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com/photos/ta na k w ho

2010

Exporting Textiles: March to Sustainability

Preview of the coming decade:
Textile Supply Chain Sustainability
Plans by Brands and Retailers

Getting Manufacturers to Create Business Value through

GHG (Energy), Water and Waste Conservation

REPORT EXCERPT
 R e po r t b y

T h e 1 9 9 0 s wa s a b o u t t h e m a rc h towa rd s m a n u fa c-
t u r i n g q u a l i t y a s t h e tex t i l e i n d u st r y wo r ld w i d e
ra c e d to a d o pt l e a n m a n u fa c t u r i n g a n d I S O d r i ve n
q u a l i t y p ra c t i c e s . T h e 2 0 0 0 s we re a b o u t e n s u r i n g
et h i ca l s o u rc i n g a n d l a b o u r p ra c t i c e s . T h e co m i n g
d e ca d e i s go i n g to b e a b o u t s u sta i n a b i l i t y a n d o pt i-
m a l l y u s i n g n at u ra l re s o u rc e s to ge n e rate va l u e i n
t h e tex t i l e s u p p l y c h a i n . T h i s re p o r t p rev i ews a c t i v-
i t i e s a l re a d y u n d e r way t h at a re h a r b i n ge rs o f t h i s
co m i n g m ove m e nt .

S u ppo r t e d b y

3
 Co n t e n t

02 P r e fa c E
06 C r e ati n g S u sta i n a b l e S u pp ly C h a i n s i n t h e T e x ti l e I n d u st r Y
10 I n Fo c u s : A c ti v it y S n a ps h ot o f T e x ti l e B r a n d s a n d R e ta i l e r s
18 Adidas
20 GA P, I n C
22 H&M
24 I K EA
26 L e v i S t r a u ss & Co .
28 M a r ks & S p e n c e R
30 Nik e
32 O tto
33 Carrefour
34 Wa l m a r t
37 Co n ti n e n ta l C l ot h i n G
40 B r a n d s a n d r e ta i l e r s w i t h s u p p ly - c h a i n i n i t i at i v e s i n p l a n n i n g
41 P h i l l i p s - Va n H e u s e n
42 T h e T im b e r l a n d Compa n Y
43 I n d it e x
44 G r u po Co r to f i e l
44 P r im a r k
45 J o h n L e wis Pa r t n e r s h ip
46 Li n d e x
47 Tesco
50 S ta n d a r d s a n d C e r ti f i c atio n s
51 S ta n d a r d s f o r r e po r ti n g a n d c a pt u r i n g e missio n s b y c ompa n i e s
51 I S O 14000
52 GHG P r oto c o l
53 GR I R e po r ti n g F r a m e wo r k
54 PA S 2050
55 P r o d u c t S ta n d a r d s a n d c e r ti f i c atio n s
57 G l o b a l O r g a n i c T e x t i l e S ta n d a r d ( GOTS ) C e r t i f i c at i o n
58 B l u e si g n
60 I n d u st r y I n iti ati v e s
61 B S R W o r ki n g G r o u ps
62 O u t d oo r I n d u st r y Asso c i atio n
64 M a d e-By
64 T e x CU T S
65 B e tt e r Cotto n I n iti ati v e
66 P r e d i c tio n s a n d P l a n n i n g A h e a d
68 G l oss a r y a n d R e so u r c e s
69 D ata so u r c e s f o r t h e r e po r t
69 R e so u r c e s

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 P������
“ F O O D, C L O T H I N G , S H E LT E R ”

“ROTI, KAPDA, MAKAAN”

“NOURRI, LOAGÉ, BLANCHI”

...

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For centuries, these three have defined our basic human needs
across all cultures around the globe.

Of these three, however, only textiles are both non-perishable and

easily transported. Thus, textiles have been part of a global market
since the days of the Silk Road. This market has continually evolved
over time, and just as the mills of Manchester and Leeds radically
changed the way textiles were produced and distributed over a cen-
tury ago, rapid shifts are continuing in the way textiles are produced
and supplied. Yet just as in centuries past, much of the production
is based in Asia. Today it is difficult to go shopping anywhere in the
world and not find goods made in China, India, Bangladesh, Vietnam,
Cambodia, etc.

As the textile supply chain has evolved to meet changing price and
quality demands from the global marketplace, so has the sophistica-
tion of buyers in tracking their suppliers. In the mid-1990s, buyers
added a new dimension to their requirements, and began making de-
mands regarding health, safety and labour conditions. Global manu-
facturing centres have increasingly had to respond not only to local
requirements but also to global ones.

