March to Sustainability 2011

Brandix Casual Clothing located in Sri Lanka has reduced carbon
emissions by 75% and energy use by 40% and water use by nearly
60% and is the first factory in the world to receive LEED platinum
status.

MAS Intimates Thurulie located near Colombo in Sri Lanka is green
from the very ground up, from its construction of compressed earth
bricks which require no kiln burning, to its rooftop of grass and
medicinal plants, which cut down on the amount of heat entering the
building. These ‘green’ factories use around half the energy and less
than half the water required by traditional factories

‘Impahla Clothing’, in Capetown became the first carbon-neutral
garment supplier on the African continent in 2009. Impalah's 2009
Sustainability Reports revealed a 40% increase in production, a
doubling of its permanent staff, and a 10% drop in absenteeism while
the company's bottom line improved through the cost savings gained.

A supplier in Czech Republic has started the installation of a solar
power plant to cover up to 50 percent of the factory’s electricity
need, while a Slovenian supplier has installed biomass boilers that
halved CO2 emissions compared to the old oil-fuelled system.

Report produced by
cKinetics is a sustainability accelerator providing strategy and operational consulting services.
This report has been produced by the Supply Chain consulting team at cKinetics which has a
presence in the US and in India.

Supported by
Sustainability Outlook creates online and offline interactions to drive conversations around the
topic of resource management in the business operations of the firms and their extended
value chains. With a focus on emerging markets, Sustainability Outlook brings together
business, policy, consumer advocates and other stakeholders.

For inquiries, please write to MTS2011@cKinetics.com

Report Excerpt

Preface
Pietra Rivoli in her book ‘The travels of a t-shirt in the Global Economy’ took up the task of tracing the
life of a t-shirt in order to examine the economics and politics of the apparel industry. The protagonist
of the book, a US$6 T-shirt, was used as a vehicle for telling the story about its entire life cycle right
from the cotton fields of Texas to its proud buyer and ultimately to the used market in Africa. The
theme of the book was triggered by an anti-globalization protest questioning the origins of university t-
shirts: "Who made your t-shirt? Was it a child in Vietnam, chained to a sewing machine without food or
water? Or a young girl from India earning 18 cents an hour and allowed to visit the bathroom only twice
a day?"

Modern consumers in Europe and North America are increasingly asking such questions. They are
expecting a lot out of the suppliers and retailers of the clothing and apparels that they buy. In addition
to fit and fashion aspects of their purchases,, consumers also expect that the employees involved in the
production of their clothing are provided with a higher standard of environ in their workplace. A recent
survey commissioned by M&S demonstrated that nearly a third of shoppers placed clothes back on the
rails owing to their concerns about their origins. The survey also highlighted that 78% of shoppers
wanted more information as to how the clothes had been manufactured, the extent of use of
chemicals, as well as the conditions in the factories producing the goods. This evolution in consumer
outlook is influencing brands and retailers to think about their product supply chain (including activities
outside their organizations) and ways to better manage the same.

In this report we discuss in detail about this recent phenomenon that is shaping the future of the
textile industry: Sustainability across the supply chain.

Sustainability by its definition is about doing ‘more with less’, which means finding savings and creating
business value in addition to having a positive impact on the environment. Furthermore, sustainability is
about producing goods which are safe for humans and the environment in all stages of its life cycle.

March to Sustainability 2011 looks at aspects of sustainability that concerns the textile supply chain
from raw material all the way to the point that it is converted to finished product. The focus of the
report is on the sustainability initiatives and targets set by progressive brands and retailers with regards
to materials usage, energy efficiency, GHG and carbon emissions, water and chemicals footprint,
restricted chemicals usage, labor practices and logistics and supply chain enhancements.

This year’s report builds upon the 20101 Report and reflects on the progress achieved by the various
initiatives since the last year as also provides a preview into the newer initiatives expected to be rolled
out over the next 12-24 months.

