Chief sustainability officer Hannah Jones talks to BoF about Nike‘s journey from sweatshop scandals to embracing sustainability as a tool for business innovation.
“The Nike product has become synonymous with slave wages, forced overtime and arbitrary abuse,” Phil Knight, then chairman and chief executive officer of Nike, told journalists at the National Press Club in Washington DC in 1998.
The sportswear giant was sinking under a rising tide of scandals, fuelled by a new type of activism targeting consumer-facing brands as a way of curbing environmental and labour abuse further down the supply chain. In 1996, Life magazine had published pictures of a 12-year-old boy in Pakistan stitching ‘Swoosh’-emblazoned soccer balls. The following year, a leaked inspection report, prepared for Nike by Ernst & Young, revealed that 77 percent of workers at a supplier factory had respiratory problems and were being exposed to carcinogens 177 times above the legal level. Television channels like CBS and ESPN broadcast footage from inside the sweatshops where Nike products were made.
As the scandals mounted, Nike insisted it had no control over the third-party suppliers that made its products, an approach current chief executive officer Mark Parker has since described as “reputation management.” Clearly, it wasn’t working.
“The company took a very defensive approach to it for about four or five years. Really all that did was to fuel the campaign,” explains Hannah Jones, chief sustainability officer and vice president of Nike’s innovation accelerator.
A former consultant on philanthropy and community programmes to Microsoft and Kimberly Clark, Jones joined Nike as director of government and community affairs EMEA in 1998. From fiscal year 1984 to 1998, Nike revenue had rocketed from $919 million to $9.6 billion. But the scandals were taking a toll. Store openings were picketed by workers’ rights campaigners and, in fiscal year 1999, revenue fell to $8.8 billion. “The company asserted that criticism of Nike’s labour practices had nothing to do with the downturn. But it was clear that Nike was suffering from a serious image problem,” wrote professor Deborah Spar in a 2002 Harvard Business School case on Nike’s labour practices. “It was no coincidence that I was recruited at that time,” adds Jones. “There was going to be a very clear change in strategy.”
In nearly two decades, Jones has helped to transform Nike from a company that was synonymous with sweatshops to a recognised sustainability leader. Last year, Morgan Stanley ranked Nike the most sustainable apparel and footwear company in North America for environmental and social performance, including its labour record.
It moved from being a risk and reputation function to being a business lever function to being an innovation function.
Back in May 1998, Phil Knight unveiled a plan to train 100 of Nike’s over 22,600 employees on sustainability issues and require suppliers to implement minimum wages. It didn’t work. “A group of 100 people alone cannot lead the transition to sustainability at a large organisation like Nike,” reflected Nike’s CSR report for fiscal year 2001. Also in 1998, Marc Kasky filed a lawsuit against Nike in California, alleging the company’s public statements on the working conditions in its supplier factories contained false information.
For the duration of the lawsuit, which was settled in 2003 for $1.5 million, Nikestopped reporting on CSR. “We really started to look into what were the things within our business that we could change or do better, such as our purchasing practises, such as teaching designers how to design with sustainability in mind,” says Jones. Following this analysis, sustainability “moved from being a risk and reputation function to being a business lever function to being an innovation function.”
The result was three major shifts in strategy — all of which the company has maintained to this day. First, Nike committed to transparency. With its fiscal year 2004 CSR report, Nike went public with its list of suppliers — data that many companies view as among their “highest competitive advantages,” says Jones, who wrote the report. “Now NGOs on the ground know which factories we’re in, if they see any issues they know how to alert us.”
Nike also reached out to industry stakeholders, co-founding the Fair Labor Association with other businesses, universities and NGOs. Many clothing factories manufacture for multiple brands — even a company as large as Nikemight only make up 5 percent of a particular supplier’s business. If asked by only one brand to improve working conditions, “the factory manager would say, ‘Well, to be frank, you’re just 5 percent, I’d rather lose my business with you than have to invest in X, Y or Z,’” says Jones.
Finally, Nike linked sustainability to innovation, defined by Jones as “invention that creates value, whether that’s value in terms of sustainability, new offerings to the athlete or in terms of our shareholders.” From 1992, Nike spent about $50 million in R&D to swap the gas in the sole of the Nike Air shoe from FS6 — a potent greenhouse gas, which contributes to global warming — to nitrogen. This change yielded performance innovations that led to the Airmax 360. “This unlocked in the company a huge insight, which was [that] solving a sustainability problem can actually unlock new performance, new price or new aesthetic benefits,” says Jones.
“Nike’s sustainability reports are noteworthy for their strategic significance,” says Lynn Paine, John G. McLean professor of business administration at Harvard Business School. “Nike is one of relatively few large, public companies making investments in potentially game-changing innovations for the sake of sustainability.”
Nike’s strategy also stands out for its organisational scope — spanning board level, design, sourcing and production teams and third-party factories. In 2009, teams at Nike became accountable for corporate responsibility as part of their business KPIs. Today, 57,000 materials in Nike’s production chain have an environmental rating; a programme tracks the company’s water footprint across over 811 vendors; and Nike product designs are rated for sustainability.
