Sustainability Report 2021 by Sourcing Journal

2021

SUSTAINABILITY REPORT 1 / 2021 SUSTAINABILITY REPORT

Contents 04

Executive Summary

The Money Tree

New Funding for e3 Growers

Green Shoots

ESG Moves Center Stage

GOTS Certifications on the Rise

The Digitized Circularity Opportunity

Peer to Peer

Biodiversity: Mitigating the Impact

Crisis Mode

Nike Lays Out Impact Plan

Ralph Lauren’s Revolutionary Take on Dyeing

Sustainable Apparel Coalition Marks a Decade

Is Blockchain the Solution to Traceability?

Walmart, CMA CGM Make Sustainable Moves

VF Takes on Sustainability, Diversity

A Green Eye on The Deep Blue

Cradle to Cradle Evolves

Bangladesh’s Industry to Get $256.5M in Energy-Efficiency Funding

22 24

Nordic Behemoths Look to Innovate

Canopy Has a Bold Plan to Save The Climate

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BUSINESS GOALS

SUSTAINABILITY GOALS

Wondering how cotton fits into your business and sustainability goals? We have the answers. As a trusted supply chain resource for over 50 years, Cotton Incorporated and its dedicated team of sustainability professionals are here to help with in-depth cotton and sustainability expertise. Through science-based research, data collection and analysis, Cotton Incorporated is the resource for accurate, accessible, and actionable information about cotton and the environment. To learn more visit www.CottonToday.com, the resource for cotton & the environment.

Executive Summary IN A YEAR MARKED BY DISRUPTION, THE METTLE OF THE SUSTAINABILITY MOVEMENT WAS TESTED.

n putting together this report, it’s hard to believe that the headlines from last year’s edition, dominated by the pandemic, are still leading the news today. While the onset of Coronavirus and the shockwaves it sent careening through the industry and supply chain made it clear things would never be the same, few could have foreseen the scope and duration of this crisis. Many wondered where all this would leave sustainability and the effect it would have on the positive momentum the movement was enjoying. In a time of base survival, doing the right thing would not always be the easiest choice. Consumers, however, continue to lean toward spending with their values and it has become apparent that a greener game plan no longer sets you apart, its inherent in the cost of doing business. And business has responded. New, more circular technologies continue to be developed, organizations focused on sustainability continue to broaden their reach and the industry’s largest players have become outspoken advocates for a more sustainable future.

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This report takes a look at the $2 trillion opportunity of a circular economy (page 10), how some brands have leaned into their core ethos to flourish over the past year (page 14) and how blockchain is becoming an integral part of the traceability challenge (page 40). The financial side of the business has also gotten more eco-conscious, and companies have turned to green bonds and sustainable loans to back new initiatives (page 26). Consequently, ESG metrics have risen in importance and scrutiny (page 30). The Sustainable Apparel Coalition, founder of the Higg Index, is marking 10 years (page 18) while green trailblazers such as Nike (page 36) and VF Corp (page 46) disclose the strides they have made and the path ahead. While it’s too early for a victory lap, one thing the past 12 months has made clear is that sustainability is not a catch-phrase or a marketing slogan. It is not a trend. Nor is it optional. It’s the only way forward. Peter Sadera Editor in Chief Sourcing Journal

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SUSTINABLE DORAEMON.

DORAEMON GOES GREEN FOR UNIQLO

niqlo has a new face. The fast-fashion retailer has tapped Asian icon Doraemon as it’s global ambassador for sustainability. The anime robotic cat, known for his blue avatar in countless shows, movies and events has one marked difference. He is now green. While Doraemon in the manga series written and illustrated by Fujiko Fujio travels back in time from the 22nd century, this Doraemon is presaging a leap forward. Commenting on the new partnership, Doraemon said, “Hi, everyone! I’m Doraemon and now I am Green. I’ll do my best as Uniqlo’s global sustainability ambassador to help create a much brighter future. I want to work with you all so we can make people everywhere more interested in the future of our world.” The Asian hero joins a stable of other well known Uniqlo global ambassadors that includes: Roger Federer, Kei Nishikori, Shingo Kunieda, Gordon Reid, Ayumu Hirano and Adam Scott. — Mayu Saini

Mylo for Stella

tella McCartney revealed the world’s first luxury garments derived from Mylo, an animal-free leather engineered by California startup Bolt Threads from the branching root network that sprouts mushrooms. Combining “deep science with high-fashion design,” the pieces demonstrate the viability of this next-generation technology as a replacement for both animal-derived and synthetic hides, smoothing the way for future commercial possibilities, according to the brand, which famously eschews leather, feathers, fur and exotic skins in favor of cruelty-free and sustainable alternatives. The items comprise a black bustier top and a pair of “utilitarian” trousers. They were handmade at the brand’s London atelier by laying panels of the mycelium-based material over recycled nylon scuba, combining an “avant-garde perspective with an athleticism” that keeps with the aesthetics of its summer and autumn 2021 collections. While neither of the pieces is for sale, the LVMH Moët Hennessy Louis Vuitton partner, a founding member of the so-called “Mylo consortium,” which also includes Adidas, Kering and Lululemon, plans to integrate Mylo into future offerings. Stella McCartney is no stranger to Mylo, either. The first product created with Mylo was a prototype of the luxury house’s Falabella bag, which debuted as part of a 2018 exhibition at the Victoria & Albert Museum in London. — Jasmin Malik Chua STELLA MCCARTNEY X MYLO

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Sustained T RU ST

Recycled PET

Cruelty-free Leather

Cotton Farmed Using Sustainable Irrigation

Packaging Made from Post-Consumer Waste

Safe Coatings Used

Carbon-Neutral Distribution

CertainT® is the plus factor that compels consumers by presenting the clear choice of assured origin, authenticity and sustainability. Our multi-layered traceability solutions enable you to provide transparency and trust at every step of your supply chain.

CERTAINT ®

redefining trust by

applieddnasciences

Verified Sustainability Revenue Driver Brand Trust and Loyalty Supply Chain Integrity IP Protection

learn more adnas.com/trust | textilesales@adnas.com 7 / 2021 SUSTAINABILITY REPORT

A&F’s Renewable Pledge

GERMANY ADOPTS BLUESIGN

bercrombie & Fitch Co. has said it was committing to source all electricity used at its New Albany, Ohio, global headquarters and distribution centers from renewable generation beginning in 2023. The retailer, which owns Abercrombie & Fitch, Abercrombie Kids, Hollister and Gilly Hicks, has signed a 13-year, 100 percent renewable energy supply agreement for its corporate headquarters and two New Albany distribution centers with fellow Ohio-based company AEP Energy, a subsidiary of American Electric Power. The agreement for approximately 30,000 megawatt hours annually will eliminate about 16,000 metric tons of carbon from reaching the atmosphere each year. “The shift to renewable electricity in our New Albany corporate operations will contribute to our overall energy goals of reducing Total Scope 1 and 2 greenhouse gas emissions by 2030,” Kim Harr, senior director of sustainability at A&F Co., said, adding that the company developed these goals “in line with science-based climate targets and international agreements, including the UN Global Compact (UNGC).” AEP Energy president Greg Hall said an integrated renewable energy solution will help Abercrombie achieve their sustainability goals with energy from regional assets, as part of the retailer’s commitment to invest in renewable energy and reduce emissions. Last year, Abercrombie & Fitch partnered with ThredUp to allow customers to send in their clothing for gift cards to be redeemed at its retail chains. At the time, Abercrombie said the partnership also supports its commitment to UNGC, which it joined in 2019. — Arthur Friedman

he German government has recognized the Bluesign System as a qualifier for Green Public Procurement (GPP). The Bluesign System eliminates harmful substances from the beginning of the textile manufacturing process, and sets and controls standards for an environmentally friendly and safe production. This ensures that the final textile product meets stringent consumer safety requirements worldwide and assures consumers that they are acquiring a sustainable product. “Public procurement of textile articles is a large market and governments will increasingly focus on the procurement of sustainable textiles,” Thomas Schaefer, head of the Bluesign Academy, said. “Governmental bodies should be a forerunner and in some countries there are already commitments to achieve a certain level of sustainable textiles in procurement decisions. We are proud that Bluesign is now accepted as a qualifier. That’s important for public sector bodies because with our label a wide range of textile articles with high technical performance will now be accepted.” For the latest revision of the Bluesign Criteria, the organization initiated a stakeholder involvement process and invited more than 500 groups to participate in the consultation process. This stakeholder involvement provided valuable feedback for criteria revision and insights into the needs of different stakeholder groups, contributing to the continual improvement of the Bluesign System. — Arthur Friedman

ABERCROMBIE & FITCH’S GLOBAL HOME OFFICE.

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up for future generations

oachil t r e t t e l a #

TENCEL™, LENZING™ and ECOVERO™ are trademarks of Lenzing AG

newyork@ lenzing.com www.lenzing.com 9 / 2021 SUSTAINABILITY REPORT

$2 Trillion on the Table: The Digitized Circularity Opportunity UPGRADING TO A CIRCULAR ECONOMY THAT MONETIZES END-OF-LIFE AND RECYCLING COULD NEARLY DOUBLE THE FASHION INDUSTRY’S VALUE. JASMIN MALIK CHUA

ashion is a big industry—$3 trillion big—and that’s based on the linear take-make-dispose model that sends resources trundling down a dead-end path. Upgrade the sector to a digitized circular economy that monetizes end-of-life and recycling for material manufacturers, however, and the same value could nearly double. That’s the conclusion Lablaco, a French blockchain-powered platform for circular fashion, reached after working with PwC, sustainable consultancy Anthesis, Wageningen University & Research and others to map out the different segments that could benefit from a more circular garment value chain, including fiber production, apparel manufacturing, digital fashion, 3D printing, packaging, product care, logistics and laundry. The report estimated that the potential of all this could be as much as $5.3 trillion. “Circular fashion is definitely really great for the environment and the world but it’s also an incredible blue ocean of opportuni-

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ties,” said Lorenzo Albrighi, co-founder and CEO of Lablaco, at a webinar organized by Canadian nonprofit Fashion Takes Action. Digitization’s potential starts right at the beginning. Fiber collection and processing are enormously fragmented with “a lot of blending and re-blending,” said Amit Gautam, CEO and founder of TextileGenesis, a fiber-to-retail traceability firm based in Hong Kong and India. TextileGenesis deploys blockchain-based digital tokens known as Fibercoins to keep tabs on fibers, yarns, fabrics and garments as they wend their way through the supply chain. Though the company initially focused on viscose and recycled polyester—Lenzing, for instance, tapped the company in 2019 to boost the traceability of its Tencel and Ecovero fibers—TextileGenesis will soon be broadening its scope to include organic cotton and recycled cotton from textile waste. Doing so is essential, Gautam said, noting that the textile industry has a 95 percent “traceability gap,” meaning that nearly the

“Circular fashion is definitely really great for the environment and the world but it’s also an incredible blue ocean of opportunities.” — Lorenzo Albrighi, Lablaco

entire textile value chain has very limited to no visibility. This has important implications for end-of-life management. “If you’re not sure about the composition of the garment, then it directly impacts your circularity,” he said. “Every single recycling technology, whether it’s mechanical or chemical or biological, must know the composition of the fibers in a reliable manner, because your processes are tailored to that.” TextileGenesis tags every pound of fiber it handles with a unique digital code at the point of origin, which, in turn, improves the accuracy of how much certified material is logged. The company requires no technology investment on the part of participating brands. TextileGenesis’ cloud-based platform is updated every time a node in the network—say, a spinner or dyer—captures the data from a transaction of fiber and uploads it to the system.

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Natasha Franck, founder and CEO of Eon, says her tech firm powers connectivity in finished products in a similar way. By using a digital-identity protocol known as CircularID, the New York startup hopes to “bring each and every garment online” and create the “digital foundation for circular commerce in fashion and retail.” “Basically we connect products from production through use, reuse, next life and beyond,” she said. One thing driving the move toward digitizing products, noted Franck, who is working with Microsoft to “digitally twin” 400 million fashion products by 2025, is the sudden shift in consumption patterns that “brands are unable to service,” such as resale, which is projected to quintuple in market share over the next five years. Brands are also scrambling to address not only growing customer demand for greater transparency

THERE IS PLENTY OF FINANCIAL UPSIDE TO A CIRCULAR SUPPLY CHAIN.

but also their desire for more sophisticated digital experiences, such as digital wardrobes and smart checkouts, that will pave the way for the “store of the future.” While retailers typically have barcodes linking data to each product they sell, this information is stripped away at the cash register. “Without this product ID, brands can’t support the management of products to new business models like resale,” Franck said. “They can’t build ongoing connections with customers. Their relationship ends at point of sale. They can’t access data and insights post-sale. It is a black hole in terms of customer service and insights.” The CircularID helps create what is essentially a product’s “digital passport,” one that is continually updated every time a dress or pair of shoes exchanges hands. It could unlock brand experiences or other types of services or business models. To provide minimum friction, Eon designed its platform to be compatible with enterprise inventory databases. “What’s pretty exciting about this is that most product data—the data that you need to support the circularity of this product— already exists within a brand’s existing system,” Franck said. “And so we capture that data and enable the digitization of that product. We also enable that data to be shared with circular partners [that] need that data to fulfill their business functions. So, for example, Evrnu needs to know the material content of a pair of denim [jeans] to recycle it, or Trove needs data like the MSRP or original photos to facilitate resale for partners

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like Patagonia and Eileen Fisher.” The pandemic, she said, has “sort of accelerated this to the point of being overwhelming,” particularly as fashion purveyors, feeling the sting of pulled-back consumer spending, see a wealth of untapped monetization opportunities—the same ones, in fact, that led secondhand sites like Poshmark and ThredUp to file for IPOs. Today, Franck said, brands can only make more money by producing more goods. “Right now, when a brand sells a product, they don’t participate in a resale revenue; they don’t participate or benefit the more that product is used,” she added. Gautam agreed there are more “tailwinds than headwinds” around digitization because of the current crisis. If anything, he said, brands are now even more conscious of where their products are coming from. “I think it has also accelerated the need for sustainability, because look what has happened with Covid-19,” Gautam added “You could say maybe it’s [because of] human and nature [conflicting], and it has accentuated the focus around sustainability and climate change within consumers as well.” Forced labor has also become a critical issue, especially now the burden of proof that products are slavery free is shifting onto retailers. “All those forces will drive higher level of traceability and transparency in the supply chain, and that ultimately would also help in terms of driving circularity because the material integrity becomes important as well,” he said.

“Every single recycling technology… must know the composition of the fibers in a reliable manner, because your processes are tailored to that.” — Amit Gautam, TextileGenesis

TR A D E O N E F O R TH E O TH E R

NOTHING-FEELS-BETTER-THAN-THIS NOTHING-LASTS-LONGER-THAN-THIS

MADE FROM

FABRICS

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Crisis Mode BRANDS INCLUDING OUTLAND DENIM, CUYANA, THE NORTH FACE AND NORDSTROM SHARE HOW THE PANDEMIC ACCELERATED SUSTAINABILITY INITIATIVES. KAT E N I S H I M U RA

aving a robust sustainability strategy has become as essential to brands and retailers as any other area of business operations, from marketing to planning or sales. But few could have foreseen the immense challenges of 2020, which seemed to throw up roadblocks in every direction. Consumer demand stagnated. Supply chains buckled. Brick-and-mortar businesses shuttered. Simply surviving these circumstances proved a tall enough task for many, and some observers wondered whether the earth-friendly commitments made pre-pandemic would be another coronavirus casualty. But the Covid crisis also accelerated a change in consumer values. As shoppers learned to make do with less, they also began examining their purchases with clearer eyes. According to brands, pulling back on commitments to address environmental and social impact was never an option—and in fact, doubling down on those goals was the only option. “We all know the future is going to be ethically, sustainably produced products, and anybody who thinks different to that I think is delusional,” James Bartle, founder and CEO of Outland Denim, told Sourcing Journal. “People like me are going to do everything they can to take their market share.” The Australia-based certified B Corp.,

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which deals in basics from jeans to jackets, dresses and accessories, has become an outspoken proponent of revamping fashion’s waste-making ways through a transparent raw materials supply chain and ethical standards of manufacturing. It helps that the company has also made waves within the It Girl set—its Harriet jeans are a favorite of Meghan Markle. Speaking about the pandemic’s impact on the fashion sector, Bartle said, “Overall, this is a little bump—and maybe even an accelerator” when it comes to the move toward sustainability. “It feels like it slowed us down maybe in some respects, but taking away some of the noise and the clutter mainly will help us as an industry.” He characterized that “clutter” as brands and products that fail to live up to the standards shoppers are increasingly demanding. Bartle founded Outland in 2008 with the mission of helping survivors of human trafficking in Asia, and the company has retained a keen focus on providing living wages and a high quality of life for its workers in small villages in Cambodia. Still, even with that clear-eyed mission, “denim wasn’t a category that was flying off the shelves for a large part of the pandemic,” he said. 2020 quickly became the era of loungewear, presenting major challenges for the denim company’s supply chain.

