FICCI TAG 2011 Conference PDF

Sustainability
by
Knowledge Paper on
Choice
FICCI TAG- 2011
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Table of Contents
Introduction Global Textile and Apparel Overview Emerging Trends Sustainability and its Pillars Sustainability at the Core of Business
01
02
05
11
13
Representative Initiatives: Sustainable Business Practices 20
Co-existence of Sustainability and Profitability 30
Way forward 33 Citations 36
Sustainability by Choice / October 2011
Chapter 1
Introduction
1
With increasing globalization and evolving consumerism, firms worldwide have been developing strategies to leverage and encash this wave. They have been adopting and executing strategies with good amount of success as well with leapfrogging revenues and profits. But the question that needs to be answered is will there be enough for everybody, will there be an equitable share of the increasing pie or will some companies dominate this surge in consumerism on a sustainable basis leaving others far behind? Or will the firms try and look at the bigger picture for the mankind and adopt strategies and devise steps towards a more sustainable development and growth? In fact in todays world it has become the need of the hour to look at success and growth from the point of view of sustainability. Whether the pillars of sustainability environmental, social and economic; are strengthened further in the process? Firms focusing on sustainability would in the process realize the core essence of their business growth in their top lines and bottom lines. Needless to say that the resources that the earth has in store, are limited and would exhaust sooner than later, if we do not take precautionary steps now. The changing global environment (global warming, melting of glaciers, global floods, earthquakes etc. are all signs of the disturbances that have been created owing to the increased globalization and consumerism). This knowledge document for TAG 2011 focuses on this key driver of success sustainability in the Textile, Apparel and Garment Industry. It makes an attempt to delve upon the issues pertaining to sustainability and its three pillars. Some startling facts about our surroundings Over 100 pesticide ingredients are suspected to cause birth defects, cancer, and gene mutations. Every day 40,000 children die from preventable diseases Every day 50 to 100 species of plants and animals become extinct as their habitat and human influences destroy them Average temperatures have climbed 1.4 degrees Fahrenheit (0.8 degree Celsius) around the world since 1880, much of this in recent decades, according to NASAs Goddard Institute for Space Studies Cars amount to three-quarters of all transportation emissions. At the current rate, the world will be driven on by more than a billion cars in 2030 and a billion more by 2050 The oceans circulation system, known as the ocean conveyor belt, could be permanently altered, causing a mini-ice age in Western Europe and other rapid changes. Rampant deforestation currently causes 20% of the worlds global warming pollution by prohibiting the re-absorption of CO2 2000-2009 was the hottest decade: The World Meteorological Organization reported that 2000-2009 was the hottest decade on record, with 8 of the hottest 10 years having occurred since 2000. Arctic ice cover already perilously thin is vulnerable to further melting: The National Snow and Ice Data Center reported that while a bit more summer Arctic sea ice appeared in 2009 than the record breaking lows of the last two years, it was still well below normal levels. Slight changes in the climate may trigger abrupt threats to ecosystems: According to a report by the U.S. Geological Survey, slight changes in the climate may trigger abrupt threats to ecosystems that are not easily reversible or adaptable, such as insect outbreaks, wildfire, and forest dieback.
Chapter 2
Global Textile and Apparel Overview

The global textile and apparel industry has been evolving driven primarily by the emergence of organized retail in developing countries like China, India, Brazil, Russia, UAE etc. with continued sustenance of the developed and established US/European markets. The developing economies have been witnessing a high GDP growth which is fuelling the demand and consumption textile and apparels being one of the beneficiaries. Major retailers and brands across the world have been witnessing increased revenues over the past few years and there has been growing focus towards improved sourcing from key manufacturing countries with improved and efficient practices. There has also been an increase in the sales revenues through the e-commerce route for the major brands and retailers in US and EU. Share of e-commerce sales range from 2% to 12% of the total revenues and have been witnessing a growth rate of 15% to as high as 55%.
Exhibit 1
Textile and Apparel Retail Consumption (US$ Bn)

2005 70 30 252 2010 160 52 260 2015(P) 260 90 275 % CAGR (2005-15) 14% 11% 1% Absolute Increase (10 year period) 190 60 23
Key Markets China India US
Exhibit 2
Annual Real GDP Growth (%)
14.0 10.5 9.0 9.7
9.5 8.1 4.2 2.6 2.6 2011 2012 2013 1.7 2014 2.6 2015
4.0
4.8 2.8
1.0 -
2005
2006
2007
2008
2009
1.7 2010
6.0 Source: IMF
China
Japan
India
United States
World
United Kingdom
The textile and apparel trade has also grown significantly over the years and is expected to grow further. The following chart illustrates the various phases of this trade and the way ahead.
Exhibit 3
Global Textile and Apparel Trade ($ Bn)

Quota Phase Out Regime Post Quota Global Slowdown & Recovery The Way Ahead. CAGR : 6% 1000 800 570 340 500 205 2005
Textile
3
CAGR : 8.6% CAGR : 5.6%
CAGR : 8% -14% Growth
350
618 In US$ Billion 311 212 108 104 1990 158 152 1995 355 198 157 2000 278 253 2008
Apparel
483 365
527 316 211 2009

Total
300
650
230 2010 (E) 2015(P) 2020(P)
E: Figures of 2010 have been estimated based on US & EU imports for 2010 P: Projections Source: WTO, OTEXA, Eurostat, Technopak Analysis
As far as the Indian textile and apparel industry is concerned, it has been witnessing a robust growth driven by strong fundamentals. Growing urbanization and higher income levels have given way to much larger consuming population in India which in turn is leading to the growth in the sector. Indias total textile and apparel industry size is estimated to be Rs 3,68,000 crores (US$ 78 bn) in 2010 and is estimated to grow @ 11% CAGR to reach Rs 10,32,000 crores (US$ 220 bn) by 2020
Exhibit 4a.
Indian Textile and Apparel Industry Size

1032 CAGR 11% 631 327 108 219 2009
Domestic
376 212 656 419 2015(E)

Total (INR'000 Cr)
211 72 139 2005

Source: Technopak Analysis
368 122 246 2010

Exports
2020(E)
Exhibit 4b
Increasing Urban Population (Mn)

1175 1325
Exhibit 4C
Rising Consuming Population (Mn)

1175 462 1253 452 334 350 117 2015 E 20-35 yrs 35-59 yrs > 60 yrs
1010 730 810 860
305 465 2020 E