Currently, 86 percent of Nike contract factories are rated bronze or above inNike’s Sustainable Manufacturing and Sourcing Index (SMSI), an internal tool that rates factories on health, safety and the environment and indicates that legal wages are being paid. Nike is targeting 100 percent bronze-or-above-rated factories by 2020. A factory’s SMSI result “can lead to greater volume and growth, it can also lead to less volume and ultimately exit,” says Jones.
Since 2013, Nike has cut the number of factories it works with by 12 percent — from 785 to 692 — to embrace larger, longer-term partnerships. “That’s when the factories really start to invest in their workers,” says Jones. Nike declined to reveal how many factories it has cut ties with over non-compliance issues, or how many non-compliance issues were found at its factories. In fiscal year 2015, excessive overtime violations occurred at 4 percent of Nike’s contract factories, 8 percent less than in fiscal year 2014.
While Nike’s sustainability initiatives were launched as a response to past scandals, they are now a tool for future-proofing the company in a world where businesses are under pressure to cut their emissions and climate change threatens supplies of raw materials like cotton and leather.
“This is about leapfrogging into the future before regulation or price volatility hits you,” says Jones. “Post the Paris agreement [a legally binding agreement between countries to limit global warming to 2 degrees], we expect the business down the road will need to become a 2-degree business. And that equates to being able to grow whilst radically reducing your impact.” In May, Nike set an open-ended “moonshot challenge” to double its growth and halve its impact — defined as the company’s carbon emissions.
But not all agree with Jones’ assessment of progress. Nike did not rank in the Corporate Knights 100 most sustainable corporations for 2016 (Adidas, Keringand H&M all did) and has come under fire from Greenpeace for not eliminating toxic chemicals from its supply chain.
“This is a company that is investing in technology, sustainability, innovation and energy,” counters Edward Hertzman, founder of Sourcing Journal, a trade journal covering apparel supply chains and a former executive in global sourcing companies. “They’re investing in auditing the factories, mandating that certain wages are paid and forcing these wages to be paid — instead of just turning a blind eye and placing the order. And don’t forget, they have much more to lose. They can’t afford a PR crisis, so they need to be on top of it.”
Nordic pulp makers are developing clean ways to turn birch and pine trees into clothes to help revive their industry and meet demand from fashion and furniture firms for alternative textiles to cotton.
STOCKHOLM, Sweden — Nordic pulp makers are developing clean ways to turn birch and pine trees into clothes or sofa covers to help revive their industry and meet demand from fashion and furniture firms for alternative textiles to cotton.
There has been no Nordic production of viscose, the main textile fibre from timber, since the last manufacturer stopped nearly a decade ago, partly on environmental grounds.
But a 2011 spike in cotton prices contributed to increased global demand for viscose and lyocell, the other major textile fibre from wood pulp. Production is dominated by Austria’s Lenzing, India’s Aditya Birla and South Africa’s Sateri.
Three Nordic mills export dissolving pulp, the product that can be turned into textile fibre. The industry would like to see textile fibre factories set up at home that will meet environmental rules and appeal to local firms such as IKEA and Hennes & Mauritz which want to project a green image.
“We have the forest here in the Nordics, we have our pulp mills. It would be better for us if more dissolving pulp was needed in our region,” said Markus Mannstrom, chief technical officer of Finland’s Stora Enso
The forestry industry, which accounts for a fifth of Finland’s and a tenth of Sweden’s exports, has been hit by lower newsprint demand and foreign competition.
But global output of pulp for textiles is expected to grow 30 percent by 2020 from 4.4 million tonnes in 2015, according to Oliver Lansdell at forest products industry consultancy Hawkins Wright.
Anticipating the rise in demand, in 2011 Sodra, the Swedish association of 50,000 small forest owners, converted a paper pulp machines so they could make textile pulp. Stora Enso did the same in 2012.
Sweden’s Domsjo, which has made dissolving pulp since the 1930’s and was bought by Aditya Birla in 2011, said demand has risen.
“We expect cotton output to peak while textile demand will keep growing,” said Dag Benestad, head of dissolving pulp production at Sodra.
The next step would be to set up factories at the mills, creating new jobs and saving money on energy and the cost of transporting for export. Sodra, Domsjo and Stora Enso are among those intensifying research into greener fibre production processes.
Stora Enso in 2015 opened a research centre in Stockholm that looks into how to make viscose production less toxic. Domsjo and Sodra are part of a large project looking at how best to integrate a textile factory with a mill so that the chemicals are recycled.
Recycling or replacing chemicals is essential to restarting production of textile fibre from timber in a region where the pulp industry’s image was also tarnished by heavy pollution. It now uses “closed loop” production that stops chemicals seeping out.
Carbon disulfide is the main polluter of viscose production. Swedish Research institute Innventia’s Fredrik Aldaeus, who is fine-tuning a method to make pulp that dissolves more easily with reduced or zero carbon disulfide, said a modified viscose fibre plant could be up and running within five years.
The main alternative textile fibre from timber pulp is lyocell which was first developed in the 1970s and has a cleaner manufacturing method than viscose. It has been marketed by Austria’s Lenzing as Tencel since the 1990s. Nordic researchers are trying to develop something similar. Herbert Sixta, who used to work at Lenzing, has led development at Aalto and Helsinki universities of a new lyocell-type fibre. “In three to four years we should be able to show if it’s commercially viable provided that we get the necessary financial support,” he said.