“There must be a commitment to choose sustainable materials over virgin materials, to fund sustainability innovation, and to publicly put ambitious goals on the table and figure out how to actually meet them.” — Amy Roberts, The North Face

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For six months during 2020, the brand’s production facility was either totally shuttered or running on a “skeleton team” that worked solely on product development as demand dwindled and health and safety issues loomed large. “We weren’t able to be in production, so that was a really heavy hit for us,” he said. Outland sent its staff home but continued to pay them throughout this period. “It was it really one of those times where you sit back and you go, ‘Okay, this is where the rubber hits the road, and how genuinely committed to these people are we?’” Bartle said. Ultimately, Outland decided it was unwilling to walk away from its founding promise, even as cash flow constricted. “The problem with these kinds of events is that the vulnerable become more vulnerable,” he said. “We had heard horrific stories happening around our industry as a result of brands canceling their orders and walking away from things that were that were committed to.” While production stalled, the brand was able to focus on advancing some of its sustainability projects, which Bartle said will likely debut this year. For one, the label is looking to implement a blockchain solution that would help Outland and its shoppers track both its environmental and social impacts throughout the supply chain. Another major priority is a circularity-driven process to manage post-consumer products and production waste. “There’s so much innovation in the agricultural space,” he said, referring to end-of-life solutions that allow materials to safely and efficiently biodegrade. In the meantime, the brand is seeing demand for denim return and bolstering business through a focus on its direct-to-consumer channel. While Outland is far from seeing business as usual, Bartle cautioned brands about being “short-sighted” in their efforts to preserve margins. “We’re happy to use cheap labor and cheap countries to produce our products, but when they really need us, we step away,” he said. “That was never going to be our brand, and I would rather our brand go down doing the right thing than be highly profitable doing the wrong thing.” California basics and accessories brand

Cuyana espoused a similar philosophy during the harshest months of last year, leaning into its tagline, “Fewer, better” as shoppers tightened their purse strings. “Early in 2020, when the pandemic first hit, we wanted to shift how we were speaking to our customers and anticipate what their needs were at such an uncertain time,” a Cuyana spokesperson said. During this period, the pandemic’s impact led many shoppers to reconsider what was most important to them, they added. “We felt similarly—we wanted to simplify and embrace a new perspective,” the spokesperson said, adding that the brand “slowed down our product launches and focused on slow living, what that meant, and how we could be there for the community in a new way.” In December, the group’s CEO, Karla Gallardo, characterized Cuyana’s core product offerings as being comprised mostly of year-round essentials. Because 80 percent of those items have been tried and tested, the brand has been able to predict its production needs using historical data—avoiding excess and helping avoid markdowns. Still, Cuyana has had to revamp its trend-forward selection to meet the needs of the “current environment,” Gallardo said—one where most shoppers were working from home and had few occasions to wear a polished ensemble or carry a supple leather shoulder bag. “The slowdown at the beginning of quarantine was very eye opening,” the spokesperson added. “One of our customers’ priorities is to buy quality-made pieces that will stand the test of time,” and that meant pivoting to wear-anywhere crossbody and belt bags, as opposed to work-ready totes. Gallardo said that the brand repurposed the materials it had already ordered from its suppliers for the smaller, more affordable bags, seeking to preserve relationships with its tanneries in Italy and Argentina and avoid putting their businesses in an unfavorable position. The company’s easy-wearing, minimalist garments are generally better suited to Zoom calls than an evening on the town, and Cuyana saw a boost in sales on these items, many of which are crafted from Pima cotton grown and spun by artisans in Peru. “Our ultimate goal is to provide the highest

OUTLAND DENIM KEPT ITS FOCUS ON SUSTAINABILITY EVEN AS PRODUCTION STALLED AMID THE PANDEMIC.

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quality possible, which means using excellent materials and working alongside skilled craftsmen,” the spokesperson said, adding that Cuyana “worked closely with [its global suppliers] to plan and adjust,” prioritizing commitments and strategically adjusting buys rather than canceling shipments and hurting partner relationships. While shoppers did indeed pull back on discretionary purchases, one sector of the apparel and footwear industry saw unexpected gains. Shoppers sought out new hobbies that allowed them to socially distance, taking solace in nature while shops, restaurants and other venues for entertainment boarded up for months on end. The increase in outdoor-related activities led not only to a spike in sales for purveyors of gear, but a newfound interest in environmentalism. “The few studies conducted since the pandemic began have shown that the crisis has focused people’s attention more sharply on the importance of the health of our planet,” Amy Roberts, senior director of sustainability and social impact for The North Face, told Sourcing Journal. Roberts pointed to an Accenture study that showed 60 percent of respondents making “more environmentally-friendly, sus-

tainable, or ethical purchases since the start of the pandemic,” with more than 90 percent intent on maintaining that behavior post-crisis. “I believe people took note of the improvement in air quality during the initial weeks of lockdown,” Roberts added, “and climate change also seems to be a higher priority for policymakers than in the past.” The North Face has launched a number of sustainability-driven programs in recent seasons. Last year, the company expanded its Bottle Source collection—which pulls post-consumer plastic waste from protected park lands and processes it for use in new apparel and footwear items—with a special project benefiting the mountain range that spans India, Nepal, China and Bhutan. In late 2019 the company launched Futurelight, a series of PFC-free waterproof outerwear made with 90 percent recycled materials, and joined forces with The Renewal Workshop on its Renewed Design Residency program, training rotating groups of the brand’s designers on the principles of circular design and garment repair. Just this February, the company announced its latest effort: a collection made with cotton sourced using regenerative farm-

“I would rather our brand go down doing the right thing than be highly profitable doing the wrong thing.” — James Bartle, Outland Denim

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ing practices, produced with Boston-based agricultural innovation company Indigo AG. The line will hit the market in fall of 2022. “We believe the investment in sustainable creation and products is not only worth it in environmental returns, but that this is what consumers are looking for when they make purchasing decisions, even during the pandemic,” Roberts said, adding that The North Face maintained its commitment to prioritize recycled content over synthetics during 2020. “We have plans to continually accelerate these products and commitments over the next few seasons,” she said. “There must be a commitment to choose sustainable materials over virgin materials, to fund sustainability innovation, and to publicly put ambitious goals on the table and figure out how to actually meet them,” she added. Roberts also pointed to the brand’s parent company, VF Corp., as a driver and a champion of these goals. While the company has found itself faring favorably with shoppers due in part to its practical product selection—which aligns with shoppers’ current outdoor obsession— Roberts believes brands across the board must prioritize environmental initiatives to have a shot at more wallet share moving forward. “The commitment to sustainability must start at the top levels of an organization,” she said, “and should be viewed through the same lens as product quality—a ‘must-have’ and not just a ‘nice-to-have.’” That responsibility doesn’t just extend to brands, but to retailers as well—even those that took major hits due to mandatory brickand-mortar store closures last year. As it was staring down a $521 million loss in the first quarter of 2020 and contending with massive cuts to its workforce across the country, Nordstrom nonetheless released a sweeping set of corporate social responsibility (CSR) goals addressing environmental impact and human rights, as well as philanthropy. The company committed to halving its single use plastic output, ensuring that 15 percent of its product assortment meets its internal “sustainable style” guidelines, taking back 100 tons of beauty packaging for recycling, and investing more than $50 million in

its local communities over the course of the next five years. “When making our 2025 sustainability goals, we collaborated with a diverse group of internal and external stakeholders across our value chain to conduct a new materiality assessment,” a Nordstrom spokesperson said, adding that this process helped the company identify the social and ecological issues that it would prioritize. “For sustainability, we focused our efforts around climate change, the environmental impact of our products, and services and circularity,” they said. The company had already surpassed its 2020 sustainability goal of sourcing 90 percent of its energy from renewable sources in deregulated markets in 2019, the spokesperson said, relieving the pressure during a year filled with relentless operational headwinds. As it stands, nearly 97 percent of the company’s energy comes from renewable sources across those deregulated states, and almost 28 percent of the energy used in operations is also renewable. The retailer has also invested in energy-efficient cost-saving measures, partnering, whenever possible, with mall owners to install solar panels on the roofs of its stores. The effort not only contributes to forward-looking sustainability goals, but the company views these partnerships as “an important way to support clean energy and reduce our expenses.” That effort is ongoing, and currently three Nordstrom Rack stores have solar arrays on their roofs, bringing the total across the company to seven stores. Nordstrom, which operates about 100 locations, develops its CSR strategy with a five-year horizon in mind, the spokesperson said, allowing it to be “strategic with our priorities and remain responsive to the current environment.” And despite retail’s enduring challenges, the company believes that customers are increasingly looking to fashion players to take on an active role in protecting the environment and lending a helping hand in their communities. “Nordstrom leads with the fundamental belief that we have a responsibility to leave the world better than we found it,” the company said.

Sustainable Apparel Coalition Marks a Decade THE FOUNDER OF THE HIGG INDEX HAS SEEN ITS SHARE OF SUCCESSES, AND CRITICISMS. JASMIN MALIK CHUA

hen two unlikely allies— Patagonia and Walmart— formed with Sustainable Apparel Coalition (SAC) in 2011, it was with the goal of creating eco-friendly products based on a standardized approach for measuring sustainability across the value chain. Nothing like that had been done before. The San Francisco-based organization ushered in a new era of corporate collaboration. Before, companies worked on proprietary programs and solutions in isolation, which meant the industry was moving neither collectively nor holistically on sustainable improvements. At first the idea of “pre-competitive collaboration” was a radical one, said Amina Razvi, the organization’s executive director. For many brands, their proprietary efforts were what set them apart from the competition. They had to be convinced that what the SAC was trying to do was not get businesses to develop the same products together but rather unite in “all the things that go into

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driving business” because no company was going to solve systemic issues on their own. Getting disparate stakeholders—from manufacturers to brands to retailers to non-governmental organizations to governments to academics—on the same page wasn’t easy, either. “They all have different goals and strategies in mind for their own companies,” Razvi said. The SAC quickly realized it had to be equal parts “instigator of courageous conversations about challenges,” mediator and cheerleader. A decade later, the SAC’s roster has ballooned past 250 members with a collective annual revenue of $845 billion, including household names such as Amazon, Asos, Gap, H&M, Levi Strauss, Nike, The North Face and Timberland. Its tentpole product, the Higg Index, has expanded into a suite of sustainability assessment tools that helps more than 21,000 organizations across 190 countries measure their social and environmental performance. “You can’t manage what you don’t measure,” Razvi

said. “It starts from having really good data.” The SAC has spun out two sister organizations—the Apparel Impact Institute and Higg Co—and helped bolster the Social & Labor Convergence Project’s efforts to improve labor conditions in the garment supply chain. In 2019, it linked arms with the Global Fashion Agenda, a sustainability think tank, the Federation of the European Sporting Goods Industry, a pre-competitive platform representing the interests of the sporting goods companies, and Laudes Foundation (then known as C&A Foundation, the philanthropic arm of Belgian-German-Dutch retailer C&A) to establish the Policy Hub for Circular Economy to “promote and demonstrate the value of a European policy framework that accelerates circular economy in the apparel, footwear and textile industry.” In that time, Razvi says making a convincing business case for sustainability has become easier, though the work is “by no means over.” Still, the organization marks its 10th anniversary at what it has dubbed an “inflection point” for the industry, with a devastating global pandemic, the worsening impacts of climate change and surging social unrest not only casting long shadows on the supply chain but also creating a “real sense of urgency and a sense of responsibility.” “Crises are, I think, incredible inflection points because they allow you opportunities to reflect on how [we got] to this point and what needs to change as we move forward,” said Razvi. “And it can often provide the impetus for having some of those really challenging conversations.” The SAC, she noted, got its start in the aftermath of the Great Recession. “Industry players were saying, ’Hey look, we’ve been working on some of these issues for 20 years and we’re not actually creating the kind of change that we wanted to see,” Razvi said. “Here we are, 10 years later, and while we have made some good progress on certain aspects, there’s clearly so much more work that needs to be done.” The Higg Index has been described by many as nothing short of transformational, allowing companies to use its data and insights to align their business goals with their

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social and environmental values at an unprecedented scale. “By providing a standardized, scored, and verified assessment and facilitating collaboration between brands, retailers, and manufacturers, the SAC helps the industry shift its focus from compliance so companies can focus on improving the wellbeing of workers who produce billions of garments, textiles, and footwear each year,” Abhishek Bansal, head of sustainability at Arvind Limited, an India-based textile manufacturer, said in the SAC’s “Decade of Review” report. Pascal Brun, head of sustainability at H&M, described the Higg Index as the “most robust and holistic sustainability assessment in the industry.” Adoption of the tools, he added, will provide a “standardized method for measuring sustainability performance and enabling comparability and transparency which will, in turn, drive industry change through collective action.” The Higg Facility Environmental Module (FEM), which informs brands and manufacturers about the environmental performance of their individual facilities, introduced a “common language” for supply chain sustainability at Guess, said Jaclyn Allen, its director of corporate sustainability, helping the denim nameplate “communicate with our denim laundries and improve their water impact.” As the SAC embarks on its next “decade of action,” the Higg Index will be a “key tool for the Guess transformation, and that of the entire fashion industry, as we collectively tackle the climate crisis,” she added. But praise for the organization’s work hasn’t been universal. Last August, a fouryear study by researchers at the University of California, Berkeley, funded by the Laudes Foundation, characterized the Higg Index in general—and the Higg FEM in particular— as a “scale without a diet” that falls short of meaningful action. “The Higg Index has established a very strong foundation to measure environmental performance at apparel factories, so factories and brands now know how these factories perform,” associate professor Dara O’Rourke, lead author of the study, told Sourcing Journal at the time. “But what they still need to do is create mechanisms to in-

“Crises are, I think, incredible inflection points because they allow you opportunities to reflect on how [we got] to this point and what needs to change as we move forward.” — Amina Razvi, Sustainable Apparel Coalition

centivize the factories to get better. To continue the metaphor, it’s not enough to know how much you weigh, you also need to say, ’Alright, I’m going to work out, I’m going to eat differently.’ There needs to be a feedback loop where the factories actually benefit from getting better right now.” In February, the Clean Clothes Campaign, the garment industry’s largest alliance of labor unions and non-governmental organizations, deriding the SAC for a “decade of denial” that “cast aside” workers’ rights and measurable transparency in favor of “self-serving corporate social responsibility gibberish.” “That SAC’s focus is on protecting brand reputation rather than protecting garment workers’ rights is obvious,” the organization said in a statement. “If ’A Decade in Review’ actually mirrored reality, it would show workers being paid poverty wages yet still having billions of dollars in wages stolen from them; working excessive (frequently forced and/or unpaid) overtime; experienc-