Urban Total
280 2000
Rural
365 2010
312 96 2010 < 19 yrs
Exhibit 4d
Per Capita Income ($)
606 2004-05
684
781
887
1,007
1,115
1,212
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
Source: Technopak Analysis, Ministry of finance, NCAER
With this backdrop of the domestic and international textile and apparel industry we explore the various trends, aspects and cases of sustainability and how the same is getting more and more incorporated in the core of the companies strategies and helping them emerge winners.
Chapter 3
Emerging Trends
5
In todays world, information technology has played a dynamic role in increasing awareness levels, spreading knowledge and sharing of relevant information. The consumer today is much more educated of the goods that he uses, the brand or label that is associated and how reliable the same is. Since multiple substitutes of a product category is available in the market, the consumers do not go just by the brand name or looks and product quality, the usage also depends on the company that the brand is associated with, the reputation that the name owns, and the market goodwill commanded. All these factors also play an important role in making consumers choose a particular product, a brand or a company - and decision making is not the usual traditional self anymore. Companies have been adopting several measures and techniques to get into the consumer mindset and influence his/her decision process. To add to that media has also been playing a very important role in this regard. Globally, we can observe a growing trend of consumer inclination for brands that owe some part of their profits to the society and the media coverage and attention drawn by this very aspect. Taking an example from the non fashion industry, the consumer electronics giant Phillips, has taken a lead in the development of energy efficient lighting. The sales of its energy-efficient lighting grew much faster, due to increasing consumer concerns about their carbon footprint and energy bills. Philipss lighting division now derives almost half of its sales revenues from light fixtures powered by light-emitting diodes, halogen lamps and energy-saving bulbs, all of which are more energy-efficient than the incandescent bulbs. Consumers generally like to associate themselves with companies that prove to be socially responsible. And on the other hand, such initiatives prove profitable for the companies as well if, driven in the right manner. Similar initiatives to promote consumer awareness are also adopted by the TATA Group of companies in India. It is promoting anti-corruption campaigns and importance of the voting power through mass media, television etc. Such initiatives help consumers associate themselves with such a group and this forms a trust between the brand and end consumers. Once built, this trust nurtures a relationship which is sustainable on a very long term basis. This is evident in any TATA product; the consumer confidence is overwhelming high towards the brand. Such a drive can go a long way to develop the Indian Textile and Fashion industry into a modern, vibrant and internationally competitive sector generating income and employment for millions.
Key emerging consumer trends towards sustainability: Growing Consumer Awareness: With different medium of knowledge platforms, the consumers are increasingly aware of their needs, wants and expectations from the retailers/brands. Consumers want and expect retailers to do whatever they can to ensure that the products they buy come from environmentally and socially sound sources. Growing middle class consumers worldwide, with similar consumption patterns: The worldwide population of middle class is expected to triple by 2030. And with the rising globalization and economic integration the consumption patterns of this segment are similar. This is the class that is mostly concerned with the social issues of sustainability Compassionate Consumer: Not just being aware, but having an ethical concern, is something that todays consumer is more focused towards. With increasing public campaigning by bigger brands, issues from global poverty to climate change are causes of serious concern. Consumers are increasingly concerned about environmental, social and economic issues, and increasingly willing to act on those concerns. Increasingly favor ethical and eco friendly products: Consumers are now increasingly in favor of ethical products such as Ahimsa silk (alternative silk fabric where there is no killing or cruelty to animals involved); vegan (vegetarian) belts etc. In a study by the European Union, 75% of respondents agreed that they would pay more for environmentally friendly products in comparison to regular products offered by brands/retailers. Sympathetic to social causes: Consumers are willing to get associated with people or brands that are working responsibly for social causes. Being Human is one such brand story, that an average Indian closely associates himself with. Promoted by the bollywood actor Salman Khan, the apparel range of this brand donates a fixed proportion of every purchase to the charity Responsible consumers: The consumers today take up initiatives to actively contribute to the society. As an instance, the shopaholic consumer also looks for a paper bag or cloth bag rather than a plastic bag to avoid the negative environmental impact Growing consumer involvement: The consumers participate in initiatives that stand to benefit the society at large. HUL is driving one such initiative called HULs Project Shakti. It was launched in 2001, and employs women self-help groups to sell its products. This is a strategy adopted by HUL to distribute in villages with less than 2,000 people, which would be expensive to reach through its redistribution stockists. Going forward, HUL is looking to increase its rural reach three-fold: through a combination of distributors and Project Shakti. About six million stores in the country sell its products, of which just about a million are serviced by its own distributors or company salesmen (as of end-2009). HUL wants to alter this ratio dramatically. Rising power of women and their contribution: Women are considered to be more generous and compassionate to social causes due to direct emotional connect. As an example setting behavior, such as water conservation (turning off the water when not in use) and energy savings (turning off lights when leaving a room). With the rising number of working women and their economic power, their decision making is all the more important in family matters. Not just the product: More than the quality and quantity of the product, the final decision making is also based upon the brand name/visibility and the brand impact. A brand name which is more responsible and socially active, of course pulls the votes in its favor. This trend is catching fast in the Indian domestic retail scenario. Consumers look at the bigger picture and dont mind paying a few extra bucks for a brand that has set itself as a more responsible one. An Appropriate Channel: Many a times the consumer willingness does not get translated into sustainable action because of factors such as availability, affordability, convenience, conflicting priorities, skepticism etc. Also, with increasing working hours and busy schedules, in spite of a will to contribute to the society, the consumers are unable to do so. In such a situation, an appropriate platform provided by manufacturers
and retailers would be more than a welcome step. In fact, retailers and manufacturers can bank on this option by multi pronged strategy to come out with sustainable value added proposition. Getting Closer to Consumer: Consumers are more concerned with issues that directly impact their lives, such as health issues at large or the quality of the air that they breathe in. Capturing issues of this manner can help firms getting closer to the consumers
The role of brands: Middle and high income Indian consumers are increasingly becoming very brand conscious, so brand owners can play a major role, both in changing their practices and in educating their consumers. The present day time pressed consumers have a preference for an offer which enables them to buy the product and simultaneously facilitates them in donating a portion for a cause. Hence, companies can assist them with options which ensure they contribute while they shop and get involved directly in making a change. As an instance Body shop, a premium cosmetic brand does its bit to promote generosity through its range of products; earnings of which is dedicated to an organization which fights against human trafficking. Puma has launched its range of pink shoes to promote the breast cancer initiative. The textile, apparel and garment (Fashion) industry has been witnessing an equally strong trend of this growing awareness and consumer expectation phenomenon. With different sources of information, sustainability has become a key issue and many of the textile and fashion brands have put a strong foot forward in this regard. Last year, Abhishek Industries(Trident) was awarded the Sustainability (Trading Area - South Asia) Award by IKEA. IKEA is one of the biggest retailers of Europe and has a global presence. It is amongst top three most trusted global brands. Abhishek is one of the major suppliers for the towels and toweling products. Recognition was awarded on the grounds of following ethical business practices, sustainability and social responsibility. This is one of the several instances wherein a company has been recognized for its increasing drive towards sustainability. Social Media and Sustainability Social media is a growing phenomenon, and one that should not be underestimated in terms of reach and influence. It has exploded within the past few years to become a fixture in our culture. For example, Facebooks network has mushroomed to 500 million+ users and Twitter attracts 190 million+ visitors a month, who generate 65 million+ Tweets a day. And the UN estimates cell phone users will number 5 billion+ globally this year, with 1 billion+ people using smartphones to access Web applications such as Facebook and Twitter.
The prevalence of social media and increasing importance of sustainability efforts offers companies a unique opportunity to more effectively engage stakeholders. Todays stakeholders are increasingly looking for an authentic, two-way dialogue. There is a natural intersection between social media and sustainability as both require authenticity, accountability and engagement with their audience to be effective. Despite the potential social media offers to access information, build knowledge, connect with stakeholders, and improve performance, most firms and NGOs have only dipped their toes into social media Four categories for using social media to achieve sustainability and engage with their stakeholders in powerful ways that enhance trust and reputation have been identified as: Exchange: Social media allows organizations to communicate exchange and broadcast. It allows one-tomany broadcast and two-way exchange. It enables not only to monitor breaking news, but also discuss it, therefore helping to form influential opinions. This exchange of information helps to formulate a transparent environment. Marks & Spencers Plan A campaigns are communicated throughout the year, including One Day Wardrobe Clear-out, Butterfly Count, Macmillans Worlds Biggest Coffee Morning, M&S Gadget Recycling and The Prince of Wales START sustainability initiative. It has also extended the use of online videos (including a progress update on Plan A) and used social media to announce new initiatives and hold Question & Answer events. Educate: Social media carries huge potential to educate, where organization and users can both teach and learn. The proliferation of webinars exemplifies this, as does the rise of user-generated content, such as Wikis, question-answer databases, and discussion boards. These tools encourage two-way conversations that stimulate continuing participation and commitment. Outdoor clothing manufacturer, Timberland, is driving corporate sustainability through the use of new media websites such as YouTube and Facebook. Timberlands goal is to gather 1 million consumers who share Timberlands passion for protecting the environment. Their campaign; Earthkeepers aims to inspire people to take action that will shrink their environmental footprints. It has also launched a dedicated page on JustMeans, a social media platform that rallies people and companies around social responsibility. Timberland follows its quarterly updates with a public conference call encouraging feedback. Engage: Few firms currently use social media to engage stakeholders, but that is quickly changing. Some examples have been cited below where firms and stakeholders increasingly engage online: One-way Proclamations: McDonalds Values in Practice blog Reactions: Nestl Waters Things to Know videos Interaction: Shareowners.org platform for investor activism Genuine Collaboration: Timberlands Voices of Challenge stakeholder engagement portal Enhance: Going forward, social media can help enhance performance, particularly on sustainability. For example, the 2degrees network of 8,000 sustainability professionals participate online in facilitated problem-solving through virtual seminars, open innovation challenges, and best practice exchanges. This represents a community of inquiry and practice, where members improve professional performance, develop new skills, and even create new knowledge to replace outdated assumptions. Also, Patagonia connects with consumers through its Footprint Chronicles website. This website describes Patagonias supply chain and invites consumers improvement suggestions. To encourage peoples efforts, the company is awarding US$5,000 to the best Earthkeeper video about lightening their environmental load. Given the rapid pace of technology innovation, sustainability leaders cant afford to watch from the sidelines. Organizations can practice the 4 Es of social media to help make the transition to a sustainable world. A few examples of companies using social media tools and campaigns to leverage the sustainability wave are cited below:
TimberlandEarth keeper Campaign Communications objectives EarthKeeper online presence is a place consumers can learn about being an EarthKeeper and Timberlands EarthKeeping efforts Timberland is interested in enabling their consumer base to take actions to help the environment
Using video, Timberland should enable consumers to learn about key green issues and join the movement Provide an avenue to engage with consumers particularly around environmental issues--showing its environmental leadership among peers Impact According to the Council of Public Relations Firms, 158 thousand+ people have registered as EarthKeepers since the launch Over 950,000 trees planted on the EarthKeeper Facebook application with 109,862,099+ impressions since June 2008 On Facebook, Timberland has 352 thousand+ fans On YouTube, Timberland received 68 thousand+ views on On Twitter, Timberland has 7.4 thousand+ followers Starbucks Communication Objectives Connect with consumers in a place many of them already are, especially offering paid wifi and office-like environment Create avenues to provide education around ethical coffee making and distribution Provide industry leadership around ethical coffee making and distribution Interact more times with the potential consumer, investor and community influencers Impact On Twitter, they have 1.3 million+ followers, their @MyStarbucksIdea campaign itself has 20 thousand + followers On Facebook, they have 20 million + fans On YouTube, they have 6.2 million + total upload views Starbucks social media efforts have been praised by the Next Web as the, Starbucks Formula, as well as Directory Journal Mashable (May 2009), Social Media Examiner (May 2010), the Brand Channel (June 2010) among many others Whole Foods Whole Foods, in 1980 started out with one small store in Austin, Texas. Today, its the worlds leader in natural and organic foods, with more than 300 stores in North America and the United Kingdom. It is a mainstream social enterprise that recognizes the importance of organic food and other products. Communication Objectives Connect with consumers, influencers and community leaders Learn more about their audience--including demographics of their consumers Provide outlets for Whole Foods loyal consumers to find their brand online; for potential consumers, social media to offer a place for them to gain trust for the Whole Foods online brand Provide a space to connect with people as a mechanism to customer service and corporate identity
Impact On Twitter, they have 1.8 million+ followers via Whole Foods HQ; their 150+ other local Twitter channels feature local initiatives and hundreds of thousands of other followers On Facebook, they have 508 thousand+ fans On YouTube, they have 1.4 million+ total upload views Apart from these there are various organizations that use only online medium/social media dedicated to sustainability. The Ethical Fashion Network is worlds largest online community of fashion professionals dedicated to sustainability. The Ethical Fashion Forum (EFF) is an industry body which is dedicated to a sustainable future for fashion. It is a not for profit organisation and aims to make it easy for fashion professionals to integrate sustainability at the core of what they do. Membership of the EFF delivers support for fashion businesses towards sustainability through a series of programmes including several essential tools which members can take advantage of to succeed in ethical fashion business. Social media presents a powerful tool to organisations to communicate with their stakeholders and develop collaborative steps and mechanisms towards sustainability. This is one tool that has to be increasingly adopted and practiced by firms across the world in leveraging their sustainability drives.
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Chapter 4
Sustainability and its Pillars

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As the word suggests, sustainability implies sustaining long term profit objective along with active contribution to society. The primary objective of any business is to fundamentally grow and achieve profitable margins for all of its stakeholders. As the business becomes bigger and more profitable, it attributes a part of its success to the society. And it is not just morally required but is socially justified to contribute in similar way to the society. And in doing so it in fact is creating a strong brand identity and association with the society which in turn would aid in increasing top line as well as bottom line. Alternatively sustainability also implies acting responsibly and at times means acting with restraint. However, businesses should take up this responsibility actively as a means to create visibility and gain consumer confidence. Changing business attitudes Businesses need to take a leadership role in promoting sustainable consumption and production patterns Sustainable business for today is the one, that defines its place in the society tomorrow Other addressable issues for the business: Regulatory: Of late there have been increased regulatory constraints as governments seek to protect the social and environmental ecosystem and health Operational: With the limited resources and its increasing costs; conflict of interest may arise in such areas leading to no other way but to adopt better sustainable measures Being Responsible: There is an urgent need to step up in the current industry environment and establish oneself as a more responsible business in the society With such changing attitudes, the businesses can take a step ahead and play a catalytic role between the consumer, government entities and ultimately stepping up their own efficiencies. Catalytic role of business: To make it easy and affordable for the consumer to make sustainable purchasing decisions, as there is an increasing awareness to do so To make such products available and affordable without compromising on quality Educating the consumers towards such important issues Leveraging the unprecedented power of consumers to share this information about companies, products and services via social networks, promoting sustainable products, usage, consumption and lifestyles Using marketing and advertising tool to promote not just the product but the associated corporate brand value. As solutions shift from technical to social, marketing also has an increased role in driving innovation Industry CSR, which is increasingly moving beyond window dressing to become a tool for firms to identify means to reduce resource use and costs, and invest in practices that can increase competiveness
Sustainability can be applied in different aspects; social, environmental and economical. Social: Growing awareness has prompted the businesses today to play a greater role in creating a social impact through their line of service. While sustaining profits, the corporate leaders are increasingly participating in the activities that can create some form of impact on the society, at large. One of the industry leaders, Alok is engaged in a lot of such initiatives to promote social equity encompassing fair employment practices, safety at work and plants, healthcare programs, education and people training. Economical: No economic system is sustainable unless it accommodates the ecosystems on which it depends. We need to acquire the ability to distinguish between need and greed. We also need to restore such an economic system in place, which moves the money not only towards the top echelons of society but is distributed in the best appropriate manner. Such a system includes community ownership and community-supported trade, markets, credit unions, non-profit community development corporations, incubator programs to aid start-up small businesses, apprenticeship programs in local businesses community focused banks, and trade. Environmental: Environmental sustainability is that aspect which emphasizes on sustaining the business value proposition along with maintaining the qualities that are valued in the physical environment. It is evident that the resources provided by the earth are limited and are increasingly affected by economic changes and environmental degradation; consumers have become edgy about the effect of human activity on the environment. In such a scenario, environment sustainability has become an industry in itself. With increasing concerns regarding the effect of the textile industry on the environment, at all stages of its chain, i.e. raw material, fiber, fabric, apparel, processing; more and more textile researchers, producers and manufacturers are looking towards biodegradable and sustainable fibers as an effective way of reducing the impact textiles have on the environment. More and more companies are now focusing on the responsibility of industry and consumer priorities, and introducing new measuring tools for electricity and water usage, carbon footprint and traceability. The young consumer is moving from the industrial economy to the sustainable economy and manufacturers/retailers globally have to build that into their processes. Hence companies need to gear up towards going green and give more weightage to environmental friendliness going forward. One such initiative is being carried out by the Adidas Group with the launch of the Adidas Grn (green) range of footwear and apparel for men and women. Adidas Grn minimizes its environmental impact by being as efficient as possible with the use of the natural resources involved in its production and packaging. With textiles in India accounting for almost 14% of industrial production and 17% of the countrys export earnings, the industry is an important vehicle for the promotion of sustainable development. It is interesting to note the kind of optimistic response already generated in the industry, and the way it is growing with a full swing. One such recent initiative is the Parivartan Awards, for sustainability and innovation. The Parivartan Sustainability leadership awards, organized by India Carbon Outlook, seek to recognize Indian companies who have embraced sustainability in their business operations and supply chain and have shown leadership by taking initiatives for making their products, processes and facilities sustainable. It is Indias first market development forum on Sustainability and Innovation. Last year, under the project Shared Talent India which was funded by Defra (Department of environment food and rural affairs); there were steps taken to improve the sustainability of textile production in India for use within the fashion industry. Under such a forum, a dialogue on sustainability was initiated through a series of discussions that led to the designers questioning ecological, social and economic criteria as a basis for work. Collaboration between manufactures and designers became single most important criteria for achieving long-term sustainability in the materials utilized in the textile and fashion industries. Additionally, transparency is essential within the fashion material and product supply chains.
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Chapter 5
13
Sustainability At The Core of Business

