychain from the raw material (natural fiber or man made fiber) to thepoint that it is converted to finished product. The focus in the re-port is primarily on the following aspects: energy efficiency, carbon/ greenhouse gas emissions, water and chemcial footprint as well aslogistics. We have intentionally left out raw material production andproduct composition since they are typically out of the control oftextile suppliers and since they are vast topics in themselves to workupon. Preview of the Coming Decade 3 7
  • 6. The report is written keeping a supplier perspective in mind: 1. What are some of the progressive brands and retailers doing and planning for their supply chain? 2. How does one begin to measure sustainability and compete in this changing market? This report also touches upon initiatives that companies have already started to engage in to improve raw materials in the supply chain, such as the Better Cotton Initiative and the Organic Exchange. In ad- dition, the report discusses other initiatives where buyers are coming together to form a unified voice, including the Outdoor Industry As- sociation, and working groups assembled by the Business for Social Responsibility (BSR). While much of the current work being done to increase the sustain- ability of the global textile supply chain is still in its early stages or being applied regionally, in the next 24-36 months these initiatives will become mainstream globally. The message for the supply chain should be clear: make no mistake, sustainability is the next wave in the ever-changing landscape of tex- tile manufacturing. firms and brands (excluding store-brands) represented in this report ADIDAS GROUP ADIDAS, REEBOK, TAYLORMADE CARREFOUR GAP, BANANA REPUBLIC, OLD NAVY, GAP INC. ATHLETA H&M IKEA LEVI STRAUSS & CO. LEVIS, DOCKERS, SIGNATURE MARKS AND SPENCER NIKE OTTO AS FLAGSHIP AND OVER 20 GROUP OTTO GROUP COMPANIES AND BRANDS WALMART CALVIN KLIEN, ARROW, IZOD, BASS, VAN PHILIPS VAN HEUSEN HEUSEN CORTEFIEL, PEDRO DEL HIERRO, SPRING- GRUPO CORTEFIEL FIELD, WOMEN’SECRET ZARA, OYSHO, KIDDY’S CLASS, BERSHKA, INDITEX MASSIMO DUTTI CONTINENTAL CLOTHING EARTH POSITIVE APPAREL JOHN LEWIS PARTNERSHIP PRIMARK LINDEX TESCO TIMBERLAND COMPANY EARTHKEEPERS4 exporting textiles: March to Sustainability8
  • 7. CREATI NGSustainable Supply chains In The Textile Industry 9
  • 8. The goods of the textile sector are such an intrinsic part of our ev- eryday lives that we take them for granted. The clothes we wear, cushions we sit on, bed sheets we sleep in, carpets we walk on – textiles surround us so completely, that the only other comparable global human needs are food and shelter. Textile production is resource intensive This vital global industry employs hundreds of millions of people, and is also very resource intensive: consuming copious amounts of en- ergy, water and other raw materials. According to research done by the World Wildlife Federation (WWF), an average of 8,500 litres of water is needed to grow one kilogram of cotton, equivalent to one pair of jeans. Due to the hundreds of harm- ful chemicals routinely used in washing and dying fabric, the textile industry is also the #1 industrial polluter of fresh water on the planet. In developing countries where large global production centres are based, the textile sector forms a large part of their carbon inventory. As a case in point, in India the textile sector consumes 10% of the country’s energy and has an increasing carbon intensity compared to other sectors. Sustainability in supply chain is integral for the sector Because of impacts such as these, over the last few years some pro- gressive brands and retailers in North America and Europe have em- barked on integrating sustainability into their supply chain. While there is the societal imperative, the greater opportunity lies in sus- tainability through more efficient resource utilization which in turn has a positive financial impact for every part of the supply chain. Virtually all the production and manufacturing of textiles occurs in developing countries and hence activities being planned in the de- veloped world are having a ripple effect in bringing about resource conservation elsewhere. This report profiles 18 such firms building plans for offshore sustain- ability and how they are looking to create a competitive edge for themselves. Why supply chain sustainability is important to brands and retailers From the standpoint of many North American and European firms that have a large textile product range, almost all the environmental impact from manufacturing occurs offshore. Some of these compa- nies are at the forefront of working towards sustainability for a num- ber of reasons: Preview of the Coming Decade 710