CHEERING THEM ON
H&M and IKEA, both at the forefront globally in their sectors on sustainability, are alongside smaller Nordic fashion brands such as Filippa K, are cheering on and cooperating with the pulpmakers, keen to sell products made using local forests to environmentally-conscious shoppers.
“We want them to find a more sustainable way to produce viscose,” said Cecilia Brannsten, sustainability expert at H&M, which has increased its use of Tencel in recent years because it has a better green profile despite being more expensive.
“Today’s viscose can’t directly be replaced with the more sustainable lyocell because they look and feel different.”
H&M and IKEA said they were providing funding for state- and industry-owned research institute Swerea, which recently launched an industrial-scale test of a new viscose-like process. They declined to say how much they had contributed.
Along with Sodra, they were also part of a consortium that in 2014 shelved a project using cold alkali as solvent amid differing opinions about how to proceed.
“We constantly look for innovations and innovators,” IKEA Group spokeswoman Josefin Thorell said in an email.
“We support the Swerea…project which we believe can contribute to a more sustainable future textile production,” but added that it was too early to say how long it would take to work out if the project was viable.
Against the backdrop of the COP21 climate summit, Adidas’ collaboration with Parley for the Oceans to create 3D-printed sneakers made from ocean waste sets an example for other brands.
“No one wakes up in the morning saying, ‘I’m going to destroy the oceans.’ No one does, but collectively, we put them at risk,” says Cyrill Gutsch, founder of Parley for the Oceans, a US-based non-governmental organisation that aims to raise awareness of the planet’s critically endangered ocean ecosystems — and what can be done.
To coincide with the COP21 climate summit in Paris, Parley for the Oceans has teamed up with global sportswear giant Adidas to develop an innovative footwear concept called Ocean Plastic. With a 3D-printed midsole, the sneakers are made entirely from materials created using reclaimed ocean waste, such as discarded plastic and illegal gill nets that harm marine life.
“The 3D-printed Ocean Plastic shoe midsole stands for how we can set new industry standards if we start questioning the reason to be of what we create,” says Eric Liedtke, a member of Adidas Group’s executive board. While the shoe is only a prototype, Parley for the Oceans and Adidas hope it will set an example for the industry to rethink their design and manufacturing processes, and help stop ocean plastic pollution. “The industry can’t afford to wait for directions any longer,” he adds.
Each year, around 8 million metric tons of plastic end up in the world’s oceans, according to a study published in the journal Science in February earlier this year, a figure that could increase tenfold in as many years if action isn’t taken. And because petroleum-based plastics are designed to last, the waste won’t break down for decades. “Plastic is a design failure. Once it is produced it never dies,” continues Gutsch. “How can we redesign plastic to make it harmless? How can we turn the problem into an opportunity?”
In the context of the fashion industry, a project called Raw for the Oceans illustrates the kinds of solutions that can help. Jointly launched by denim brand G-Star Raw and Bionic Yarn, the eco-friendly label co-founded by Pharrell Williams, with support from Gutsch and Parley for the Oceans, Raw for the Oceans is a collaborative project that collects ocean plastic and turns it into denim. And the fact that the jeans produced through this initiative are environmentally-friendly actually makes the product more appealing, says Gutsch. “It was desirable because it was designed to help save the oceans. There was a sense of exclusivity around it, but it didn’t cost more…That’s when it becomes relevant.”
The fashion industry is in a unique position to address the problem of ocean pollution, says Gutsch. “Fashion is at the crossroads of consumerism and innovation; it is able to communicate messages others can’t address. It’s a strong vehicle of change.” Since its inception, Raw for the Oceans has recovered about 2 million plastic containers from ocean coastlines around the world. “But we need to reach a critical mass to make a real difference. When I first heard that the oceans were about to collapse, I had no idea. Yet, I contributed to it as a consumer.”
Take e-commerce, which has grown rapidly in the past few years. How many people realise that e-commerce is a major source of pollution in fashion? In part, that’s because every single item shipped, even the smallest, must be individually wrapped in plastic.
According to the Environmental Protection Agency, containers and packaging accounted for 30 percent of total solid waste generated in the US in 2012. And this figure is undoubtedly set to rise with growing global e-commerce sales.
In 2014, protective packaging reportedly represented a $22 billion industry, with plastic foam alone valued at $6 billion, as millions of products are constantly revolving around the planet, waiting to be sold online. Not only do they consume fossil fuel, but if the customer sends the item back, the ecological impact doubles.
“Products have become messengers of the era we live in. We can only change something if we establish a new standard, and steer suppliers and manufacturers in the right direction,” says Gutsch, pointing to projects like Adidas new sneakers as examples of this. “It’s in the hands of the creative communities to make a change. It’s not the consumer’s fault.”
In turn, Parley has also launched a new sustainability scheme — A.I.R. (short for avoid, intercept, redesign) — which provides guidelines that any fashion business or consumer can follow, beginning with everyday choices, like avoiding using plastic, intercepting to help manage waste and redesigning and reinventing to explore alternative solutions.
