Fair Trade. Ethically Sourced. Eco-Friendly. Cruelty-Free. These are not just buzzwords for millennials. Businesses are now adopting more transparent practices within their supply chains but why? Could it be that catering to a millennial consumer market with a majority that will gladly pay 10% to 25% more for sustainable products and services could generate even more revenue? (World Economic Forum)
Or, could it be that the UN’s 2030 Sustainable Development Goals (SDGs) are changing our worldview as consumers? Or, could it possibly be that we are seeing and feeling the effects of a world with an increase in natural disasters; an increase in human trafficking; an increase in poverty? All of the above. If businesses don’t begin to adopt sustainable practices, they will be left behind.
Adidas, H&M, ASOS, Levi Strauss and Co are just a few major apparel brands that are transforming their supply chains to become sustainable. New departments and positions have been created specifically for this purpose.
Adidas: The above chart is from the Adidas Group website. Adidas sustainability goals involve environmentally friendly products and worker empowerment. Just outside of Nairobi, KE is an artisan partner of Adidas, Artisan Fashion. They are just one of Adidas’ many international partners. Artisan Fashion works with artisans in Kenya to empower them by paying them a fair wage and through learning technical skills and training. I can’t speak to the other international partners but the fact that Adidas is working with a small UK company in Kenya shows significant improvement in their practices. Nike has also worked with an African partner (Piece & Co).
H&M: How many RTW (Ready-to-Wear) Fast Fashion companies do you know that actually have sustainability reports that track wages in the factories? Not many, if any. H&M has also introduced the Global Change Award through their H&M Foundation. This award invites participants from all over the world to submit their proposals for new innovative ideas (early stage innovation) that will positively influence the fashion industry. The winners receive money to help fund their ideas. If anyone wants to partner with me next year, let me know!
ASOS:
Their focus is to reduce environmental impact through designing and producing apparel that uses recycled materials, is biodegradable, and of good quality. They also value traceability and more transparency within material sourcing. By 2020, ASOS has some major sustainability goals that they are working to achieve. Through their partnership with the Centre for Sustainable Fashion at the London College of Fashion, they have launched a pilot program to promote and practice circular fashion. “Circular fashion can be defined as clothes, shoes or accessories that are designed, sourced, produced and provided with the intention to be used and circulate responsibly and effectively in society for as long as possible in their most valuable form, and hereafter return safely to the biosphere when no longer of human use.” (Circular Fashion).
Levi Strauss and Co: Levi’s has introduced Water<Less and Waste<Less programs. These programs are a great start to creating a better approach to denim production. Producing denim is one of the most harmful products on the environment from cotton production releasing CO2 into the air to excessive water usage to toxic chemicals within the dyes. Levi’s are the pioneers of denim and it will take longer to completely transform their traditional production practices into more sustainable ones. They are on the right track and I look forward to following their transformation.
So…
Why are businesses adopting sustainable practices within their supply chains?
McKinsey has the answer!
Consumers literally hold the power in their hands!
Failing to increase sustainability performance could slow a company’s growth. Companies need permission from governments, consumers, and investors to produce and to sell goods and services. With increased education in social and environmental issues by the UN and major governments worldwide, businesses are strongly encouraged to create more sustainable practices in order to simply produce their products. If you can’t produce, you can’t sell therefore you can’t make money and your growth transforms into failure.
Companies also benefit financially from adopting more sustainable practices due to these regulations on water and energy consumption. Companies will have to reduce the cost of their products and services (sustainability can be expensive) to serve the entire market. (Side note: This is why Levi’s began with a collection of sustainable denim rather than transforming their entire line. It’s expensive to be completely sustainable.) New innovations, like what the H&M Foundation is doing, create cost-effective ways of reusing and recycling items and power sources which saves money in the long run. (For example, reusing water throughout denim production.)
Challenge:
Lack of Knowledge or Turning a Blind Eye?
Many companies don’t directly deal with the sourcing of their raw materials. (Beyonce was in trouble with this last year – see Beyonce post for more details). There are tiers within a supply chain from Tier 0 being the retailer to Tier 4 being the raw material producer. Tier 0 will most likely never communicate with Tier 4 and will probably not even know who they are. This challenge can be mitigated by decreasing the tiers and working together. (Follow my future company, INZOVU for more answers).
Luckily…
McKinsey has offered three solutions to helping companies become sustainable so they won’t miss out on these opportunities!
1. Determine the critical issues within the supply chain. As I mentioned above, there are departments created specifically for this purpose. (Ethical Trade at ASOS. Sustainable Growth at Levi’s.)
2. Align the company’s supply chain goals with the global sustainability agenda. Partner with governments and NGO’s. Attend sustainability forums and conferences around the world. Adopt the UN’s SDGs within the supply chain.
3. Work with the suppliers to ensure transparency. This could mean eliminating tiers or being more involved within every tier of the supply chain. Again, there are now departments created for these sustainability roles.
Get like us! Become more sustainable in your buying habits and business practices. It will increase your profits while also decreasing negative environmental impacts and poverty!
Loren Nichole 