Report Excerpt

Contents
Preface i
Sustainability and the textile industry 1
Sustainability initiatives led by industry coalitions 6
Snapshot of key brands with Sustainability initiatives in the supply chain 8
Supply chain Sustainability initiatives by leading textile and apparel brands 11
adidas Group 12
C&A Group 16
Gap Inc 20
H&M: Hennes & Mauritz 23
Inditex Group 26
John Lewis Partnership 28
Levi Strauss & Company 30
Lindex 34
Mountain Equipment Co-op 36
New Balance 38
Nike Group 40
The Otto Group 44
Patagonia Group 46
Phillips-Van Heusen 48
Puma 50
Recreational Equipment Inc 54
Timberland 56
VF Corp 58
Textile supply chain Sustainability initiatives by leading retailers 61
Carrefour Group 62
IKEA Group 64
Marks & Spencer 68
Tesco Group 70
Wal-Mart Group 72
Specialized Sustainability firms 75
Continental Clothing Company 76
Specialized Sustainability brands 77
Textile specific ecolabels and certifications 80
Other ecolabels and certifications relevant to the textile and apparel sector 83
Forecast and road ahead 86
Index 88
Endnotes 89

iii

Report Excerpt

Sustainability and the textile industry
The global textile and apparel industry 2 is predicted to grow to US$800 billion by 2015 3 as compared to
roughly $700 billion today. As a sector, it not only has a large environmental footprint but is also the
single largest contributor to industrial waste water and the largest user of pesticides. Some specific
processes, like yarn production and dyeing, use large volumes of water and are copious consumers of
The basic drivers for energy.

the textile industry to
In a global market with increasing regulation and consumer preferences for ‘sustainable products’,
move towards eco- sustainable production is gaining increasing importance. Sustainability has typically meant looking at
efficiency and both environmental and social aspects.
sustainability exist.
The environmental facets like sustainable sources of raw material, optimal use of energy, minimal use
Energy prices are high of toxic chemicals, waste reduction and preservation of land have been receiving greater focus in recent
times. This report delves in detail on these aspects.
and rising, water is
getting scarce, and The social aspects have been under scrutiny for a couple of decades, since the early 1990s. The industry
compliance has a huge requirement of cheap and skilled workforce but there continues to be a dearth of both.
requirements across Workers are not available for the garment industry owing to poor pay and poor working conditions and
the globe on social the workforce lacks the adequate skill set. Hence while the industry holds a promise of creating an
additional 12 million jobs by 2012, pressure is high to create better paying jobs with respectable work
and environmental
conditions.
issues are increasing.
The drivers for the increased focus on Sustainability are
Compliance is inter-twined with risk
(a) Brand reputation protection and risk management mitigation. As future legislation
(b) Increasing resource (water, energy, land) scarcity in continues to develop in Europe and
some of it is being planned in
the regions of production
US/Canada, brands and retailers are
(c) Compliance requirements both at a product level looking to get an idea of their supply-
(which is driven mainly by the importing market like chain risk and proactively managing
REACH in the EU) or compliance requirements at a it. In addition, emerging countries
themselves are working on looking at
process level (which are driven by the production legislation on carbon emission and
region laws) water usage. This impacts
(d) Consumer pull i.e. increasing consumer preference in manufacturers (which are mainly
based in emerging countries) as well
the EU and in North America (which are the largest as brands and retailers.
markets) for sustainable labels.

One-upmanship
On account of the above factors, Sustainability is now being looked at by the apparel and textile brands
not as a mere CSR activity but more as a market differentiator and business enabler. The major brands
and retailers across the globe have entered into a healthy competition in order to outdo the other and
M&S aims to become
entice the consumer towards them. Some of the path-breaking initiatives taken by the major brands
the first major retailer recently are:
to collect information As part of its Plan ‘A’ commitment to become the world’s most sustainable major retailer by
from the extended 2015, Marks & Spencer (M&S) signed a deal with supply chain traceability specialist Historic
supply-chain, Futures 4 to develop a full ‘raw material to store’ traceability on every single clothing item 5.
This would allow M&S to become the first major retailer to collect information from the
describing where and
extended supply-chain, describing where and how every product is made, including the
how every product is
source of the raw materials such as cotton and wool. The full traceability will enable an even
made, including the greater ability for M&S to differentiate its products. As an example, for its t-shirts, it will give
source of the raw information on where: cotton is grown; yarn is spun; fabric is produced; fabric is dyed; etc.
materials such as Related to this, M&S has launched the ‘Look-Behind-the-Label’ campaign in a few of its
cotton and wool stores, which informs shoppers as to the way the group sources its products.
In 2010, Sportswear giant Puma became the first company to release an Environmental Profit
and Loss (EP&L) statement, which measures the full economic impact of the brand on