“The only way to move forward, in the future, would be to produce on demand,” says Gutsch, citing 3D printing methods as a sensible alternative. But there are other sustainable solutions: consuming less, creating products that have a longer life expectancy or mimicking nature to develop products that disintegrate.
How do fashion businesses respond when a raw material that they depend upon is under threat?
LONDON, United Kingdom — A fashion business exercises careful control: over its image; its business growth; where possible, over how consumers respond to its brand. But even the world’s most prestigious luxury houses cannot control the climate.
According to a report released this month by Kering and non-profit consultancy Business for Social Responsibility (BSR), climate change is already having noticeable effects on global cashmere supplies — and this impact is likely to get worse.
Currently, cashmere products make up €4 billion of the €60 billion global luxury apparel market, according to data provided by Bain & Company. “The cashmere knitwear market is definitely outgrowing the luxury apparel market,” says Federica Levato, senior consultant at Bain & Company, who cites “casualisation of the market” — dressed-down, comfort-led trends like athleisure — as the main driver of demand.
In the last few years, the “democratisation” of the fashion industry has caught up with cashmere. Once a highly expensive commodity, available to an exclusive few; today, affordable, casual cashmere products have permeated the high street. At Uniqlo and H&M, pure cashmere knitwear starts at $79.90; while athleisure retailer Kit & Ace has built its brand around “technical cashmere,” — blends of cashmere and sport-friendly materials like spandex.
But, cashmere is under threat. Made of the fine winter undercoat of Hircus goats, the global cashmere clip is estimated to be between 15,000 and 20,000 metric tonnes, or 6,500 tonnes of “pure” cashmere after it is cleaned. Luxury brands are more selective in their sourcing, centring on Mongolia and Inner Mongolia (an autonomous region within China that borders Mongolia), and using only the finer, longer and whiter fibres. However, most of the global cashmere output comes from China, where The Nature Conservancy estimates there are over 100 million goats. According to the National Resources Defense Council, it can take four goats to produce enough fibres for one sweater.
While cotton, silk, or leather — all key raw materials on which the luxury fashion sector depends — can be produced in modified farming systems, cashmere production relies on natural grasslands in limited geographies. As a result, it is especially vulnerable to environmental change.
“The availability of cashmere has suffered because of the degradation of the native grasslands, which the animals depend on for their food,” says Elisa Niemtzow, consumer sectors director at BSR and co-author of Kering and BSR’s report. “We’re talking about changes in temperature, in water availability and in the extreme winter conditions.”
According to the United Nations Development Programme, 90 percent of Mongolia is fragile dry-land, under increasing threat of desertification. In 2010, the combined impact of a drought the preceding summer (which reduced available forage in the grasslands) and a dzud (an extremely severe winter), saw more than nine million livestock perish in the country, of which most were cashmere goats.
According to Pier Luigi Loro Piana, deputy chairman of Italian fashion house Loro Piana, which specialises in luxury cashmere and wool products, the recurring dzud has seen Mongolia and Inner Mongolia suffer cashmere shortages for 50 years. “You learn over the years how to balance these potential shortages,” he says. “Unfortunately, they continue to have an impact on the shepherds and their communities, on the animals, the environment.”
However, in recent years, the environmental obstacles facing cashmere have worsened. To tackle rising demand, many producers increased the size of their herds — from 1993 to 2009, Mongolia’s livestock population grew from approximately 23 million to 44 million — creating a vicious cycle. More goats mean more grazing; which, in turn, leads to degradation of the grasslands. The result is undernourished goats with coarser hairs, causing the supply of high-quality cashmere to shrink. To make up the lost revenue, herders breed bigger herds, setting off the cycle again.
“There’s been an absolute avalanche of people wanting more and more cashmere, and pushing the price, pushing the supply chain,” says James Sugden OBE, a director of luxury cashmere clothing label, Brora, and former managing director of Scottish woollen mill, Johnstons of Elgin. “It has created a problem, insomuch as in some areas, some growers, tempted by higher volumes have gone for volume rather than quality.”
“Lately what has really worried us as a potential risk for the whole industry is the quantity approach: quantity seems to be overtaking quality,” concurs Mr Loro Piana.
Cashmere’s future is even more precarious. While the dzud is an extreme, cashmere yields depend on harsh winter conditions to grow their high-quality undercoats. Looking forwards to 2036 to 2060, Kering and BSR warn that rising temperatures due to global warming could also constrain goats’ winter hair growth, causing further decline in the quality of cashmere. “There’s sort of a perfect storm,” says Elisa Niemtzow.
So, what does this mean for fashion businesses? According to Niemtzow, luxury brands are already seeing decreases in availability of high quality cashmere. “You can either take it as a decrease in quality or a decrease in availability,” she says. Either way, the raw material is running out.
Two years ago, the Chinese government put restrictions on farmers’ acreage, in a bid to reduce the stripping of the pastureland. However, Outer Mongolia and other producing regions like Afghanistan have no such controls. Even within China, “The problem still remains in terms of finding quality fibre, consistently,” cautions James Sugden.
These changes present not only an environmental concern, but a business risk too. So how does an industry respond, when a raw material that its products — and, therefore, its profits — rely on, becomes endangered?