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ing gender-based violence, abuse and intimidation on the factory floor and suffering many other human rights violations.” The Higg Index Materials Sustainability Index (MSI), which measures and scores the environmental impacts of materials based on life-cycle assessments (LCAs), has also come under fire for rating the cradle-togate impacts of synthetic materials such as polyester, acrylic and polyurethane orders of magnitude below silk, wool and cow-based leather and, in so doing, framing them as better-for-the-planet options. “It is a generally accepted principle that you cannot compare LCAs unless they are produced using exactly the same boundaries and methodologies,” said Veronica Bates Kassatly, an independent analyst. “No such suite of comparable LCAs for the various fibers used in the apparel sector exists. In fact, the only LCAs based on global data are for cotton. Polyester constitutes 57 percent of global fiber production, but nobody has

THE SUSTAINABLE APPAREL COALITION CELEBRATED 10 YEARS OF FOSTERING ECO-FRIENDLY CHANGE. | CREDIT: SVETA/ ADOBE STOCK

the slightest idea what the average impact of worldwide polyester production is, because there is no global LCA for polyester. Wool comes close, as Australia represents 70 percent of the wool used in the apparel sector and there are two LCAs for Australian wool. For the rest, there is no representative data at the global level, so we really are flying blind here.” Facing mounting criticism, the SAC announced last November that it will be replacing the MSI’s contentious aggregated single score with a second edition of the Higg Product Module that will include, for the first time, a more comprehensive consideration of a material’s use and end of life. Bates Kassatly remains skeptical, however. “The announced changes will make absolutely no difference,” she said. “MSI users already have access to the five individual impact area scores and can use them any way they please. It’s those impact scores that are unsubstantiated and misleading. Deleting the aggregated single score simply makes the MSI’s bias in favor of plastic fibers less apparent.” Razvi is aware of the gaps the Higg Index’s various modules must still address and the need for better, up-to-date information so its databases stay fresh. The SAC has adopted recommendations, including O’Rourke’s, to hone its tools. They’ll continue to evolve,

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she said, as the organization charts its course for the next 10 years with a “bold, new” strategic plan built around the pillars of collective action, integrated tools, transparency and sustainability leadership. Though most details are still coalescing, one specific member goal is to achieve a 45 percent reduction in greenhouse-gas emissions in line with Science Based Targets by 2030. “We will be looking at how we measure that for different member types, because what that means for a manufacturer is really different than what it means for a brand or retailer,” Razvi said. Despite the emphasis on measurement, the tools themselves aren’t “end game,” she said. Rather, it’s using the tools to “really actually understand where you are as a company or understand where we are as an industry and then use those insights to drive action at scale,” Razvi said. “Now that the tools are built, and they’re ready, the next step really is how we actually get that information in the hands of decision-makers, whether [they’re] companies or consumers,” she said. “In a lot of ways I feel like the next decade is going to be crucial for everyone, but I think there’s a lot of incredible work that’s coming out of our member companies in the coalition that will really allow us to transform the industry.”

Nordic Behemoths Look to Innovate SWEDISH TEXTILE GROUP TREE TO TEXTILE ANNOUNCED PLANS TO OPEN A NEW FACILITY TO SCALE ITS PRODUCTION OF SUSTAINABLE FIBER. KAT E N I S H I M U RA

“The objective is to provide a new manmade cellulosic textile fiber with as strong sustainability performance as possible, at the same time to an attractive cost level.” — Sigrid Barneko, Tree to Textile

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wedish fiber innovation group Tree to Textile, which was founded by the some of the Nordic region’s leading companies, is investing big to bring its sustainable cellulosics to a wider audience. Founded by fast-fashion firm H&M Group, global home goods giant Inter Ikea Group, paper producer Stora Enso, and LSCS Invest, Tree to Textile revealed that it will pump 35 million euros ($42.5 million) into building out a pilot plant in Sweden in an effort to commercialize its alternative cellulosic fiber for use across multiple industries. The plant opening marks a “critical next step” in bringing the fiber to market with scalable technology and low manufacturing cost, Tree to Textile said. Made from a biobased regenerated cellulose sourced from trees, the versatile fiber is developed using 33 percent less energy, 70 percent less chemicals and 80 percent less water than conventional fibers. What’s more, the process was engineered to suit large-scale production, and contains a recovery system so that processing chemicals can be reused. The plant with be built at Stora Enso’s

Nymölla mill in southern Sweden this spring, with the expectation that it will eventually produce 1,500 tons of fiber per year. The demo plant will be strategic for optimizing the process for the use of different types of dissolving wood pulp, Tree to Textile CEO Sigrid Barnekow told Sourcing Journal. Barnekow said the plant will allow her team to “verify the technology in a full-scale similar setting, and further fine-tune the process,” with an eye toward increasing sustainability and testing out alternative cellulose sources. “The objective is to provide a new man-made cellulosic textile fiber with as strong sustainability performance as possible, at the same time to an attractive cost level,” she added. Tree to Textile’s current process relies on the dissolution of pulp in a cold alkaline solution that “does not come with any air emissions, residue streams or involve carbon disulfide,” Barnekow said. Meanwhile, water and chemicals are recovered and reused to repeat the process. When asked when the fiber is expected to hit the mainstream market, the CEO said that he hopes to see its introduction within the next few years.

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Canopy Has a Bold Plan to Save The Climate THE FORESTRY NONPROFIT REVEALED AN “AUDACIOUS SOLUTION” IN DAVOS. JASMIN MALIK CHUA

anopy has a “survival plan” for saving both forests and the climate. At Davos in Switzerland earlier this year, the forestry nonprofit revealed a “bold” but tangible strategy to save 30 percent or more of the world’s forests by 2030. The key step? Replacing half of forest inputs for global pulp supply with alternative fibers such as agricultural waste, which is typically burned or left to rot on fields, or leftover cotton from the textile supply chain, which is often incinerated or landfilled. It’s an “audacious solution,” Canopy said, but one backed by solid data that makes a business case for investing not only in mills producing these alternatives but also in “well-sited and well-managed” forests. Fashion’s relationship with forests makes such a move especially vital. Of the 6.5 million metric tons of viscose pulp produced annually, roughly half stems from ancient and endangered forests, from the “carbon-rich peat-

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lands of Indonesia [to the] old-growth boreal forests of Canada,” the organization said. At the same time, just 25 percent of cotton textile waste and 25 percent of rayon waste could replace all wood fiber currently used to manufacture dissolving pulp, it added. In its “next-generation action plan,” Canopy says its proposal will require the establishment of 200 agricultural-fiber pulp mills, 107 recycled-paper pulp mills, 17 recycled cotton garment and/or microbial-cellulose-dissolving pulp mills and 7.5 million hectares of new forests planted on lands not prioritized for food production, habitat maintenance and restoration or carbon storage. To further secure the scale of conservation needed, Canopy recommends the reduction of 16.65 million metric tons of consumption through reuse and materialefficient design initiatives. While overhauling supply-chain infrastructure will cost an estimated $69 billion over the next 10 years, such a change is not only necessary, Canopy says, but achievable.

“We’re thinking big, because there’s no point to doing anything less.” — Nicole Rycroft, Canopy

It only requires strategic alignment among investors, innovative technology ventures, pulp producers, paper and viscose manufacturers, governments and corporate buyers of wood pulp-derived products. And, as the organization somewhat wryly notes, the maker of Botox sold for $63 billion in 2018. “More pertinently,” in 2018, private, public and development finance institutions committed $140 billion in investments to infrastructure development in 41 low- and middle-income countries. “Our brand partners want these next-generation solutions and the technologies are ready,” Nicole Rycroft, executive director of Canopy, said in a statement. “We’re thinking big, because there’s no point to doing anything less. Now is not the time for climate despair, but for transformative action, and, ultimately, hope for our forests, climate and people the world over.” Madelene Ericsson, environmental sustainability business expert at H&M, a Can-

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opyStyle member that has pledged to eliminate the use of ancient and endangered fibers from its supply chain, said she welcomed Canopy’s approach of breaking the plan into components for producers, investors and corporate purchasers of pulp products. “Collaboration across supply chains, at scales beyond what has been considered before, is needed in order to address the climate and biodiversity challenges we face,” she said. Andrew Pidden, global head of sustainable investing at DWS (formerly know as Deutsche Asset Management), likewise lauded Canopy’s proposal. “DWS believes that protecting global biodiversity and increasing carbon sinks from forests will play an instrumental role in sequestering carbon as a climate change mitigant on a global level,” he said. “Approaches like Canopy’s, targeting supply-chain sustainability across the paper products and textiles industries, represent a critical component of this effort.”

CANOPY’S STRATEGY AIMS TO SAVE 30 PERCENT OR MORE OF THE WORLD’S FORESTS BY 2030. | CREDIT: SMILEUS/ADOBE STOCK

The Money Tree FROM GREEN BONDS TO SUSTAINABILITY-LINKED LOANS, COMPANIES ARE RAISING FUNDS TO SUPPORT NEW INITIATIVES. JASMIN MALIK CHUA

burgeoning number of fashion brands want to raise green by going green. While environmental, social and corporate governance financing (ESG)—from green bonds to sustainability-linked loans—dates back to the mid-aughts, the idea of tying debt costs to measurable and verifiable corporate goals is still a new concept for apparel and footwear. That is rapidly changing, however. Over the past year, half a dozen companies, from luxury stalwarts like Burberry and Chanel to fast-fashion giant H&M, have issued billions of dollars in debt to accelerate social and environmental objectives throughout their supply chains. Climate change, no longer a distant or ignorable prospect, has caused a paradigm shift in the world of business. Across all sectors, green bond issuance reached a record high of $269.5 billion in 2020 and could hit $450 billion this year, according to the Climate Bonds Initiative. But the appetite for such instruments in fashion is indicative of growing pressure on apparel and footwear purveyors to demonstrate a commitment to cleaning up practices known to be especially polluting and exploitative. They’re also a way of courting investors who want to beef up their ESG holdings and

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avoid potentially controversial assets. “There is a growing recognition amongst investors that they have a role to play in helping to tackle climate change, and we look forward to engaging with them,” Philippe Blondiaux, chief financial officer at Chanel, said after the French company raised 600 million euros ($716.3 million) through its BNP Paribas-supported bond issue last September. “The philosophy of Chanel is the creation of long-term value for the business and for society. This financing is entirely in line with these principles.” Not all green financial vehicles are equal; nor do they behave the same way. Green bonds, for instance, are typically pegged to defined sustainability projects. Chanel connects its bond terms to specific carbon targets, such as transitioning to 100 percent renewable energy across all owned facilities by 2025 and halving its Scope 1 and 2 greenhouse-gas emissions by 2030. Adidas says it will use the proceeds from its eight-year, 500-million-euro ($596.9 million) bond, which also debuted last September, to purchase recycled materials, invest in renewable energy production and support “various initiatives to create lasting change for underrepresented communities.” In February, VF Corp., which owns The North Face, Timberland and Vans, announced it will be deploy-

FIRMS ARE TURNING TO THE FINANCE MARKET TO FUND GREEN INITIATIVES.

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ing the 493 million euros ($588.6 million) in net proceeds from its inaugural green bond, which it rolled out last year, to a swath of sustainability projects, including procuring more sustainable materials, planting 2 million trees and saving hundreds of millions of liters of water through conservation efforts. Sustainability-linked loans, on the other hand, incentivize a brand’s achievement of predetermined performance indicators at a companywide level. More crucially, while a green bond offers a fixed income, its sustainability-linked counterpart can have fluctuating terms. “The beauty of sustainability-linked bonds is they directly hurt a company when it comes to money,” said Joachim Klement, an investment strategist at U.K. banking firm Liberum. “So, if they don’t reduce their carbon footprint, for example, or if they have labor issues, or if they have issues with increasing injury rates of the workforce, they have to pay [the bondholders] more interest.” Prada was the first luxury house to partake of the scheme in 2019 when it closed

a five-year, 50-million euro ($59.7 million) “sustainability term loan” rewarding the realization of certain sustainability thresholds— such as the number of stores that acquire a LEED Gold or Platinum certification—with lower annual interest rates. H&M’s recent eight-year, 500 million-euro ($596.9 million) sustainability-linked bond, which was nearly eight times oversubscribed, will create a “clear and transparent commitment” for it to increase its share of recycled materials by 30 percent, reduce emissions from its operations by 20 percent and shave off Scope 3 emissions from fabric production, garment manufacturing, raw materials and upstream transport by 10 percent by 2025. H&M considered issuing a green bond, but it ultimately opted for a sustainability-linked one, because the latter was a “better fit,” said Nils Vinge, head of investor relations at the company, which also owns the & Other Stories, Cos, Monki and Weekday brands. “In our view, the sustainability-linked format, compared to traditional green bonds, gives more flexibility to invest where the money

“There is a growing recognition amongst investors that they have a role to play in helping to tackle climate change.” — Philippe Blondiaux, Chanel

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makes the most impact in order to meet the ambitious targets we have set out.” In the case of VF Corp., the company was exploring a traditional bond as a financing avenue before it decided to give green bonds a go, said Jeannie Renne-Malone, its vice president of global sustainability. It turned out to be good timing, she said, dovetailing with the company’s new science-based targets, its intensified promotion of the circular economy and a shift toward regenerative agriculture.“It fit within our business culture—we have a deep commitment to the betterment of people and the planet—and it just seemed absolutely right to go down this road,” Renne-Malone added. The advantages of such vehicles are manifold, its proponents say. Borrowers benefit because they have a new source of capital to help them reach their social and environmental ambitions faster. The community and the planet benefit because dollars are being channeled in ways that create positive change. Customers win, too, Renne-Malone said. The more a company like VF Corp. invests in sustainable materials and processes, the bigger the opportunity they have to choose products that reflect their values. Seeking out green financing also allows brands to “tell their sustainability story” to investors, particularly deep green investors, who are more discerning in where they allocate their money, she added. The fact that H&M’s bond oversubscribed so quickly, Vinge agreed, “shows that investors really appreciate H&M as a company as well as the new sustainability-linked bond format.” While critics have taken issue with green financing as another marketing gimmick for

potential greenwashers, Klement doesn’t think such vehicles will give brands that much of a reputational boost among consumers. “Let’s be honest: How many people who go into an H&M store or go online to H&M know that it has issued a green bond?” he said. Green and sustainability-linked bonds, he said, fasten a company’s bottom line to its environmental outcomes “and, with that, the possibility to reduce the cost of its debt or the cost of financing its operations. And that makes a big difference for a business.” But brands acknowledge that a key part of the process is validation and verification, especially when it comes to the measurement of the key performance indicators such vehicles hinge on. The landscape is still, for the most part, voluntary. The Green Bond Principles & Climate Bonds Standard, for example, leaves the definition of what is “green” up to the issuer to define. More standardization is still required to “enhance the effectiveness, transparency, comparability and credibility of the green bond market,” the European Commission wrote in its proposal for an EU Green Bond Standard in 2019. In a 2020 survey by International Finance, 60 percent of the investors polled described current green bond impact reporting as “inadequate.” “We want to make sure that we are communicating to our investors who put their dollars toward this bond, so we’re very diligent about how we outlined the spend in our bond,” Renne-Malone said of VF Corp.’s Green Bond Impact Report, which it published in February. “It really helps get everyone on the same page and really build that consensus that this is the right thing to do.”

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ESG Moves Center Stage SCRUTINY ON COMPANIES’ PRACTICES AND ETHICS IS INCREASING, AS IS THE POTENTIAL FOR MORE REGULATION. V I C K I M. YO U N G

aking investments based on a company’s ESG characteristics has been gaining relevance in recent years, and the fashion and retail sectors are taking notice. ESG, or environmental, social and governance, is a metric that examines a firm’s performance in three areas. On the environmental front, carbon footprint and water conservation, as well as waste disposal, are often the most vital factors. For social, a greater emphasis on worker health and safety at factories, along with ethical supply chain sourcing have become key concerns. As for governance, executive compensation, transparency in communications and a separation between the chairman and CEO positions are priorities. According to credit analysts Corinne B. Bendersky and Michael T. Ferguson at S&P Global Ratings, ESG is expected to gain even greater prominence going forward as a litany of issues from a turbulent 2020 linger.

