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Creating Sustainable Apparel Value Chains - A Primer on Industry Transformation

The global textile and garment industry is at a crossroads. It is a three trillion dollar industry that encompasses the manufacturing and selling of textiles and garments, and has long been considered a source of economic progress around the world, historically serving as a catalyst for national development and industrialization. The flipside of this growth and the accelerating production of fashion has been a broadening and deepening track record of poor working conditions and heavy pollution. The collapse of the Rana Plaza factory in April 2013 in Dhaka, Bangladesh jolted to life widespread and increasingly prolonged scrutiny of the industry. This incident has brought longstanding questions to the forefront over how to bridge the gap between economic viability and social and environmental performance.

This Primer attempts to sort through the minefield of perspectives, expectations, and challenges that have only grown more complicated in recent months, and provide an evidence-based assessment of the prospect of sustainable value chains in the textile and garment industry. The report is intended for stakeholders in the apparel industry to use as they deliberate how they can achieve the leap forward needed. The findings are based on extensive desk research and informed by evidence gathered from reaching out to over 730 industry stakeholders through an online survey, conducting more than 25 expert interviews and site visits, reviewing over 200 reports on the overall industry or some relevant dimension of it, and leveraging our general insights into innovation, impact, investment and market building. The textile and garment industry is global, but its main production clusters are in Asia, thus the Primer also includes five country spotlights: China and Bangladesh, the industry’s largest sourcing locations; Myanmar and Thailand, production locations in the midst of transition; and Japan, the world’s third-largest apparel market.
Our findings indicate that creating a win-win of raising productivity and competitiveness, as well as social and environmental performance is possible. But an ambitious, systemic approach is needed to achieve industry transformation. This includes pulling the following four levers: (1) fostering total resource productivity and transparency across the supply chain; (2) upgrading the industry infrastructure by (impact) investing; (3) improving working conditions with a new level of ambition; and (4) studying and replicating the best practices of leading producers. In addition to a whole host of leading examples, the Primer also includes four solution spotlights on key enablers of industry transformation, including: (1) using information technology to foster shop floor transparency; (2) the implications of the emerging circular economy on business model disruption; (3) improving the use of chemicals in the manufacturing process; (4) and lessons learned from the RAGS Challenge Fund, an innovative effort to improve industry working conditions.

The Primer concludes that achieving sustainable market transformation is within reach if the opportunity is connected to the generation of greater resource productivity (e.g., lowering the use of water by up to 50 percent, energy by up to 40 percent, and chemicals by up to 20 percent) with an ambitious agenda to improve productivity and working conditions as well as environmental footprints. But seeding success will require focus. The many social, environmental and economic issues that need addressing are disparate, yet they all meet at the manufacturing stage. Moreover, adopting an investment mindset is a crucially required fresh ingredient. Developing industry blueprints for scale as well as engaging in cross-industry collaboration with solution partners from other industries will greatly enhance the prospects of success. From an implementation perspective, and given the complex systemic challenge at hand, solution partners need to enter where they have comparative advantage. Frontrunner companies are great models of best practices, NGOs bring the issue awareness and street credibility, and governments can redefine the rules of the game. Solution-building subsidies from players that can take a longer view, such as philanthropic foundations, can be instrumental in raising the ambition level and creating the inclusive vision and enabling framework required to empower all stakeholders to drive industry wide collaboration beyond crisis management. The industry’s problems are complex, systemic and of great consequence. This means that the solution blueprints and providers must be practical, sophisticated, and able to move with equally impressive scale.