In this report we talk about a new dimension on the cusp of being

rolled out throughout the supply chain: Environmental Sustainability.

Environmental Sustainability takes into account the use of water, en-

ergy, and natural resources, and seeks to minimize negative impacts
to the environment in the production of textile-based goods, as well
as in their use by consumers. The long term goal of such initiatives
would be complete sustainability.

Progressive brands and retailers have been exploring sustainability

initiatives since the middle half of the last decade: testing initiatives
first internally and now considering roll-out through their global sup-
ply chains. This report profiles such firms and what they are doing.

Sustainability is about doing ‘more with less’, which means finding

savings and creating business value in addition to having a positive
impact on the environment. For the purpose of this report, we are
looking at aspects of sustainability which concern the textile supply
chain from the raw material (natural fiber or man made fiber) to the
point that it is converted to finished product. The focus in the re-
port is primarily on the following aspects: energy efficiency, carbon
/ greenhouse gas emissions, water and chemcial footprint as well as
logistics. We have intentionally left out raw material production and
product composition since they are typically out of the control of
textile suppliers and since they are vast topics in themselves to work
upon.

Preview of the Coming Decade 3

7
 The report is written keeping a supplier perspective in mind:
1. What are some of the progressive brands and retailers doing and
planning for their supply chain?
2. How does one begin to measure sustainability and compete in
this changing market?

This report also touches upon initiatives that companies have already
started to engage in to improve raw materials in the supply chain,
such as the Better Cotton Initiative and the Organic Exchange. In ad-
dition, the report discusses other initiatives where buyers are coming
together to form a unified voice, including the Outdoor Industry As-
sociation, and working groups assembled by the Business for Social
Responsibility (BSR).

While much of the current work being done to increase the sustain-
ability of the global textile supply chain is still in its early stages or
being applied regionally, in the next 24-36 months these initiatives
will become mainstream globally.

The message for the supply chain should be clear: make no mistake,
sustainability is the next wave in the ever-changing landscape of tex-
tile manufacturing.

firms and brands (excluding store-brands) represented in this report

ADIDAS GROUP ADIDAS, REEBOK, TAYLORMADE

CARREFOUR
GAP, BANANA REPUBLIC, OLD NAVY,
GAP INC. ATHLETA
H&M
IKEA
LEVI STRAUSS & CO. LEVIS, DOCKERS, SIGNATURE
MARKS AND SPENCER
NIKE
OTTO AS FLAGSHIP AND OVER 20 GROUP
OTTO GROUP COMPANIES AND BRANDS
WALMART
CALVIN KLIEN, ARROW, IZOD, BASS, VAN
PHILIPS VAN HEUSEN HEUSEN
CORTEFIEL, PEDRO DEL HIERRO, SPRING-
GRUPO CORTEFIEL FIELD, WOMEN’SECRET
ZARA, OYSHO, KIDDY’S CLASS, BERSHKA,
INDITEX MASSIMO DUTTI
CONTINENTAL CLOTHING EARTH POSITIVE APPAREL
JOHN LEWIS PARTNERSHIP
PRIMARK
LINDEX
TESCO
TIMBERLAND COMPANY EARTHKEEPERS
4 exporting textiles: March to Sustainability
8
 CREATI NG
Sustainable Supply chains
In The Textile Industry

9
 The goods of the textile sector are such an intrinsic part of our ev-
eryday lives that we take them for granted. The clothes we wear,
cushions we sit on, bed sheets we sleep in, carpets we walk on –
textiles surround us so completely, that the only other comparable
global human needs are food and shelter.

Textile production is resource intensive

This vital global industry employs hundreds of millions of people, and
is also very resource intensive: consuming copious amounts of en-
ergy, water and other raw materials.

According to research done by the World Wildlife Federation (WWF),

an average of 8,500 litres of water is needed to grow one kilogram of
cotton, equivalent to one pair of jeans. Due to the hundreds of harm-
ful chemicals routinely used in washing and dying fabric, the textile
industry is also the #1 industrial polluter of fresh water on the planet.

In developing countries where large global production centres are

based, the textile sector forms a large part of their carbon inventory.
As a case in point, in India the textile sector consumes 10% of the
country’s energy and has an increasing carbon intensity compared to
other sectors.