“Our industry’s challenge is to change this unsustainable system and put new, sustainable practices in place,” says Marie-Claire Daveu, chief sustainability officer and head of international institutional affairs at Kering. “Companies need to recognise that their business depends on natural capital and also impacts many livelihoods at the base of their supply chain.”
According to Daveu, Kering’s brands are working with their suppliers to create “production systems that are more resilient to the shocks of climate change impacts,” such as sustainable herding practises and holistic management of pasturelands, or implementing early warning/disaster management systems to respond to negative weather events.
But, with demand for cashmere still high, companies must consider the herding communities in their supply chains, and make it worth their while to farm less, but better. “Desertification also exacerbates economic hardship for herders and drives them into poverty and displacement to urban slums,” says Una Jones, chief executive officer of the Sustainable Fibre Alliance (SFA), which was formed in 2015 to unite companies, governments and NGOs to tackle sustainability issues in the cashmere industry, by establishing the first Sustainable Cashmere Standard, which will pilot in 2016.
In 2009, Loro Piana, which was acquired by LVMH in 2013, launched a five-year selective breeding programme, involving about 24,000 cashmere goats in China. By breeding only the most productive animals, the scheme aims to elevate the quality of hair on each animal, resulting in smaller herds but higher yields of quality cashmere — thus easing pressure on the land and avoiding desertification.
The project has “improved standards of living for goats and pastors, as well as a restored balance between animals and environment,” says Mr Loro Piana. A luxury fashion business, he says, must choose “Integrity, investments, research, respect and aiming for the best quality versus mere exploitation.”
“In bad years, we pre-pay. We give the farmers advance money, in order to see them through the winters,” says Sugden of Brora, which processes its garments in Scotland and sources its cashmere from Inner Mongolia, where goats are not just sources of cashmere, but meat and milk for the herding communities. If the commodity price of cashmere drops, “Our responsibility is to try and not take advantage of that. We want consistency of quality, number one. The price is secondary,” he says.
“A number of luxury brands and retailers are stepping up to the plate,” says Una Jones, to tackle the industry’s current “unsustainable production and consumption patterns and how the sector will have to change to meet their future demands.” Last year, for example, Burberry added protecting its cashmere supply to the company’s environmental targets for 2017.
But is it too late for the so-called “diamond fibre?” Should fashion business also adapt their strategies to the possibility of shrinking cashmere supplies?
As more environmental changes make farming more challenging, and modernisation across Asia tempts younger generations away from their families herding businesses, James Sugden says luxury brands have a “duty” to support the
ir suppliers, by protecting the price, and ensuring suppliers understand, “It’s better to be at the top end of the market, and not to be tempted by the larger orders from Uniqlo or the like.” But, he adds, “The bulk producers have a responsibility.”
At Kering, Daveu, remains positive. “Ultimately, availability will also be positively affected,” she says, of Kering’s collaborative efforts. “We have a tremendous opportunity now to work on this issue to create a vibrant cashmere industry that helps regenerate natural systems and supports the livelihoods of millions of people. Let’s look to the solution, not just the problem.”
This week, LVMH unveiled an unconventional approach to environmental sustainability. But a “carbon fund” alone won’t solve fashion companies’ eco-problems.
Later this month, around 100 world leaders and 40,000 delegates will gather in Paris for COP21, the UN’s climate summit, with the stated aim to reach a global, binding agreement on how the 195 countries represented will tackle climate change.
Fashion remains one of the most polluting industries in the world. According to the Danish Fashion Institute, fashion is the world’s second most polluting industry, exceeded only by oil. Some companies have launched initiatives to reduce their environmental impact: Stella McCartney operates an animal product-free supply chain; Inditex has pledged to eliminate toxic chemicals from its supply chain by 2020; and H&M has launched a global clothing recycling programme.
This week, LVMH put forward an unusual approach to the issue, and one that merits further exploration. On Monday, the company announced that it has set up an internal “carbon fund,” a company-wide piggy-bank financed by contributions from its 70 subsidiary companies. From now on, each will pay into the fund at a rate of €15 per tonne of carbon that they produce. Starting in 2016, the money collected will finance projects at LVMH whose sole purpose is to reduce the company’s emissions — for example, more energy-efficient LED and cooling equipment.
It’s an interesting proposition. Carbon trading — whereby a company or individual pays money towards emissions-reducing projects in order to “offset” its own emissions — is a marketplace model for controlling climate change that began in earnest a decade ago. Currently, the EU Emission Trading Scheme is the largest greenhouse gas emissions trading scheme in the world, with 11,000 factories, power stations, and other installations “trading in” money that goes towards carbon-reducing ventures, to balance out the emissions they cannot reduce themselves.
For fashion companies, an internal carbon “fund” is an unconventional approach to sustainability — and one that raises two ideas that are key, if fashion is going to reduce the damage it does to the planet:
First, the fund creates an immediate business incentive for LVMH to become more sustainable. By effectively “taxing” itself for producing carbon, LVMH hands its fashion houses an incentive: the more sustainable they become, the less money they have to give up to the fund. The carbon fund lays out, transparently, how LVMH will raise the money it needs to invest in environmental initiatives. Few brands have been so open about where they’ll find the cash to finance their sustainability programmes.