Clothing is an economic success story, globally worth over $1 trillion, employing approximately 26 million people and supporting a significant number of economies and individual incomes around the world. But this economic success story also has a significant environmental and social footprint across it global periphery with each step of the clothing life cycle generating potential environmental and occupational hazards; rising consumption being a key factor in this. The industrys supply chain goes through many different stages of production from growing the fibres, through dyeing and sewing to the final stage of transport to the warehouse or retailer and finally to the consumer in a packaged form carried traditionally in a poly bag. With increasing concerns regarding the effect of the textile & apparel industry on the environment, at all stages of its chain; more and more researchers, producers and manufacturers are looking at ingenious, innovative and effective ways of reducing the negative impact of textiles and apparels on the environment. As brands and consumers in the consuming countries get aware of sustainability issues, it is going to put tremendous pressure on manufacturers in the production hub countries like India to comply.
The textile, readymade garment and export industry is extremely significant in India and is emerging as a key player in the global textile and clothing market. The industry is evolving from low to higher value added products through improving functions such as fashion design, reducing lead times, responding to market demands, and improving compliance with health and safety working conditions and labor standards, as well as addressing environmental concerns. However, in India noxious fumes from dye houses, untreated water released into community drains, use of child labor, heavy machinery guzzling either diesel-set generated electricity and use of pesticides in cotton farming are some of the common issues that are still prevalent in any textile town in India. Across the Indian apparel and textile industry there is a gap that needs to be filled by working towards making the entire supply chain more transparent while promoting information sharing about resource use, labor conditions, pollution, and waste.
Each step of the clothing production process carries the potential for an environmental and a social impact. Apparel supply chain can broadly be divided into 7 stagesfiber production, textile manufacturing, garment manufacturing, distribution, consumption, disposal, and aftermarketand the types of businesses or consumers involved with each stage. Each of the seven life cycle phases takes place all over the world. Understanding the structure of the apparel supply chain is instrumental in exploring opportunities for sustainability initiatives. Companies incomplete authority over parts of their supply chains limits their ability to implement sustainability initiatives in those areas.
Exhibit 5
Apparel Supply Chain Stages

