Sustainability May be the Best Way to Skirt Compliance Risks

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Photo credit: Fashion Positive

There are new ways to avoid risk and be compliant in the supply chain, but there are also new threats.

Technology is helping companies better trace their suppliers and manufacturers, and collaborative efforts have emerged to create more transparency and better methods of ensuring a safer route from factory to retail shelf.

Brittany De Stefano, business development manager for BSI Supply Chain Solutions & Services, speaking on a panel at the recent Apparel Importers Trade & Transportation Conference, discussed the issue of forced labor and new U.S. customs rules regarding migrant workers from North Korea.

The regulations state that if goods made by North Korean citizens or nationals anywhere in the world are in the supply chain, Customs and Border Protection could ban those import shipments or seize goods.

De Stefano noted that evidence of North Korean labor in a supply chain could also lead CBP to initiate a criminal investigation, so “make sure it doesn’t get into your supply chain.”

“It really highlights the importance of transparency and traceability,” she said. “For 2018, I think the government will be look to the industry for some best practices. Its why we stress to map the supply chain. For some importers, that can be a real challenge.”

China, for instance, is North Korea’s leading trading partner, and while China recently stopped issuing visas for migrant workers, many are still working there.

Amanda Carr, director of strategic initiatives for Canopy, also speaking at the event hosted by U.S. Fashion Industry Association- and Apparel Import Shoppers Associaion, explained that the group works to protect the world’s forests by collaborating with business leaders, scientists and decision-makers to help create sustainable supply chains and foster innovative solutions to environmental challenges.

“Canopy creates brand partnerships based on a policy,” Carr said.

There is no cost to join the organization, which 105 brands and retailers have doen.

“We see a pinch point in the supply chain,” she said. “Dissolving wood pulp ends up in a very concentrated place among viscose producers. There are now nine of the top 10 working with us on consistent policies and are now beginning to audit those. We’ve audited 25 percent and will have 50 percent by the end of the year. It’s about the power of collaboration and greater visibility.”

[Read more about the circular economy: It’s Circular Economy or Bust According to Euro Trade Shows]

The movement toward a more sustainable apparel and textile supply chain has evolved in the last decade or so from improving the environmental impact of raw materials and manufacturing to the advent of recycled materials used in fibers and fabrics, and reuse of textiles and apparel, all leading the concept and striving to create a circular economy.

This had led to companies creating systems and programs to advise and help companies achieve the goals of circularity, which brings the added benefit of avoiding compliance risks and costs in the overall product development and production process.

Adrian Wain, sustainability lead within UL EHS Sustainability Advisory Services, focuses on carbon management and circular economy strategy. Wain explained that sustainability empowers organizations to protect the well-being of workers, reduce risk, improve productivity, enhance compliance, and drive measurable business improvement.

Wain is also a co-author of a white paper called “Supporting Progress Towards a Circular Economy: An Introduction to UL’S Circular Economy Solutions.”

In discussing the paper and UL EHS’s services, Wain said, “Accelerating resource extraction and waste production in a linear economy place continued progress at risk.”

“A growing number of businesses see the risks posed by the linear economy as an opportunity, and are preparing to progress towards a circular economy, where products and the embedded resources within them are used at maximum capacity and then regenerated at the end of their use phase for further life cycles,” Wain said. “Progress toward a circular economy presents a wide range of business challenges, from the initial selection of approaches, through to demonstrating their safety, managing their transparency, and continuously enhancing their sustainability.”

Adopting a circular economy strategy can enable continued progress with significant advantages over a linear economy, he noted.

Research by Accenture reveals that for certain value chains, moving from a linear to circular model can deliver a 60 to 85 percent reduction in environmental impacts, and yield up to seven times more revenue, the white paper said.

Wain noted that UL’s Pure Platform can be configured to efficiently capture, aggregate and analyze circular flows such as end-of-life product return and re-manufacturing rates. Such activity data can then be converted into secondary metrics such as carbon and manufacturing cost avoidance.

By gathering and analyzing data during the transition to circular economy business models, decision makers can better identify performance strengths and weaknesses within specific areas, and implement efforts to scale strengths, and design out weaknesses, the paper added.

In a similar vein, Infor designs solutions and systems specifically for sustainability efforts, and with its sub-company GT Nexus has worked with companies such as Puma and Levi’s to identify and encourage manufacturers that are using sustainable production methods.

Guy Courtin, vice president of industry and solution strategy for retail and fashion at Infor, said, “We work with clients to become smarter about sustainability through our softwear. We provide tools by which they can work toward greater sustainability by having a better understanding about the relationships with their suppliers.”

Courtin said by achieving greater visibility with their supplier network through Infor systems, it helps lead to achieving their sustainability goals.

“The system incentivizes their suppliers to meet certain thresholds and then they’ll get better financing and interest rates,” he said.

Courtin noted that clients are seeing benefits of cost reduction and greater efficiency in energy use. Last year, the company worked with Levi’s to establish a standard for production and strengthen its supply chain by providing financial incentives to suppliers who meet its sustainability goals.

Looking ahead, Courtin said, “For the industry to extend the evolution, I think we need some kind of movement toward sustainability indexes placed on products.”

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