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Nike Strides Toward Goals THE COMPANY OUTLINES PLANS TO TACKLE EVERYTHING FROM EQUALITY TO PLASTICS TO INPUTS. J E S S I CA B I N N S

ike Inc. has taken its mantra of “Just Do It” and applied it to its approach to sustainability. The Oregon-based superpower has outlined plans to build a cleaner, greener and more globally diverse business in the next five years. In its impact report for fiscal 2020, published in March, the athletic wear giant looked back at its achievements over the past five years while plotting not just “aspirations” but rather a “call to action” guiding progress in the half decade to come, president and CEO John Donahoe wrote in the executive summary. The sneaker powerhouse says its plans align with both science-based targets and the United Nations’ Sustainable Development Goals. And “[f]or the first time,” he added, “we will tie executive compensation to Nike’s progress in deepening diversity and inclusion, protecting the planet.”

DIVERSITY

Nike’s top brass has ample opportunity to push progress forward. Though the firm saw racial and ethnic minorities filling 29 percent of U.S. vice president roles last year (an eight percentage-point improvement), the owner of the Jordan Brand in addition to Nike and Converse aims to perk that figure up to 35 percent by 2025 “as our society continues to reckon with

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systemic racial injustice,” Donahoe wrote. What’s more, the company recognizes that attracting and retaining diverse talent means instructing executives on how to lead different kinds of employees. To that end, Nike said that by fiscal 2025, it’s shooting for all leaders at the vice president level to “complete and be credentialed on inclusive leadership education.” And pay parity is on its radar, too: Nike has ambitions to achieve 100 percent “pay equity across all employee levels on an annual basis” while ensuring “competitive and equitable benefits.” It’s already close to meeting goals for women in the workplace, aiming for 50 percent companywide in the coming five years, up from fiscal 2020’s 49.5 percent mark. However, Nike sees female talent representing 45 percent of leadership roles by the middle of the decade and stated goals to double its investments “focused on professional development for racial and ethnic minorities in the U.S. and women globally.”

MATERIALS AND MANUFACTURING On the materials and manufacturing side, Nike reported notable gains while detailing plans for improvement. Suppliers responsible for finishing and dyeing textiles consumed 30 percent less fresh water since fiscal 2016, equivalent to 40 billion liters kept unsullied

NIKE’S “ENVIRONMENTALLY PREFERRED” MATERIALS MATRIX PUTS A FOCUS ON SUSTAINABILITY.

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and out of Nike’s supply chains. It says it plans to further prune that metric by 25 percent by fiscal 2025. Tier 1 suppliers of finished footwear products now funnel nearly all—99.9 percent—of their manufacturing-derived waste from landfills into alternate uses. In the next five years, the sports standout is aiming for a tenfold increase in the amount of finished product it can repair, recycle or re-home, it said. Nike has its eye on castoffs, too, striving to curb production waste from sneakers and other shoe products that otherwise would be tossed in the trash heap or fed to the fires. Though no baseline was given for this metric in fiscal 2015, Nike saw a 6.5 percentage point improvement in the ensuing five years. Upward of 47 million kilograms of production leftovers were channeled into new footwear items, it said, much of which shows up as its well-known Nike Grind sneaker soles. As part of its Reuse-a-Shoe program, the company transforms manufacturing scraps destined for the landfill and previously worn athletic shoes into Nike Grind, seen in “soft landings on playgrounds around the world and perhaps even under the carpet on your floor,” a spokesperson said.

Though material innovation has gotten considerable attention in fashion as of late, Nike’s work on this front is something of an enigma. While it grew its sustainable apparel inputs from 19 percent to 59 percent since fiscal 2015, it actually took two percentage steps backward with its goal to pour more eco-friendly components into footwear, dipping from 31 to 29 percent over the past 60 months. Nike is aiming to course correct by setting “functional targets on the areas of greatest impact linked to our innovation roadmap,” which means shelving “inconsistent priorities” for the sake of homing in on eco-friendlier material replacements—and especially those consumed in high volumes, a spokesperson said. Cotton, polyester and leather, for example, will be replaced with recycled alternatives where possible. Footwear is a tough nut to crack, material wise, due to the myriad components that make up a typical shoe, from rubber, foam, adhesives and sockliners to the polyester and leather commonly composing its uppers. “To minimize our impact, we are focused not only in our upper materials, but also in our materials and methods of [making] of our footwear bottom units, especially around midsole foam and outsole rubber,” a spokesperson said. What’s more, Nike is now following the Sustainable Apparel Coalition’s “more holistic” and “rigorous” Higg Material Sustainability Index instead of the Footwear Sustainability Index that previously guided its sourcing and design efforts. It’s also driving “awareness and education about impact and offering tools” to help footwear teams adopt “better material and design choices,” the spokesperson said. “Innovation by focusing on new methods of recycling as well as new material types that meet our product and consumer requirements will be increasingly important,” the spokesperson added, noting Nike’s “environmentally preferred” materials matrix encompassing Flyknit, Flyleather, recycled poly and nylon, and sustainably sourced cotton. In fact, cotton emerged as a highlight for Nike, which says it sourced 100 percent of the staple fiber more sustainably by last year, up from 24 percent in fiscal 2015. The Better Cotton Initiative pioneer came in at No. 5 on the group’s 2019 leaderboard in recognition of its sourcing efforts.

PLASTIC AND PACKAGING “We envision a world free of waste, where products are designed to be loved, reused and rediscovered as something new.” — Nike Inc.

Part of fashion’s waste woes and pollution problems stem not just from production and sourcing but also the piles of plastic and packaging employed for transit throughout the supply chain. And at Nike, packaging alone accounts for approximately 30 percent of its total waste footprint. In 2021, Nike says it’s on track to globally eliminate plastic bags from its operations, with a special focus on ditching packaging air pillows in North American digital commerce orders, a move that could trim 200,000 pounds of plastic each year. Removing paper return slips will conserve 25 million sheets of paper while redesigned shoe boxes, it added, slash carbon emissions in half. A pilot employing new popup cartons for footwear, produced with 57 percent to 100 percent recycled content, eliminates “110 football fields” of corrugate cardboard consumption. It’s also trying out paper mailers for apparel, derived from 90 percent recycled content and fully recyclable at curbside. Shopping bags are also under review. “In a move that could eliminate more than 70 million shopping bags a year, Nike is working on eliminating single-use plastic bags globally,” the spokesperson said, noting a new goal to trim another 10 percent of waste via “additional packaging design and operational efficiency programs.” “We have already rolled out this initiative in Greater China and Europe and plan to transition to paper bags in all of our stores soon.” Nike admits the sprawling “size and scale” of its business are a “major driver in maintaining a healthy planet.” Though it didn’t reveal plans and strategies for any new stores, the company said its “retail design ethos challenges us to ensure sustainability lives at the core of everything we do,” from the ingredients used in fixtures and mannequins to materials for displays, doors, flooring and more. Stores like the sustainability-minded Guangzhou location are likely to inform future templates.

CONSUMER-FACING CIRCULARITY Though brands face the task of cleaning and greening their own activities, they also must take on the role of teaching their consumers

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about the part they play in managing their planetary impact. Like many others in the industry, Nike is not only looking at how it can “responsibly extend the life of products and materials,” but also “how we empower consumers to [make] educated shopping decisions,” a spokesperson said. Those ambitions will manifest this spring in the form of a “new circular business model that offers high-quality, refurbished products” at enticing prices at select North American retail locations, the spokesperson said, hinting at how Nike will support a “sustainable lifestyle” for its consumers through an owned resale operation where it controls and verifies product authenticity. “We envision a world free of waste, where products are designed to be loved, reused and rediscovered as something new,” the spokesperson added.

SUPPLIER SUPPORT

Nike also noted the ways in which it supports its sprawling supplier community. Its trade finance scheme with the International Finance Corporation has distributed north of $717 million to 46 factories, which may have helped footwear suppliers curtail their per-pair energy consumption by nearly 10 percent since fiscal 2015. In the five years ahead, the athletic firm wants 100 of its “strategic suppliers” to facilitate access to career advancement and “upward mobility for women employed in their facilities.” It also stated a goal to reach a cumulative spend of $1 billion on “diverse suppliers.” Looking ahead to fiscal 2025, the NBA’s official uniform supplier has set its sights on slashing greenhouse-gas emissions by 70 percent—in both owned and operated facilities— while it’s prioritizing “clean chemistry alternatives” for its 10 primary chemical inputs. Nike succinctly summarized its mindset on sustainability, noting that in “the race toward a better tomorrow, there is no finish line.” “Our goal is, and always will be, for Nike’s people and purpose to come together for good,” Donahoe wrote. “At Nike, we’ll never stop striving for better. Our purpose will always guide us, and our values will always push us forward—toward that better future we believe in.”

While sustainability continues to be a top priority across denim, achieving true circularity remains the biggest challenge for everyone in the industry, according to Sedef Uncu Aki, director at ORTA. That’s why the denim manufacturer has developed its own “Golden Ratio,” what it calls a “perfect mix of pre- and post-consumer recycled materials and alternative natural materials” to give its product the look and feel it is known for, while retaining its strength and durability. In this Q&A with Sourcing Journal, Uncu Aki explains how the denim manufacturer has built on this standard by making additional commitments to design a world without waste. What have been your most recent developments to address the continuing demand for sustainability? ORTA’s new Gen H features a breakthrough denim fabric made with up to 30 percent hemp, an important net-positive biodiversity crop sustainably sourced from the leading hemp farm in France. With Gen H, ORTA has perfected the authentic look and feel of your favorite denim with the most resilient, soft and bio-positive ecofibers. With our new Golden Ratio standard in mind, we have been incorporating recycled cotton into our products. The amount of recycled cotton we used to develop new jeans in 2018 was equivalent to 130,000 jeans diverted from landfills and incinerators. In 2019, this number skyrocketed to 11.3 million. Recently, as a next step to close the loop, we partnered with GAMA, a recycling center here in Turkey. We send GAMA our textile waste, and they send us the recycled fibers that we can use in new material production. This collaboration redirects our waste from the downcycling sites and from going into our landfills. ORTA recently launched an industry-leading impact platform called the “New Denim Route.” With this supplier and resource platform, ORTA opens its processes, traceability and production so that every brand, every partner and consumer can access the origins of the denim they love. How critical is it for the apparel industry to standardize sustainability assessments and frameworks? This is very critical. All brands and retailers apply slightly different frameworks on environmental and social subjects in order to achieve their own sustainability goals. Managing these systems on different formats and platforms makes it difficult to monitor, track and manage the performance for the suppliers. The sector needs a universal standardized system powered by third-party verification, which could help transfer system-related data to consumers more comfortably.

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To address the top concerns of the end consumer, what are the key metrics that brands and retailers should track and report? Brands and retailers should track the environmental and social performance of their suppliers and report and communicate on these so consumers can use them as decision-making KPIs for their purchases. Here, we see great potential in life cycle assessment (LCA) studies, which can determine the potential environmental impact of your products, such as carbon emissions and water use, starting from the design choices. We share LCA of our products as a decision KPI to our customers through QR codes on product hangtags. When scanned, the QR code directs the user to a webpage featuring fiber origin countries and the environmental performance of that fabric compared to standard denim. We believe these studies are the first step in communicating to the new Gen Z shoppers the real value of their choices. What are some of the roadblocks that apparel and fashion brands still must overcome to deliver on their sustainability initiatives? The human element of manufacturing is still a great challenge, and the true cost of a garment should reflect that. It shouldn’t only be about the materials and resources going into the product. As another roadblock, we see that the lack of standardization and control throughout the sector causes the market to be vulnerable to unsubstantiated sustainability claims, hence greenwashing. That is why brands need to educate themselves on the global challenges and the solutions first; set science-based targets and then educate their customers to grow the demand for better solutions. What will sustainability in 2021 look like? How has the conversation evolved? For the past year or so, we see an increasing attention to circularity and demand on recyclable products, as well as products with recycled content. This challenges fabric mills to design textiles meeting both needs without compromising the quality and performance of their products. Besides, on the supply side we are still facing problems finding enough recycled material sources, a challenge that we hope to alleviate in the near future. Brands are now fully mapping their supply chains in transparency practices. Recently, we have seen brands using DNA and other marking and tracking systems using blockchain technology, and we hope to see more of that in the future.

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ORTA ACHIEVES THE ‘GOLDEN RATIO’ TO DESIGN A WORLD WITHOUT WASTE

Is Blockchain the Solution to Traceability? THE TECHNOLOGY ENABLES THE PRECISE TRACKING OF EVERYTHING FROM RAW MATERIALS TO GOODS IN THE SECONDHAND MARKET. KAT E N I S H I M U RA

hen it comes to the fight for a more ethical and sustainable future, fashion players are increasingly engaging technology in an effort to guarantee transparency. It’s no longer enough for a brand to vouch for its supply chain—instead, true traceability has become the objective, requiring sophisticated solutions that follow textiles and raw materials from farms to mills to factories and finally, store shelves. “Blockchain technology creates visibility into the entire supply chain of any material, allowing its journey to be tracked from sourcing all the way to sale and, effectively, beyond it,” Leanne Kemp, CEO of blockchain and IoT technology company Everledger, told Sourcing Journal. One reason brands are upping their game when it comes to implementing tools like blockchain is due to the rapidly growing consumer interest in where—and how—products are sourced. “Supply chains are not only about the movement of products from point

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A to point B,” Kemp explained, “they are also the backbone of a company’s perceived value.” Kemp characterized consumers as “the most important part of the supply chain,” as they drive demand, effectively shaping the industry’s output. “It’s critical for players in the industry to understand consumers’ needs,” she said, while adapting to a need for communication systems that ensure integrity and “reinforce a consistent source of ethics and trust.”

HOW DOES IT WORK?

Blockchain tracks the provenance and journey of products and their inputs, drafting a virtualized narrative “from the very start of the supply chain through to end-use,” Kemp said. Mapping that migration creates a full picture of the companies and organizations that touch every aspect of a product. The objective is not to show how an individual product changes literal hands, she added, but to enable visibility into all of the potential actors within each tier of the supply chain. The process relies on perpetuating the

concept of a “digital twin,” or a virtual version of an item that is tracked electronically. “Traceability provides opportunities to find supply chain efficiencies, meet regulatory requirements, and to connect with and understand the actors in the upstream supply chain,” Kemp said. In the end, tools like blockchain are also used “to story-tell to consumers,” often through pictures or scannable QR codes on packaging. Everledger’s platform combines blockchain and other tech solutions, like near-field communication (NFC), which allows electronic devices—like a smartphone and an RFID-chip-enabled garment, for example—to talk to each other and exchange information.

WHY USE IT?

According to Kemp, implementing blockchain into an existing transparency strategy is a no-brainer, as it helps companies better respond to “the most important risks and opportunities in their multitier supply chains.” Demand for raw materials “continues to grow unabated,” she said, under the stressors of “global population growth, the rapid rise of the middle class and the continuous emergence of new technologies and applications placing ever greater demand on nat-

ural resources.” As need for a multitude of crops and materials skyrockets, supply faces increasing constraints due to factors like climate change, water scarcity, political instability and “resource nationalism,” or the tendency for groups and governments to assert control over their own natural resources, shielding them from use by others. “The growing, long term imbalance of supply and demand threatens business performance across the board,” Kemp asserted, and companies that are “unable to insulate themselves against the threat of scarcity” stand to face challenges. Supply chain traceability isn’t just about proving and promoting sustainable operations—it’s also about monitoring the overall health of a supply chain.