The second reason it’s an interesting proposition is also to do with transparency. No brand can be 100 percent sustainable. By running factories, using raw materials, transporting goods around the world, a modern, global fashion company will inevitably have some environmental impact.
Those brands that do stick their neck out and launch sustainability policies face a serious amount of scrutiny and potential backlash. H&M and Zara — both of which have launched large-scale sustainability efforts — have faced criticism in the press for not doing enough, doing it wrong, or doing one thing at the expense of another.
An internal carbon fund acknowledges a company’s impact on the environment. That’s a big step. According to an LVMH press release: lighting, heating, air conditioning and production processes for LVMH’s activities generated 370,000 metric tonnes in 2014. That’s a huge amount of carbon — but it would have also translated to €5.55 million in the fund, going straight to projects that reduce those emissions. We need more brands to be transparent about their impact.
Still, a carbon fund alone is not a solution to companies producing emissions in the first place. It needs to be part of a wider set of initiatives to lower environmental impact — at LVMH, it feeds into the company’s LIFE (LVMH Initiatives For the Environment) programme, launched in 2013, that encompasses other eco-initiatives, like adding solar panels and recycling facilities to its production sites.
LVMH is also a sponsor of the COP21 event — a move that caused a ruckus amongst some campaigners who oppose corporate influence in policymaking. However, if the COP21 talks come off, and an agreement is reached, companies can expect to see governments driving a harder bargain on climate change, imposing stricter guidelines on their environmental impact, and potentially penalising those who pollute. In June this year, senators Sheldon Whitehouse and Brian Schatz went to the US’s American Enterprise Institute to introduce the American Opportunity Carbon Fee Act, their proposal for a $45-per-tonne carbon tax which, they say, would reduce US CO2 emissions by more than 40 percent by 2025, and raise over $2 trillion in the process.
Companies need to reduce their environmental impact. And if they don’t take the initiative themselves, governments may soon start forcing them to do so.
Set to join Parsons as the new dean of fashion, Burak Cakmak speaks to BoF about his vision for one of world’s most distinguished creative incubators.
NEW YORK, United States — Parsons School of Design at the New School is known the world over as the former academic home of Donna Karan, Marc Jacobs, Anna Sui and Alexander Wang. This month, the New York-based design school is welcoming a major new addition to its faculty: Burak Cakmak, who joins as dean of fashion.
Selected from 200 applicants by the executive dean of Parsons, Joel Towers, this is Cakmak’s first foray into academia. Succeeding Simon Collins, who stepped down in December after a six year career, Cakmak will be responsible for overseeing a number of courses: the BFA in Fashion Design, AAS degree programs in Fashion Design and Fashion Marketing, and the MFA in Fashion Design and Society.
Cakmak’s career in the fashion industry began at Gap Inc. in 2000, where he served as the senior manager of social responsibility for eight years. Cakmak moved to London in 2008, where he was hired to spearhead sustainability strategies for Kering’s luxury brands, including Gucci, Stella McCartney and Bottega Veneta, as the first director of corporate sustainability. Most recently, Cakmak was vice president of corporate responsibility at the Swarovski Group, where he implemented best practice industry standards across the business.
Given Cakmak’s 15-year-strong background in sustainable design, one of the key initiatives he is bringing to the school is a focus on sustainability.
“When I was at Gap Inc., it was the largest specialty retailer in the world. Because of that, there was pressure from the rest of the world for us to act responsibly. We had to think about how we were managing suppliers and look beyond boundaries in design and production that we normally control,” says Cakmak. “Then, I was hired at Kering to implement the concept [of sustainability] in their businesses. I understood how sustainability worked for a global fast fashion retailer, but at Kering, I had to re-think about what it meant for the luxury business.”
There’s a recognised need for sustainability. You can’t make excuses like ‘It’s not within my control,’ or ‘I didn’t know about it.’
It is Cakmak’s real world learning (“I went from factory to factory to understand how things were produced, what the issues were and figuring out how we could deal with that,” he says) that has informed his knowledge on the complexities of the business, which he intends to apply to his leadership at Parsons.
“There’s a recognised need for sustainability, especially if you’re a large business. We’re at a point where there’s nowhere to hide. You can’t make excuses like ‘It’s not within my control,’ or ‘I didn’t know about it.’ There’s an expectation for all businesses to own up to their responsibilities and they have to go beyond that,” says Cakmak. “What has been positively surprising to me is how much Parsons cares about the topic of sustainability. They try to implement this across the board and in every part of their education.”
It’s a topic that the students are keen to enrich their knowledge on, too. In a survey of more than 4,000 students conducted as part of BoF’s inaugural Global Fashion School Rankings, only 44 percent were satisfied with the standards of education on sustainability offered by fashion institutions. At Parsons, only 41 percent of students and alumni reported that they were satisfied.
Cakmak is set to address this growing need. “It’s a new set of rules that the industry operates in, so it’s important for design students to understand the challenges they will face as they grow, especially once they start producing more than a few hundred pieces,” he says.
