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Evaluating the Cost of Sustainability

Presenters at the Sustainable Textiles Conference couched the environmental impact of manufacturing in dollar terms.

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HONG KONG — Presenters at the Sustainable Textiles Conference couched the environmental impact of manufacturing in dollar terms, emphasizing not only the cost of cleaning up after poor environmental practices, but also the potential cost to brand names.

This story first appeared in the October 24, 2012 issue of WWD.  Subscribe Today.

Putting a price tag on the environmental impact makes more people pay attention, said Reiner Hengstmann, global director of Puma Safe, a social and environmental responsibility department within Puma.

“With some people, [talk about environmental impact] goes in one ear and out the other,” he said. “You have to put it in terms of money for them to start to pay attention.”

Hengstmann described the company’s creation of an “environmental profit and loss account” estimating the environmental impact of greenhouse gas emissions, water use, land use, air pollution and waste. Puma estimated that the company’s “EP&L” generated by its supply chain totaled 145 million euros, or $188.6 million, a year in 2010. Within that total figure, Hengstmann said, much of the impact came from lower-tier suppliers.

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So Hengstmann suggested sourcing from more “low-impact countries,” using environmentally efficient suppliers, consolidating material purchasing and reducing the amount of styles being made. The EP&L program is to be rolled out across other brands within PPR, which owns Puma, Hengstmann said. PPR also owns luxury brands such as Gucci, Yves Saint Laurent and Bottega Veneta, as well as sport brands such as Tretorn.

Peter Melchett, policy director at the Soil Association, gave figures describing the financial impact on environmental issues and noted that the organic cotton industry has shown annual growth rates in the double digits, even in Europe during the financial crisis. Melchett focused much of his talk on cotton production, citing data that estimates pesticide-related illnesses in sub-Saharan Africa’s cotton-growing lands costing $90 billion by 2020.

In another panel at the conference, organized by Textile Exchange on Oct. 4 and 5 at the Hong Kong Convention Center, Debra Tan, director of China Water Risk, a nonprofit focused on China’s water crisis, discussed the country’s water scarcity and warned companies that water issues would be an important business consideration in the near future.

The Chinese government, recognizing a water shortage problem, identified water as a key focus in its latest five-year plan. National and provincial caps are coming soon, Tan warned, and manufacturers need to be prepared. Though China has 7 percent of the world’s freshwater reserves, it has 20 percent of the world’s population, which means it has a low ratio of renewable water per capita. Meanwhile, the top production areas in China, such as Jiangsu, Hebei, Shanghai, Tianjin and Beijing, are in areas where water is particularly scarce.

When the government missed its energy-reduction targets during the most recent five-year plan, it implemented mandatory blackouts to meet its target, Tan noted. If water-usage caps are not met, something such as a three-month mandated closure wouldn’t be out of the question, she warned.

Speakers also emphasized the importance of working with government regulators. Ullhas Nimkar, chairman and managing director of Nimkartek Technical Services, gave an example of Chinese regulators establishing a limit of 100 liters of water a kilo for some manufacturing processes, which was unnecessarily high as the processes could be accomplished with as little as 20 liters a kilo.

Participants and speakers bandied about some suggestions to ease environmental impact and increasing control over the supply chain by consolidating the number of mills, using less harmful chemicals and encouraging the design team to be mindful of environmental impact when selecting colors.

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