Quartz

Nike proves that cleaning up your act is smart business

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LeBron James makes a cameo in a Nike video about its recycled polyester jerseys. (Nike)
LeBron James makes a cameo in a Nike video about its recycled polyester jerseys. (Nike)

In a literal sense, sustainability is about being able to maintain performance over a long period. More commonly it refers to how environmentally sound a business is. But more and more, the two are inseparable—and the apparel and footwear industries are taking notice.

While they’re still notorious polluters that use huge amounts of resources, many of the biggest brands now have programs in place to clean up their supply chains. A number are also at least trying to address labor issues that see some of the world’s poorest exploited for profits. Those actions are good for business in the long run; they save money and keep companies stable, allowing them to sustain growth. According to an in-depth note for investors from Morgan Stanley on which North American apparel and footwear companies are the most sustainable, Nike was number one, followed by VF Corp., which owns brands such as The North Face, Wrangler, and Vans.

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The report, compiled by analyst Jay Sole, measured sustainability based on each brand’s performance on environmental, social, and governance issues—it calls all three together ESG. Among the environmental issues it looks at are brands’ efforts to reduce the amount of waste they produce, and how they source and use raw materials, such as cotton and leather, which can be water-intensive and heavy polluters. Social issues include how a brand manages its supply chains, treats labor, and ensures factory safety. Governance issues include to what extent sustainability is integrated into the business strategy, and how “shareholder friendly the corporate governance structure is.”

“Nike leads because it not only has the most extensive disclosure, but also has concrete quantified plans to improve in key ESG areas such as environmental and social,” the report says. “For example, Nike has the most extensive disclosures on water usage, waste creation, and factory and community engagement, plus plans to improve on each key performance indicator (KPI) within those areas.” Nike took first in environmental and social performance, and came in second on governance, outranked only by VF Corp. The report highlights Nike measures such as making jerseys from recycled plastic bottles.

It’s a big turnaround from Nike’s reputation in the ’90s, after an investigation by Life Magazine made Nike the face of sweatshop and child labor. Even so, not everyone agrees on Nike’s sustainability. Greenpeace’s “Detox Catwalk” list currently labels Nike a “greenwasher” (a company that markets how green it is to hide unsustainable practices) and says it’s “way behind on transparency.”

The report is admittedly limited by an absence of good data. There isn’t enough third-party data to definitively say whether any brand is recklessly overusing resources, or not using fair labor practices in its manufacturing. The evidence, according to the report, suggests none are, but the reality is the prevalence of subcontracting means it can’t say for sure.

But the larger point is that sustainability translates into smart business in some significant ways. Good supply chain control, it says, “can reduce the risk of disruption and reputational damage.” Environmentally friendly practices “can lead to direct cost savings via less raw material usage, plus energy and waste reduction.” A company that prudently manages all these issues together is “likely to have lower risk associated with its business.”

Not least of all, millennials place value on ethical practices, so implementing them can influence whether you get their business or not.

It makes sense, then, that a company’s sustainability practices can affect how it may perform financially in the long-term, which is what shareholders really want to know. It’s clear why a massive luxury group, such as Kering, would treat sustainability as part of its business strategy and why polluting factories would want to clean up their act when shown how they can actually make money in the process.

Morgan Stanley’s report isn’t strictly about profits though. Sustainability, it says, can also be considered valuable in itself, even if it has no impact on a company’s stock price.

**This story first appeared on Quartz here.

Why cotton is so difficult to recycle—and how clothing retailers hope to change that

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Cotton is by far the world’s most popular natural fiber, and much of it is used for clothing. No doubt, it would be ideal if all those cotton clothes could simply be recycled into new garments when their time was up. It would keep millions of tons of waste out of landfills, and allow the fashion industry to use far less virgin material, in turn cutting use of water, pesticides, and chemicals for dyeing.

Unfortunately, recycling cotton clothes isn’t simple. To create a new piece of clothing from old clothes, the old clothes first have to be chopped up and turned back into raw material. But that chopping-up process tends to lower the cotton’s quality because it shortens the staple length of the fibers. Staple length plays an important role in determining the strength and softness of cotton threads. The longer the staple, the better these characteristics, which is why cotton varieties with extra-long staple lengths, such as supima, are highly valued—and why fashion brands currently find it difficult to use any large amount of recycled cotton in their products.