TRACKING RAW MATERIALS

Blockchain is becoming especially valuable when it comes to complex upstream operations, Kemp said, which often have a high number of stakeholders, from smallholder farmers to miners, artisans and homeworkers. It can be especially difficult to trace the origins and the journey of these materials and products, often produced in remote locales, without the help of traceability tech. That premise informed the partnership

“The key issue is validating the claims that brands make to their consumers about the origins of the garments they’re selling.” — John Roberts, AWI BLOCKCHAIN TECHNOLOGY CAN ENABLE BET TER TRACING THROUGHOUT A FIBER’S LIFECYCLE.

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between Everledger and nonprofit research center and consultancy Australian Wool Innovation (AWI). AWI’s subsidiary, The Woolmark Co., owns the most recognizable global certification symbol for the production of pure new wool. The project, which began in January, allows AWI to track and trace the full supply chain of Australian merino wool from farms to end consumers. “AWI came to us, as they had been monitoring how consumers have been more and more mindful of provenance, corporate social responsibility, and biosecurity,” Kemp said, asserting that the group’s goal was to demonstrate merino authenticity throughout the processing phases, as well as lend credence to its sustainable practices and compliance. “Knowing the origin of any given product, and the raw materials that go into it, is quickly becoming the minimum expectation in the raw materials supply chain, rather than a nice to have,” John Roberts, chief operations officer at AWI, told Sourcing Journal. “Wool has a particularly compelling story to tell, particularly in light of the ever-growing consumer demand for garments made from natural, renewable and biodegradable fibers.” It was this influx of interest from shoppers—who have cottoned on, in recent years, to fashion’s massive environmental impacts—that led the group to pursue blockchain as a solution. “The key issue is validating the claims that brands make to their consumers about the origins of the garments they’re selling,” Roberts explained. Everledger will also help AWI profile individual Australian wool growers, providing assurances for brands that they can confidently market their products as ethically sourced. According to Roberts, tracking wool is “an extensive process,” as the material sees up to 15 different treatments and transactions in its journey to become a finished garment sold at retail. “In time, we hope to be able to capture that entire journey,” he said. Given the complexity of the material’s supply chain, though, Roberts believes it’s difficult to predict whether blockchain will become a widely adopted tool by producers. “When using a natural fiber like wool, processors need to continuously blend to create

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the perfect recipe that delivers the right finished garment,” he explained. The nuanced “art form” of mixing those fibers could make finished garments harder to trace. Kemp was confident, though, in blockchain’s viability—and its necessity—in the raw materials space. When it comes to wool in particular, she anticipates that Everledger’s data systems will soon be able to show details as granular as the sheep’s birth date and breeding, as well as how its wool was processed, giving shoppers even more peace of mind about the wellbeing of the animals in the supply chain.

BLOCKCHAIN, LUXURY AND THE SECONDARY MARKET Blockchain isn’t just useful in providing assurances that a product is sustainable—it can also be used to validate its authenticity as it continues to change hands, Kemp said. This could prove extremely valuable in the luxury re-commerce space. “The pre-owned luxury goods market is growing and shows no signs of slowing down,” she said, driven by the acceleration of digital, a heightened sensitivity to value and evolving consumer understanding of circularity. “Resale disruptors—especially online luxury consignment sites—are positioning themselves as conscious alternatives to fast fashion, tapping into affluent consumers’ changing attitudes towards sustainability, luxury experience and the concept of ownership,” she explained. While luxury brands have traditionally shied away from the secondhand market, the trajectory of resale trends is forcing them to rethink this stance. Platforms from The RealReal to eBay, ReBag, ThredUp and Poshmark make it easy for shoppers to buy and sell preworn goods, including luxury wares that have lost their luster with their original buyers. While these players have managed to successfully streamline the transacting process, authentication continues to plague platforms dealing in high-value luxury goods— even as they tout trained authenticators as part of their business model. “Secondhand shopping is inherently riskier than purchasing straight from a manufacturer or design-

“Traceability provides opportunities to find supply chain efficiencies, meet regulatory requirements, and to connect with and understand the actors in the upstream supply chain.” — Leanne Kemp, Everledger

er, as there’s no guarantee an item is authentic,” Kemp said, fingering this issue as an outstanding “barrier to widespread interest in the secondary market” among shoppers seeking high-value items. “Giving shoppers a clear way to easily verify the authenticity of each item erases these concerns and allows them to have confidence in the legitimacy of what they are buying,” she said, as Everledger has done with luxury fashion house Alexander McQueen’s MCQ label. In February, the groups launched a brand-centric platform for MCQ that relies on the implantation of blockchain-enabled RFID chips in its garments. Not only can shoppers view a product’s backstory—they can also check their purchases into a digital wardrobe on the MCQ app, “empowering them to collect, and eventually trade, each of their items as collectibles on the platform,” Kemp said. The indestructible ledger is also proof of purchase, enabling shoppers to sell their products to anyone with confidence. “While the secondhand personal luxury goods market is today relatively small compared to the entire luxury market, its growing influence on the primary market is enough for luxury brands to take notice,” Kemp said. “We’re only at the beginning of understanding the potential of blockchain in the fashion space, and as more consumers recognize the added value it brings, particularly to luxury fashion, it’s certain to be more widely implemented.”

BLOCKCHAIN’S MAINSTREAM APPLICATION Blockchain isn’t just for brand execs or luxury buyers, according to California cool apparel brand Reformation. It’s also not a goal for the future, but a present reality, as evidenced by the launch of its own line of traceable denim in mid-March. The company, which has built a cult following around the idea of conscious consumption and transparency, regularly releases its own sustainability scorecard, committing to paper its goals and missteps. In service of its current objective—complete traceability through its entire supply chain— the brand sought out a partnership with

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BLOCKCHAIN PRIMER

A TRANSACTION IS SENT, WHICH IS THEN SHARED ON A PEER-TO-PEER NETWORK.

THE REQUEST IS THEN VALIDATED AND A BLOCK IS CREATED THAT CONTAINS INFORMATION AND DATA.

THE BLOCK IS ADDED TO THE BLOCKCHAIN.

THE TRANSACTION IS TIMESTAMPED AND BECOMES UNALTERABLE. A CRYPTOGRAPHIC KEY SIGNATURE IS CREATED TO PROTECT ACCESS.

blockchain technology provider FibreTrace. The company’s unique platform involves the embedding of small quantities of dye directly into denim’s raw fibers, Danielle Stratham, FibreTrace’s founder, told Sourcing Journal. “The luminescent pigment essentially creates a passport for the fiber to move through the supply chain,” she explained. The garments are then traced with digital bluetooth scanning devices, “which drop information verifying provenance, environmental impact, location, fiber quantification, factory certification and beyond onto the blockchain platform.” What’s more, the process “does not affect the quality or output of the yarn, fabric or garment or its wearbility” in its goal of providing a “real-time, live connection” with the product. According to Kathleen Talbot, Reformation’s chief sustainability officer and vice president of operations, the company has already exceeded its 2020 goal of providing 100-percent traceability into its tier one and

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two suppliers, including finished goods assemblers, subcontractors, dyers, printers, weavers, finishers and knitters. The brand is currently reaching for the brass ring of full traceability into tier three suppliers, like fiber producers, spinners, recycled material collectors and processors. “Working with FibreTrace is part of a focused effort towards our next traceability goal of digging into our tier four raw materials suppliers and achieving deeper traceability at the fiber, forest, and farm level,” she said. “We’re exploring how to incorporate this type of technology into other fabrics and future collections as part of that goal.” As the company continues to promote transparency in its supply chain, Talbot believes traceability technology will play an integral role in securing shoppers’ trust. “Using blockchain makes our efforts and supply chain assurance claims even more automatic and irrefutable, which we see as a huge value for both our brand and our consumers,” she said.

BLOCKCHAIN MAKES IT EASIER TO PROVE SUSTAINABLE CLAIMS WITH ENHANCED END-TO-END VERIFICATION.

With partnerships across brands in footwear, children’s wear, workwear, and outerwear, as well as a presence in more than 25 countries, Morito Scovill Americas (MSA) casts a wide net across the supply chain. The fastener manufacturing company develops all kinds of products necessary for apparel, whether it’s snaps, buttons, grommets and washers, zippers, hooks and bars. In covering some significant ground, MSA develops these products not only with a commitment to providing operational efficiency to customers and partners, but also to preserving the Earth’s resources and using eco-friendly manufacturing methods. Shane McEntyre, chief sales officer at Morito Scovill Americas, shares more about the company’s continued commitment to sustainability via the C.O.R.E initiative, which is aimed at reducing manufacturing’s emissions rates, as well as the overall consumption of water and power. What have been your most recent developments to address the continuing demand for sustainability? In 2020, Morito Scovill Americas announced our sustainability initiative—C.O.R.E.™, which is our promise to be Committed to Our Resources and Environment. C.O.R.E. is composed of eco-friendly manufacturing methods, products, and partnerships that will greatly reduce our manufacturing impact. MSA has joined the Sustainable Apparel Coalition (SAC) and will use the group’s sustainability suite of tools, the Higg Index, to drive environmental and social responsibility throughout the supply chain. Prior to 2020, MSA made several upgrades to its Clarkesville, Ga., manufacturing facility to improve its environmental footprint, including the construction of an in-house wastewater treatment plant, the implementation of counter-flow rinse systems that reduce finish plating water consumption by approximately 50 percent and the retrofitting of LED lighting to reduce lighting energy consumption by 68 percent. The efforts don’t end there, with MSA committing to 90 percent recycled corrugated packaging and up to 80 percent recycled plastic packaging to ship all of our products. Our facility also keeps Volatile Organic Compound (VOC) or Hazardous Air Pollutant (HAP) discharge at less than 10 percent of the allowable limit. As scrutiny over sustainability claims has increased, what types of new requests are you fielding from your brand and retail partners? Some of our larger brand partners are now requiring membership in the Sustainable Apparel Coalition and completion of the Higg Index to reduce unnecessary environmental harm and impact throughout the textile supply chain.

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Is there a particular area (water, energy, chemistry, etc.) that seems to be the first priority for fashion today? Where should they focus next? We have not seen one particular area that fashion seems to be focused on first. However, to support the transition to more sustainable garments, MSA’s C.O.R.E manufacturing methods do not utilize processes such as electroplating, sandblasting, color filling and paint baking. Removing these processes means that significantly less water and power is consumed, and emissions are decreased during production. Educating our customers about C.O.R.E. allows us to influence garment designs and help the industry continue to move toward more sustainable and eco-friendly alternatives. As investors are increasingly equating sustainability with risk mitigation, what pressure does this put on players up and down the supply chain to substantiate their claims? As more focus is put on sustainability initiatives, transparency into environmental and social responsibility throughout the global supply chain has become increasingly important What are some common misconceptions your brand and retail partners have about assessing the sustainability of the components in their products? Without question, sustainability goes beyond textile and now goes through the entire garment. Brand and retail partners need visibility into what sustainability initiatives are being practiced throughout their entire supply chain. What are some roadblocks that apparel and fashion brands still must overcome to deliver on their sustainability initiatives? Apparel and fashion brands are becoming more transparent with their sustainability initiatives, which are being pushed further down the supply chain. One roadblock to reaching these is cost; are they willing to pay more to achieve those goals? MSA is committed to continuous improvement and is always working toward the advancement of our ecofriendly manufacturing processes and product offerings. What will sustainability in 2021 look like? How has the conversation evolved? In 2021 and beyond, sustainability conversations are taking place on a global scale. Our partnership with the Sustainable Apparel Coalition will help us have a positive impact on product sustainability, eco-friendly manufacturing processes and will become a model for how industries can collaborate to make a positive impact on value chain performance.

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HOW SUSTAINABILITY REMAINS AT MORITO SCOVILL’S C.O.R.E.

VF Takes on Sustainability, Diversity FROM CUTTING DOWN ON PLASTIC IN ITS PACKAGING TO EXAMINING INCLUSIVITY IN ITS WORKFORCE, THE CONGLOMERATE IS TAKING A HANDS-ON APPROACH TO CHANGE. S J S TA F F

F Corp. whose brands include The North Face, Supreme, Timberland, Vans and Dickie’s, has long been on the pioneering front of sustainable practices. Recently, the company was recognized by Ethisphere, which aims to advance ethical business practices, as one of the World’s Most Ethical Companies. It was the fifth consecutive year it has earned that distinction. Already in 2021, the vendor has put multiple new initiatives in place.

PACKAGED GOOD

At the start of this year, VF revealed plans to eliminate all single-use plastic packaging, including polybags, by 2025. Remaining non-plastic packaging used by VF and its brands will be reduced, originate from sustainable sources and be designed for reuse or recyclability, it added. Before it reaches that point, VF plans for all single-use plastics in product packing to be 100 percent recycled, bio-based content STEVE RENDLE

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or a combination of both by 2023. The apparel, footwear and accessories conglomerate also plans to shift all its paper-based packaging to recycled content—a minimum of 80 percent, where performance allows— third-party-certified virgin content or a combination of the two by 2023. As part of its new sustainable packaging roadmap, VF also said it will commit to leadership in “crucial industry coalitions and policy initiatives” to help build circular packaging infrastructure that will enable its 2025 pledge. The company noted its support for Canopy’s Pack4 Good effort. One of the initial 10 brands to join the initiative at its founding in 2019—other participants include Asos, H&M, Kontoor Brand, Reformation and Toms—VF has committed to not using materials from ancient and endangered forests in any of its paper packaging and reducing its overall forest fiber consumption for packaging. “With a portfolio comprising some of the world’s most iconic apparel and footwear brands, we recognize we play an important role as environmental stewards and can serve as a catalyst for industry movements that drive positive change,” Jeannie Renné-Malone, vice president of global sustainability for VF, said in a statement. “Our new global packaging goals are an example of how we can leverage our scale for significant impact. In just one year, we could potentially eliminate as many as 100 million polybags from our packaging waste.” Beyond packaging, VF has also introduced a suite of complementary guidelines and goals to support its commitment to minimizing waste. The company plans to eliminate all non-essential, single-use plastics for which there is a viable product alternative throughout its direct operations and from all company-sponsored events by 2023. It also plans to transition its owned distribution centers to be zero-waste by April 1, to “implement sustainability best practices” in its internal and external sponsored events and to work with retailers and industry peers to support the development of collection platforms and recycling technology. Additionally, VF’s Icebreaker brand has set a goal of becoming plastic-free by 2023.

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Timberland has outlined a plan to have a net positive impact by 2030. The North Face’s Polybag Brigade recycling program, launched with TerraCycle in 2011, has recycled more than 5 million polybags to date, according to VF.