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Report Excerpt

ecological systems including water and air. The EP&L project is part of a larger environmental
initiative by Puma’s parent company PPR Group 6- to move beyond conventional CSR and
promote a new business paradigm: Sustainability as a driver of creativity and innovation;
which in-turn would deliver financial, social and environmental returns.
In the latter part of 2011 H&M plans to launch its first product line using ‘Better Cotton’,
which would give H&M the early mover advantage amongst the pioneers in using Better
Cotton. H&M also started selling the ‘Conscious Collection’ line of clothing which is not just
organic cotton but showcases the creation of a fashion statement using eco-smarter
materials like Tencel and recycled polyester.
Levi Strauss & Co launched the ‘Water<Less’ denim collection which reduces water
consumption by an average of 28% and saved 16 million liters of water in its spring collection.
Recently Patagonia announced its web-initiative ‘The Footprint Chronicles’ which allows
consumers to track social and environmental impact of specific garments. The Footprint
Chronicles would help Patagonia in a big way to have all its clothes being fully recyclable. This
initiative by Patagonia is in line with its reputation as being at the vanguard of sustainable
clothing.
Anvil Knitwear joined the Cotton made in Africa (CmiA) initiative, becoming the first U.S.-
based apparel manufacturer to do so. Anvil knitwear also created a website called ‘Track My
T’, which takes consumers through the journey that their t-shirt has taken (each tee has a
tracking number). From just a cotton seed on the farm, through the cotton gin, yarn spinner,
textile mill, cut and sew facility, distribution center and then onto the consumer, one can get
an inside look across the process.

These are just few of the initiatives, being taken by brands and retailers to create a competitive edge
using sustainability and in this report we have covered actions undertaken by 24 brands and retailers.

Advances in tracking Sustainability
In our last report March to Sustainability 2010, we had outlined how sustainability was at the cusp of
being rolled out within the supply chain. In the time since the last report, we see that not only are a
number of initiatives in ‘execution mode’, but significant investments in systems are being made to
track Sustainability.

Illustrative list of systems and efforts to coordinate sustainable sourcing
Levi Strauss & Co In 2009 LS&Co started to collect water use data directly from the suppliers, as well as
their own operations and to support this data collection exercise Levi’s started the
new ‘Social and Environmental Sustainability Information Management System’
(SESIMS), which allows them to monitor detailed environmental performance at the
supplier level.

Nike Nike launched the Environmental Apparel Design Tool (EADT), which would help
designers make real time decisions in reducing waste leading to an increased use of
Environmentally Preferred Materials (EPM). Nike has kept the tool as an open source
and encourages designers and other users to build upon the tool.

Puma Puma in cooperation with the Global Reporting Initiative announced its intention to
expand environmental considerations and improve working conditions throughout
their strategic supplier network. The suppliers who are responsible for more than two-
thirds of all Puma products will receive GRI certified training on transparent
measurement and reporting on their Sustainability performance using the GRI G3
Guidelines – the world’s most widely-used framework for Sustainability reporting. This
program is known as Global Action Network for Transparency in the Supply Chain
(GANTSCh) and is conducted by GRI certified training partners and during the
reporting process; the suppliers are scheduled to release their own Sustainability
reports.

GAP Gap introduced the ‘Environmental Footprint Assessment’ (EFA) to provide a detailed
accounting of how their business affects the environment. The first phase of the EFA
focused on regions and facilities where Gap controls the operations. The second phase
of the EFA is will focus on the supply chain.

2

Report Excerpt

Sustainable Apparel Coalition Index
The industry is quite cognizant of the fact that the proliferation of multiple standards and systems to
track sustainability will be inefficient and expensive. To address that challenge a number of leading
brands and retailers teamed up to form the Sustainable Apparel Coalition that will develop a
Sustainable Apparel Index. The Index will enable companies to evaluate material types, products,
facilities and processes based on a range of environmental and social practices and product design
choices. The aim is to develop an industry-wide supply-chain index that measures water and energy use,
greenhouse gas emissions, waste, and social labor practices, to name a few. The companies have
committed to collect supply-chain information, work toward a standard level of best practices, and
share information that may be helpful in improving supply chain sustainability.