Levi’s, for example, which recently kicked off a massive clothing recycling program in the US, can only use up to 20% recycled cotton in a garment before the garment no longer meets its quality standards. The company is experimenting with blending recycled fibers with long-staple fibers to solve the problem. But so far nobody has come up with the kind of large-scale solution that could change the whole industry.
A cotton picker works in a field in Hami, northwest China’s Xinjiang Uygur autonomous region, November 1, 2012. China is expected to harvest 6.9 million tonnes of cotton this year, a decline of 4.2 percent from a year ago, due to a smaller sowing area, an official from the country’s top planning agency said in remarks published on October 9. Picture taken November 1, 2012.
Using less virgin cotton also means using less water and pesticides to grow it.(Reuters/China Daily)

The H&M Conscious Foundation, funded by the Persson family—which owns clothing retailer H&M—hopes to surface an answer through its Global Change Award contest. It’s giving out a €1 million ($1.15 million) grant to be shared among five winners with pioneering ideas for “closing the loop”—sustainability speak for recycling used material into something brand new.

The contest isn’t focused on any one way of doing so; a novel technique for recycling cotton is not an explicit priority. “We want to find new approaches in the whole value chain of the fashion industry, changing the way garments are designed, produced, shipped, bought, used, and recycled,” a spokeswoman for the foundation tells Quartz.

But it’s clear that finding a way to recycle cotton easily, without impairing it, could be the sort of “game changer” the foundation is seeking, and a competition could speed up the process. “The largest potential lies with finding new technology that means we can recycle fibers with unchanged quality,” she says.

The inherent contradiction is that it’s H&M—a fast-fashion brand that contributes copiously to the paradigm of cheap, disposable clothing—behind the effort. Cotton is the fiber H&M uses most, and so far the massive amount it consumes is a sustainability problem it hasn’t been able to address. “Closing the loop” would let it continue cranking out giant volumes of clothing, just with fewer consequences.

In any case, a $1.15 million grant for five people isn’t huge in the context of the roughly $18 billion (pdf) that H&M did in sales last year. But the planet would benefit from any progress the fashion industry can make on sustainability, especially with regard to recycling cotton.

**This story first appeared on Quartz here.

A New Kind of Animal Cruelty

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Patagonia and another “ethical” clothing brand are being accused of a new kind of animal cruelty

Image: Quartz
Image: Quartz

This post has been updated.

You don’t generally think of wool as a material involved in debates on animal cruelty, like fur or leather. But a new investigation by People for the Ethical Treatment of Animals (PETA) just put it at the center of one involving two big brands.

PETA uncovered what it calls “routine mutilations” of sheep and lambs on two Argentine ranches in a network—of about 50—supplying wool to Patagonia and Stella McCartney. Both labels are known for their public commitments to ethical sourcing—McCartney, a committed vegetarian, doesn’t even use glue made with animal products.

Both Patagonia and Stella McCartney use the ranch network, called Ovis 21, as part of its sustainable wool program. But PETA recorded workers on the ranches abusing the sheep in a variety of ways, the most shocking and cruel including skinning them while still alive (that link includes a graphic video), in full view of other sheep, who bleat in distress.

“This video should mean that millions of people will think twice about ever buying wool socks and sweaters again,” PETA states on the video page.

Lambs on one of the Ovis 21 farms
Lambs on one of the Ovis 21 farms.(PETA)

Indeed, McCartney has suspended all purchases of wool from Ovis 21 since viewing the video. “We are now even more determined to continue our fight for animal rights in fashion together and monitor even more closely all the suppliers involved in this industry,” McCartney said in a statement released through PETA.

“We are also looking into vegan wool as well, in the same manner we were able to develop and incorporate high-end alternatives to leather and fur over the years,” she added.

Patagonia released its own statement, as well as a detailed timeline of its involvement with Ovis 21 and which products its wool appears in, such as socks and baselayers. In 2011, it began sourcing from Ovis 21’s sustainable wool program, which is designed to help preserve the grasslands of Argentina by using only regenerative practices. “We accept responsibility for everything done by our suppliers at any level, but especially in this case,” Patagonia said.

It hasn’t announced any course of action, but in the timeline, it says it is committed to “working with Ovis 21 to make needed improvements, reporting back to our customers and the public on steps we are taking.”