DIVERSITY AND INCLUSION

The Colorado-based company also announced that it’s doubling down on diversity commitments by implementing a number of programs and public policy initiatives to address gaps in opportunity for people of color both within its organization and beyond. The agreed-upon actions were developed by an internal group, the Council to Advance Racial Equity (CARE). “Given the profound inequities that negatively impact the lives and livelihood of Black and Brown Americans, the actions we are taking through our CARE initiative, combined with our strategic partnerships at the corporate and brand levels, are critical steps to elevating and accelerating our work to promote racial equity,” VF president and CEO Steve Rendle said in a statement. “We are committed to the actions we’ve outlined and will hold ourselves accountable for making meaningful progress and leading by example.” By 2030, VF aspires to see Black, indigenous and people of color (BIPOC) represent one-quarter of the company. In support of this goal, it has partnered with the Oregon-based Pensole Design Academy—which provides students with training in footwear design—to introduce students of color to its Vans, Timberland and The North Face businesses. A masterclass with the labels’ design teams will help provide these upcoming industry creatives with on-the-ground experience, and top-performing candidates will earn the opportunity to participate in a year-long rotational apprenticeship at VF’s Denver offices. Rendle said the firm’s partnership with Pensole “directly aligns with our commitment to enable racial equity for marginalized communities with a specific focus on uplifting the Black and Brown communities, which have been traditionally underrepresented in the fashion and design space.” Also bolstering its goal of finding and hir-

ing diverse candidates, VF has committed to employing Mansfield Rule requirements as a recruitment benchmark. The system was originally developed as a tool for the legal industry, and it requires that at least 50 percent of candidates up for hire or promotion to any position are women, BIPOC, LGBTQ, and individuals with disabilities. The company has also pledged to resolve any identified pay gaps for employees, its sponsored athletes and influencers using a pay equity analysis. In order to both enforce and incentivize the adoption of diversity, inclusion and equity goals among people managers, director-level staff and above will see a portion of their bonuses tied to the implementation of the new goals. What’s more, the company’s vice presidents will commit three hours each fiscal quarter to mentoring BIPOC employees and individuals from the community. New review processes will help identify advancement plans for those who demonstrate high potential, and they will be paired with executive leaders who can sponsor their aspirations. The responsibility for promoting inclusion won’t fall squarely on the shoulders of VF’s leaders. All employees will be required to participate in diversity and inclusion training to foster a culture of belonging and allyship, it said. VF also plans to take its commitments beyond its walls by establishing a diversity program for its suppliers. The company said it would double its spend with minority and women-owned businesses by 2025, both through direct and indirect procurement of goods and materials, as well as through the activities of its individual brands. Meanwhile, the VF Foundation, which provides philanthropic grants on behalf of the company, has committed 10 percent of its funding support to community initiatives that advance its racial equity strategy.

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SUPPLY CHAIN TRANSPARENCY

VF is also broadening its traceability mapping program by publicly disclosing Tier 1 through Tier 4 supplier information for dozens of products in a consolidated, downloadable file. The move, according to the fashion conglomerate, provides an “unprecedented level” of transparency, both for the company and the larger fashion industry, which often struggles to map its suppliers past the first tier of finished-goods manufacturers. The scheme currently covers 46 of its “most iconic” products. Offering supply-chain visibility through Tier 4, VF said, demonstrates its commitment to improving and increasing transparency as outlined in its corporate sustainability and responsibility strategy, Made for Change. “Traceability is foundational to building an ethical and sustainable supply chain and drives improvements for both people and our planet,” Shanel Orton, director, VF responsible materials and traceability, said in a statement. “The new data helps us further validate adherence to VF’s policies and supplier requirements throughout our supply chain, giving our teams, stakeholders and consumers greater confidence that our products are manufactured in a responsible manner.” VF has also translated the data into interactive geographical maps, plus a traceability disclosure list, that are available on its website. The new disclosures, it said, offer consumers and stakeholders previously unavailable visibility into the tiers of its supply chain, while providing “greater insights” into the origins of its products. “We’re on a journey to drive positive change throughout our global supply chain while simultaneously strengthening the trust between VF and its suppliers, stakeholders and consumers,” said Orton. “We believe this bold action improves our practices and sets an even higher standard in our industry.”

With deep roots in apparel production, Polartec knows a thing or two about manufacturing using sustainable materials. Since inventing the process to knit fleece products from recycled plastic bottles nearly 30 years ago, the company has increased the use of recycled materials while expanding its offerings into performance textiles designed to be worn for all seasons and conditions. While any expansion invites challenges, the commitment to continuous improvement is what enables the company to stay ahead of growing sustainability demands, Steve Layton, president of Polartec, tells Sourcing Journal. What have been your most recent developments to address the continuing demand for sustainability? Top of mind would be our newly launched premium lowshed Polartec® Power Air™. This groundbreaking technology is the next generation of fleece, and can be a real enabler for circularity. We’re also spending a tremendous amount of effort to fully eliminate perfluorinated chemicals (PFCs) in our durable water resistant (DWR) treatments across our entire performance fabric line without diminishing performance or longevity. Additionally, our experts are gathering research on various fibers, and are constantly looking for ways to make our product more circular. How have demands from your apparel clients changed over the past year, and how has this impacted your products and operations? Over the past year, we’ve seen a big increase in outdoor participation—the average consumer is more engaged with the outdoors than ever before. Our core apparel clients have taken notice, and are looking ahead positively. With the influx of new customers, there’s a greater interest to get back to providing something familiar and comfortable, and that’s where Polartec’s deep heritage can add to the consumer relationship. As far as operations, it’s been a bit of a bull whip since last March. From plant shutdowns to lack of labor and transportation, not to mention a scarcity of raw materials, operations were drastically slowed. We’re now facing an even more challenging year because of the increased demand from consumers, but we’re working hard to increase capacity and route all available materials into our products. Many apparel retailers and brands have set aggressive sustainability goals. What will it take to ensure the industry is able to reach them?

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The bottom line is commitment. The industry needs to work together to commit and hold themselves accountable to their stated goals. At Polartec, we don’t see those goals as a way to look good on paper—we see them as a way to continuously improve and discover ways to do things better. It truly is a commitment to understand how science enables sustainability, to dive into the end of life of garments and understand how products behave. Any step forward is a good step forward. How critical is it for the apparel industry to standardize sustainability assessments and frameworks? As one of our engineers likes to say: good science begins with good measurement. This is really the crux of standardization. We, as an industry, need to collectively work together to make sure all our independent movements are coordinated. What are some of the roadblocks that apparel and fashion brands still must overcome to deliver on their sustainability initiatives? Reflecting back on the impact of operations over the past year, a big roadblock that comes to mind is the tightening of the post-consumer plastic supply chain. There’s been an emphasis on recycled plastic for quite some time from apparel brands, but now the big bottling companies are starting to use the same supply. It’s something we’ll need to keep notice of. To address the top concerns of the end consumer, what are the major metrics that brands and retailers should track and report? It’s important to have your consumer trust you and your products. A lot of it is responsible sourcing, from how we obtain products to how they’re made. What is the actual cost of this garment? How is it being made? In what conditions? Those are questions that should really be asked from the gathering of the raw material all the way through to the finished product. That transparency builds trust, which is so important to gain and maintain your consumers. What will sustainability in 2021 look like? How has the conversation evolved? The conversation is definitely evolving from recycled content as the only option, to how other materials and production practices can positively impact our efforts at a more sustainably-driven industry. However, we’re still setting the table, so to speak, and there are a lot of possible outcomes and solutions. It will take a true collaboration of ideas to find the best path forward.

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HOW CONTINUOUS IMPROVEMENT DRIVES POLARTEC’S SUSTAINABILITY PUSH

Cradle to Cradle Evolves THE NEW STANDARD IS A COMPREHENSIVE FRAMEWORK THAT ENABLES COMPANIES TO PRIORITIZE ACTION ACROSS FIVE SUSTAINABILITY FOCUS AREAS. A RT H U R F R I E D M A N

he Cradle to Cradle Products Innovation Institute has recently released Version 4.0 of its Certified Product Standard–the most ambitious and actionable yet for designing and making products today that enable a healthy, equitable and sustainable tomorrow. For more than a decade, leading brands, designers and manufacturers have looked to the Cradle to Cradle Certified Product Standard to optimize products for immediate and long-term positive impacts. “Cradle to Cradle Certified has long been regarded as the most trusted and advanced science-based standard for designing and manufacturing products that maximize health and well-being for people and our planet,” institute president and CEO Peter Templeton said. “The fourth version of Cradle to Cradle Certified builds on this legacy by equipping brands, retailers, designers and manufacturers with actionable guidance and best practices for choosing safer materials, driving meaningful innovation, and creating products, systems and business models that have a positive impact on humans and the environment today and in the future.” The new standard is a comprehensive

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framework that enables companies to prioritize action across five sustainability focus areas. These are “material health,” ensuring materials are safe for humans and the environment; “product circularity,” enabling a circular economy through regenerative products and process design; “clean air and climate protection,” promoting clean air and renewable energy, and reducing harmful emissions; “water and soil stewardship,” safeguarding clean water and healthy soils, and “social fairness,” respecting human rights and contributing to a fair and equitable society. The new standard also enacts roadmaps for change, from product innovation to operations; transforms business models, systems and collaboration throughout the value chain; verifies sustainability performance and measure progress; and leads industry transformation toward a safe, circular and equitable future. Companies in every sector face growing pressure from investors, customers, employees and other stakeholders to demonstrate environmental, social and governance performance and to communicate progress in credible and transparent ways, according to Dr. Christina Raab, vice president of strategy

and development for the Institute. “Cradle to Cradle Certified Version 4.0 offers businesses of all sizes an ambitious solution for advancing from commitment to action by addressing interconnected sustainability topics, and developing safe and circular products,” Raab told Sourcing Journal. “By benchmarking performance against the standard’s ascending levels of achievement, companies can set strategy, measure progress, and clearly communicate their impact and leadership to their stakeholders.” Raab said 4.0 provides a framework to make products in a “very holistic way,” looking at sustainability, circularity and product safety. The interconnectivity of those topics gets increasing important, she noted, as the challenges companies face grow. “The product circularity and the social fairness of this new version are what really stand out,” Raab said. “The social fairness category has been updated to reflect the best practices around human rights topics, and diversity, equity and inclusion. It’s really about business operations and the practices in the supply chain.” The Cradle to Cradle Products Innovation Institute developed the new standard through a multi-stakeholder process informed by diverse technical subject matter experts, leading manufacturers, independent assessors and other market representatives serving on the Institute’s Standards Steering Committee, as well as its Stakeholder Advisory Council and Technical Advisory Groups. The standard has been tested in the market through the Cradle to Cradle Certified Version 4.0 Pilot Program. Eight companies have participated in the program by working to certify products to draft requirements of the new standard. The first products certified to Cradle to Cradle Certified Version 4.0 will be announced this spring. Materials and products that meet the Cradle to Cradle Certified Product Standard requirements may achieve Cradle to Cradle certification. The Cradle to Cradle Certified Product Standard verifies products and materials that are safe, circular and responsibly made. To earn product certification, organizations must work with an independent third-party assessor to determine a product’s achievement levels across the sustainability

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performance categories. The product is then assigned an achievement level for each category–Bronze, Silver, Gold and Platinum. The lowest level of achievement among the five categories determines the product’s overall certification level awarded by the Cradle to Cradle Products Innovation Institute. Looking ahead, Raab feels the industry is making step-by-step progress “and that is, of course, not satisfactory. Accelerated progress is required and more collective progress.” “Our standard is a leadership standard that requires deep commitment throughout a company and its supply chain,” she added. “And being in it for the long term. We hope this new framework can provide a means to accelerate industry progress toward circularity.”

CRADLE TO CRADLE PRODUCTS INNOVATION INSTITUTE’S CERTIFIED PRODUCT STANDARD VERSION 4.0 WAS RELEASED EARLIER THIS YEAR.

New Funding for e3 Growers ONE-HUNDRED PERCENT OF FUNDS CONTRIBUTED TO THE PROGRAM WILL BE DISTRIBUTED TO SUSTAINABLE COTTON FARMERS. A RT H U R F R I E D M A N

idalia Mills and General Standard are the first two companies to contribute to BASF’s new e3 Sustainable Cotton program–an unprecedented effort to provide additional economic support for farmers in the program who commit to growing sustainable cotton. Brands, retailers, mills and other cotton fiber value chain companies sourcing e3 Sustainable Cotton will have the opportunity to contribute a monetary amount to the fund. At the end of each year, 100 percent of those funds will be distributed equally to e3 Sustainable Cotton farmers, which is in addition to a $2.50 per bale premium BASF provides to farmers enrolled in the program. “We’re excited to have Vidalia Mills and General Standard join us in this first-of-itskind commitment and look forward to even more brands pledging to the fund,” Jennifer Gasque-Crumpler, e3 Sustainable Cotton program manager for BASF, said. “Our vision for honest, fair, sustainable cotton isn’t possible without our dedicated farmers and we’re grateful to our cotton fiber value chain collaborators who understand the importance of rewarding their effort.” Cotton farmers like Elizabeth Lague will

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be direct recipients of the fund. Lague grows Stoneville cotton in Tennessee and has been part of the e3 Sustainable Cotton program for the past two seasons. She also is a BASF business representative. As a farmer, she appreciates the opportunity she has through the BASF program to connect her cotton with companies that want to create traceability and transparency through the entire cotton fiber value chain, starting with sustainable farming practices. “For many generations, our family has worked the land with the mindset of leaving it better than we found it,” Lague said. “It’s encouraging to see brands support this mentality and reward the farmers behind the cotton.” The e3 Sustainable Cotton Grower Fund is part of a program that provides field-level traceability and is driven by comprehensive verification and a valued reputation for growing socially equitable, economically viable and environmentally responsible cotton. Farmers who are part of the e3 Sustainable Cotton program commit to tracking eight sustainability measures with 100 percent of their eligible cotton acres, ranging from water use and pesticide management to soil conservation and greenhouse gas emissions reduction.

Sustainability reporting strategies are not static, and this is clear in the evolution of wood-based fiber maker Lenzing’s own environmental communication over the years. Lenzing has been disclosing its environmental impact since 2003, when it released its debut publication on the topic in response to growing interest in sustainability. Five years later, the company published a sustainability report that included the first global fiber lifecycle study, which showed the benefits of wood-based fibers. As the demand for sustainability information advanced in the next decade, Lenzing established a dedicated department and introduced its “Naturally Positive” sustainability strategy in 2015. Two years later, the company published its first sustainability report that was based on GRI standards. Today, Lenzing’s sustainability reporting is on par with its business reporting. This includes having third-party audits and verification covering its raw materials, production processes and products, as well as its sustainability report. “Third-party assurance is of crucial importance as it is the best basis for internal and external credibility and also contributes a factual basis to strategy and target setting,” said Peter Bartsch, Lenzing’s VP Corporate Sustainability. “Lenzing has a history of basing its sustainability communication on third-party assurance because it helps stakeholders better understand complex issues.” Bartsch and Angelika Guldt, Sustainability Communications Director at Lenzing, spoke with Sourcing Journal about how downstream and upstream supply chain partners can better measure a product’s full impact and where sustainability reporting is headed. From your perspective, what are the top challenges fashion is facing when it comes to sustainability reporting? PB: To know your supplier and their environmental and social performance and to be able to track and trace back to raw material. To show internal tools, processes, how they assess and monitor suppliers’ performance. Regarding climate change, fashion brands have a high share of Scope 3 emissions from their supply. How to calculate and to report that is a challenge. Given the importance of being able to report on Scope 3 emissions, how can raw material suppliers help their downstream partners better measure their full carbon footprint? PB: Raw material suppliers should collect data of their own production, approach their own suppliers and calculate the carbon footprint of their own company. This information needs to be third-party verified and communicated with transparency. One option that includes all these steps would be provid-

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ing product lifecycle assessments. Having a dialogue down and upstream so everyone can understand and learn from each other’s challenges. Lenzing was an early adopter of science-based targets. How does having this added framework in place impact your ability to report on sustainability? AG: By joining the SBT (Science Based Target) Initiative, Lenzing created the basis for a comprehensive knowledge of its Scope 1, 2 and 3 emissions. This enabled us to adopt the new requirements by the Task Force on Climate-Related Financial Disclosure (TCFD) framework and Lenzing’s CDP climate and forest disclosures. All this has had a substantial impact on improving Lenzing’s reporting. As a publicly traded company, how does Lenzing consider investor interests as it issues sustainability information? What metrics matter to existing and potential shareholders? AG: Investors are one of Lenzing’s most important stakeholder groups, and sustainability has gained a lot of importance for this group. Climate protection and sustainable action are fundamental elements of Lenzing’s strategy and increasingly integrated in the core business. As part of that effort, we follow stricter transparency requirements laid down by investors and other stakeholders. We work hard to communicate our sustainability performance even more clearly based on the environmental, social and governance (ESG) approach. To that end, Lenzing established a dedicated ESG committee in 2020, chaired by the CEO of the Lenzing Group. Lenzing also established a working group focused on adopting the recommendations of the TCFD in order to credibly demonstrate Lenzing’s economic resilience as a business leader. How would you sum up the state of sustainability reporting? What do you expect to see change in sustainability disclosures in the next year? AG: Reporting has been professionalized over the past 10 years. The perception of sustainability reporting has tremendously gained in importance since. In the years to come, sustainability reporting will be increasingly considered by rating agencies, the financial community and end consumers, so we can expect an even higher degree of regulation, stricter standards and KPI-based disclosure of a company’s sustainability performance. The ecological aspects of sustainability will be even more linked to the economic and social dimensions of sustainability. This may even shape the character of reporting and promote the integration of annual reporting and sustainability reporting.