Rewiring the cotton supply chain
Another significant development with regards to Sustainability and the textile industry has been the
focus on sustainably sourced cotton. Cotton, the ‘white gold’ is the principal raw material for the textile
industry and provides livelihood to millions of people both from the farming sector and the industry.

adidas has provided a massive boost to sustainable cotton farming by announcing that all adidas
apparel would use ‘better cotton’ sourced through the Better Cotton Initiative (BCI) by 2018. Similarly,
IKEA wants all cotton used for its product range to come from Better Cotton Initiative (BCI) by 2015. In
addition to players like Levi’s, H&M, M&S and Nike have come up with equally bold commitments in
adidas has committed going for ‘better cotton’ and called all their cotton suppliers in Pakistan, Bangladesh, India and Turkey
to apprise them of what is coming with Better Cotton Initiative (BCI).
to have all its apparel
be ‘better cotton’ by
To strengthen the implementation and success of Better
2018; and Ikea wants Cotton Initiative (BCI), leading brands like adidas, H&M, Cotton is produced in more than 110
countries around the world, many of
all cotton used for its M&S, IKEA, and Levi Strauss & Co along with funders like which are already feeling the impact of
products to be ‘better ICCO, IDH, and Rabobank have founded the ‘Better Cotton climate change and as the temperatures
Fast Track’ (BCFT) program. Under this program the group rise and water supplies fall, cotton faces a
cotton’ by 2015. risk of crop failure. Cotton production
along with several implementation partners like
uses 3.5% of world wide water use for
Solidaridad and WWF will work together until 2015 to crop production and consumes 11,000
accelerate the implementation of BCI by building a liters to make 1 kg of cotton textile which
demand for Better Cotton. The program has set a target of implies that 2,700 liters of water is used
to make 1 T-shirt.
producing 1 million tons of better cotton by 2015 and will
invest in farmer projects around the world and initiate
procurement of the Better Cotton that is produced.

Outside of brands engaged with the BCI, brands like C&A have formed the Cotton Connect initiative
along with the Shell Foundation. The Cotton Connect initiative is working on various community
investment programs for C&A such as value chain coordination, mapping and supplier engagement and
measuring various social and environmental impacts.

Such initiatives by these major global brands is changing the way sustainable cotton is being looked at
and gives a huge fillip to the farmers who are otherwise reluctant to adopt better cotton farming.

Sustainability and labor
Labor practices in the textile industry have been under scrutiny for a couple of decades now.
Consequently the policies and systems in this area are the most mature. However, a few process and
system innovations continue to happen in this space. Some of the most notable ones in the past couple
of years are as follows:
Nike has been working on a program called the ‘Lean and Human Resource Management’,
through which Nike seeks to align factory Human Resource Management (HRM) with lean
manufacturing concepts. The lean manufacturing alignment requires the factories to employ

3

Report Excerpt

higher- skilled and higher- paid workforce as the workers would be trained to perform
multiple tasks. Consequently, gains in productivity, quality and profitability are expected,
which would create a win-win scenario. With Nike’s goal of having 90% of its footwear
“We are designing for coming from the lean sites by 2011, the Lean and HRM practice would result in reduced cost
the sustainable of production and better wages for the workers. Till now 8 factories in Vietnam and 8
factories in China have taken part in this measure.
economy of
adidas continues to advocate for a better employer-employee relationships and has been
tomorrow, and for us
working on its Human Resources Management System (HRMS). As a part of the HRMS, adidas
that means using started the confidential reporting channels called ‘hotlines’ and through these hotlines it
fewer resources, more would educate the workers about their rights and the way to protect themselves from the
sustainable materials risks in the workplace. By end of 2010 workers from more than 400 suppliers had access to
and renewable energy these hotlines.
to produce new 2010 also saw global brands like Levi Strauss & Co. and H&M work together with the
International Textile, Garment & Leather Workers’ Federation (ITGLWF) to impose a global
products.”
ban on sandblasting- a process using crystalline silica to wear down denim 7. The process of
- Mark Parker, sandblasting leads to silicosis, a fatal lung disease that caused the death of 40 garment
President & CEO, Nike workers in Turkey since 2005. Levi Strauss and H&M have been working to remove
sandblasted products from their lines and along with ITGLWF aim towards placing
government-mandated bans in countries throughout the world. This step would compel the
developing countries where most of the supplier units are based, to impose a blanket-ban on
sandblasted products and also discourage consumers across the globe from buying such
products which are detrimental to the health of the workers.