Sustainability in supply chain is integral for the sector

Because of impacts such as these, over the last few years some pro-
gressive brands and retailers in North America and Europe have em-
barked on integrating sustainability into their supply chain. While
there is the societal imperative, the greater opportunity lies in sus-
tainability through more efficient resource utilization which in turn
has a positive financial impact for every part of the supply chain.

Virtually all the production and manufacturing of textiles occurs in

developing countries and hence activities being planned in the de-
veloped world are having a ripple effect in bringing about resource
conservation elsewhere.

This report profiles 18 such firms building plans for offshore sustain-
ability and how they are looking to create a competitive edge for
themselves.

Why supply chain sustainability is important to brands

and retailers
From the standpoint of many North American and European firms
that have a large textile product range, almost all the environmental
impact from manufacturing occurs offshore. Some of these compa-
nies are at the forefront of working towards sustainability for a num-
ber of reasons:

Preview of the Coming Decade 7

10
 1
C r e ati n g B u si n e ss
Va l u e
Walmart is well-known for
making its stores and build -
ings more energy ef ficient,
and now the company is us -
ing that knowledge to help
suppliers save money. The
program is called S.E.E.P.,
which stands for “Supplier
Energy Ef ficiency Project ”.
James Stanway, Senior Di -
rector of Global Energy
Ser vices at Walmart says
that the “program only
makes our suppliers more
profitable; and there is an
environmental impact ”. In
an illustrative success of
the program, Walmart sent
its engineers to a supplier
in Georgia: Dana Undies
where 71% of the utility
bill was saved.
1. Sustainability generates business value. Less is the new more
and firms are looking at identifying resource savings which
come from undertaking sustainability measures.
2. Capital market shareholders and stakeholders are reward-
ing firms with sustainability practices (and this is applicable
to sectors outside textiles too). The Dow Jones Sustainability
Index and the FTSE4Good Environmental Leaders which track
the financial performance of the leading sustainability-driven
companies worldwide have been outperforming the market.
Additionally, investor groups interested in sustainability are
uniting their voice through organizations like Ceres and Carbon
Disclosure Project.
3. Risk mitigation at a few different levels. As climate legislation
continues to develop in Europe and some of it is being planned
in US/Canada, firms are looking to get an idea of their supply-
chain risk and proactively managing it. In addition, developing
countries themselves are working on looking at legislation on
carbon and water usage. This too impacts the brands and re-
tailers depending on their sourcing regions.
4. Attracting conscious consumers with new products and car-
bon/sustainability labelling. There are consumer segments get-
ting savvy and looking to make purchase decisions based on
environmental impact.

R&D work on sustainability for some of the firms has been done in
their corporate responsibility groups and now is being entered into
the mainstream (Nike, Adidas), while in other cases firms have made
it a centerpiece of their new strategy (M&S, Walmart) and still in
some other cases internal EHS initiatives are evolving further to focus
on sustainability (PvH, IndiTex).

Nike for example began building capabilities through its Considered

range of products in 2005 and now has plans to require all its apparel
products to meet the Considered Standard by 2015. The company
sees sustainability as a route towards future profitability. It created a
dedicated group of 130 people in what is called Sustainable Business
& Innovation, and last year made a commitment to weave sustain-
ability into the mainstream.
According to the non-profit organization Organic Exchange, glob-
al retail sales of organic cotton apparel and home textile products
reached an estimated $3.2 billion in 2008, a 63 percent increase from
the $1.9 billion market in 2007. The top ten users of organic cotton
include some of the biggest names in retail including Walmart, Nike,
H&M, and the Inditex brand Zara.
The direction is clear. Many brands and retailers are moving rapidly
and inexorably toward increased sustainability standards for their
textile supply chains, all the way from raw material through to fin-
ished goods.
8 Exporting Textiles: March to Sustainability
11
 What is the implication for textile manufacturers?
carbOn label
As the market for sustainable textiles grows, many more firms will be- fOr cOnScIOuS
gin demanding sustainability from their manufacturers the same way cOnSuMerS
they demand fair prices, fast delivery and high quality. Currently, this The UK has been amongst
means having a sustainable supply chain is a competitive advantage the most progressive mar-
for textile manufacturers. kets in defining a formal
carbon footprint that can be
While most suppliers selling to the brands and retailers are engaged used by consumers.
only in cut & sew, it is only a matter of time before the entire sup-
The Carbon Label Company
ply chain is held accountable. In section titled Industry Initiatives
set up by the Carbon Trust
on Page 60, we outline initiatives that have already commenced on in 2007 provides information
the raw material sourcing front. Many brands will soon start shifting for both consumers as well
focus beyond that and downstream to manufacturing. Already firms as businesses on how to use
like Levi Strauss & Co. and Walmart have started collecting data from the Carbon Label.
the rest of the supply chain.

