Posted by: edwinrutten | October 11, 2010

Greening the cotton chain: H&M and Wal-Mart move upstream

Wal-Mart and H&M, two of the world’s largest clothing retailers, are starting pilot programs with their Chinese textile suppliers to reduce water, energy, and chemical use in their supply chains according to this newspost on ProcurementLeaders. Both companies will focus at key mills for reducing their environmental footprint.
According to Linda Greer, director of the Health Program at NRDC and Clean by Design creator, “People don’t think of the fashion industry as polluting the environment like chemical or steel manufacturing, but in fact it is one of the biggest polluters in China.”

Please join me in having a closer look into this supply chain…

The textile supply chain generally consists of the following steps: 1. fibre production, 2. spinning, 3. fabric production, 4. dying/finishing, 5. clothing production and finally 6. clothing retailing.

The pilots will focus on low-cost practices that dramatically cut water, energy, and chemical use in textile dyeing and finishing. This is a great initiative, and a logical next step ‘upstream’ after a focus on social issues like child labour and poor labour conditions in clothing production.

From a supply chain perspective, it’s good to consider all the ‘People’ and ‘Planet’ issues from the ‘source to shop’. In the cotton case, there are quite some negative effects as well at the fibre production stage, as can been seen in Figure 1 below. Yet, it’s a start and a matter of choice where to start (start from the source or move upstream from the end).

Figure 1. Ecological and social impacts in a cotton chain [1]

Maybe these giants can learn from Bergman/Rivera, a company created in 2007 as the result of the merger of Bergman Sweden (formerly Verner Frang) and Cortextil’s organic cotton projects. They are one of the pioneers of the organic cotton movement in the world. A case study of this company by Beatrice Kogg [2] describes a change process in greening a cotton-textile supply chain. The lessons learned from this case were based on the experience of a small company. Below I modified it the for big players, in this case H&M and Wal-Mart:

  • Find someone your own size to pick on: work with suppliers that are motivated to participate since your orders are big enough (this should not be a problem in this case…)
  • Pay a premium: in the case of H&M and Wal-Mart, this may be financing initial investments and sharing anticipated revenues with the suppliers, since the NRDC reports very positive business cases. This is to be preferred over shifting away from these suppliers in case of non-participation in the initiative (which is of course a viable option for big players).  
  • Facilitate and make the process as painless as possible: share knowledge and resources.
  • Pick the right actors: use local connections, and close the gap. Use this initiative to get to know your suppliers well, don’t just demand things from a distance.  
  • Promise growth: for making collaboration interesting, make the business case as interesting as possible for the suppliers. If the measures taken require fixed investments, but their effect grows with production, the suppliers can make their whole production more sustainable and profitable, not just the part for Wal-Mart of H&M.

After making site specific improvements, the real challenge for H&M and Wal-Mart will be to go further upstream and create and co-ordinate sustainable cotton chains for the mass market. In my next blog, I will elaborate on the co-ordination implications of making supply chains more sustainable.

[1] Source: Goldbach, M., Seuring, S. and Back, S. (2003). Co-ordinating Sustainable Cotton Chains for the Mass Market, Greener Management International, Vol. 43.

[2] Source: Kogg, B. (2003). Greening a Cotton-textile Supply Chain: A Case Study of the Transition towards Organic Production without a powerful Focal Company, Greener Management International, Vol. 43.

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