Such measures by the leading brands have gone a long way in setting standards for the implementation
of better working conditions for the workers at the supplier sites. But the worry lies in the fact that
despite steps taken by the global brands, the worker compensation remains abysmally low in countries
like China, India, Bangladesh, Cambodia and Vietnam and since the government regulation on minimum
wages differs from one country to another, it remains difficult for the brands to impose any floor value
on compensation.

Sustainability: from CSR to core business
The big shift that is happening today is that Sustainability is moving from being a ‘nice-to-have’ to be a
‘must-have’. Most brands and retailers started testing the waters on Sustainability through their CSR
initiatives. For some of these brands, Sustainability efforts are now moving out of CSR and becoming
core to business operations.

Nike’s President and CEO, Mark Parker sums it up well: “We are designing for the sustainable economy
of tomorrow, and for us that means using fewer resources, more sustainable materials and renewable
energy to produce new products.”

Simultaneously, serious investments of capital and time are being made to make Sustainability core.
Nike spent US$6 million in developing its Environmental Apparel Design Tool (EADT) tool which is now
becoming a key component of the Sustainable Apparel Index (being rolled out by the Sustainable
Apparel Coalition). Similarly, PPR, the parent company of Puma, has allocated an annual budget of €10
million for the PPR HOME initiative, which sets a new standard in sustainability and business practice in
the Luxury, Sport & Lifestyle and Retail sectors. Marks & Spencer which committed £200 million in 2007
for its 5 year Plan ‘A’ program which focuses on Sustainability (although not on textiles alone)
generated returns of over £70 million in 2010-11 (up from £50 million the prior year) 8.

4

Report Excerpt

Snapshot of key brands with Sustainability initiatives in the supply chain
The following is a snapshot of the nature of actions being undertaken by key brands profiled in this report.

Major Sustainability policies and initiatives in place for the supply chain
GHG/
Materials Energy Water Waste Chemicals Labor Logistics
Carbon

adidas

C&A

Gap Inc

H&M

Inditex

John Lewis

Levis Strauss & Co (LS&Co)

Lindex

MEC

New Balance

Nike

The Otto Group

Patagonia

Phillips-Van Heusen

Puma

REI

VF Corp

Timberland

Carrefour

IKEA

M&S

Tesco

Wal-Mart

Legend
Supply chain initiatives in place for introducing Supply chain initiatives in place for waste management
Sustainability in materials, manufacturing and and land use
processes

Supply chain initiatives in place for increasing energy Supply chain initiatives in place for increasing
efficiency at supplier facilities Sustainability in reducing chemical usage and restricting
use of harmful chemicals

Supply chain initiatives in place for monitoring and Supply chain initiatives in place for tracking and
reducing Greenhouse Gas Emissions at factories improving labor practices.

Supply chain initiatives in place for reducing water Supply chain initiatives in place for improving
consumption in manufacturing and treatment of Sustainability in logistics.
waste water

