Two decades ago, the clothing industry was confronted with something that seemed far beyond their own factory fence and their perfectly happy neighborhood. Suddenly, likable brands were made accountable for inhuman working conditions at supplying factories somewhere else and for their airy-fairy safety standards.

The accusations result from outsourcing labor-intensive work such as sewing without sustaining at least minimum social standards. Some companies went through a painful learning process that outsourcing labor does not mean outsourcing responsibility. And some of them still have a long way to go.

Nowadays, greenhouse gas emissions and their negative impact are uncovered by the consumer spotlight. And again, consumers resist tacitly buying goods which cause emissions that are “exported” to factories in Asia and which are shipped all around the globe or even air freighted. Furthermore, even the financial markets call for taking carbon responsibility beyond internal business processes. Why not apply the experiences from improving working conditions at the supplier’s level to advance energy efficiency and cut emissions there? Old wine in new skins. So let’s go!

Pause for a moment. In the face of globally organized and multi-level value chains, retailers and brands have limited access to the supply chain. Textile retailers with a wide range of styles usually can manage their first tier suppliers (and if they are proficient enough, their subcontractors) in operating social and ecological performance. Inauspiciously, the available level, then, means just the Ready Made Garment (RMG) including cutting, sewing and sometimes washing. Not at all an energy intensive process-step – compared to spinning or dyeing on an earlier stage in the textile chain! And regarding air freight, it is the pitiless consumer who requires short term deliveries of products which sometimes “provoke” chartering boxes in air cargo bays.

Before getting discouraged, let’s pause once again. Compared to the implementation of social standards, there is something different about entailing RMG factories with the “new burden” of energy efficiency. It is not another audit and it is not about suspicious acid tests. Just talk to the suppliers and ask them about their energy costs. Yes, in relation to the labor costs, the expenses for electricity, gas and oil are not that much. But these costs are rising, not to say just exploding – whereas the price competition for textile products is rising for suppliers. Furthermore, power cuts and limitation of grid allowances lead to the running of energy-thirsty generators. Go through the facility with the manager (and ideally with a line-manager or somebody in charge of electricity and boilers). There is lots of potential, even on a low cost level: small leakages in pipes, sporadic insulation, old magnetic ballasts for tubes, dark and light-absorbing walls, diffuse light by missing reflectors and so forth. If you reveal the saving potential to them, and explain adequate measures and develop a short-term plan for improvements, you will feel like preaching to the converted.

You will be much more surprised when you take the time to come more than once. The leaks are repaired. There is a process installed which wholeheartedly assures checks of pipes and an immediate repair of leaks. The first steps for implementing an energy-management system have been done. The paint for whitening the dark walls is ordered. And they rigorously ask you about where they can get a condensate recovery system. Those who are experienced in the field of working conditions will be surprised to see such enthusiasm and persistence. As our checks in RMG factories have revealed, there is a potential for reducing energy input and thus carbon emissions by 40 percent by mostly simple measures which pay off in the short and intermediate term. For example, an RMG in Bangladesh with about 800 employees could reduce its carbon emissions by 200 metric tons per year or by 270 grams on the product carbon footprint by such measures. Translated for the supplier: it is a cost-saving of 12,800 US dollars or 1.7 US cents per piece. The reduction of one ton of CO2 implies revenues of 64 US dollars (notice the low price level for energy in Bangladesh) and requires just low capital spending.

This may look like chickenfeed, but it is a good starting point. Larger investments with a longer payback horizon offer further potential for energy efficiency. However, there are barriers to investing in large-scale measures such as complete installation of new tubes, heat exchangers or even solar heating. Suppliers need to be encouraged to bridge the amortization gap. Partnership programs can initiate improvements by setting incentives. In addition, these suppliers may serve as multipliers in their region and industry. The immense potential for suppliers through a partnership approach is a door opener for further reductions. If you initiate an issue-focused enhancement process you may discover that far-reaching options such as reducing air freight, integrating further levels of the supply chain or deploying a system of water footprint management are not that far off.

Carbon emissions and energy consumption are new topics in the supply chain. They offer substantial advances through a unique business case. This subject is more than the often stressed win-win situation, which is usually dearly loved by consultants. It can be a triple win for retailers, suppliers and the environment in fact. The textile sector has the opportunity to again become the kernel for an improvement process in emerging markets by taking responsibility beyond factory fences and shop doors. It requires a partnership approach which addresses the specific needs of suppliers. Just listen to your customers as well as your suppliers. It really pays off!

Contact
Systain Consulting GmbH
EMail arretz@systain.com
Phone +49 (0)40 / 64 61 52 54
www.systain.com

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Photo: Dr. Michael Arretz, Systain Consulting GmbH