  • 9. 1 1. Sustainability generates business value. Less is the new more C r e ati n g B u si n e ss and firms are looking at identifying resource savings which Va l u e come from undertaking sustainability measures. Walmart is well-known for making its stores and build - 2. Capital market shareholders and stakeholders are reward- ings more energy ef ficient, ing firms with sustainability practices (and this is applicable and now the company is us - to sectors outside textiles too). The Dow Jones Sustainability ing that knowledge to help Index and the FTSE4Good Environmental Leaders which track suppliers save money. The the financial performance of the leading sustainability-driven program is called S.E.E.P., companies worldwide have been outperforming the market. which stands for “Supplier Energy Ef ficiency Project ”. Additionally, investor groups interested in sustainability are uniting their voice through organizations like Ceres and Carbon James Stanway, Senior Di - Disclosure Project. rector of Global Energy Ser vices at Walmart says 3. Risk mitigation at a few different levels. As climate legislation that the “prog ram only continues to develop in Europe and some of it is being planned makes our suppliers more in US/Canada, firms are looking to get an idea of their supply- profitable; and there is an environmental impact ”. In chain risk and proactively managing it. In addition, developing an illustrative success of countries themselves are working on looking at legislation on the program, Walmart sent carbon and water usage. This too impacts the brands and re- its engineers to a supplier tailers depending on their sourcing regions. in Georgia: Dana Undies where 71% of the utility 4. Attracting conscious consumers with new products and car- bill was saved. bon/sustainability labelling. There are consumer segments get- ting savvy and looking to make purchase decisions based on environmental impact. R&D work on sustainability for some of the firms has been done in their corporate responsibility groups and now is being entered into the mainstream (Nike, Adidas), while in other cases firms have made it a centerpiece of their new strategy (M&S, Walmart) and still in some other cases internal EHS initiatives are evolving further to focus on sustainability (PvH, IndiTex). Nike for example began building capabilities through its Considered range of products in 2005 and now has plans to require all its apparel products to meet the Considered Standard by 2015. The company sees sustainability as a route towards future profitability. It created a dedicated group of 130 people in what is called Sustainable Business & Innovation, and last year made a commitment to weave sustain- ability into the mainstream. According to the non-profit organization Organic Exchange, glob- al retail sales of organic cotton apparel and home textile products reached an estimated $3.2 billion in 2008, a 63 percent increase from the $1.9 billion market in 2007. The top ten users of organic cotton include some of the biggest names in retail including Walmart, Nike, H&M, and the Inditex brand Zara. The direction is clear. Many brands and retailers are moving rapidly and inexorably toward increased sustainability standards for their textile supply chains, all the way from raw material through to fin- ished goods.8 Exporting Textiles: March to Sustainability 11
  • 10. What is the implication for textile manufacturers? carbOn label As the market for sustainable textiles grows, many more firms will be- fOr cOnScIOuS gin demanding sustainability from their manufacturers the same way cOnSuMerS they demand fair prices, fast delivery and high quality. Currently, this The UK has been amongst means having a sustainable supply chain is a competitive advantage the most progressive mar- for textile manufacturers. kets in defining a formal carbon footprint that can be While most suppliers selling to the brands and retailers are engaged used by consumers. only in cut & sew, it is only a matter of time before the entire sup- The Carbon Label Company ply chain is held accountable. In section titled Industry Initiatives set up by the Carbon Trust on Page 60, we outline initiatives that have already commenced on in 2007 provides information the raw material sourcing front. Many brands will soon start shifting for both consumers as well focus beyond that and downstream to manufacturing. Already firms as businesses