Natural Fibers Manufactured Fibers Fiber Producers Raw Material
14
Farms
Textile Mills
Spinning, Weaving, Dyeing, Finishing
Fabric
Garment Factories
Designing, Cutting, Sewing, Embellishing
Article
Transportation by 1 or more modes
Production 4 Distribution Centers Sorting, Repackaging, Distributing to stores Distribution 5 Retailers Sell to Consumers
Consumer
Uses, Washes, Disposes
Use
Aftermarket
Reuse/Recycle, Composite, Landfill or Incinerate
Disposal
The Dimensions of Sustainability and the Business Companies with sustainable supply chains adapt their design, production, distribution, and promotion strategies to provide socially and environmentally responsible products and services in a profitable way. They incorporate sustainability into their daily operations and decisions at every level. Forward-thinking apparel companies are racing to address these issues and create more sustainable businesses. The apparel supply chain, and the life cycle of an apparel product, is global and segmented. Raw materials, works-in progress, and finished goods traverse the globe and change ownership several times before products reach consumers. Today many options are open for businesses to change their supply chain and make it sustainable. The key to become sustainable is to develop a culture of sustainability within the organization, develop adequate goals, educate the employees, implement projects to meet the goals,
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audit the supply chain process, and correct deviations if any. Industry needs to act proactively and find ingenious and innovative ways in which to design and develop fashion; rather than see sustainability as a constraint or limitation. Sustainability today is not singularly about minimizing negative impact, but also maximizing positive impact, allowing individuals, communities and economic systems to flourish. To work sustainably is to challenge convention and find new ways of working that achieve ecological, social and cultural balance that is in tune with human behavior. There could be initiatives taken at various steps of textile & apparel supply chain. Sustainable supply chain is an umbrella concept, and care has to be taken at various levels of textile & apparel making such as using organic and natural fibres, using renewable fibres, application of nontoxic treatments to fabrics, design and color choices focusing on longevity of the garment, ethical labor practices, and using environmentally appropriate packing materials.
Exhibit 6
The Dimensions of Sustainability
Sustainability
Economic
Environmental
Social
Compliance Corporate Governance Risk & Crisis Management Brand Management
Material Consumption Energy Use Water Use Waste Toxics & Pollutants Land Use
External
Internal(Cultural)
Corporate Citizenship Labor Practice Indicators Supplier Social Reporting Stakeholder Engagement
Talent Attraction & Retention Human Capital Development
*The shaded boxes indicate areas strongly linked to supply chain management
Issues related to Sustainability in Supply Chain The major environmental impacts of the sector arise from the use of energy and toxic chemicals: Energy utilization: Energy is vital to the current consumerist system. The sectors contribution to climate change is dominated by the requirement for burning fossil fuel to create electricity for heating water and air in laundering. Other major uses arise in providing fuel for agricultural machinery and electricity for production. Use of toxic chemicals: Toxic chemicals are used widely in cotton agriculture and in many manufacturing stages such as pre-treatment, dyeing and printing. Increasing landfills: Waste volumes from the sector are high and growing with the advent of fast fashion. The clothing and textile per capita to landfills have been increasing very fast. Water consumption: especially the extensive use of water in cotton crop cultivation can also be a major environmental issue.
Sustainability issues related to Landfills and Increasing Demand Industrialization brought consumerism with it as an integral part of the economy. Economic growth depends on continued marketing of new products and disposal of old ones that are thrown away simply because stylistic norms promote their obsolescence. According to Well Dressed? (a report by : Institute for Manufacturing, University of Cambridge) about 60% of the energy used in the life cycle of a cotton T-shirt is related to post purchase washing and drying at high temperatures; transportation constitutes only a small portion of the energy profile to produce a cotton product. Since the rate of purchase and disposal has dramatically increased, the path a garment travels from the sales floor to the landfill has become shorter. According to the EPA Office of Solid Waste, Americans throw away more than 68 pounds of clothing and textiles per person per year, and clothing and other textiles represent about 4% of the municipal solid waste. With respect to UK, consumers send 30kg of clothing and textiles per capita to landfill each year. But these figures are rapidly growing and it would not be surprising to find similar patterns emerging in the developing nations as well. Through reducing the purchase of garments, livelihood of people in developing countries would be severely get affected due to job cuts in the manufacturing industry. To address the environmental impacts of fast fashion and its increasing demand various innovative approaches are being implemented and can be taken ahead: Some manufacturers are aiming to develop eco-fashions. The International Standards Organization (ISO) has defined eco-fashions as identifying the general environmental performance of a product within a product group based on its whole life-cycle in order to contribute to improvements in key environmental measures and to support sustainable consumption patterns. The ISO is developing standards for labeling system to identify garments that meet criteria as environmentally friendly. The global current behavior in disposing of used clothing and textiles to landfill is not sustainable as volumes are growing. Incineration is preferable to landfill, as it allows energy recovery and reduces final waste volumes. With reference to products in which production dominates environmental impacts, process efficiencies should be pursued and the impact will be reduced by extending the life of the product or by re-using materials by some form of recycling For products in which raw material production dominates, in addition to measures to extend product life, alternative processes or materials should be pursued. A switch from conventional to organic cotton growing would eliminate most of the toxic releases. Recycling is significant for materials with high impacts in the production phase. Technology innovations may provide a means to extract longer fibres from used textiles. Technology development may lead to new means to freshen clothes without washing, efficient sorting of used clothing, new fibre recycling technology and new low temperature detergents. Sustainability Issues Associated with Cotton in India Indian cotton accounts for almost 16% of world production. The cotton farms are predominantly found in the cotton belt that starts in the north-west, crosses through the centre of the country and ends in the south-east. In the central and south, cotton farms are usually family run, mixed, not irrigated, and smaller with 87% less than six hectares. Larger farms are typically found in the north, where the cotton is grown more intensively and is under irrigation. The national average production is 429 kg per hectare, being among the worlds lowest average. Many regions of India have become heavily dependent on the crop and it provides a livelihood for 40 to 50 million people. Cotton is considered as very water intensive crop a finite resource though the exact measurement of water usage in cotton is difficult to assess as it depends on how the crop is fed water.
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Use of Pesticides for Cotton Production In an attempt to limit the damage caused by pest infestations, Indian cotton farmers now apply an estimated US$ 344 million of pesticides annually. This represents 55% of the countrys entire expenditure on agricultural pesticides; a truly disproportionate figure given that cotton accounts for just 5% of Indias total cropland. As a result many people in India are affected by the harmful chemicals used in cotton production. The consequences of occupational exposure to cotton pesticides are both extensive and severe. A 2005 study of 97 farmers working to grow cotton in 3 different villages in the southern state of Andhra Pradesh documented 323 separate incidents of ill health over a 5 month observation period. Of these 39% were associated with mild poisoning, 38% with moderate poisoning, and 6% with severe poisoning. Aldicarb, parathion, and methamidopho, three of the most acutely hazardous insecticides to human health as determined by the World Health Organization, rank in the top ten most commonly used in cotton production. All but one of the remaining seven most commonly used are classified as moderately to highly hazardous. Use and production of Organic and Fairtrade Certified Cotton are methods to deal with these sustainability issues related with cotton. Organic certified cotton and Fairtrade certified cotton seek to minimize some of the negative sustainability issues associated with cotton agriculture and production. Organic cotton Indian organic cotton accounts for 50% of the worlds organic cotton production, approximately 8000 hectares. In organic farming fertilizers such as animal manure and neem oil are used to protect against pests along with complementary crops such as peas instead of chemical based pesticides and insecticides. In order to become certified as organic, farmers must usually grow cotton over a period of three years with organic methods to ascertain there are no chemicals in the soil. There are a range of different organic certifications associated with cotton production. Fairtrade Certified Cotton The Fairtrade Labeling Organization (FLO) provides an independent product certification label guaranteeing that cotton farmers who meet international social and environmental standards are getting a better deal. Farmers involved receive a fair and stable price for their cotton, as well as a financial premium for investment in their community, receiving pre-financing where requested and benefiting from longer-term, more direct trading relationships. The label is applicable so far only to cotton production, and not to the other stages of textile and garment manufacture. The focus is on addressing the imbalances of global trade for farmers in the developing world. Alternative fibres such as bamboo, nettle and hemp are not grown and processed in significant quantities within India so it was decided to focus on promoting organic and Fairtrade certified cotton, which are important within the Indian context. Various Indian textile mills are taking steps toward promoting Organic cotton. Indian textile giant Arvind Ltd. is committed to support and develop a model that brings sustainability to the production of its most valued and extensively used raw material. It works along with over 1000 small and marginal farmers in the Vidharbha region of Maharashtra to grow organic cotton, without the use of any chemical inputs. It provides the farmers know-how on organic farming, and a guarantee to buy back cotton produced directly from the farmer. Also, Alok Industries project Zameen Organic & Fair Trade Golden Supply Chain is taking steps by providing relief to farmers in Vidharbha via providing the farmers with pre-finance to procure essential agricultural inputs in the beginning of the growing season and technical support to each farmer for conversion to organic farming. It also helps in arranging the Organic and Fair Trade certification for the growers. More such references are presented in subsequent sections of this document.
Sustainability issues related to use of Non-Renewable Sources of Energy Energy is vital to the current consumerist system it is at the centre of any sustainability debate. We have to trace back to where our energy is sourced from and we have to look at where our energy goes in order to properly understand its role. Our current system is reliant on petroleum, linking our production systems to governments in both the developed and developing countries. Non-renewable energy is cheap to procure but ties us in to a system which is hard to break. Designers have the opportunity to conceive products and supply chains that are not reliant on non-renewable energy. By designing better, the volume of production can be reduced so that we do not have superfluous goods each requiring high levels of energy use. Sustainability issues with energy-intensive manufacturing of polyester Polyester, the most widely used manufactured fiber, is made from petroleum. With the rise in production in the fashion industry, demand for man-made fibers, especially polyester, has nearly doubled in the last 15 years, according to figures from the Technical Textile Markets (Textiles Intelligence). The manufacture of polyester and other synthetic fabrics is an energy-intensive process requiring large amounts of crude oil and releasing emissions including volatile organic compounds, particulate matter, and acid gases such as hydrogen chloride, all of which can cause or aggravate respiratory disease. Volatile monomers, solvents, and other by-products of polyester production are emitted in the wastewater from polyester manufacturing plants. The Trident Group having formidable presence in home textiles, yarn, paper, IT, energy and chemicals is paving its way to environmental sustainability through practicing 3Rs (reduce, reuse and recycle) and waste management in its industrial plants. It has initiated energy conservation drives by installing power saving technology on the machines in the industrial plants enhance recycle & reuse of treated effluent for purposes of plantation and maintenance activities in various sections of the industrial plants. Also it has adopted various cost effective cleaner technologies, waste minimization techniques and appropriate pollution control / abatement technologies. Furthermore, international retail major, JC Penny established a company-wide recycling program by putting in place the capabilities to recycle the majority of the waste generated in their operations to divert recyclable materials away from the communities landfills. In 2010 alone, the efforts of the store and supply chain associates allowed JC Penney to generate approximately $16 million in revenue by recycling. More such references are presented in subsequent sections of this document. Social implications for the Apparel and Textile Industry In the textile & apparel sector there are many concerns about the quality of the jobs they create and their social consequences. There is room for improvement of working conditions in the supply chain by running projects to find ways to address the root causes of workers rights infringements in the supply chain. Main issues are related to the following: Living Wages Wages in any garment workforce vary according to the skill and responsibility of a worker. Most workers monthly earnings around the world average a little higher than the national minimum wage for the country where they work. When governments set minimum wages, they balance the interests of workers with what they see as the need to remain competitive in the global market and pressure from companies to keep wages low. As a result, minimum wage rates often bear no relation to the cost of living, and fall far short of what many argue is a living wage. In many garment producing countries, the minimum wage actually leaves a family below the national poverty line, even though this is also set by the government. Minimum wages often remain unchanged for years while the cost of living rises, which means that the real value of the workers pay falls.
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Child Labor Even though the elimination of child labor is one of the goals of the International Labor Organisation (ILO) it remains a challenge in the clothing and textiles industry mostly due to the difficulty in monitoring subcontractors, indirect workers and home workers. The industry workforce is largely made up of young women, who are low skilled or unskilled and may be migrants. Such workers are vulnerable to various forms of abuse and may not know or be able to claim their rights as employees. A particular problem at present is that many subcontractors deny the right of workers to form an association (or trade union) to assert their rights to appropriate working conditions, pay, training and promotion. Living and Working Conditions The Indian apparel & textile industry had been largely dominated by incompliant factories and working conditions. Large exporters and mills are addressing the concerns related with health and safety working conditions and labor standards. However, in India there is a gap that needs to be filled by working towards making the entire supply chain more transparent while promoting information sharing about resource use, labor conditions, pollution, and waste. Major occupational health issues associated with the sector are prevalent amongst the workers due to working conditions and related exposure to : Hazardous chemicals particularly in cotton production, wet pre-treatment, dyeing and finishing Fibre dust, especially when processing cotton, giving rise to the respiratory disease termed byssinosis. Noise associated with yarn manufacturing, knitting and weaving. Monotonous repetitive processes is leading to injuries amongst sewing machinists Denim dust: The blue dust from the jeans is a heavy irritant to the lungs. Workers in factories use wearand-tear process like clock scrubbing, spraying, and tearing jeans in order to meet the production demand and achieve fashionable distressed denim look. This causes heavy respiratory disease and lung problems. In order to address social issues in the supply chain and attain sustainability companies need to create a sustainable working model. There must be worker consultation to listen to the concerns of the workers Production incentive scheme where workers are given a bonus linked to productivity Improved industrial engineering and production planning A provident fund to provide workers with a means to save money to reduce their vulnerability in case of hardship Free lunch for all workers aimed at improving nutrition Enthusiastic backing to the project from senior management with regular meetings between supplier representatives and buying teams to discuss the project
Chapter 6
Representative Initiatives: Sustainable Business Practices