Among the qualities Cakmak hopes to impress upon his students is the virtue of diplomacy and how it can be used to affect smart decision-making. “Diplomacy plays a key role in being able to draw up ideas and values. As a leader, you have to be able to convey a message that is aligned with people’s interests and objectives. Even if they’re not fully aligned, it’s about making sure it’s as much of a priority as other priorities, so that things can move forward.”
“I’ve begun speaking to several schools on how we can work together to better define fashion education on a global level,” continues Cakmak. “I’m looking beyond just creating a product. It’s about your overall influence on society and how we can work together to address some of the ongoing challenges today.”
According to Cakmak, it’s important to instil virtuous values in his students given that they have the potential to affect change, whether that means taking a role at a large company or starting their own business. “Graduates play a key role in driving the fashion business. They have the biggest opportunity to do things differently, because, unlike large companies and brands, they’re not constrained by their existing environments,” he says. “This is when we are able to really influence a designer, because once they get into the industry, it’s harder to make those changes.”
What do you think constitutes a high quality, rewarding fashion education? To view the full Special Report on the State of Fashion Education, including the first Global Fashion School Rankings, click here.
**This story first appeared on Business of Fashion here.
‘Made in’ matters, but Fair Trade is more powerful because it introduces the consumer to the actual producer of a garment, argues Safia Minney of People Tree.
LONDON, United Kingdom — The ‘Made In’ label matters more than ever. It is the start of offering transparency and accountability to the consumer. In the same way that consumers asked for a fair deal for coffee farmers and other agricultural commodities in the early 1990s, they are now demanding it of fashion. This has been brought on, in part, by a swell of concern after the horrific collapse of the Rana Plaza factory complex in Bangladesh, an industrial tragedy killing 1,134 garment workers, which triggered the making of the movie True Cost, raising further awareness of the continuing abuse of human rights and environmental laws by fashion companies and their suppliers. The fashion industry needs to face up to its responsibility in its overseas supply chain. I believe company directors should be made legally responsible for criminal activities committed in the name of their companies.
‘Made in’ matters, but is it enough?
Fair Trade fashion goes further than ‘Made in’ labelling, as it introduces the actual producer of a garment to the end customer. The World Fair Trade Organisation (WFTO) defines Fair Trade as: “a trading partnership, based on dialogue, transparency and respect, that seeks greater equity in international trade.” Products produced through Fair Trade partnerships can revive organic agriculture and protect craft skills and are made within the country on the label and with respect to the environment. The consumer considers Fair Trade purchases like any other, based on aesthetic, brand, quality and value for money. But increasingly, they also want to know that the goods they buy are made with respect for people and the environment. Consumer cupboards are full and they are increasingly frustrated by the speed of fashion and looking for greater connection with producers and an ethical lifestyle.
Fair Trade recognises, promotes and protects the cultural identity and traditional craft skills of small producers within a given region, bringing deeper meaning to the label ‘Made In.’ For example, People Tree’s producer Swallows, based in Bangladesh, uses handlooms to weave the fabric used to make clothing. Practiced by 10 million people in Bangladesh, hand weaving is the country’s biggest employment sector after agriculture and the skill of Bengali handweavers has been renowned and revered internationally for thousands of years. Handweaving is also carbon neutral, so customers can choose hand-woven, climate-friendly clothing to fit with their values. Each country has different “natural advantages” due to the skills of its people, their heritage and their geographical location.
For People Tree, organic cotton craft and traditional skills are vital to the design process, adding value to the final product by helping to create a unique point of difference and bringing solid benefits to farming and artisan communities. We supply Indian organic cotton for our People Tree collaboration with Lee in Japan (produced in Japan) and hand-woven, hand-embroidered uppers for Tatami, a Birkenstock brand in Japan.
More companies need to show the commitment to engage responsibly with their supply chain. Ethical credentials will come from these initiatives, but consumers are increasingly sceptical of ‘green washing’ or superficial ethical policies or claims made without third-party audits. For example, the Ethical Trading Initiative (a voluntary code) is widely considered to have no teeth.
In September 2013, the WFTO launched a new Fair Trade manufacturing labelling system, which guarantees Fair Trade principals are met throughout the supply chain, which will help to ensure that people know if companies are living up to their messaging on ethical policies. Placing a World Fair Trade Organisation label on a product acts as a guarantee to the consumer that manufacturers comply with the Ten Principles of Fair Trade: fair wages, working conditions, transparency, capacity building, environmental best practice, gender equality and setting standards for conventional fashion companies to improve their supply chains.
Ten years ago People Tree launched the first clothing range to meet the Global Organic Textile Standard certified by the Soil Association. Nearly 70 percent of our collection carries the Fair Trade mark and/or the Soil Association organic mark, guaranteeing small-scale cotton farmers in developing countries receive a fair and stable price, as well as an additional premium granting them the opportunity to develop their communities.
But third-party audits and certifications should not be used as a barrier that works against the very people that they are supposed to help. Certification needs to be accessible to the poorest of the poor in the developing world. For People Tree this is about the value added through capacity building, through which small scale producers are given the tools to develop their management skills, production capabilities and access to markets and design, ensuring that the products they produce attract fair prices and long-term orders.
Fair Trade is more than just detailing the country where a product is made. It relays the story of the farmers, artisans and tailors who make our products, as well as the heritage, culture and sustainability of their goods. ‘Made In’ needs to go to deeper and Fair Trade is a good example to follow.
