Clean by Design: An Innovative Approach to Green Supply Chain Management

Over 20 Chinese textile mills, many of which provide fabric for 10 high-volume apparel brands and retailers, achieved more than $8 million dollars in savings annually by implementing efficiency improvements, per a recent report from the Natural Resources Defense Council (NRDC). These improvements have dramatically reduced the pollution generated by these mills, saving 4 million tons of water and more than 30,000 tons of coal (or its energy equivalent) per year. The 23 mills participated in a joint effort known as Clean by Design (CBD) – an innovative global model for “Green Supply Chain” programs, led by NRDC, which calls upon multinational apparel retailers and fashion brands to take responsibility for the environmental impacts of their factories abroad.

Over the past two decades, China has become the epicenter of global manufacturing as multinational corporations have concentrated their production there. In fact, according to China Textile Industry Development Report (2014/2015), more than half of fabric in the world is produced in China nowadays. This concentration of manufacturing has created unmanageable pollution problems.

Since 2008, NRDC’s CBD program has reduced the environmental footprint of textile mills – particularly energy and water use – with a business-friendly model that focuses on increasing production efficiencies that also reduce operating costs. NRDC has partnered with leading apparel retailers and brands, as well as with the International Finance Corporation (IFC), a member of the World Bank Group and the largest global development institution focused exclusively on the private sector, and with the Sustainable Apparel Coalition (SAC), a trade organization representing more than 40 percent of global apparel production. To date, CBD has been successfully introduced to more than 200 textile mills around the world. The latest installment of the program in Suzhou, China included varying degrees of participation from the following multinational brands: Target, Gap, Levi’s, Walmart, New Balance, Inditex, JCPenney, Ann Inc., Li & Fung and Disney.

“Although textile manufacturing is among the largest polluting industries in the world, it doesn’t have to be that way,” said Kurt Kipka, senior project manager for the CBD program. “Clean by Design offers the industry low-cost, high-impact solutions to clean up its act while providing reduced costs at the same time.” Navneet Chadha, IFC’s EAP Advisory Lead of Energy & Water Solutions, added “We are glad to have partnered with NRDC in China since 2013 to leverage our collective expertise, which has clearly resulted in significant energy and water savings and environmental benefits for textile supply chains.”

The newly released CBD 2016 Report, A New Approach to Mill Improvement summarizes the actions taken by the programs participating mills from the Greater Suzhou Area in China, a hotspot of global textile manufacturing. In total, the participants completed 138 improvement projects consisting of simple “Best Practices” promoted by CBD and in some cases, more sophisticated investments made at the facilities discretion.

By adopting CBD’s signature Ten Best Practices, which are low-cost, easily implemented improvement measures, and some additional more extensive resource efficiency improvements, the 23 mills collectively delivered the following inspiring achievements:

· WATER SAVINGS: 3.9 million tons in total annually. The average mill reduced water use by 16 percent and the mill with the best improvement achieved water savings of 43 percent annually.

· ENERGY SAVING: equivalent of 30,000 tons of coal in total annually. The average mill reduced energy use by 7 percent and the mill with the best improvement saved 27 percent annually.

· ECONOMIC RETURN: $8.4 million dollars (57million RMB) in total annually with an average payback time of only 14 months. The annual return per mill averaged $365,000, with the top five performing mills saving more than $900,000.

The results of the 2016 program demonstrate that the CBD approach continues to deliver high levels of environmental improvement for participating mills. It shows there is still huge potential for achieving carbon and pollution reduction in the global textile supply chain using the programs proven business leverage strategy and best practices.

“At Target, we know that our decisions have the potential to impact millions of people around the globe, from the people who create our products to the families they support and the communities where they live. We announced a number of responsible sourcing aspirations last year that are guiding our work to ensure the products we deliver to Target guests are made ethically and responsibly, including commitments to optimize water use and drive clean energy throughout our supply chain. In partnership with our suppliers, Target has been part of the Clean by Design program since 2012. We’ve been impressed by the program and are proud of our efforts to reduce the amount of resources we’re using across our supply chain and make our suppliers more competitive.” Said Kelly Caruso, President of Sourcing, Target.

"The 2016 CBD program shows a promising way forward for the industry and the members of our coalition,” Amina Razvi, Vice President of Membership at the Sustainable Apparel Coalition, said. “The results prove a positive impact can be achieved through a scalable model focused on building technical capacity, providing targeted expert advice and utilizing strong encouragement from multinational business partners. The adoption of these policies will be closely supported by the SAC's Higg Index, an industry tool that measures environmental and social labor performance in a consistent, standardized way. The Higg Index offers transparent information disclosure about the performance of suppliers throughout the global supply chain and coupled with successful programs like Clean by Design, offer a way forward for industry improvement.”

The CBD program will continue advocating for accelerated uptake of the its best practices, through widespread adoption of multinational supply chain policies that include real business consequences (i.e., loss of business) for bad environmental performers while rewarding top performers, in all places where they do business globally.