on how to use like Levi Strauss & Co. and Walmart have started collecting data from the Carbon Label. the rest of the supply chain. In order to build best-practices and quantify savings, different ap- proaches are being taken. For instance, Marks & Spencer is creating entire ‘eco factories’ where it is able to demonstrate energy savings to the tune of 40% over comparable factories. Nike on the other hand is working with a set of strategic partner factories that are part of its MLS (Manufacturing Leadership), to establish benchmarks. The signaling for manufacturers is quite clear: become aware and get started on this new path! The Carbon Footprint is de- how does one begin to measure sustainability that makes veloped on basis of the PAS 2050 guideline. Tesco, Conti- sense to buyers? nental Clothing, Levi Strauss In this report we have compared a few standards and certifications & Co. are amongst those that have been testing some underway that ought to be on the radar of every supplier. While most products with the Carbon of the standards are still in the adoption phase, the underlying data Label. requirements for most of them are quite similar. The section titled Standards and certifications on Page 50 summarizes a few key stan- dards and initiatives. Preview of the coming decade 912
  • 11. IN FOCUS activity Snapshot ofTextile brands & retailers 13
  • 12. Snapshot of Firms with Supply Chain Sustaina Brand Standards and What are they doing on reporting for Frameworks being suppliers + initiatives relevant for used suppliers Adidas • ISO14001 • Using EBA to collect data from Tier I and II • Internal EBA tool suppliers • Better Place Project to mainstream sustainability • Global Apparel Strategic Alliance • GRI • CDP supply chain leadership collaboration Carrefour • GHG Protocol • Training regional supply chain teams on logistics • Oeko-Tex Certification • GRI • Clean Water Programme Gap • GHG Protocol • Expanding the environmental footprint pro- gramme into supply chain in 2010 H&M • GRI • Efficiency index for suppliers on wet processing • Internal LHF tool in • Cleaner Production Programme for fabric mills dying factories • Initiate supply chain footprint monitoring in 2010 IKEA • Own tool: e-Wheel • Internal “IKEA Goes Renewable” is now extend- for assessing environ- ing to suppliers to cut CO2 emissions mental impact • Implementing new quality standards to reduce textile weight Otto Group Proprietary toolbox con- Climate Protection Strategy being rolled out taining over 70 custom- ised measures Walmart • Sustainability Index • CDP supply chain leadership collaboration • GOTS Certification for • Supplier Energy Efficiency Programme organic textiles • Walmart online resources for supplier sustainability • Expanding supplier assessment internationally in 201014
  • 13. ability Activities for the Textile Sector S tat e d g o a l s a n d tim e l i n e Parameters for Supply Chain Sustainable Emmisions Materials Logistics Carbon Energy Waste As per the strategy 2008-2010, Adidas has identified three primary sustainability areas as being core to their business: aaaa • Embedding environmental sustainability across the business. • Effectively managing business risks and social compli- ance in the supply chain. • Extending engagement internally and externally. The Group has stated its commitment to reducing energy consumption by 20% per square meter of sales area by 2020 (compared with 2004 levels). aa a By 2010: • Complete first phase of an environmental footprint as- sessment across select owned and operated locations. aaaa • Complete the implementation of the denim clean wa- ter programme. • Have LEED accredited designers at Gap, BR and old Navy Brands. • Develop quantifiable environmental goals based on data from the environment footprint assessment. • Introduce new supply chain waste management initiatives. Since 2005, H&M has set a clear goal to reduce their car- bon footprint 10% by 2009 compared to a 2004 baseline year. In 2008, H&M listed Key Focus Areas for the envi- ronment including reducing CO2 emissions, promoting aaa environmentally responsible cotton growing, and paying increased attention to water impacts throughout their product life cycle. Reducing CO2 emissions, and also increasing their share of renewable energy. aaaa aaa a Reducing 20 million tonnes of CO2eq from its supply chain (not only textiles) by 2015 aaaaa 15