Safia Minney MBE is the founder and chief executive of People Tree.
**This article first appeared on Business of Fashion here.
The conscious consumer, who demands to know the story behind a fashion product, could lead the charge for transparent, ethical production, says designer Bruno Pieters.
ANTWERP, Belgium — Over the past few decades the fashion industry has gone through an impressive transformation. Today, there is an abundance of fashion, available around the globe, in all price ranges. Our dream of globalising the industry has been largely realised. But the Rana Plaza tragedy in Bangladesh was a cold reminder for some, and a brutal discovery for others, that the people who had helped us build this dream were living a nightmare. 1,129 human beings died, over 2500 were injured. On April 24th 2013, it wasn’t just a building that collapsed. Our innocence about fashion came crashing down with it. For millions of people, that event has tainted the joy of admiring and purchasing the fashion that once seemed so glamorous. Worldwide clothing sales have not been affected. But a seed of consciousness was planted that has kept on growing ever since. There isn’t a design good enough to remove the bitter aftertaste of that catastrophe. We want to assume the best about the purchases we make — but now, we know better. When I was younger, I was fascinated by images of the ateliers of renowned couture houses and all the work that went into the realisation of one design. Those days seem long gone. Companies have moved most of their production to low-wage countries. Brands are operating more efficiently than ever before, producing large quantities at very low costs. By expressing our values through our purchases, we allowed brands to behave irresponsibly. Through buying their products, we told them we didn’t care. However, consumer behaviour can become a solution. Money is a language and when spoken fluently, can be a powerful tool for change. Another kind of consumer has emerged: the conscious customer. A clientele that respects craftsmanship, authenticity and transparency. For the millions of people who love the constant newness of fashion, there are others who value the beauty of the story as much as the design itself. A very influential, well-educated minority is demanding humane products and transparency from fashion brands, leading a shift that is happening around the world. Very few luxury products still carry the traditions that built the reputation of the brand. Often, when told today, the story is no longer credible. There is a need for a new story. An honest one. A smart brand will seize this opportunity to gain a whole new audience. Today, there is a new generation of fashion brands, driven by designers with a vision of street culture, youth and our future. But what I find most unfortunate is that almost all of them fail to include any notion of sustainability in their production. They are not setting themselves apart from their predecessors; they are not translating their opinions into deeds. I am cheering for new technologies, such as 3D printing. The day might come that we download the design for a pair of socks and print them out in the comfort of our own home — eventually, such progress might put an end to labour problems. But in the time that it takes us to develop this, the consequences of our current activities are racking up, as Rana Plaza tragically proved. Consumers need to make better choices and this industry urgently needs to evolve. Bruno Pieters is the founder of Honest By, a transparent and sustainable luxury fashion label.The views expressed in Op-Ed pieces are those of the author and do not necessarily reflect the views ofThe Business of Fashion. ** This article first appeared on Business of Fashion here.
BoF editor-in-chief Imran Amed recaps the week in the business of fashion.
LONDON, United Kingdom — Exactly two years ago today, on the morning of April 24, 2013, the world woke up to the news of a devastating tragedy unfolding near Dhaka, Bangladesh.
Outside Rana Plaza, a building that housed a number of clothing factories making garments for globally recognised fashion companies including Benetton, Le Bon Marché, Mango, Matalan, Primark, Joe Fresh, Walmart and scores of other brands and retailers, garment workers had warned their managers that cracks in the building’s concrete structure made it critically unsafe. The workers were told their wages for an entire month would be docked if they refused to enter the building and work, threatening their very livelihoods. So they trudged up the stairs of the rickety eight-storey building and took their places behind sewing machines to churn out products destined for markets around the world.
One hour later, the building collapsed, thousands of workers were crushed in the aftermath and ultimately more than 1,000 people were killed. It was the worst garment factory disaster the world had ever seen and, yet, two years later, nobody has really been held accountable.
So, how did we get here? Facing a brutally competitive marketplace, characterised by intense pressure to generate profits and a desire for constant newness, the fashion industry is producing more and more products, faster and faster, at lower and lower costs. Many fashion companies have shifted production to markets like Bangladesh, with low labour costs and limited protections for workers’ rights. Meanwhile, most consumers continue to buy cheap products without thinking of the human costs of producing them. The Rana Plaza tragedy was a serious call to action. Governments, companies and consumers — we are all responsible.
To help to generate discussion about this critical issue, this afternoon in London we hosted a live #BoFVoices discussion, focusing on the human cost of fashion’s supply chain. The highlight of the event was a special preview screening of Andrew Morgan’s groundbreaking film, The True Cost (watch the trailer below) followed by a panel discussion with experts Livia Firth and Lucy Siegle.
Our aim was to raise and discuss one simple question: ‘How can we safeguard the people who make our clothing?’ which is the focus of a new discussion launching on BoF Voices next week.
Use the hashtags #BoFVoices and #FashRev to participate in the global conversation on Fashion Revolution Day and tune into BoF next week to watch the panel discussion and explore expert opinions on how the fashion industry can tackle this issue.
** This post first appeared on Business of Fashion here.