In order to build best-practices and quantify savings, different ap-

proaches are being taken. For instance, Marks & Spencer is creating
entire ‘eco factories’ where it is able to demonstrate energy savings
to the tune of 40% over comparable factories. Nike on the other hand
is working with a set of strategic partner factories that are part of its
MLS (Manufacturing Leadership), to establish benchmarks.

The signaling for manufacturers is quite clear: become aware and get
started on this new path!
The Carbon Footprint is de-
how does one begin to measure sustainability that makes veloped on basis of the PAS
2050 guideline. Tesco, Conti-
sense to buyers?
nental Clothing, Levi Strauss
In this report we have compared a few standards and certifications & Co. are amongst those
that have been testing some
underway that ought to be on the radar of every supplier. While most
products with the Carbon
of the standards are still in the adoption phase, the underlying data Label.
requirements for most of them are quite similar. The section titled
Standards and certifications on Page 50 summarizes a few key stan-
dards and initiatives.

Preview of the coming decade 9

12
 IN FOCUS
activity Snapshot of
Textile brands & retailers

13
 Snapshot of Firms with Supply Chain Sustaina
Brand Standards and What are they doing on reporting for
Frameworks being suppliers + initiatives relevant for
used suppliers

Adidas • ISO14001 • Using EBA to collect data from Tier I and II

• Internal EBA tool suppliers
• Better Place Project to mainstream sustainability
• Global Apparel Strategic Alliance

• GRI • CDP supply chain leadership collaboration

Carrefour • GHG Protocol • Training regional supply chain teams on logistics
• Oeko-Tex
Certification
• GRI • Clean Water Programme
Gap • GHG Protocol • Expanding the environmental footprint pro-
gramme into supply chain in 2010

H&M • GRI • Efficiency index for suppliers on wet processing

• Internal LHF tool in • Cleaner Production Programme for fabric mills
dying factories
• Initiate supply chain footprint monitoring in
2010

IKEA • Own tool: e-Wheel • Internal “IKEA Goes Renewable” is now extend-
for assessing environ- ing to suppliers to cut CO2 emissions
mental impact • Implementing new quality standards to reduce
textile weight
Otto Group Proprietary toolbox con- Climate Protection Strategy being rolled out
taining over 70 custom-
ised measures
Walmart • Sustainability Index • CDP supply chain leadership collaboration
• GOTS Certification for • Supplier Energy Efficiency Programme
organic textiles • Walmart online resources for supplier
sustainability
• Expanding supplier assessment internationally in
2010

14
ability Activities for the Textile Sector
S tat e d g o a l s a n d tim e l i n e Parameters for Supply Chain

Sustainable
Emmisions

Materials

Logistics
Carbon

Energy

Waste
As per the strategy 2008-2010, Adidas has identified
three primary sustainability areas as being core to their
business: aaaa
• Embedding environmental sustainability across the
business.
• Effectively managing business risks and social compli-
ance in the supply chain.
• Extending engagement internally and externally.
The Group has stated its commitment to reducing energy
consumption by 20% per square meter of sales area by
2020 (compared with 2004 levels). aa a
By 2010:
• Complete first phase of an environmental footprint as-
sessment across select owned and operated locations.
aaaa
• Complete the implementation of the denim clean wa-
ter programme.
• Have LEED accredited designers at Gap, BR and old
Navy Brands.
• Develop quantifiable environmental goals based on
data from the environment footprint assessment.
• Introduce new supply chain waste management
initiatives.
Since 2005, H&M has set a clear goal to reduce their car-
bon footprint 10% by 2009 compared to a 2004 baseline
year. In 2008, H&M listed Key Focus Areas for the envi-
ronment including reducing CO2 emissions, promoting
aaa
environmentally responsible cotton growing, and paying
increased attention to water impacts throughout their
product life cycle.
Reducing CO2 emissions, and also increasing their share of
renewable energy.
aaaa
aaa a
Reducing 20 million tonnes of CO2eq from its supply chain
(not only textiles) by 2015
aaaaa