In this section we take a look at some of the initiatives taken by companies across the world wrt sustainability and how they have incorporated sustainable practices suitable for their businesses at the core of their strategy. The benefits accrued as a result of the sustainable business practices have also been highlighted.
(The facts and figures cited have been taken from various sources available in the public domain)
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Alok Industries Alok Industries is one of the leading players in the Indian Textile, Apparel & Garment industry. Over the years Alok Industries has expanded into weaving, knitting, processing, home textiles and garments, making it one of the few Indian textile companies that are vertically integrated. Alok Industries has strengthened its position in both international and domestic market by catering directly to manufacturers, exporters, importers, retailers and brands in the domestic and international market. Sustainable Business Practices adopted by Alok: Social Development: Alok Industries has developed a base of skilled workers through local hiring. With special focus on women empowerment, Alok provides the womenfolk technical training to absorb them in their weaving and garmenting units, thereby reducing recruitment costs and hoping to increase productivity per employee. The company puts high importance to the well being of its employees and the same is evident through the fair employment practices, safety at work and plants, healthcare programs and local infrastructure development. Environmental Development: Being in an industry which is heavily dependent on chemicals during various stages of the production, Alok has proactively taken the responsibility to reduce inefficiency and increase the usage of environmentally safe raw materials. Alok encourages usage of organic cotton, pollution control through using eco-friendly dyes for all its processing, reverse osmosis processes for recovering fresh water from treated water. In order to reuse easily available waste products to produce fibre, Alok has a 10 TPD plant for recycling polyester yarn waste, flakes and PET bottles. Arvind Limited Arvind is one of the oldest and most respected textile and garment players in the industry. Arvind is globally known for its denim production and is amongst the top few denim manufacturers in the world. The company holds the license for producing for various global denim brands and caters to the end consumer through its domestic retail chain Megamart. Arvind has established an Advanced Textiles Business whose products are primarily used in industrial filtration, wind energy, defense, auto components, personal protection, transportation and housing & infrastructure. Sustainable Business Practices adopted by Arvind: Social and Environmental Development: Arvind has executed the Organic Cotton Project where it aims to bring sustainability to the production of its most valued raw material. Arvind is working with 3700+ villagers in the deprived region of Vidharbha. Organic farming experts from Arvind visit the farmers in Vidharbha to inculcate the practice of growing cotton without any chemical inputs. Arvind has adopted the contract-farming method where the company buys the cotton produced in the Vidharbha region by the farmers. The organic farming method practiced by Arvind obviates the need of expensive chemical inputs for crop protection, eliminates the role of middlemen and the liquidity guaranteed by Arvind
through its 7 day payment schedule ensures a sustainable practice of farming and livelihood without polluting the environment with harmful chemicals. Arvind also provides vocational training to unemployed youths and help them to take up jobs in garmenting unit in Arvind or other garment manufacturing units in Ahmedabad.
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Moralfibre Moralfibre is a firm set up to promote and sell the Moralfibre label of fabrics, furnishings and clothing, locally and globally in home and health markets. It uses natural materials like cotton, silk and wool to the highest specifications and quality. The unique feature of Moralfibre line of products is its complete hand production with almost near zero reliance on machinery or electricity during the production process. Sustainable Business Practices adopted by Moralfibre: Environmental & Social Development: All products produced by Moralfibre are produced by hand spinning. The spinning is done by semi skilled and unskilled women while weaving is done by paddle looms by trained women and men. The USP of the production process, apart from being completely hand produced, is that no harmful chemicals are used for processing. Instead natural sources like rice starch and natural oils are used which helps in retaining the original sheen of the fabric. Most of the employees are from surrounding communities and Moralfibre works with small cooperatives based in remote villages. What truly makes the employees take ownership of the work, resulting in garments of the highest quality, is the profit sharing by the promoters and a robust system of provident fund and pension schemes. Marks & Spencer Marks & Spencer (M&S) is a leading global retailer with over 700 stores in the United Kingdom and over 300 stores across 40 countries. Primarily known for its apparel, M&S has diversified into Food, Technology etc. The company is UKs largest clothing retailer (by volume). M&S is a vehement supporter of sustainable practices and has envisaged various concrete action points and agenda. In 2007, M&S launched Plan A, to increase the business sustainability through steps and action that addresses key social and environmental challenges faced by the company. The 100 commitments as per Plan A are built around the five pillars of: climate change, waste, natural resources, fair partnership and health and well being with an aim that by 2012, it would: Become carbon neutral Send no waste to landfill Extend sustainable sourcing Help improve the lives of people in their supply chain Help customers and employees live a healthier life-style Already, of the original 100 commitments set in 2007, 62 have been accomplished. Another 80 new have been established which have to be met by 2015. Upon deeper analysis the five pillars reveal their business sense. Each of the pillars is central to the sustenance of the business and M&S, well in time, has identified specific targets for each of the pillars. Each pillar either is linked to a resource which is non renewable, directly or indirectly, or linked to longterm favorable brand image development in the minds of its 21 million customers who visit the M&S stores every week or build partnerships with stakeholders that are based on sustainable trading. The key success of the Plan A initiatives can largely be credited to the managements vision of a sustainable future and identification of key areas that need to be targeted to build a sustainable business. Along with setting time based targets, a strong sense of commitment from the employees, stakeholders, suppliers and customers
has enabled M&S to achieve many of its targets before time and also gave M&S the platform to set new targets by 2015. Starting from a plan aimed at building a socially responsible company, the Plan A has become a central core idea for each and every activity at M&S. The following table exhibits the specific achievement, tangible impact on revenue (if quantifiable at this stage) and business sense of each of the five pillars.
Exhibit 7
Pillar
Commitments Achieved
Specific Notable Achievement Carbon Emissions are down by 8% from all operations; Energy efficiency in stores improved by 19%
Commitments for 2015
Business Sense Improving the efficiency of energy use in stores and fuel use in transport reduces costs. As these resources become more expensive in the future the savings will continue to grow Using less packaging and materials whilst still maintaining quality saves costs. Improving recycling rates in operations has been cost neutral but will avoid future expense Ensuring the sustainability of natural resources will help to ensure the availability of high quality supplies for M&S and future generations
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Climate Change
16 of 29
Carbon neutral by 2015 and improve energy efficiency by 35%
Waste
14 of 18
Waste sent to landfill is down by 33% and Non Glass packaging is down by 36% for general merchandize products 72% of its wood are either recycled or from sources that protect forests & communities while 62% of fish are from sustainable sources
Create more partnerships to help customers reuse or recycle the products and packaging. Achieve zero landfill rates from stores and suppliers Use natural resources as efficiently as possible in operations and extend existing sustainable sourcing programmes to cover farmed fish, cocoa, beef, leather and coffee Extend efforts to make sure that people working in the supply chain and living in local communities benefit. This includes working with suppliers to pay higher wages in clothing factories in developing countries. Extend health and nutrition benefits across more of the products while also encouraging customers and employees to make healthier diet choices and lead active lifestyles.
Natural Resources
7 of 20
Fair Partner
14 of 21
Invested 1.9% of pre-tax profit in community projects and set up 10 Ethical Model Factories
Fair partnerships with employees, communities and suppliers are an investment in future success of the company
Health & wellbeing
11 of 12
38% are healthy on the entire portfolio of food products while 91% meet salt reduction targets
Promoting healthier diets and lifestyles benefits everyone and as a retailer, creates markets for new products and services.
PUMA PUMA, is a major German multinational company producing high-end athletic shoes, fashion accessories, lifestyle footwear and other sportswear. Historically, the parent company was set up in 1924 but in 1948 the parent company was split into two separate entities Adidas and Puma. Puma is known globally for its football shoes and has sponsored many football legends. Puma has initiated its own sustainable practices under the name of PUMA.Safe which works closely with PUMA.Peace and PUMA.Creative PUMA.Safe is the program which deals with implementation of projects at various key junctures in the supply chain. These projects are typically aimed at reducing wastage of resources, reduction in emission, energy saving, non violation of human rights, fair wage practices etc. The major targets which PUMA has set for it to achieve by 2015 are: 25% reduction of CO2, energy, water and waste in PUMA offices, stores, warehouses and direct supplier factories.
Paperless office policy aiming for a 75% reduction in paper usage, with an offsetting initiative compensating for the remaining paper usage, for example tree planting initiatives. 25% CO2 reduction through more efficient product transport solutions by our logistics partners. Begin collaborations with strategic suppliers and logistics service providers to offset their own footprints in the long-term.
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Introduction of the PUMA Sustainability-Index (S-Index) standard that serves as a benchmark for more sustainable products, and communicates the products sustainable features to consumers. 50% of PUMAs international collections will be manufactured according to the PUMA S-Index standard by 2015, using more sustainable materials such as organic cotton, cotton made in Africa and recycled polyester. This includes applying best practice production processes. PUMA has developed PUMA Sustainability scorecard, built on PUMAs Sustainability Index or S-Index. The scorecard measures the target achievement rate on three prime areas
Exhibit 8
Component Company Factories Product
Focus Area Reduce - CO2 Emission , Energy & Water consumption, Waste, Paperless Office Social development, CO2, Energy & Water Consumption Reduction, Waste Reduction Logistics related CO2 emission, Sustainable Packaging, Sustainable Products & Materials, Design to support waste reduction
Few of PUMAs projects that need highlighting in this report to show the importance and impact on sustainable practices have been briefly mentioned below. Each of these projects are related to sustainable sourcing of raw materials, reduction of contaminants during farming, community development through skill transfer and organic farming, reduction in production packaging etc. Organic Cotton: Conventional cotton cultivation has numerous problems, mainly the use of pesticides as well as requiring greater water consumption. By expanding the range of organic cotton products in its collections, PUMA helps to increase demand for cotton from non-genetically modified plants grown without the use of any synthetic agricultural chemicals such as fertilizers and pesticides. In 2010, PUMA used larger volumes of organic cotton in product lines such as the Play For Life and Jamaica Jam collection. Organic cotton is already successfully being cultivated in many countries including Turkey, India and China. Cotton made in Africa: Cotton made in Africa is an initiative that produces cotton without the use of artificial irrigation and uses rainfall to irrigate their produce. The Cotton made in Africa project is an initiative of the Aid by Trade Foundation who mentor and offer advice to ensure an efficient management of its farms. Techniques such as mulching that keep the soil covered and prevent high-levels of evaporation, as well as balanced fertilization, are crucial. Farmers participating in the Cotton made in Africa project are taught the relevant skills to make these techniques effective in Farmer Field Schools. Since spring 2008, to help improve the living conditions of African cotton farmers and their families, PUMA has widely supported the Aid by Trade Foundations Cotton made in Africa initiative. In 2009-2010, PUMA produced approximately 1.7 million pieces made using Cotton made in Africa, translating to 2.4% of PUMAs overall collection. Clever Little Bag: PUMA, again, set new standards within the Sport lifestyle retail industry when it partnered with designer Yves Bhar, of San Francisco based fuseproject, to rethink the way the millions of pairs of shoes that it sells each year, are packaged. Less packaging means fewer raw materials, reduced use of water and energy in production, and less weight to ship and ultimately less to be disposed of. The Clever Little Bag to replace the cardboard shoebox with a re-usable shoe bag, that protects each pair of shoes from damagefrom the point it leaves the factory until the consumer takes it homethus generating savings on production due to less material used, reducing weight during transport and eliminating the need for extra plastic carrier bags in shops. Through the introduction of the Clever Little Bag concept, PUMA aims to reduce the paper used for shoeboxes by 65% and carbon emissions by 10,000 tons per year.
Apart from the above projects, PUMA has implemented a very strong sense of reducing wastage of resources and energy. PUMA closely works and tracks the emissions caused by PUMA and its suppliers, emissions deriving from transporting PUMA goods, per employee energy consumption, per employee water consumption, per employee waste produced etc. All the policies and a strong individual sense of combating these issues have provided very positive results to the PUMA.Safe initiative and plan.
Exhibit 9
Results from PUMAs Environmental Profit and Loss