8

Report Excerpt

Index
adidas, 3, 4, 6, 7, 8, 9, 12, 13, 14, 15, 52, 80, 86 Inditex, 5, 6, 7, 8, 9, 11, 26, 27, 80
Apparel and Footwear International RSL International Finance Corporation, 7
Management Working Group (AFIRM), 7, International Labor Organization, 7, 21, 23, 48
15, 18, 19, 22, 25, 33, 39, 42, 53, 59 International Textile, Garment & Leather
Better Cotton, 2, 6, 9, 13, 23, 69, 86 Workers’ Federation, 4, 27
Better Cotton Fast Track, 3, 6, 13, 15, 25, 33, Intertek, 66, 67
64, 67, 69 John Lewis, 5, 6, 7, 8, 11, 28, 29
Better Cotton Initiative, 3, 6, 15, 23, 25, 30, 33, Lindex, 5, 7, 8, 9, 11, 34, 35, 80
35, 64, 67, 69 LS&Co, 2, 5, 6, 7, 8, 9, 11, 30, 31, 32, 33, 80
Better Factories Cambodia, 24, 25, 48, 49 M&S, iii, 1, 3, 6, 7, 8, 10, 68, 69, 89
Better Work, 7, 14, 15, 22, 25, 27, 33, 39, 41, MADE-BY, 80, 82
42, 53, 69, 74 MEC, 6, 7, 8, 9, 36, 37, 39, 80
BICEP, 20, 22, 30, 33, 57, 59 New Balance, 5, 6, 7, 8, 11, 38, 39, 80
BSR, 22, 23, 25, 57, 66, 67 Nike, 2, 3, 4, 5, 6, 7, 8, 9, 11, 40, 41, 42, 52, 73,
Business Social Compliance Initiative, 45, 89 80
C&A, 3, 5, 6, 7, 8, 9, 11, 16, 17, 18, 19, 80, 89 NRDC, 20, 73
Carbon Disclosure Project, 62, 63, 74 Oeko-Tex, 62, 76, 80
Carbon Label, 84 Organic Cotton, 18, 34, 53, 69, 81
Carrefour, 5, 6, 8, 10, 61, 62, 63, 80 Otto, 5, 6, 7, 8, 11, 44, 45, 80, 84
CEO Water Mandate, 7, 25, 27, 30, 31, 33, 42 Outdoor Industry Association, 6, 37, 47, 54,
Continental Clothing, 7, 76, 80, 81 55, 57
Cotton Connect, 3, 18, 19 PAS 2050, 84
Cotton made in Africa, 2, 44, 45, 52, 84 Patagonia, 2, 5, 6, 7, 8, 9, 11, 46, 47, 80
DEFRA, 70, 84, 89 Plan ‘A’, 1, 4, 68, 69, 89
EarthPositive, 76 Puma, 1, 2, 4, 5, 6, 7, 8, 9, 11, 50, 51, 52, 53,
ecolabels, 80 80, 81
Environmental Apparel Design Tool, 2, 4, 40, PVH, 48, 49
42 REI, 6, 8, 9, 54, 55, 87
Environmental P&L, 50, 51, 53 SA8000, 45, 59
Environmentally Preferred Materials, 2, 38, 39, Sedex, 7, 28, 29, 71, 87
40, 41 SEEP, 24, 25, 74
Ethical Trading Initiative, 6, 21, 27, 70, 71 Source4Style, 77
Fair Factories Clearinghouse, 14, 55, 57, 74 Suppliers Energy Efficiency Program, 74
Fair Labor Association, 7, 15, 24, 25, 37, 39, Sustainable Apparel Coalition, 3, 4, 6, 12, 14,
42, 47, 48, 49, 53, 59 15, 19, 22, 25, 33, 37, 39, 42, 45, 47, 53, 54,
Fairtrade, 69, 70 55, 57, 59, 69, 73, 74, 86, 87
GANTSCh, 2, 51, 53 Sustainable Apparel Index, 3, 4
Gap Inc, 5, 6, 7, 8, 9, 11, 20, 21, 22 Tesco, 5, 6, 7, 8, 10, 61, 70, 71
GHG Protocol, 27, 51, 62, 64 Textile Exchange, 7, 15, 18, 19, 22, 25, 27, 33,
Global Compliance Principles, 57, 58, 59 34, 35, 37, 39, 42, 45, 47, 53, 55, 59, 69, 71,
GOTS, 52, 76, 80, 81 74, 76, 80, 81
GRI, 2, 27, 28, 36, 51 Timberland, 6, 8, 10, 56, 57, 58
GSCP, 6, 10, 15, 19, 22, 49, 63, 66, 67, 69, 71, UN Global Compact, 7, 30
73, 74, 89 Verite, 6, 47
H&M, 2, 3, 4, 5, 6, 7, 8, 9, 11, 23, 24, 25, 80, VF, 5, 6, 7, 8, 10, 11, 57, 58, 59
86, 87, 89 Wal-Mart, 5, 6, 7, 8, 61, 72, 73, 74, 80, 87
Historic Futures, 1, 9, 30, 82, 89 Worldwide Responsible Accredited Program,
IKEA, 3, 6, 8, 10, 64, 65, 66, 67, 86 7, 58, 59

88

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March to Sustainability 2011

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