Update, August 17, 4:45pm EST: In a statement, Patagonia announced today that it will cease buying wool from Ovis 21. “We’ve spent the past several days looking deep into our wool supply chain, shocked by the disturbing footage of animal cruelty that came to light last week,” the company said. “In light of this, we’ve made a frank and open-eyed assessment of the Ovis program. Our conclusion: it is impossible to ensure immediate changes to objectionable practices on Ovis 21 ranches, and we have therefore made the decision that we will no longer buy wool from them.”

Patagonia added that it will not buy wool again until it has found a source offering “a verifiable process that ensures the humane treatment of animals.”

PETA’s investigation points to just how difficult it is for brands to monitor their supply chains, even when their supply chains claim to be ethical. It gets even harder when you start dealing with practices such as subcontracting, which is rampant in countries like Bangladesh and leads people to argue that it’s no longer even possible to be an ethical consumer.

Perhaps it’s not surprising that Patagonia has run into this sort of problem before. It changed the way it sources goose down after a different animal-rights group accused it of cruelty. On the matter of wool, PETA is taking a hard line. It says “the only way to ensure that a company does not contribute to the horrors of sheep rearing, shearing, transport, and slaughter is to switch to vegan wool.” But Patagonia isn’t willing to go that far.

“PETA does not believe in the use of animals for any human purpose; this is a belief we respect but do not share,” the company said in its statement.

**This post first appeared on Quartz here.

How the luxury group Kering treats sustainability as a serious business strategy

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The first rule of sustainability is don't talk about sustainability (on the runway). (AFP Photo/Giuseppe Cacace)
The first rule of sustainability is don’t talk about sustainability (on the runway). (AFP Photo/Giuseppe Cacace)

For Kering, the luxury goods group that owns brands including Gucci, Saint Laurent, Bottega Veneta, Boucheron, and Balenciaga, sustainability is not a selling point.

The Paris-based company is establishing protocols for more socially and environmentally sustainable business practices, but its big-spending customers won’t see hangtags proclaiming that the leather of a Gucci bag was tanned without the use of heavy metals—as increasingly will be the case. And that’s by design, Marie-Claire Daveu, Kering’s chief sustainability officer, tells Quartz.

The company published its first “Environmental Profit & Loss” report, which attempts to put a monetary value on its environmental impact, in May, and has set ambitious targets (pdf) for eliminating harmful chemicals from production, auditing suppliers, offsetting CO2 emissions, and reducing waste.

But Daveu emphasizes that Kering is approaching sustainability as a business strategy, not a marketing one. Customers aren’t the ones to convince that the company’s commitment to sustainability is worthy, Daveu says—the products alone should still inspire them to spend. The real stakeholders to win over are the investors, the employees, and the executives.

So how does one make the case for sustainability to them? “Alors,” says Daveu. “I will target differently all the people.”

Investors

“Investors, these kind of people are more and more convinced by sustainability—even if they don’t use the word sustainability—but for them it’s a risk management approach,” says Daveu. Global warming, for example, can contribute to the price volatility of raw materials such as cotton and leather.

On the social side, of course, it’s also about protecting a company’s reputation. No one wants their company’s name tied to an environmental disaster or a human tragedy like the factory collapse at Rana Plaza in Bangladesh.

“It would destroy your brand,” says Daveu, making a convincing argument that supply chain audits are worth the investment.

Potential hires

As the founders of companies such as Warby Parker and Toms could attest, a social or environmental mission is a powerful recruiting tool. A Nielsen poll found that nearly half of those surveyed between the ages of 21 and 34 prefer to work for a company they identify as “sustainable.”

Daveu says that for Kering, a sustainability strategy is particularly helpful when it comes to attracting talent in Asia.

“People can really choose their company, where they want to work,” says Daveu. “And for them it’s really important because they make the link between pollution, health, and this kind of thing, so they are very sensitive.”

Executives

For executives at the brands, Daveu says Kering has provided an old-fashioned incentive to engage with sustainability: cash. Their bonuses are linked to reaching the company’s sustainability targets.

Whether or not they buy into these ideals, says Daveu, it’s also a “signal to show them that sustainability is really linked with the business strategy.”

**This post first appeared on Quartz here.