Non-Financial Performance 110.1 108.8 131.4 5,319.8 476 72,064.5 717.5 77,493.1 Economic Value (Euro Mn) 7.2 0.1 8.6 0.8 31.2 46.5 47.0 47.4 94.4 Economic Value (%) 7.6% 0.1% 9.1% 0.8% 33.1% 49.3% 49.8% 50.2% 100%
2010 PUMA Operations: Greenhouse Gases (ktCO2e) Water (000 m3) Tier 1 suppliers Greenhouse Gases (ktCO2e) Water (000 m3) Tier 2-4 suppliers Greenhouse Gases (ktCO2e) Water (000 m3) Total Greenhouse Gases (ktCO2e) Water (000 m3) Total Economic Value
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Gap Inc. Gap is an American clothing and accessories retailer based in San Francisco, California having five primary brands: the namesake Gap banner, Banana Republic, Old Navy, Piperlime and Athleta. Gap identifies its responsibility towards the society and has identified four crucial areas: supply chain, environment, employees, and community investment. Though it may, at first glance, seem that these are merely activities symbolizing social responsibility. But these thrust areas are where building a present action plan will bring in long term future benefits. In a crux, these thrust areas will carry the burden of developing a sustainable business. The most tangible and measurable return is where savings are encouraged: areas of waste reduction, recycling, reusing, shifting to sustainable raw materials and design, optimum resource usage etc. Any kind of initiative which reduces usage of cardboard for packaging or reusing hangers will eventually lead to present savings and future returns. At Gap the prime focus through their ECO program is on: Energy and Water Conservation: Through stringent measures, Gap has reduced Green House Gases emissions in its US operations that include stores, distribution centers and HQ buildings by 20 per cent per square foot. In distribution centers, Gap has introduced energy efficient fluorescent light that essentially brought down the power bill by 40% With suppliers, Gap has made it mandatory that water used for denim washing is treated properly before discharging Cotton and Sustainable Design: Gap encourages its design team to design products that have been developed using recycled fabric and clothing, ensure that denims which are being produced use minimum chemical ingredients, improving product packaging to save paper and subsequent less waste being generated, design sustainable stores which use energy efficient lighting, reduce wastage of natural resources, generates less waste and recycles more
Output and Waste Reduction: Reduce solid waste and ensure efficient recycling Reduce corrugate cardboard usage Gap has migrated to containers at distribution centers that are space efficient and it is estimated that these new containers will save approximately US$ 20 million every year
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Lets have a brief look at programs that are being implemented by Gap to build sustainable business and more importantly a sustainable industry: Sustainable Apparel Coalition: The coalition comprises of retailers, clothing manufacturers, environmental groups and academics and has three main goals: To develop an industry-wide index to assess the social and environmental impact of apparel and footwear. The index is intended to look at the full spectrum of players and processes involved in creating a piece of clothing, from cotton growers and fabric mills to shippers, packagers and retailers. It will provide a score on everything from the dyeing and production of fabric to water and land use, energy efficiency, greenhouse gases and labor practices. Spotlight promising technological innovations that would promote greater sustainability. To identify new opportunities for both social and environmental improvements in the supply chain. Improving Packaging: The movement of the final product from the factory floor to the shop floor has risk of being damaged and thus extra packaging is ensured to minimize the amount of damage. Gap is constantly reviewing the mode of packaging the various product lines with a view to bring down the amount of packaging, ultimately to reduce the cost of packaging. The babyGap sleepwear line is one example: While they need to package these products for efficient in-store display, an employee pointed out that theres no need to package them the same way for customers who view and purchase product online. As a result of this observation, Gap cut out the plastic packaging from babyGap sleepwear line when its sold online, saving the company more than $100,000 each year and significantly decreasing the amount of packaging that eventually finds its way to landfill. While this is by no means an enormous step on its own, it represents the type of thinking that will add up to significant improvements in waste reduction. Gaps Product RED: As a founding partner of (RED), Gap made a multi-year commitment to sell (RED) clothes and contribute 50 percent of the profits to the Global Funds efforts to fight AIDS in Africa. Since its launch, (RED) has raised $130 million for the Global Fund to invest in AIDS programs in four countries: Rwanda, Swaziland, Ghana and Lesotho.
H&M H&M is one of the worlds top retailers selling clothes and cosmetics in around 2,200 stores around the world. H&M offers fashion for women, men, teenagers and children. Like most other retailers, H&M does not own any factories but instead buys its products from about 700 independent suppliers primarily in Asia and Europe. Being amongst the worlds top retailers and associated with a large base of suppliers that are mostly present in developing economies, H&M takes its drive for sustainable business practices very seriously. H&M Conscious Action: At H&M sustainability is seen as an integral part of what it means to be a business and its look at the entire issue of sustainability through three inter connected aspects: People, Planet & Profit. H&M has developed seven clear commitments that are their guiding principles that encompass all the stakeholders in its business. The seven commitments along with a brief highlight to bring out the core essence of each commitment are mentioned below: Provide fashion for conscious customers: In 2010, H&M for the first time offered a full fashion collection made from organic or recycled materials such as organic cotton, organic linen, recycled polyester and Tencel. Investing in such materials and demonstrating how they can be used to make fashionable garments that meets customers demands was an important objective. Recycled polyester used for this collection was made from PET bottles. This collection represented about 5 percent of total garments produced from environmentally adapted materials Choose and reward responsible partners -- More than 300,000 garment workers in Bangladesh have been educated on their rights -- 1938 active audits across 1700 supplier factories -- Average of 3.5 sustainable activities per active factory Be ethical -- Equity amongst male and female employees and equal representation on the board of H&M -- Responsible marketing H&M does very simple advertisements that convey the style factor and price very clearly Be climate smart -- 750,000 kWh of solar energy generation to be expected by photovoltaic solar panels in their distribution centers in Germany & Belgium -- Energy use decreased by 8% from 2007 to 2010 in all H&M stores -- Target to reduce Green House Gas emission by 5% relative to sales Y-o-Y till 2012 Reduce, Reuse, Recycle -- 1600 tonnes of recycled materials used to create new garments -- Since 2010 all consumer bags were being made of recycled materials -- 85% of hangars that were not reused in stores were recycled -- Product packaging initiatives like using recycled materials, using single materials to increase recyclability of the packing materials, choosing standard packaging shapes to minimize waste in production Use natural resources responsibly -- 100% of all the paper used in mail order catalogues is Flower eco-labeled -- 75% of non-drinking water in H&Ms biggest distribution centre comes from rainwater -- 50 million liters of waters saved in denim production -- 100% of cotton to be procured from sustainable sources by 2020 Strengthen communities -- Focus on employment and education among women and youth, water and innovation of sustainable materials
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-- US$ 6.5 million generated through 2008-10 in Fashion Against Aids Collection -- 631,295 garments donated to charity Levi Strauss & Co. Levi Strauss & Co. is a privately held American clothing company known worldwide for its Levis brand of denim jeans. Levi Strauss & Co has a long understanding and commitment towards sustainability. The companys product not only influences what consumers wear but also influences both internal and external stakeholders on how to efficiently use natural resources keeping the needs of the planet first. Levi Strauss & Co has adopted an innovative approach to understand how its products can be made more sustainable. The company studies the product life cycle, right from cotton production to the point the denim is discarded and interestingly, as per their belief, most water is used during cotton production and when the consumer purchases the denim. Sustainable Cotton through Better Cotton: Levi Strauss & Co, like many other leading brands and retailers, is a member of Better Cotton. As it has been mentioned before, Better Cotton is a way of cultivating cotton that uses less of water and other chemical additives. As per Levi Strauss the usage of pesticides has gown down by 33% while net profit for farmers has zoomed by 69% during 2009. Levis Water<LessTM Jeans: An average pair of denim uses about 42 liters of water during the production process. The designers at Levi Strauss & Co took this as a challenge and changed how denims are produced. Through strict process modification the designers have been able to reduce their water consumption by 28% and for some lines of product almost as 96%. Though anyone can produce a pair of denim with less water usage, but Levi Strauss & Co has managed to design denims that use less water without compromising on the fashion quotient. Levi Strauss commitment towards a greener planet and to limit dependence of natural resources is highlighted through their setting up of ambitious targets and striving to achieve the same. Distribution: Reduced greenhouse gas emissions by 50-60% in 2008 through inter modal transportation model. In 2009, 700 metric tons of carbon emissions were reduced. Also Distribution Centers are being overhauled to be more energy and water efficient Retail: Introduced energy efficient lightings and cooling, resulting in energy consumption reduction to the tune of 20 -40 % Chemicals: Minimizing the environmental impact from chemicals used in all stages of their product lifecycle Materials: Committed to becoming a zero-waste company offering consumers more sustainable products Adidas Group For over 80 years the Adidas Group has been part of the world of sports delivering state-of-the-art sports footwear, apparel and accessories. Products from the Adidas Group are available in virtually every country of the world. Adidas understands that a sustainable business is about striking the right balance between the expectations of the various stakeholders. The response to the challenges, which is a very integral part of making any business sustainable, is rooted in their business values. Adidas has defined for themselves clear Sustainability Principles which covers the following five areas: Embedding environmental sustainability across the business: Adidas has identified the entire supply chain right from the cultivation of cotton till the product is being disposed off as waste. This step is very crucial to identify where intervention is possible so as to reduce the impact on the environment - right from reducing the content used in packaging, chemicals used in processing, tanneries being certified by autonomous institutes to emission reduction through optimized transportation. All these efforts are
27
aimed at reducing the carbon footprint of Adidas. The eight steps of Innovation, Design, Marketing, Development, Sourcing, Own Operations and Sales have been given ambitious reduction targets that will help Adidas to reduce environmental footprint. Achieving social compliance in supply chain: Adidas works with around 1200 independent factories from around the world. Adidas supply chain is multi-layered with many different types of business partners, from whom products are directly or indirectly sourced. With an overall aim to benefit the employees working in the supplier factories and to develop factories that have the best operations in place, Adidas has developed comprehensive guidelines for Health and Safety, Guidelines on Employment Standards, Environmental Guidelines, Sustainable Compliance and Termination Guidelines. Adidas carries out frequent audits of the factories to assess the performance and provide guidance, wherever required, to maintain performance standards. Extending stakeholder engagement: Adidas does not operate in isolation and seeks feedback from internal and external stakeholders by engaging with them. The stakeholders are not limited to suppliers only but also people in the company as well as external including governments, civil society, investors, analysts, customers, and industry alliances. Various parts of the Groups sustainability program have been developed in close consultation with stakeholders: examples are its corporate reporting and disclosure practices, review and verification of labor issues in supplier factories or addressing systemic issues to governmental bodies. Creating the best and most productive workplace in the industry: Adidas promotes a performance culture based on strong leadership and therefore links employee compensation to group and individual achievements Making a difference in the communities where they operate: Brand programmes are managed under the Adi Dassler Fund, the Reebok Corporate Responsibility Programme and the TaylorMade-adidas Golf Charity Programme. Nike Inc. Nike Inc. is one of the largest sellers of athletic footwear and apparel in the world. Nike sells products in more than 180 countries around the globe. To be the leading athletic brand in the world today and into the future Nike realizes it has to deliver innovative new products and experiences in a more sustainable way. For Nike, this is not about trading one business challenge for another. Its about recognizing that sustainability is a route to future profitability. Nike sees the world moving to a low carbon footprint era which could potentially impact labor forces, working conditions, communities, development, youth, sport, supply chain, products and more. Making the Nike products currently relies on the availability of natural resources from raw materials to water and to energy. The cost of competition for resources will increase as these resources become increasingly scarce and thus Nike intends to develop sustainable strategies, relying as less as possible on the scarce natural resources. The Future for Nike: Closed-Loop Business Model: Nike thinks the future will demand closed-loop business models that move closer to achieving zero waste by completely reusing, recycling or composting all materials. The vision of a closed-loop business model includes up-front design of products that can be manufactured using materials reclaimed throughout the manufacturing process and at the end of a products life. For this Nike has formed the Sustainable Business and Innovation (SB&I) team comprising of around 130 individuals who work with sustainable specialists selected from other parts of the organization such as retail, logistics and information technology. Sustainability, after all, has to be weaved through all the functions of an organization. The idea of SB&I is clear: to help Nike and its consumers thrive in a sustainable economy where people, profit and planet are in balance. This translates into developing a sustainable model of manufacturing, sustainable design to influence the supply chain to create less waste, promote equitable and empower workers in contract factories.
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Sustainable Products and Business Models: Nike operates by creating index for various parameters that helps in assessing the road to building sustainable products and operating models. Nike identifies four key parameters in measuring sustainability of products: Design: Adapt designs of apparel, footwear, equipment that uses less storage space, packaging material and, more importantly, are sustainable Waste: Reduce wastage of resources like energy, water and less dependence on chemicals
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Volatile Organic Compounds: Reduce the contents of petroleum based products so as to make the product less harmful during production, also when recycled or disposed by the consumer Environmentally Preferred Materials: Use more of organic cotton, recycled polyester and less dependence on traditional cotton and polyester material Patagonia Patagonia is a $340 million privately owned company based in Ventura, California engaged in designing, developing and marketing of clothing and gear for a wide range of outdoor sports, travel and everyday wear, and are best known for their innovative designs, quality products and environmental conscience. They have been adopting sustainable practices at the core of their business, exemplified by the use of environmentally sensitive materials (organic cotton, recycled and recyclable polyester, and hemp among them) and their sponsoring and participation in a host of environmental initiatives that range from promoting wildlife corridors to combating genetic engineering. As a business practice they work with factories that share their values of integrity and environmentalism. They realized that it doesnt require a lot of extra effort to achieve this. They have integrated corporate responsibility into their sourcing strategy: when considering new factories they take a fourfold vetting approach one that includes social and environmental practices equally with quality standards and business requirements like financial stability, adequate capacity and fair pricing. They train their staff in social responsibility issues encompassing factory workplace issues, to help them understand how their own actions can unwittingly cause factory workers to suffer longer workweeks, hurry-up pressure and greater stress. In an effort to understand the social and environmental impacts of their supply chain, Patagonia has launched the Footprint Chronicles, in which they trace the development and environmental and social impact of products from design through fiber creation to construction to shipment to their warehouse. The sustainable business practices presented in this section is a representative on and not exhaustive. It provides us with insights on the various practices being successfully adopted by companies worldwide and the associated benefits getting accrued in their drive towards sustainability. The idea should be to carry forward these insights and adopt them into the core of business strategy for sustained top line and bottom line.
Chapter 7
Co-Existence of Sustainability and Profitability