  • 14. SnaPShOT Of fIrMS WITh SuPPly chaIn SuSTaIna brand STandardS and WhaT are They dOIng On rePOrTIng fOr fraMeWOrKS beIng SuPPlIerS + InITIaTIveS relevanT fOr uSed SuPPlIerS LEVI STRAUSS • GHG Protocol • Finalizing methodology for analyzing water foot- print of supply chain partners, to be deployed in • Global Effluent 2010. Guidelines (GEG) for wastewater • Information management system being rolled- out to suppliers to collect and track energy use data. • Extending its Global Effluent Guidelines (GEG) to second-tier suppliers of bulk fabric and sundry items. • Extended its Greenhouse Gas Inventory to all of owned and operated locations worldwide • DEFRA GHG Guide- • M&S Supplier Exchange for sharing best lines/ PAS 2050 practices MARKS AND SPENCER • GRI G3 • Cotton Sourcing Strategy in 2010 • Internal programme: • Aim to have 20 million clothing garments that Plan A use Fairtrade Cotton by the conclusion of Plan A • Working with suppliers to improve logistics efficiency • Looking to promote PAS to suppliers as the preferred method for calculating product carbon footprints • Material Analysis • Nike Water Programme Tool (MAT) to evalu- NIKE ate lifecycle impacts • Will require all its apparel to meet the Consid- (Nike internal tool) ered Standards by 2015 • Considered Index • Integrating energy efficiency practices at sup- (Nike Internal Tool) plier factories and bringing contracted factories to the same relative energy performance level • Closed loop business models • Lean manufacturing CONTINENTAL CLOTHING • GOTS • Carbon Reduction Label • PAS 2050 • Continental’s EarthPositive Apparel16
  • 15. abIlITy acTIvITIeS fOr The TexTIle SecTOr STaTed gOalS and TIMelIne ParaMeTerS fOr SuPPly chaIn Sustainable emmisions Materials logistics carbon energy Waste Current goals are mainly for Scope 1 and Scope 2 and the company is collecting data on its supply chain to define its goals. aaaaa Aims to be the world’s most sustainable retailer by 2015. aaaaa Nike will require that 100% of its apparel meet Considered Standards by 2015. aaaaa a aa 17
  • 16. P���������� and Planning ahead18
  • 17. The evidence pointing to a new wave of sustainability is quite clear.The analogy that we will offer again is that of quality and the move-ment towards ISO 9000 in the early 1990s. By the mid-1990s theentire industry knew about the savings possible from quality and byend of the 1990s one had to be ISO 9000 certified to be in business.The investments being made in sustainability allow companies touse fewer resources for a greater output. Manufacturers that areearly adopters on carbon efficiency, water conservation, energysavings, etc. will not only add to their bottom line but also have anopportunity to differentiate themselves with the buyers in the nearterm.As we synthesize the available datapoints around us, we offer thefollowing predictions:• By the end of 2011 all major textile brands and retailers will have announced initiatives that plan for working with a more sustainable supply chain. Most of the firms are already imple- menting measures within their own facilities and it is a matter of months before they look to their supply chain which is where the majority of the environmental footprint exists. We expect the movement to move beyond the early adopters and into the mainstream between 2012 and 2015.• Textile brands will make supplier choices based on which suppli- ers are able to report and demonstrate sustainability measures.• Brands and retailers may struggle initially in mapping out their supply chain but we expect that issue to be overcome by 2011.• Some of the low-hanging opportunities from a retailer stand- point will be logistics, and 2010 will see increasing activities on this front.• From a supply perspective, vertically integrated firms are likely to be early adopters of sustainability reporting because they have easy visibility throughout their supply chain. They will also likely use this as a market advantage.• We expect to see a buzz around non-tariff barriers being raised by some textile exporting nations at the WTO. We are quite cer- tain that market mechanics will soon trump these concerns. Just like no one questions the need for quality products any longer, no one will question the need for sustainable products.• The buzz around organic cotton will continue to increase. But as soon as it is public knowledge that organic cotton is going to remain a very small percentage of the overall raw mate- rial for the textile sector, we expect to see the emphasis shift toward other sustainable materials. We also expect to see a greater emphasis on reducing toxics and chemicals. Preview of the Coming Decade 67 19
  • 18. To access the complete report, please visit: http://www.cKinetics.com/MarchToSustainability2010/20