15
 SnaPShOT Of fIrMS WITh SuPPly chaIn SuSTaIna
brand STandardS and WhaT are They dOIng On rePOrTIng fOr
fraMeWOrKS beIng SuPPlIerS + InITIaTIveS relevanT fOr
uSed SuPPlIerS

LEVI STRAUSS • GHG Protocol • Finalizing methodology for analyzing water foot-
print of supply chain partners, to be deployed in
• Global Effluent 2010.
Guidelines (GEG) for
wastewater • Information management system being rolled-
out to suppliers to collect and track energy use
data.
• Extending its Global Effluent Guidelines (GEG) to
second-tier suppliers of bulk fabric and sundry
items.
• Extended its Greenhouse Gas Inventory to all of
owned and operated locations worldwide
• DEFRA GHG Guide- • M&S Supplier Exchange for sharing best
lines/ PAS 2050 practices
MARKS AND SPENCER
• GRI G3 • Cotton Sourcing Strategy in 2010
• Internal programme: • Aim to have 20 million clothing garments that
Plan A use Fairtrade Cotton by the conclusion of Plan A
• Working with suppliers to improve logistics
efficiency
• Looking to promote PAS to suppliers as the
preferred method for calculating product carbon
footprints
• Material Analysis • Nike Water Programme
Tool (MAT) to evalu-
NIKE ate lifecycle impacts • Will require all its apparel to meet the Consid-
(Nike internal tool) ered Standards by 2015

• Considered Index • Integrating energy efficiency practices at sup-

(Nike Internal Tool) plier factories and bringing contracted factories
to the same relative energy performance level
• Closed loop business models
• Lean manufacturing
CONTINENTAL CLOTHING • GOTS • Carbon Reduction Label
• PAS 2050 • Continental’s EarthPositive Apparel

16
abIlITy acTIvITIeS fOr The TexTIle SecTOr
STaTed gOalS and TIMelIne ParaMeTerS fOr SuPPly chaIn

Sustainable
emmisions

Materials

logistics
carbon

energy

Waste
Current goals are mainly for Scope 1 and Scope 2 and the
company is collecting data on its supply chain to define its
goals. aaaaa

Aims to be the world’s most sustainable retailer by 2015.

aaaaa

Nike will require that 100% of its apparel meet Considered

Standards by 2015.
aaaaa

a aa

17
 P����������
and Planning ahead

18
The evidence pointing to a new wave of sustainability is quite clear.
The analogy that we will offer again is that of quality and the move-
ment towards ISO 9000 in the early 1990s. By the mid-1990s the
entire industry knew about the savings possible from quality and by
end of the 1990s one had to be ISO 9000 certified to be in business.

The investments being made in sustainability allow companies to

use fewer resources for a greater output. Manufacturers that are
early adopters on carbon efficiency, water conservation, energy
savings, etc. will not only add to their bottom line but also have an
opportunity to differentiate themselves with the buyers in the near
term.

As we synthesize the available datapoints around us, we offer the

following predictions:

• By the end of 2011 all major textile brands and retailers will
have announced initiatives that plan for working with a more
sustainable supply chain. Most of the firms are already imple-
menting measures within their own facilities and it is a matter
of months before they look to their supply chain which is where
the majority of the environmental footprint exists. We expect
the movement to move beyond the early adopters and into the
mainstream between 2012 and 2015.

• Textile brands will make supplier choices based on which suppli-

ers are able to report and demonstrate sustainability measures.

• Brands and retailers may struggle initially in mapping out their

supply chain but we expect that issue to be overcome by 2011.

• Some of the low-hanging opportunities from a retailer stand-

point will be logistics, and 2010 will see increasing activities on
this front.

• From a supply perspective, vertically integrated firms are likely

to be early adopters of sustainability reporting because they
have easy visibility throughout their supply chain. They will also
likely use this as a market advantage.

• We expect to see a buzz around non-tariff barriers being raised

by some textile exporting nations at the WTO. We are quite cer-
tain that market mechanics will soon trump these concerns. Just
like no one questions the need for quality products any longer,
no one will question the need for sustainable products.

• The buzz around organic cotton will continue to increase. But

as soon as it is public knowledge that organic cotton is going to
remain a very small percentage of the overall raw mate-
rial for the textile sector, we expect to see the emphasis shift
toward other sustainable materials. We also expect to see a
greater emphasis on reducing toxics and chemicals.

Preview of the Coming Decade 67

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 To access the complete report, please visit:
http://www.cKinetics.com/MarchToSustainability2010/

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