Role of Stakeholders Sustainability is pervasive. Developing sustainable strategies is not something that is planned by the upper echelons of the management or the board members by internal brainstorming in the board room. Drawing sustainable strategies is a collective effort, guided by the strategists and executed by the implementers. Implementers are people who have worked at the grass root level and have expertise to continuously provide feedback on the strategies communicated by the senior management. Implementation of the strategies is not possible in silos, but when all the business centers work together to implement it and make it a success. The stakeholders of any organization who are primarily responsible for driving sustainability are its suppliers and customers. In the flat world, where production is being outsourced to rationalize costs and achieve better profitability, the west is looking towards the east. Global retailers and apparel brands are sourcing majority of their apparel requirements from Asian countries like India, China, Bangladesh, Pakistan, Vietnam, Cambodia etc while very few companies have retained production in their home countries. The retailers and brands should consider these outsourced factories as their own factories and be responsible for every process internal to the factories. With the world getting more conscious about the impact of their actions on the environment, any kind of detrimental activity taking place at the factory not only tarnishes the global image but also the local sentiments. There are many things which can go out of control starting from employing underage children, lower wages, and unhygienic factory conditions, denial of basic worker rights to dumping chemical waste into nearby land or water. Thus it is very important for the global brands to work with the suppliers to proactively adhere to environmental and human norms. This is possible through clear communication of plans, targets and charters to the factories and carrying out frequent audit checks. Indeed the process is long and complicated, but in the long term the results of such strict policies will be reaped by all the stakeholders. The international companies that have been cited in the report understand the role of stakeholders in successful achievement of sustainability targets. The targets whether they are reducing carbon emissions, using less chemicals in production, sourcing organic cotton, usage of less packaging material, reducing consumption of natural resources can be achieved if the suppliers work closely with the brands. Nike understands the importance of the suppliers meeting sustainable targets as without them the overall target for Nike is unmet. As part of its sustainable strategies Nike has set itself very ambitious targets concerning footwear manufacturing, inbound and outbound logistics, worker welfare etc. Targets such as Increase use of Environmentally Preferred Material, Reduce Nike-caused excessive overtime incidents in contract factories or Human Resource Management program implemented in all focus contract factories communicate clearly the holistic idea of sustainability. With an increasing concern for the welfare of employees and working conditions, Levis and H&M banned usage of sandblasting mechanism during the production process of denims. The other important stakeholder for the success of sustainability for an organization is its customers. The role of the organization does not end when the product is purchased by the consumer. The customers must be made aware of the environmental impact of purchasing the product. Many retailers have adopted the practice of mentioning whether the products sold are Green certified. Though this may help the customer
30
to realize it as a Green product but is the customer fully aware as how it should be treated during the end phase of the product life cycle also needs to be ensure. The retailers or brands must encourage the three Rs Reduce, Reuse and Recycle through its marketing communication. Whatever be the targets, successful achievement rests solely on the stakeholders who are involved in the value chain. As stated previously, the financial results of sustainability will be tangible only when the targets have been achieved and such practices transcend the path of habit to way of doing business and is a long term effort. Reputation Our present world is always connected. It is only a matter of few minutes when a person in India becomes aware of any major incident taking place in USA. This is the power of internet and media. The impact of negative media is very difficult to control and often has far reaching impact, often immeasurable. What effect did the presence of pesticides in carbonated drinks have on its consumers? It is very hard to quantify but the bloating of the companys marketing budget was certainly measurable. Thus it becomes very important for the company not to provide any opportunity for creating bad news, especially with various environmental and human rights related organizations working actively. On the flipside, the opportunities of building brand reputation are innumerable. The number of instances when the retailer is leveraging the Green factor to augment sales is definitely increasing. The retailers understand that the world is moving towards products that are environmentally safe because the consumer psyche is changing. Consumers cannot or it is impossible to cut down on the number of miles travelled per day or number of units of energy consumed with each hour of air conditioning, switch to such products so that their overall contribution to polluting the environment is reduced. Stated simply, consumers buy Green products to offset their carbon footprint. Retailers make this a very important factor while designing or launching their next line of products as Greenand such products can be offered at a premium. Though just attaching a label which says This product is Green is not the end of it. Retailers must invest and develop practices that truly make the product Green in every sense. It is true that the number of environmentally conscious customers make a very small percentage of total customers but it makes for a strong business case for retailers to invest and develop in sustainable practices. Early starters occupy space in the mind of the consumer as whenever the consumer thinks of going Green, the first mover always has the advantage.
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It can be very simply stated that building brand reputation through sustainable initiatives will result in increased profitability for the company but carrying out such practices takes years of continuous effort. As per a 2002 PwC Sustainability Survey, 90% of respondents chose Enhanced Reputation for adopting sustainable business practices. The practices mentioned are about designing products and processes that reduces the strain on environment and natural resources. The ways through which various international retailers and brands are increasing brand reputation and enhancing positive image in the mind of the consumer are very innovative. e.g. PUMA has designed a bag that replaces cardboard packaging for its shoes but instead a new bag has been designed which holds the shoe when it leaves the factory till it is purchased by the consumer. The impact of such designs is very hard to measure in absolute numbers, but it will be very hard to argue against the positive impact on the mind of the consumer. Retailers also give a certain part of their profits back to the community by linking products to social causes. e.g. through M&S and Oxfam Clothes Exchange in 2009-10, approximately 500,000 customers helped in raising 700,000 by returning 1.8 million garments. Oxfam is an organization of 15 global companies that is continuously working to improve the lives of poor people through the intervention of the socially well off. In this example, the stupendous support of its customers in such exchanges not only raises the brand reputation in the mind of the consumer but also contributes to the top line of the company, directly or indirectly. On similar lines H&M, the Swedish retailer, raised close to USD 2,500,000 of donations by selling its apparel linked to causes like Haiti earthquake. Few brands use independent rating agencies to assess the impact of the products on environment during production. Levis uses GoodGuide ratings to help the consumer understand how the product stacks up against its competition when it comes to producing products that are environmentally safe. Brands and retailers are consciously sourcing cotton that has been cultivated organically and the companies who are becoming a part of Better Cotton are on the rise. In 2004, 2% of organic cotton fiber was used by Nike but the usage of organic cotton was increased to 14% in FY09. Sustainability is an indispensable dimension of the brand and educating the consumers about the back end practices which makes the products sustainable builds the brand equity. Such reinforced brand equity creates awareness about the product, enhances the image of the company resulting in customer loyalty and increased market share.
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Chapter 8
Way Forward
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Sustainability is no longer an option for businesses, but an environmental and business necessity. The path to sustainability begins with a green supply chain. Apart from just the manufacturers/retailers, even the buyers must aim to take corrective action in order to help achieve sustainability in the supply chain. Fierce global competition in the garment industry translates into poor working conditions for many laborers in developing nations. Often due to unorganized buying practices or low buying prices manufacturers are forced to put over-time for its workers and still pay low wages. By organizing and taking steps to improve forecasting and buying cycles, negative impact can be reduced in the supply chain.
Exhibit 10
Better Purchasing Practices
Better Efficiency
Long term partnership/ collaborative project
Better Business
Better Wages
Overall, starting from farmers to end consumers in order to have a sustainable supply chain, a complete life cycle approach to sustainability must be implemented.
Exhibit 11
A Life Cycle Approach to Sustainability
Reduce Environmental Impacts Energy Efficiency Costs Savings