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HOW ECOLOGICAL DISCLOSURES RELATE TO ECONOMIC REPORTING

GOTS Certifications Top 10K in 2020 MORE THAN 3 MILLION PEOPLE IN 72 COUNTRIES ARE WORKING IN CERTIFIED FACILITIES. A RT H U R F R I E D M A N

ast year, the number of Global Organic Textile Standard (GOTS) certified facilities increased 34 percent globally, to a new high of 10,388 from 7,765 in 2019. The 16 GOTS Approved Certification Bodies reported that more than 3 million people in 72 countries were working in GOTS-certified facilities. Significant increases were seen in all regions. The Top 10 countries for certified facilities were India at 2,994, Bangladesh with 1,584, Turkey at 1,107, China with 961, Germany at 684, Italy with 585, Portugal at 449, Pakistan with 391, the United States at 167 and Sri Lanka with 126. GOTS-approved chemical inputs now number 25,913, an increase of 13 percent in 2020. This confirms that these inputs are increasingly used as a risk management tool by wet processors to satisfy legal and commercial residue requirements, GOTS noted. “The exceptional increase in this unprecedented year shows that decision makers value GOTS as an important tool to drive sustainable transformation in a comprehensive way, from field to fashion,” GOTS managing director Claudia Kersten said. “Using organic fibers and processing them under

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strict GOTS criteria definitely provides a credible and strong base for market players to be successful in the future.” GOTS version 6.0, to be implemented starting March 1, includes stricter social and environmental criteria. Certified entities will now have to calculate the gap between wages paid to “living wages” and will be encouraged to work toward closing this gap. Specific references to OECD Due Diligence Guidance and Good Practice Guidance for Social Criteria and Risk Assessment, as well as Ethical Business Practices have been explicitly included. GOTS is the stringent voluntary global standard for the entire post-harvest processing, including spinning, knitting, weaving, dyeing and manufacturing, of apparel and home textiles made with certified organic fiber such as organic cotton and organic wool, and includes environmental and social criteria. Key provisions include a ban on the use of genetically modified organisms (GMOs), highly hazardous chemicals such as azo dyes and formaldehyde, and child labor, while requiring strong social compliance management systems and strict waste-water treatment practices. GOTS is a non-profit organization that is self-financed.

“Using organic fibers and processing them under strict GOTS criteria definitely provides a credible and strong base for market players to be successful.” — Claudia Kersten, GOTS

Fashion companies’ environmental impact is largely tied to their products, and backing up sustainable claims for garments or footwear starts with proving the origins of all raw materials used. This responsibility is vital, as it’s ultimately the fashion brand’s reputation on the line. According to MeiLin Wan, vice president, textile sales at Applied DNA Sciences, one of the main mistakes that firms make in sustainability reporting is not having enough oversight of their supply chains and relying too heavily on paper records, transaction certificates or blockchain data that hasn’t been verified. Providing better visibility starts with tracking materials themselves. Applied DNA’s CertainT® solution places molecular signatures on everything from cotton and recycled polyester to leather, down and feathers, as well as specialty additives, coatings and finishes. With the addition of these tags, a brand knows whether its organic cotton is truly organic, and it can in turn communicate that confidently to consumers. Sourcing Journal caught up with Wan and Wayne Buchen, vice president of strategic sales at Applied DNA, to talk about how to better back up material claims and earn consumers’ trust. What challenges have your customers shared when it comes to sustainability reporting? WB: Our customers’ concerns relate to proving the provenance of the raw materials, and then being able to substantiate that their yarn, fabric and finished products are traceable to the raw material. For materials that claim recycled content, this still creates a challenge for customers that rely on a paper trail, mass balance or “tick the box” forms, which are inherently risky. Many companies have published sweeping sustainability goals for 2025. What can they do to more accurately audit whether they have reached these targets? MW: Auditing is only good if there is a system to ensure that you are not auditing the “golden samples.” All obtained samples must be authenticated with integrity. The challenge with Covid-19 on companies meeting their sustainability goals is that many supply chains have become fragmented due to cash constraints, excess inventories and suppliers becoming insolvent. Therefore, it is important to have an integrated supply chain that efficiently and effectively collects the samples from each touchpoint within the manufacturing process. This also includes all raw materials associated with the production of the finished products. Even trims and zippers need to be authenticated.

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As a best practice, we recommend authenticating products you know are from your supply chain. The key to proving that your sustainability goals are met is by linking them with scientific data to the claims for actual products. One of the hurdles for fashion firms is verifying sustainability data. How can raw material-level traceability and testing help to back up companies’ claims? MW: We developed a unique molecular tag that is specifically made to establish the date, time, place and who is using the tag on the physical material. Once the tag is applied, it enables the supply chain to test and track the raw materials as they are made into yarn, fabric and finished products including apparel, footwear and accessories. Our CertainT platform enables the supply chain to not only tag large volumes of raw material, but they can, with some training, conduct their own quality assurance using the portable testing systems, which can be used at the raw material stage. In addition, all testing data is uploaded into our CertainT portal, which can be accessed by authorized users. In consumer-facing communications, what’s the balance between sharing too much and too little sustainability information? WB: As the saying goes, “If you claim it, you own it”. Consumers expect transparency from brands, manufacturers and entire supply chains to provide proof of adherence to sustainability goals and communications. Consumers are more aware when brands and manufacturers make big claims without saying how they plan to achieve them. We believe that having data integrity enables you to be sure that consumers can trust that what you say is what you are doing. How would you sum up the state of sustainability reporting? WB: Although sustainability reporting is top of mind of many companies, the reality is that the impact of Covid-19 on businesses globally has moved the focus on sustainability to survival. However, the consumers, NGOs and advocates still expect that you meet your sustainability goals and therefore, the use of technologies such as CertainT will help to prove the provenance of your raw materials through to finished products. What do you expect to see change in sustainability disclosures in the next year? MW: We look forward to increased transparency and communications by brands and manufacturers to show their measurements against their stated goals.

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WHY A PAPER TRAIL DOESN’T CUT IT FOR MATERIAL PROVENANCE

Mitigating the Impact THE FASHION PACT HAS LAUNCHED A NEW SCIENCE-BASED INITIATIVE TO MITIGATE THE INDUSTRY’S SIZABLE ROLE IN BIODIVERSITY LOSS. JASMIN MALIK CHUA

“We are providing funds to groups that can directly trigger change at the farm-level, ultimately transitioning 1 million hectares to practices that work in harmony with nature.” - Marie-Claire Daveu, Kering

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leading climate-focused fashion agreement backed by Adidas, Chanel, H&M, Nike, Prada and Hermès has revealed a new science-based initiative to mitigate the industry’s impacts on biodiversity loss by minimizing land-use change, pollution and natural resources extraction. The Fashion Pact, a non-legally binding series of sustainability commitments launched by Kering boss François-Henri Pinault in 2019, has linked arms with environmental nonprofit Conservation International to establish “Transforming the Fashion Sector to Drive Positive Outcomes for Biodiversity, Climate and Oceans,” a project funded by a $2 million grant from the Global Environment Facility, the financing arm of the United Nations Framework Convention on Climate Change. “Conservation International is proud to partner with The Fashion Pact and its member companies to develop biodiversity strategies that conserve and restore forests and improve management of agricultural lands,” Bambi Semroc, acting senior vice president for the Center for Sustainable

Lands and Waters at Conservation International, said in a statement. “The support from the Global Environment Facility will enable us to develop regenerative approaches to agriculture supply chains, lessen the impacts of gold mining on nature and reduce carbon emissions while improving the lives of producers.” The effort, which will develop and share best practices designed to “clean [up] supply chains, improve agricultural practices, decrease deforestation and support livelihoods,” will provide a roadmap for the Fashion Pact’s 60-plus signatories to help them create “positive environmental change,” particularly across the cashmere, leather and gold supply chains. Conservation International, a Fashion Pact technical partner, will also help signatories establish “concrete” conservation targets that encourage practical action, including the development of a biodiversity strategy that encourages sustainable forest management with zero deforestation. “This pioneering program is absolutely aligned with The Fashion Pact’s conviction that we as the fashion industry need to

THE TOPIC OF BIODIVERSITY IS BECOMING MORE PREVALENT | CREDIT: KATHOMENDEN/ADOBE STOCK

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work together in order to drive solutions, innovation and impact at scale,” said Eva von Alvensleben, executive director and secretary-general of The Fashion Pact Association. “We are honored and humbled to join Conservation International and the GEF in leading this foundational work needed to explore sector impacts, [the] relevance of biodiversity to brands and their business and dive deeper into setting priorities and targets, taking action. Ultimately, this program has the potential to drive understanding and industry transformation towards nature-positivity through a science-based approach.” Conservation International recently partnered with Kering to roll out the luxury conglomerate’s Regenerative Fund for Nature, a grant-administering vehicle that aims to transition 1 million hectares of current crop and rangeland to regenerative farming practices over the next five years.

The fund will initially zoom in on leather, cotton, wool and cashmere—four raw materials that are not only central to Kering brands such as Alexander McQueen, Balenciaga and Saint Laurent, but also have the highest environmental impact, according to Kering. Projects will be monitored throughout to ensure they deliver measurable outcomes for nature, climate and livelihoods, it said. “Scaling the quantity and quality of natural, regenerative raw materials for the luxury and fashion industry is one of the key goals of the Regenerative Fund for Nature,” Marie-Claire Daveu, chief sustainability officer and head of international institutional affairs at Kering, said at the time. “Essentially, we are providing funds to groups that can directly trigger change at the farm-level, ultimately transitioning 1 million hectares to practices that work in harmony with nature. As an industry, luxury and fashion can

support this pivotal lever of change and help transform agriculture to meet climate goals and stem biodiversity loss.” The subject of biodiversity—and by extension regenerative agriculture, which incorporates practices meant to enhance the mix of microorganisms, plants and animals—is emerging with increasing frequency in discussions about promoting sustainability in the fashion supply chain. Last August, McKinsey & Co. said that brands and retailers must also tackle biodiversity, which is declining faster than at any other point in history, because apparel supply chains are “directly linked to soil degradation, conversion of natural ecosystems and waterway pollution.” The pandemic has only further underscored the need. Biodiversity loss, together with the wildlife trade, scientists says, is intensifying the risk and incidence of zoonotic diseases that jump from animals to humans. “Covid-19, instead of slowing the trend, has accelerated it—perhaps because people now understand more deeply that human and animal ecosystems are interdependent,” it said. “It’s time for the apparel industry, which to date has contributed heavily to biodiversity loss, to now make bold moves in the opposite direction.”

THE FASHION PACT HAS LAUNCHED A NEW SCIENCE-BASED INITIATIVE TO MITIGATE THE INDUSTRY’S ROLE IN BIODIVERSITY LOSS | CREDIT: EAD72/ADOBE STOCK

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As brands are looking to share more detailed information with consumers about their products, tier one factories have a key role to play in offering this transparency. And with supply chains under the microscope, there is a lot at risk if manufacturers don’t disclose sustainability data. “Violation of integrity can result in serious damage to a manufacturer’s reputation and the loss of customer trust,” said Daymond Kim, vice chairman at South Korea-based manufacturer Hansae. Responding to this need for information, Hansae’s first corporate social responsibility report was issued in 2012. In the almost decade since, the company’s focus has expanded from reducing water and energy consumption to include reporting on chemical management and benchmarking with the Higg Index and CDP, formerly known as the Carbon Disclosure Project. Here, Kim talks about how Hansae is working with its customers to provide the reporting they require and how sustainable action results in sales growth. What are your customers asking about when it comes to sustainability reporting? The top three sustainability activities demanded by our customers are reducing greenhouse gas emissions, eliminating hazardous chemicals in production and sustainable products. And data accuracy and transparency are considered the most important aspects when it comes to reporting those activities. Due to that, our customers also introduced and provided us with various reporting tools, and Hansae is closely working with our factories and subcontractors to utilize those tools. As of February 2021, over 70 factories including owned sewing factories and subcontractors are working on Higg Index Facility Environmental Module (FEM 2020) and over 20 wet processing factories that do printing and laundry are utilizing ZDHC Gateway to monitor their chemicals. Higg Co also developed the Higg Material Sustainability Index (Higg MSI) and the Higg Product Module (Higg PM), which assess a product’s environmental impacts. Currently, Hansae’s sales and R&D department are in discussions with a few of our customers on how we can utilize these indexes to develop a more sustainable product. Why did Hansae decide to join the CDP disclosure system? Our customer Walmart first invited us to participate in CDP in 2010, and Target Corporation has also been requesting it since

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2020. As one of the top garment vendors, transparency and full disclosure of Hansae’s GHG emissions and environmental impact were essential, and CDP was the one of the most powerful tools available for us to provide that information to customers. As a manufacturer, you’re sandwiched between raw material and component suppliers and your brand customers. How are you working with the entire supply chain to better understand your full eco impact? It is known that most of the environmental impact in the apparel industry comes from fabric manufacturing and processing. As a garment vendor, there are more and more requests for us every year from our customers to drive our fabric suppliers to participate in carbon reduction programs and chemical management programs. We are internally in discussion on how to effectively work with our fabric suppliers and gather full sustainability data from them to understand the entire supply chain. It is very important for us to understand the whole supply chain, which is very complex and diverse, and to have full visibility. We set the traceability system to track each supplier’s social and environmental impact. With this baseline, we support our suppliers to set up their own goals and implementation plan aligned with our brand customers’ targets. All these come from transparency and trust. Hansae is a publicly traded company. What information do you see investors most engaged with when it comes to sustainability? Environmental, social and governance (ESG) issues have traditionally been of secondary concern to investors. But in recent years, it has been changed, and ESG issues have become much more important for long-term investors, who use it as a KPI to determine their investment. In addition, our buyers in the U.S., Europe and Japan will drive more firms to take part to achieve the goal of net-zero emissions by 2050. From your perspective, what is the relationship between sustainable action and financial performance? Sustainability is concerned with the impact of present actions on the societies, environments and ecosystems of the future. Such concerns should be reflected in the strategic planning of our company. We believe we can expect sales growth and return on assets with the sustainable actions. Thus, our company has been making sustainability efforts and will keep doing so.

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HOW HANSAE IS MEASURING ITS TOTAL MANUFACTURING IMPACT

Ralph Lauren’s Revolutionary Take on Dyeing COLOR ON DEMAND ENABLES THE RECYCLING AND REUSE OF ALL WATER FROM THE DYEING PROCESS. A RT H U R F R I E D M A N

alph Lauren Corporation has introduced an innovative dyeing platform that could transform how the fashion industry colors cotton–more sustainably, effectively and faster. The company has debuted Color on Demand, a multiphased system with an aim to deliver the world’s first scalable zero wastewater cotton dyeing system. Ralph Lauren Corp. noted that every year, trillions of liters of water are used for fabric dyeing, generating around 20 percent of the world’s wastewater. Designed to help address water scarcity and pollution caused by cotton dyeing, Color on Demand is composed of technologies that enable the recycling and reuse of all water from the dyeing process. Color on Demand also dramatically reduces the amount of chemicals, dye, time and energy used in the cotton dyeing process. In addition, the platform provides a more efficient and sustainable way to color cotton at any point in product manufacturing, rather than at the outset. This will enable

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significantly shorter lead times for making product color decisions. “Traditional color dyeing is one of the most polluting practices in our industry and as a global brand, we recognized the need to create a scalable solution,” said Halide Alagöz, chief product and sustainability officer at Ralph Lauren. “Color on Demand significantly reduces the environmental impact of dyeing cotton and as an added benefit, will enable us to better balance inventory and meet personalized consumer demands faster than ever before.” As part of the first phase of Color on Demand, Ralph Lauren optimized the use of Ecofast Pure Sustainable Textile Treatment, a pre-treatment solution developed by Dow for cotton textiles. When used with existing dyeing equipment, it enables the use of up to 40 percent less water, 85 percent fewer chemicals, 90 percent less energy and a 60 percent reduction in carbon footprint compared with traditional cotton dyeing processes. Ralph Lauren is integrating this process into its supply chain and will launch product using this technology later this year.

