How can our industry be truly sustainable if it maintains global supply chains? Don’t those supply chains create a carbon footprint so large that there will never be a way to offset the overall ecological impact of such operations? It’s an interesting question, says Robert P Antoshak, managing director of Olah Inc.
For our industry, when seen through the lens of sustainability, managing how supply chains function is the central question of our time.
Go deeper with GlobalData
Indeed, with the elimination of quotas and the ensuing expansion of globalised supply chains, our industry scattered to all corners of the Earth in its efforts to identify and benefit from a new slate of low-cost manufacturers.
Although the end of quotas in 2005 catapulted so many brands and retailers to search globally for suppliers of textiles and apparel, the overall process of globalisation began many years earlier – perhaps as early as the mid-1970s – but was stymied until the formation of the World Trade Organization (WTO) and the elimination of textile and apparel import quotas some 30 years later.
Today, however, we’re faced with a backlash to globalisation, as manifested in the rise of Trump, Brexit, and a feeling amongst portions of the population that they’ve somehow missed out on the party. The perception for so many is that globalisation benefited elites and left everyone else to fend for themselves. This may be the hot political topic of the moment, but it represents profound implications for our industry, how it operates, and how it can remain profitable over time.
Cheaper prices, but at what cost?
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataI find it ironic, though, that the very people who complain about a changing world brought about by globalisation have benefitted so much by having access to a greater variety of products at lower prices than was previously the case during the quota years. But greater product diversity and better prices have come with costs – particularly to our planet’s environment.
When it comes to environmental impact, globalisation deserves a lot of the blame. As large segments of the developing world became industrialised, along came increased pollution. If history has taught us anything, industrialisation results in dirtier air and water. And, of course, it makes no sense to only blame the developed world for climate change. The developed world can also claim responsibility for that – both from its past, and today from the millions of cars spewing smog into the air, along with polluting ways of so many affluent consumers.
Scattered, interlinked global supply chains.
So, what about these scattered supply chains interlinked around the world? What is the environmental impact of making components in multiple countries for final assembly and shipment to purchasing markets? As the graphic below illustrates, to produce a T-shirt using global supply chains, the various components used to create the final garment often have to travel around the world – in this case, some 15,000 miles from the source of raw material, cotton, to the ultimate consumers in the form of a finished garment. The shipping alone creates a large carbon footprint for the product, let alone other environmental costs, including wasting water, disposal of chemicals, and misuse of other raw material inputs.
Source: econlife.com
I see numerous NGOs and environmental groups cajole brands and retailers to lessen their ecological footprint by adopting this standard or that, promoting the use of renewable energy in their production, or utilising “closed-loop” production techniques to clean up the industry. Follow such-and-such procedures, adopt new technologies, and we’ll all be on our way to a greener, more environmentally secure world, so they say.
Does a more sustainable industry go hand in hand with a better environment? I’d hope so. But there’s still the problem of economics. Until our industry adopts an economic model supporting real, sustainable production, I can’t help but be sceptical. Unless there’s a financial incentive to change, our industry as a whole won’t. I don’t care what NGOs say. The best we expect is that environmental innovation will be on the edges of the supply chain. And I can’t believe people will hit the streets in protest over how their clothes are made. Let’s be real here: protests over clothes is a far cry from protests over civil rights or other more pressing social issues.
Can our industry ever be truly sustainable?
I’m not alone in wondering if an industry like ours can ever be genuinely sustainable despite all the hype – which, when taken in this context, amounts to little more than marketing to make consumers feel better about their purchases. Many companies only nibble around the periphery of the problem and don’t solve anything in its totality. For sure, they’re good at angering folks and pitting segments of the industry against itself (cotton is a good example).
However, there are other factors to consider, such as where to make clothes? Donald Trump would have you believe that apparel should only be American-made. I bet he’d even say that it’s more sustainable as it would eliminate all of those global supply chains that muck up the Earth in the first place – although he doesn’t believe in climate change of course. Moreover, he doesn’t support immigration – so I wonder from where all the low-cost labour would come? Maybe unemployed Wall Street traders.
Are regional supply chains more ecologically sustainable?
To say that a company is sustainable on the one hand is to ignore the realities of using global supply chains. At some point, I think it will occur to someone that globalisation, with all of its integrate multi-country supply chains, is not sustainable. And our industry, which imports 97% of all apparel sold in the US, typically uses polluting modes of transportation to move products. Now, I’m not trying to make a pro-Made-in-USA argument, but instead, I am asking this question: Is it possible that supply chains that are closer to consuming markets are more environmentally friendly than other global alternatives?
And I’m not alone in wondering about the true sustainability of such far-flung supply chains. The venerable Financial Times echoed these same sentiments just last month.
Even so, it’s hard to discuss environmentalism and climate change without devolving into politics, a party-crasher for sure these days. For instance, a portion of Americans believes that climate change is a hoax, fake environmental news. However, most American’s do think climate change is a real and present threat. But there’s not a public consensus on what to do; people complain about it, but with the current politics in Washington, gridlock is more likely than solution-driven policy.
A “Catch-22” for our industry
Until average consumers demand change, there will be little incentive for our industry to alter its business practices. But if the politics of climate change evolve to encourage consumer rejection of the old methods of our industry, particularly in a post-Trump world, then we’re in for a bumpy ride.
There is no silver bullet to solve climate change. Does our industry contribute to climate change? Of course. Are there ways to correct that? That’s the big question. Passionate people through the industry and in the environmental world seem to think it’s solvable, or at least manageable. But until supply chains become closer to consuming markets, I fear such progress will be hampered by people’s desires to maximise their profits by using far-flung supply chains in the first place. It’s a “Catch-22” for our industry.
Related Company Profiles
Olah Inc.