Sustainable Material %Recycled
Manufacturing
Optimization Emissions Costs Savings
Lower Logistics
Content %Organic Content Restricted Chemicals
Raw Material
Transport
Recycling &
Re -Use
Biodegradable Compostable Waste
End of Life
Use
Eco
Design
Product Innovation
Reduction
Further companies need to adapt their design, production, distribution, and promotion strategies to continually provide socially and environmentally responsible products and services in a profitable way.
Exhibit 12
Capacity for innovation
Managerial orientation toward sustainability
Re-conceptualization of supply chain
Focus on supply base continuity
Firms must be innovative and Economic goals and employee Skills and knowledge of Supplier continuity is valued non-traditional supply chain and encouraged through dethink beyond lean techniques incentives are aligned with members such as NGOs, commoditization, transparency, and total quality management environmental & social goals competitors, regulators, and and reducing supplier risks Focus must be on closed loop Sustainability is part of day-to community members are systems and reverse logistics day conversations and decision Encouragement of supplier leveraged certification and inclusion of making across the organization social and environmental criteria Investment is made in human in supplier selection capital Traceability of products throughout the supply chain is key
34
Future Trends towards Sustainability By now we would have realised how sustainability is taking the business world by storm. It seems that every day a new company is getting on board in an incredible range of different ways. While some are still only approaching it on a very superficial level, plenty of others are really taking sustainability seriously, exploring what it does and can mean to their business, their suppliers, their employees, their customers and the role that they can plan in strengthening society and the environment while also running an increasingly successful business. Some noteworthy trends that could be seen in the near future are: Carbon-centric to water-centric Globally buyers, consumers, suppliers have become obsessed with carbon footprints, but now the term water footprint has entered the corporate vocabulary. About 2.6 billion people have no access to clean water (FairHome 2008), a problem not isolated to developing countries. This has pushed water issues up the environmental agenda. Businesses will no longer be able to ignore their water use, management and efficiency. Energy access to energy efficiency As most organizations aim to reduce and effectively use energy and its resources, energy efficiency is set to become even bigger business in the coming years. Printed papers to digital development Digital marketing has provided new tools for brands to reach their audiences; the development of online videos, social networks, podcasts and games, highlights that the digital marketing space will continue to expand. Brands will increasingly use online spaces to communicate with consumers. Increased International campaigns International campaigns will continue to drive improvement in working conditions for employees in developing countries. Increased pressure from consumers and legislation Pressure from consumers and legislation is likely to drive increasing demands for environmentally sensitive production. In the short term this is likely to focus on the use of chemicals but may extend to include re-use of materials and substitution of alternative materials.
More open environment to explore sustainability Companies are increasingly working together; with competitors, across industries, with NGOs and with government, to get it right when it comes to sustainability. Combine this with a trend towards increased transparency in reporting means they are disclosing increasing amounts of information about the impacts that they have on the planet, both positive and negative. As awareness levels about sustainability go up, companies are being encouraged to be honest about the challenges they face, and to work together on finding the solutions. Increased innovation and creativity at various supply chain steps Sustainability is all about innovation. As individuals and companies become more experienced with what sustainability means and how to approach it, organizations are being very innovative, creative, and experimental. Packaging is the most evident area where organizations are and would show innovation.e.g. Pumas Clever Little Bag: it takes 65% less paper to make and reduces water, energy, and diesel consumption during manufacturing by over 60% a syear. It also reduces carbon emissions by 10,000 tons a year. Increased portability from BricknMortar offerings to ClicknMortar offerings (e-tail) is going to be one of the biggest trends evolving and establishing globally With the establishment of sustainability at the core of business, the world can be rest assured that it would be a better place to live in and the companies can be rest assured that they would pioneer the cause without compromising on their top line and bottom line. A win-win situation for one and all!
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Citations
Arvind CSR Overview, Arvind corporate website, http://www.arvindmills.com/csr/overview.htm, accessed 27 August 2011 Arvind Organic Cotton & BCI, Arvind corporate website, http://www.arvindmills.com/csr/ organiccottonprojectbci.htm, accessed 27 August 2011 Alok Sustainable Growth, Alok corporate website, http://www.alokind.com/sustainable_ growth.html, accessed 27 August 2011 Trident Initiative, Trident corporate website, http://www.tridentindia.com/About_Initiative.htm, accessed 27 August 2011 MORALFIBRE sustainability agenda, MORALFIBRE website, http://www.moralfibrefabrics.com/sustainabilityagenda.asp, accessed 27 August 2011 M&S: How we do business report 2010, M&S corporate website, http://corporate. m a r k s a n d s p e n c e r. c o m / d o c u m e n t s / publications/2010/how_we_do_business_ report_2010, accessed 28 August 2011 PUMA Sustainability Report 2010, PUMA corporate website, http://safe.puma.com/us/ en/wp-content/uploads/GB-e-2010-sp.pdf, accessed 28 August 2011 J.C. Penney, jcp cares report 2010, J.C. Penney corporate website, http://www.jcpenney. net/jcpcares/2010/2010v2/jcp%20cares%20 2010%20summary%20report, accessed 29 August 2011 GAP Sustainability report 2009-10, GAP Inc corporate website, http://www.gapinc.com/ content/dam/csr/documents/SR%20Full%20 Report.pdf, accessed 30 August 2011 Sustainability Report 2010 - H&M, H&M corporate website, http://www.hm.com/filearea/ corporate/fileobjects/pdf/en/CSR_REPORT2010_ PDF_1302846254219.pdf, accessed 31 August 2011 Levi Strauss & Co Annual Report 2010, Levi Strauss & Co corporate website, http://levistrauss. com/sites/default/files/librarydocument/2011/4/ levistrauss-annualreport-2010.pdf, accessed 31 August 2011 Sustainability Report 2010 - Adidas, Adidas corporate website, http://www.adidas-group.com/ en/SER2010/, accessed 1 September 2011 Nike Corporate Responsibility Report, Nike Corporate Report, http://www.nikebiz.com/ crreport/, accessed 1 September 2011 Waste Couture: Environmental Impact of the Clothing Industry, http://ehp03.niehs.nih.gov/ article/info%3Adoi%2F10.1289%2Fehp.115-a449, Claudio L 2007, accessed 11 September 2011 The deadly chemicals in cotton, Environmental justice foundation, http://www.ejfoundation. org/pdf/the_deadly_chemicals_in_cotton.pdf, accessed 11 September 2011 Well Dressed? The present and future sustainability of clothing and textiles in the United Kingdom, Institute for Manufacturing, University of Cambridge http://www.ifm.eng.cam.ac.uk/ sustainability/projects/mass/uk_textiles.pdf, accessed 22 September 2011 International Trade Statistics 2010 World Trade Organization; http://www.wto.org/english/ res_e/statis_e/its2010_e/section2_e/its10_ highlights2_e.pdf, accessed 22 September 2011 Organic cotton: A route to eco-friendly textiles, http://www.indiantextilejournal.com/articles/ FAdetails.asp?id=644, November 2007, accessed 22 September 2011 Steps towards Sustainability in Fashion: Snapshot Bangladesh, http://www.sustainable-fashion. com/files/2009/09/Steps-towards-Sustainabilityin-Fashion-Snapshot-Bangladesh4.pdf, March 2011 Tactics for Change , http://www. sustainablefashion.com/files//2009/09/CSF%20 Volume%203_Tactics%20for%20Change.pdf, June2009 Fashion that is Environmentally (and Financially) Sustainable, Green Energy News, 2011, http:// www.renewable-energy-news.info/affordableeco-friendly-clothing/ Is the urban Indian consumer ready for clothing with eco-labels?, http://www.slideshare.net/ Pradipta_India/is-the-urban-indian-consumerready-for-clothing-with-ecolabels
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Sustainability: A consumer perspective, 2008, http://agecon.ucdavis.edu/extension/ presentations/files/cook/sustainability-_a_ consumer_perspective.pdf Twenty Trends for Sustainability in 200910, Environmental Leader, http://www. environmentalleader.com/2009/09/24/twentytrends-for-sustainability-in-2009-10/ Ethical Fashion, Moral Fibre, http://www. moralfibre-fabrics.com/ourmission.asp International Trade Statistics 2010 World Trade Organization; http://www.wto.org/english/ res_e/statis_e/its2010_e/section2_e/its10_ highlights2_e.pdf The Textile Exchange, http://www.textileexchange. org/company/alok-industries-ltd, accessed 22 September 2011 Company website, Patagonia, http://www. patagonia.com, accessed 22 September 2011 World weather post, 2010, http://www. worldweatherpost.com/2010/03/22/globalwarming-effects-10-startling-facts-from-2009/ , accessed 22 September 2011 Human Influence Facts, http://library.thinkquest. org/11353/facts.htm, http://facts.randomhistory. com/2009/01/29_global-warming.html, accessed 22 September 2011 Can Social Media Lead Sustainability?, http:// www.clickz.com/clickz/column/1721763/cansocial-media-lead-sustainability, , accessed 22 September 2011 The Four Es of Social Media & Sustainability, http://murninghanpost.com/2010/08/19/the-foures-of-social-media-sustainability/, accessed 22 September 2011 Social Medias Powerful Impact on the Sustainability Dialogue, http://3blmedia.com/ theCSRfeed/Social-Media%E2%80%99sPowerful- Impact-Sustainability-Dialogue, accessed 22 September 2011 IBGC, 4th Sustainability Summit: Asia 2009, http:// www.sustainabledevelopment.in/events/4thsust ainabledevelopment-2009_Presentations/Day1/ Carlos.pdf, accessed 22 September 2011
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About FICCI
Established in 1927, FICCI is the largest and oldest apex business organization in India. Its history is closely interwoven with Indias struggle for independence and its subsequent emergence as one of the most rapidly growing economies globally. With a Membership of over 500 Chambers of Commerce, Trade Associations Industry bodies, the Chamber speaks directly and indirectly for over 2, 50,000 small, medium and large business units employing around 20 million people. FICCI is the rally point for free enterprises in India. It has empowered Indian businesses, in the changing times, to shore up their competitiveness and enhance their global reach. FICCI plays a leading role in policy debates that are at the forefront of social, economic and political change. FICCI works closely with the government on policy issues, enhancing efficiency, competitiveness and expanding business opportunities for industry through a range of specialized services and global linkages. It also provides a platform for sector specific consensus building and networking. FICCIs stand on policy issues is sought out by think tanks, governments and academia. Its publications are widely read for their in-depth research and policy prescriptions. Partnerships with countries across the world carry forward our initiatives in inclusive development, which encompass health, education, livelihood, governance, skill development, etc. The Head Office is located in Delhi. It has 8 State offices and 6 International Offices. Contact Dr. Vaijayanti Pandit Senior Director - FICCI 33-B, Krishnamai, Sir Pochkhanwala Road, Worli, Mumbai 400 030 Phone: 022 2496 8000 Fax: 022 2496 6631 / 32 Email: drvpandit@ficci.com, or Mr. Pradeep Ahire, pradeep.ahire@ficci.com www.ficci.com, www.ficci-progressivemaharashtra.com
About Technopak
Indias leading management consulting firm with more than 20 years of experience in working with organizations across consumer goods and services Founded on the principle of concept to commissioning, we partner our clients to identify their maximum value opportunities, provide solutions to their key challenges and help them create a robust and high growth business models Ability to be the strategic advisors with customized solution during the ideation phase, implementation guides through start-up and a trusted advisor overall Drawing from the extensive experience of 200+ professionals, Technopak focuses on six major divisions, which are Fashion & Textile, Retail & Consumer Goods, Healthcare, Education, Food & Agriculture and Leisure & Tourism. Our key services are: Business Strategy. Assistance in developing value creating strategies based on consumer insights, competition mapping, international benchmarking and client capabilities. Start-Up Assistance. Leveraging operations and industry expertise to commission the concept on turnkey basis. Performance Enhancement. Operations, industry & management of change expertise to enhance the performance and value of client operations and businesses. Capital Advisory. Supporting business strategy and execution with comprehensive capital advisory in our industries of focus. Consumer Insights. Holistic consumer & shopper understanding applied to offer implementable business solutions. Technopak Advisors Pvt. Ltd. 4th Floor, Tower A, Building 8, DLF Cyber City, Phase II, Gurgaon 122 002 (National Capital Region of Delhi), India Tel: +91-124-454 1111, Fax: +91-124-454 1198 www.technopak.com
www.technopak.com
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Sustainability

FICCI TAG- 2011

Representative Initiatives: Sustainable Business Practices 20

Co-existence of Sustainability and Profitability 30

Way forward 33 Citations 36

Sustainability by Choice / October 2011

Sustainability by Choice / October 2011

Global Textile and Apparel Overview

Textile and Apparel Retail Consumption (US$ Bn)

Key Markets China India US

Annual Real GDP Growth (%)

14.0 10.5 9.0 9.7

6.0 Source: IMF

Sustainability by Choice / October 2011

Global Textile and Apparel Trade ($ Bn)

CAGR : 8% -14% Growth

527 316 211 2009

230 2010 (E) 2015(P) 2020(P)

Indian Textile and Apparel Industry Size

376 212 656 419 2015(E)

211 72 139 2005

368 122 246 2010

Sustainability by Choice / October 2011

Increasing Urban Population (Mn)

Rising Consuming Population (Mn)

1010 730 810 860

305 465 2020 E

312 96 2010 < 19 yrs

Per Capita Income ($)

Source: Technopak Analysis, Ministry of finance, NCAER

Sustainability by Choice / October 2011

Sustainability by Choice / October 2011

Sustainability by Choice / October 2011

Sustainability by Choice / October 2011

Sustainability by Choice / October 2011

Sustainability by Choice / October 2011

Sustainability by Choice / October 2011

Sustainability and its Pillars

Sustainability by Choice / October 2011

Sustainability by Choice / October 2011

Sustainability At The Core of Business

Sustainability by Choice / October 2011

Apparel Supply Chain Stages

Spinning, Weaving, Dyeing, Finishing

Designing, Cutting, Sewing, Embellishing

Transportation by 1 or more modes

Uses, Washes, Disposes

Reuse/Recycle, Composite, Landfill or Incinerate

Sustainability by Choice / October 2011

The Dimensions of Sustainability

Compliance Corporate Governance Risk & Crisis Management Brand Management

Talent Attraction & Retention Human Capital Development

Sustainability by Choice / October 2011

Sustainability by Choice / October 2011

Sustainability by Choice / October 2011

Sustainability by Choice / October 2011

Sustainability by Choice / October 2011

Representative Initiatives: Sustainable Business Practices

Sustainability by Choice / October 2011

Sustainability by Choice / October 2011

Commitments for 2015

Carbon neutral by 2015 and improve energy efficiency by 35%