Wednesday, February 20, 2019

Putting Sustainability to Work For Your Bottom Line

No longer just the cost of doing business, sustainability reveals its hidden value.

According to the Sustainable Apparel Coalition’s Higg Index, the fashion industry produces 1.26 billion tons of greenhouse emissions every year – more than those created by international flights and the shipping industry combined. At the same time, data shows that fashion retail purchases are continuing on an upward trend. In fact, the average consumer bought 60 percent more clothes in 2014 than in 2000, but kept each garment for half as long, filling landfills at an exponential rate.

As consumers become more and more aware of the environmental impact of their purchases, brands have had to re-evaluate their supply chains and find more sustainable ways of creating, transporting and disposing of their products.

But sustainability isn’t just the cost of doing business these days; quite the opposite. As companies take a closer look at every aspect of the supply chain, from manufacturing to inventory management, they’re uncovering countless cost-saving opportunities. From smarter dyeing methods, to minimized water usage, to research and development into 100% recyclable (and even compostable) products, these new efficiencies are having a profound positive impact on the bottom line.

Sustainability offers other business benefits as well – heartening the perception of a brand and making consumers the champions of causes through their purchases. The result is a circular, self-fulfilling model that celebrates beauty and creativity without the negative impact on our planet and well-being.

With these goals in mind, we convened a group of industry experts to learn how companies are using sustainable initiatives to help shape the future of retail and apparel.

The Paybacks of Sustainability

Today, as Environmental, Social and Governance (ESG) investing plays a increasingly important role in the minds of investors, the need for full transparency is forcing companies to set new targets for sustainability. Tensie Whelan, Director of the Center for Sustainable Business at NYU Stern, is working with HSBC to uncover ways to embed sustainability into retail business models and supply chains. Whelan says that companies that make sustainability a priority stand to benefit immensely, as sustainability initiatives also force them to identify efficiencies in their operations, maximize their supply chains and minimize waste. The result is often an increase in yearly revenue and a renewed sense of loyalty among consumers who see the company as a champion for sustainability.

“Recycling paint solvents reduces impact on workers,” says Whelan. “Product safety strategies means avoiding recalls.” It’s all about connecting sustainability with bottom line results.

One of the challenges, however, as Whelan points out, is that accounting is set up to be focused on tangibles not intangibles. In order to track the ROI of sustainability, finance teams need to have a better understanding of ESG investments, circularity and the B2B stickiness they promote.

Building A Purpose-Led Brand

A sustainability champion for decades, Timberland has set a benchmark for what it means to be a purpose-led brand. Their motto, “Work together and make it better” can be seen throughout their operation – from the way they interact with wholesale partners (having them participate in community service projects) to breaking through myths around recycling and reuse, and striving to create products that are 100% sustainable.

When putting the brand’s purpose first, the products immediately follow. Colleen Vien, Sustainability Director at Timberland, explains how addressing the challenges of sustainability head on were what pushed the brand toward a major breakthrough. “Everyone said you can’t make a product that’s truly 100% sustainable. We broke that myth with our Earthkeepers boot. It was the single product that ever in history has outsold [our bestselling] yellow boot in a single year, so we proved the myth wrong.”

By completely rethinking design and development, Timberland created a boot that became a hero in the marketplace. Soon, the Earthkeepers boot was expanded into an entire apparel and accessories line that proudly embodies the brand’s promise.

L-R: Scott Miller (SAC), Tensie Whelan (NYU), Colleen Vien (Timberland), Richard Gerstein (UNIFI0 and Robert Trauber (Johnny Was) discuss the importance of sustainable initiatives at HSBC’s Disruption and Innovation: What’s Next for the Global Retail Market?

 

Make It Real

Richard Gerstein, EVP Branded PVA Business and Global Chief Marketing and Innovation Office at UNIFI says that in order to gain traction and momentum with sustainability, companies need to connect the dots for consumers on how they’re actually making a difference.

UNIFI recently worked with Hartsfield-Jackson Atlanta International Airport, Mercedes-Benz Stadium and Georgia Aquarium to transform collected plastic bottles into recycled fiber used in the athletic apparel and uniforms worn at the facilities.

According to Gerstein, this type of circular economy is not only smart and cost-effective, but necessary from a resource perspective. “The fact is, we don’t recycle enough and there will be a shortage of material soon.” The reason? “Consumers don’t believe that recycling actually goes somewhere.”/p>

Initiatives like the one in Atlanta help people see the direct benefits of recycling and compels them to get involved. Timberland’s Colleen Vien agrees. “We need to educate consumers. The tipping point is starting to happen. Restaurants banning straws – this almost insignificant action is having a huge conversation impact. It’s shifting the public’s perception.”

Incentivize Progress

Gerstein breaks down a successful sustainability program into simple economics. “Do you incentivize recycling for your supplies? In Thailand, they incentivize people to return their bottles to get a token for food.” By connecting a real value to a material, you can propel its circularity.

“Plastic is a commodity and you can track it,” Gerstein says. As more and more brands come into the space, it drives up the value of the commodity, and thereby incentivizes people to collect.

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