Our previous article analyzing the Greenhouse Gas (GHG) Protocol and reviewing sustainable emissions reduction opportunities in apparel focused on actions that retailers could take closer to home.
Here, we take a step further down the supply chain to focus on indirect emissions from purchased services or goods by apparel retailers. While brands cannot have direct control of everything, they can strongly influence and orientate activity through structured relationships with their suppliers to drive a reduced environmental footprint and, quite often, higher overall value creation.
Among the many disruptions caused by COVID-19, procurement and supply chain issues faced by apparel retailers were unexpected. The scarcity of raw materials and declining demand in the textile industry increased raw materials’ prices and complicated production. One of the greatest challenges of this period has also been to secure a supply chain of finished products. Container prices from Asia to Europe rocketed to unprecedented levels due to a lack of resources, fewer containers circulating and the increased time for logistics due to lockdown restrictions.
This exceptional situation highlighted the struggle of many retailers to maintain visibility and control over their supply chain, and more generally, over their suppliers’ operations.
Vendor management – the underestimated effort
The pandemic has exposed the necessity of long-term and strategic partnerships with suppliers rather than purely transactional relationships. Therefore, supplier relationship management has become critical for many reasons.
Given the legal obligations for companies to monitor their social and environmental impact, it is vital to ensure the impact of their suppliers is in line with these standards.
There are also many measurable benefits of building long-term relationships with suppliers. These include improved overall service level enhancement, reduced cost base through sharing investments, increased quality of products and greater access to technology capabilities.
Beyond the potential for reputational damage if brands are implicated in a supply chain scandal – be it environmental or social – changing consumer preferences towards more transparency and traceability of products puts pressure on retailers’ pace of change and level of engagement.
Positive action taken in a sustainable direction will significantly contribute to a more appealing brand image for apparel retailers. Increasing consumer awareness and transparency channeled through social media also means that simply greenwashing will not be enough. Brands must strive for full visibility and transparency in their entire supply chain.
Transition towards sustainability with suppliers and establish a chain of custody
The transition to a sustainable and long-term relationship is only made feasible through a shared and processed approach. Examples of best practices include:
- Baseline suppliers’ footprint: This is a first step to implement a realistic transition program into sustainability. Several tools exist to assess a supplier’s environmental footprint (i.e. The Higg Index) and the level of progress achievable in the short and long term.
- Share respective objectives: Agree on common ones to grow in the same sustainable direction. The development of new products should be based on quantified objectives and products should be co-developed aligning efforts into a sustainable transition.
- Set up a sequenced action plan: For the relationship to be long-term, explicit and quantified milestones should be set to monitor progress and invest in sustainable solutions.
- Invest in training and assistance for continuous improvement: Achieving more sustainable performance will only be feasible if the additional costs incurred to achieve common objectives are shared by all parties.
- Monitor and save results: Long-term commitment should encompass measures of progress and defined scopes of responsibility to create a chain of custody. Dashboards will help in recording data and monitoring main KPIs.
If such investments are only implemented for strategic suppliers, having visibility on broader suppliers’ practices is the minimum requirement for any sustainable relationship. Audit programs ensure suppliers’ conformity with retailers’ social and environmental requirements. Suppliers’ products allocation should further be reviewed against audit results as well as related performance improvement plans.
To grow in the same sustainable direction, scopes and KPIs must align
Carbon footprint is the primary indicator for many when it comes to assessing a business’s sustainability. We believe that in apparel this is just one of the factors. Other factors such as water pollution / reusage plastic fibers and packaging recycling, social responsibility and treatment of waste / unsold items all come into play when it comes to the impact on this industry.
With China and Bangladesh being the two largest worldwide exporters of garments, gas emission reduction from transportation could easily be thought of as a priority. However, the high fulfilling rates of containers are balancing the impact of long-haul transportation by reducing the emission cost per product. Solutions for emissions reduction related to transport encompass greener ways of moving goods, digital sample validation to avoid air freight but also near-shoring sourcing efforts.
There is more to carbon emissions than transport alone. Raw materials production and preparation is one of the main challenges for the apparel industry, representing the highest carbon emissions contributors. Alternatives to traditional fibers should be highly prioritized: recycled fibers, natural fibers, new sources of material (vegetal leather for example) or use of mixed fibers. The incremental costs from the production and use of eco-friendly material should be measured and shared.
The main contributing actions to carbon emissions are within a supplier’s scope of responsibility. A recent study by Quantis has revealed that more than 50% of emissions in apparel come from dyeing and finishing, yarn preparation and fiber production. These actions are also highly pollutive in other ways – fibers preparation and clothing production extensively use chemicals that contribute to water pollution. Berlin-based not-for-profit organization Sustain Your Style reports that 20% of industrial water pollution globally is attributable to the dyeing and treatment of textiles, while 23% of all chemicals produced worldwide are used in the textile industry.
A shift in raw materials selection and production will contribute to further improvements in manufacturing. Many eco-friendly processes such as reusing waste (water and material), water treatment pre-disposal, dyeing with safer ingredients, alternative and accurate cutting, weaving and trimming with new methods and concepts should all be considered as top priority investments for a sustainable transition. Finally, packaging possibilities should move towards a reduction in materials used and preference for recycled ones.
The lack of information regarding the supply chain and suppliers’ activities often leads to hazardous actions towards sustainability further contributing to damaged brand images. Strong ways of working with key strategic partners must be implemented to avoid greenwashing and contribute to the overall industry movement towards greater sustainability.
In our final article, we will focus on how apparel retailers can contribute to a more circular fashion industry.