As fashion firms are seeking ways to attain more sustainable supply chain operations, one organization aims to educate the industry on how it can effectively reach these goals. Cotton Incorporated is conducting research and developing science that will enable brands to make smarter decisions in emerging areas of concern such as plastic pollution and biodegradability. Dr. Jesse Daystar, chief sustainability officer of Cotton Incorporated, tells Sourcing Journal of the strategies behind improving sustainability science and supply chain knowledge that can ultimately help drive sustainability outcomes for the industry. Given your role as a leader in textiles, how is Cotton Incorporated actively educating stakeholders in the industry on the advantages of more sustainable and eco-friendly cotton developments? Cotton Incorporated is primarily a research organization, so our educational activities start with conducting research that can increase the profitability of growers and manufacturers while lowering impact on the environment. We share our research with the global cotton supply chain at events around the world, through one-on-one meetings, and through our communications platforms such as www.CottonToday.com, our sustainability website, and www.CottonWorks.com, an educational resource for the textile supply chain. We also hold a variety of live sustainability-focused workshops and webinars that provide education on lifecycle assessment (LCA) and other sustainability topics. We believe that by improving decision-maker sustainability literacy, more decisions will be based on sound science and result in better outcomes for cotton and the environment. As the science around sustainability improves, how do cotton growers go about establishing specific goals on metrics such as energy efficiency and soil carbon? Sustainability science will continue to evolve, but what needs to improve is an understanding of what science tells us and how to put that knowledge to use. U.S. cotton growers have already set realistic, but impactful, sustainability goals to achieve by 2025. These developed through a series of meetings within a Sustainability Task Force and discussions with cotton growers and other supply chain stakeholders across the country. Historical trend data showing industry reductions through time, global context such as the Paris Climate Accord and the Sustainable Development Goals were used to frame the goals and plot our trajectory.

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Is there a particular area (water, energy, chemistry, etc.) that seems to be the priority for fashion firms today? Where should they focus next? The focus area differs from brand to brand, but greenhouse gas emissions and water quality continue to be of keen interest. I don’t want to speculate on what the next big sustainability trend will be. Doing so fosters a bandwagon approach that doesn’t always address the individual sustainability challenges and opportunities for a brand. Sustainability is specific. If a brand is interested in affecting real and meaningful change, it needs to look at its individual supply chain and identify areas for immediate and long-term improvement. As investors are increasingly equating sustainability with risk mitigation, what pressure does this put on players up and down the supply chain to be able to substantiate their claims? Consumer pressures and emerging policies suggest that the textile supply chain will have to start embracing sustainability as an operational imperative, rather than a trending marketing opportunity. This means getting up to speed on the environmental impact of their materials and processes, and being able to explain their choices in an investor context. Investors are making it clear that creating sustainability goals is of increasing importance and a clear way to show commitment over time to environmental stewardship. Impactful ways to do this are by signing up and creating goals with the Science Based Targets Initiative or signing The Climate Pledge. What are some of the roadblocks that apparel and fashion brands still must overcome to deliver on their sustainability initiatives? As many have pointed out recently, the industry is plagued with old, incorrect or inappropriately used data. Lifecycle assessment data can be very useful, but they are often taken out of context and compared in ways not consistent with the study data. However, we should not push to use tools and data not fit for the job as this will not lead the industry towards meeting its sustainability goals. Incorrectly comparing data or using old data will more likely result in worse sustainability outcomes and prevent brands from meeting their sustainability goals. Since we see this as a major problem, Cotton Incorporated supports the industry by conducting educational activities and International Standards Organization (ISO)-certified LCA studies. These initiatives improve the data decision makers need and help them understand how to use this data.

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EDUCATING FASHION ON THE SCIENCE BEHIND SUPPLY CHAIN SUSTAINABILITY

Walmart, CMA CGM Make Sustainable Moves THE RETAILER IS TESTING ELECTRIC DELIVERY VEHICLES, WHILE THE TRANSPORTER IS INVESTING MORE IN LNG. A RT H U R F R I E D M A N

ne of the biggest global retailers and a powerhouse in the ocean freight world are taking steps to make their supply chains more environmentally sound. Walmart is teaming with Cruise to pilot all-electric self-driving delivery powered by 100 percent renewable energy. Tom Ward, senior vice president of customer product of Walmart U.S., wrote in a blog that “this year, we’ve had our foot on the accelerator expanding our pickup and delivery services, so customers can get the items they need quickly and safely.” Last April, Walmart launched Express Delivery and has since scaled it to more than 2,800 stores, reaching more than 65 percent of American households, Ward noted. “We may be growing delivery options today, but we’re still experimenting with new ways we can use technology to serve customers in the future,” he wrote. “This time, we’re cruising over to Scottsdale, Ariz., to rev up a new pilot with self-driving car com-

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pany Cruise. What’s unique about Cruise is they’re the only self-driving car company to operate an entire fleet of all-electric vehicles powered with 100 percent renewable energy, which supports our road to zero emissions by 2040.” As part of the pilot, customers can place an order from their local store and have it delivered, contact-free, via one of Cruise’s all-electric self-driving cars. Ward said this technology has the potential to not only save customers time and money, but is also helpful to the planet and is something the company wanted to learn more about. “You’ve seen us test drive with self-driving cars in the past and we’re continuing to learn a lot about how they can shape the future of retail,” he added. “We’re excited to add Cruise to our lineup of autonomous vehicle pilots as we continue to chart a whole new roadmap for retail.” Meanwhile, the CMA CGM Group has embarked on a major program to build a new class of liquefied natural gas (LNG)-powered

WALMART IS TEAMING UP WITH CRUISE TO PILOT ALL-ELECTRIC SELF-DRIVING DELIVERY.

vessels, as part of its drive to take the shipping industry’s energy transition to the next level. The CMA CGM Jacques Saade, the world’s largest containership powered by LNG and the CMA CGM Group’s flagship, late last year began its first LNG bunkering operation in Rotterdam. The Port of Rotterdam will play a key role in refueling the Group’s LNG-powered fleet, which operates regular services between Asia and Europe, the company said. In November 2017, Rodolphe Saadé, chairman and CEO of the CMA CGM Group, made the visionary decision to order nine 23,000 20-foot equivalent units (TEUs) with an LNG power supply, a first in the history of the shipping industry for vessels of this size. This pioneering fleet is the product of seven years of research and development efforts. It will operate on the group’s French Asia Line connecting Asia with Europe. The CMA CGM Group now operates seven LNG-powered containerships and will have a fleet of 26 containerships of various sizes by 2022. LNG is currently the state-ofthe-art industry solution for preserving air quality. It delivers a reduction of 99 percent in sulfur dioxide and fine particle emissions

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and of 85 percent in nitrogen oxide emissions, surpassing the requirements of current regulations. “The energy transition is well and truly underway at CMA CGM,” Rodolphe Saadé, chairman and CEO of the CMA CGM Group, said. “As of today, our flagship is powered using liquefied natural gas. By 2022, our LNG-powered fleet will be 26 strong. Through this initiative we are directly addressing the environmental challenges we are faced with. As well as being reliable, LNG is the best available technology for significantly improving air quality and contributing towards tackling global warming.” LNG also provides an initial response to the challenge of tackling climate change. An LNG-powered vessel also emits up to 20 percent less CO2 than fuel-powered systems. This technology is one of the initial ways in which the CMA CGM Group plans to meet its target of being carbon-neutral by 2050. CMA CGM is seeking to establish a center of excellence in LNG for the shipping industry. Rotterdam port is now becoming a world-class hub for LNG, which will take the shipping industry’s energy transition to the next level, the company said.

A Green Eye on The Deep Blue A.P. MOLLER-MAERSK IS CONTINUING TO MAKE STRIDES FOR MORE SUSTAINABLE WATERWAYS. A RT H U R F R I E D M A N

.P. Moller-Maersk and The Ocean Cleanup earlier this year extended and expanded their relationship with a new three-year partnership. The Ocean Cleanup’s mission is to develop advanced technologies to rid the world’s oceans of plastic. To achieve this goal, it aims to stop the inflow from rivers and clean up what has already accumulated in the ocean. Its ultimate goal is reaching a 90 percent reduction of floating ocean plastic by 2040. Maersk said as a responsible maritime operator, it is committed to ensuring that the oceans can remain a healthy environment for generations to come. That’s behind the action to broaden the partnership agreement initiated in 2018. “Besides Maersk Supply Service support with vessel operations and offshore project management, Maersk will now support The Ocean Cleanup with logistics, end-to-end handling services, ranging from worldwide shipment from different locations to airfreight, container and special transport, customs clearance and warehouse and storage management,” Mette Refshauge, vice president of corporate communications and sustainability at Maersk, said. “We will have a transport and supply chain manager fully embedded in The Ocean

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Cleanup’s office in Rotterdam,” Refshauge added. “That program manager will serve as the single channel for them to engage with the full range of Maersk’s supply chain and transport services globally, and will help The Ocean Cleanup to develop its own supply chain management capacity over time.” As part of the partnership agreement, Maersk will also assist The Ocean Cleanup in deploying scientific sensor technology aboard Maersk’s own fleet to map plastic floating in the oceans and help the organization have a better understanding of the severity of the problem they are working to solve. “What better way to map the oceans than to harness one of the world’s largest fleets?” asked Robin Townley, head of special project logistics at Maersk. Lonneke Holierhoek, director of science and operations at The Ocean Cleanup, said Maersk’s support over the past three years has been invaluable to furthering Ocean Cleanup’s mission. Holierhoek said strengthening end-to-end logistics service “will not only help us clean more plastic from the ocean, but it will help us to effectively deploy more Interceptors river cleaning systems and develop our next products made of certified plastic from the Great Pacific Garbage Patch.” Also on the nautical front, A.P. MollerMaersk is accelerating its efforts to decar-

bonize marine operations with the launch of the world’s first carbon neutral liner vessel in 2023–seven years ahead of the initial 2030 goal. All future Maersk-owned new ships will have dual fuel technology installed, enabling either carbon neutral operations or operation on standard very low sulphur fuel oil (VLSFO). “A.P. Moller-Maersk’s ambition is to lead the way in decarbonizing global logistics,” Søren Skou, CEO of A.P. Moller-Maersk, said. “Our customers expect us to help them decarbonize their global supply chains and we are embracing the challenge, working on solving the practical, technical and safety challenges inherent in the carbon neutral fuels we need in the future. Our ambition to have a carbon neutral fleet by 2050 was a moonshot when we announced in 2018. Today we see it as a challenging, yet achievable target to reach.” Around half of Maersk’s 200 largest customers have set or are in the process of setting ambitious science-based or zero carbon targets for their supply chains, the company said. Maersk’s methanol feeder vessel will have a capacity of around 2,000 20-foot equivalent units (TEU) and be deployed in one of its intra-regional networks. While the vessel will be able to operate on standard VLSFO, the plan is to operate the vessel on

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carbon neutral e-methanol or sustainable bio-methanol from day one. “It will be a significant challenge to source an adequate supply of carbon neutral methanol within our timeline to pioneer this technology,” Henriette Hallberg Thygesen, CEO of Fleet & Strategic Brands at Maersk, said. “Our success relies on customers embracing this groundbreaking product and strengthened collaboration with fuel manufacturers, technology partners and developers to ramp up production fast enough. We believe our aspiration to put the world’s first carbon neutral liner vessel in operation by 2023 is the best way to kick start the rapid scaling of carbon neutral fuels we will need.” Maersk said it continues to explore several carbon neutral fuel pathways and expects multiple fuel solutions to exist alongside each other in the future. Methanol (e-methanol and bio-methanol), alcohol-lignin blends and ammonia remain the primary fuel candidates for the future. A key collaboration partner is the Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping, an independent, non-profit research and development center that works across sectors, organizations, research areas and regulators to accelerate the development and implementation of new energy systems and technologies.

THE OCEAN CLEANUP VESSEL TAKING PLASTIC POLLUTION OUT OF THE OCEAN.

Bangladesh’s Industry to Get $256.5M in EnergyEfficiency Funding THE INFUSION IS THE LARGEST APPROVED FUNDING PROPOSAL FOR ANY DIRECT ACCESS ENTITY BY THE GREEN CLIMATE FUND. JASMIN MALIK CHUA

The scheme will help the Bangladesh government achieve its goal of reducing the country’s greenhouse-gas emissions by 15 percent by 2030.

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he United Nations-backed Green Climate Fund (GCF) has approved $256.5 million in funding to help Bangladesh promote the largescale adoption of energy-saving technologies and equipment in its textile and ready-made garment (RMG) sectors. The disbursement, announced late last year, will mark the first concessional GCF credit line for the South Asian nation, whose pandemic-battered garment industry generates more than 80 percent of its export earnings and nearly 16 percent of its gross domestic product (GDP). It’s also to date the largest approved funding proposal for any Direct Access Entity (DAE) of GCF, accredited globally, according to the Infrastructure Development Company, a government-owned non-bank financial institution that finances infrastructure and renewable energy projects in Bangladesh.

Established under UN climate talks in 2010, the GCF is the world’s largest dedicated fund to support developing countries seeking to reduce their greenhouse-gas emissions and tackle the impacts of climate change. Bangladesh’s textile and RMG production currently accounts for 38 percent of the total energy consumption in the industrial sector, which in turn makes up 47.8 percent of the country’s commercial energy consumption, according to the Sustainable and Renewable Energy Development Authority. The country’s 2015 Energy Efficiency and Conservation Master Plan noted that manufacturing industries in Bangladesh tend to practice poor energy management or utilize old and ill-maintained machines. Chief barriers to the adoption of energy-efficient technology include inadequate financial incentives and a dearth of technical expertise, it added.

THE GREEN CLIMATE FUND HAS APPROVED $256.5 MILLION IN FUNDING TO HELP BANGLADESH INDUSTRY.

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Under the scheme, IDCOL will receive $250 million in concessional funds from the GCF for a tenure of 20 years, including a grace period of five years for financing energy-efficient equipment. Of this, $100 million will go toward energy-efficiency projects in the textile sector. IDCOL will funnel another $150 million to four local financial institutions for financing energy efficiency projects in the RMG sector. The organization will receive an additional $6.5 million technical-assistance grant to cover areas such as capacity building, support in loan disbursal and monitoring and evaluation of program parameters. With co-financing from IDCOL, local financiers and the project’s sponsors, the total program size will exceed $423 million, it said. “This program is a remarkable success for IDCOL in terms of accessing climate change

fund to pave the path for our country to achieve its Sustainable Development Goals (SDGs),” IDCOL said in a statement, singling out SDG 7 (affordable clean energy), SDG 9 (industry, infrastructure and innovation) and SDG 13 (climate change). The scheme will also help the Bangladesh government achieve its goals of reducing the country’s greenhouse-gas emissions by 15 percent below business-as-usual levels by 2030 and its primary energy consumption by 20 percent per GDP by 2030, it added. Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association, the nation’s largest union of garment factory owners, said she hoped the concessional financing will facilitate the adoption of energy efficient equipment and “further strengthen the competitive advantage of [the] Bangladesh RMG sector.”

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