Assessing the environmental sustainability of an apparel supply chain -the development of a conceptual model based on a comparative study of preferred tools and actual practices M a d e le i n e B a r å s Master of Science Thesis Stockholm /2015/ Madeleine Barås Assessing the environmental sustainability of an apparel supply chain -the development of a conceptual model based on a comparative study of preferred tools and actual practices Supervisor: Rafael Laurenti Examiner: Monika Olsson Master of Science Thesis STOCKHOLM /2015/ PRESENTED AT INDUSTRIAL ECOLOGY ROYAL INSTITUTE OF TECHNOLOGY TRITA-IM-EX 2015:18 Industrial Ecology, Royal Institute of Technology www.ima.kth.se Acknowledgements Many have contributed to the creation of this master thesis, but some deserve a bit more attention. First of all, I would like to thank my supervisor for contributing with valuable feedback and support throughout this process. I have deeply appreciated it and I am most grateful for the time you have out into this project. Secondly, thank you to all stakeholders who provided valuable feedback and Company X for allowing me to gain insight to your routines and processes. Without you, this thesis would not have been possible to complete. Lastly, thank you to my boyfriend, sister and sister in law, for putting up with me, particularly in the end of this process. I imagine your struggle was harder than mine in between moments. v Abstract The apparel and textile industry is one of the largest in the world and is characterised by complex, global supply chains, water and chemical intensive processes as well as environmentally harmful raw material extraction and production. Because of this, environmental sustainability has become a key issue for the businesses in recent years. With this in mind, and considering an increasing demand for textile and apparel goods, the industry is in urgent need of improving the environmental footprint of its products. However, lack of transparency and available data throughout apparel supply chains decrease chances of producing accurate sustainability assessments, which in turn obstruct improvement measures. Moreover, companies often lack the in-‐house competence required to manage and create strategies for sustainability assessments. In this study an overview of an apparel supply chain is provided, highlighting phases, sub phases, input and environmental indicators. Appropriate tools for assessing the environmental sustainability of such a supply chain are inventoried and examined. Based on a case study, a literature review and a stakeholder opinion assessment, misalignments between actual practices within an apparel company and recommended practices of the researcher and stakeholder communities are uncovered. These identified misalignments enabled the development of a conceptual model, aiming at facilitating the process of developing an environmental sustainability assessment strategy within an apparel company. Key words: Apparel industry, environmental sustainability assessment, environmental footprints, supply chain management vi Sammanfattning Klädindustrin, en av världens största industrier, är ofta hårt kritiserad för sin negativa miljöpåverkan. Kemikalie-‐ och vattenintensiva produktionsprocesser samt resurskrävande råmaterialtillverkning orsakar allvarliga utsläpp och trycket från konsumenter och lagstiftare är hårt för att säkerställa att textil-‐ och klädkonsumtionen blir mer hållbar för både människa och miljö. Trots att problemen är erkända och att forskare kommit långt med arbetet om hur man ska utvärdera hållbarheten av klädindustrins produkter, ligger industrin efter vad gäller att implementera verktyg och utvärderingsprocesser som kan bidra till en mer hållbar produktion. Ofta används extern kompetens för att tillgodose vissa behov, men den interna kompetensen brister. Utöver detta är industrin beroende av komplexa leverantörskedjor som är svåra att utvärdera från ett miljömässigt hållbarhetsperspektiv. Komplexiteten bidrar till minskad transparens och problem med datainsamling. Denna studie syftar till att minska gapet mellan forskare och industri vad gäller hållbarhetsutvärderingar av leverantörskedjor inom klädindustrin. Detta är tänkt att åstadkommas genom att jämföra processer för miljömässig hållbarhetsutvärdering på ett globalt klädföretag med processer och verktyg som rekommenderas av forskare och intressenter. Metoder som applicerats för att åstadkomma detta är en fallstudie, en intressentanalys samt en litteraturstudie. Genom att applicera de olika metoderna ovan har rekommendationer gällande olika processer och verktyg identifierats, vilket resulterade i att fem olika footprint-‐metoder kunde lyftas fram som specifikt applicerbara inom klädindustrin. Vidare tillfrågades olika intressenter om dessa metoder, för att på så vis kunna identifiera eventuella skillnader i rekommendationer mellan forskare och intressenter. Den mest signifikanta skillnaden utgjordes av vilka faser av leverantörskedjan som ansågs mest komplex att utvärdera. Forskare anser att tillverkningsfasen är förhållandevis okomplex, medan intressenterna lyfte fram den fasen som en av de mest komplexa. Det framkom även att fallstudieföretaget inte applicerade de rekommenderade footprint-‐metoderna i någon större utsträckning eller enligt en tydlig strategi. Med bakgrund av detta utvecklades en modell med syfte att underlätta för företag inom klädbranschen att utvärdera sina leverantörskedjor från ett miljömässigt hållbarhetsperspektiv. Modellen är uppdelad i fyra steg och möjliggör för företag att utföra en riskbedömning över de olika faserna i leverantörskedjan, samt prioritera vilka faser som kräver vidare åtgärder. Prioriteringen gör det därefter möjligt för företag att konkretisera vilka kompetensbehov som finns och huruvida dessa ska kompletteras med extern kompetens. Med bakgrund av detta är förhoppningen att modellen ska minska kunskapsgapet mellan industri och forskare, genom att tillåta företag att stegvis bygga upp sin kompetens inom området och således ta mer ansvar för sin leverantörskedja. vii Table of Contents 1 Introduction ................................................................................................................. 1 1.1 Background to the problem area ............................................................................... 1 1.2 Aim and objectives .......................................................................................................... 3 2 Methodology ................................................................................................................. 4 2.1 Applied methods for data collection and analysis ............................................... 5 2.1.1 Case study and product selection ...................................................................................... 5 2.1.2 Literature study ........................................................................................................................ 6 2.1.3 Stakeholder opinion assessment ....................................................................................... 6 2.2 Method for analysis and development of the conceptual model ..................... 7 2.2.1 Identifying misalignments between researchers and company .......................... 7 2.2.2 Analysis of Stakeholder opinion assessment ............................................................... 7 2.3 System boundaries and delimitations ...................................................................... 8 3 Literature review ........................................................................................................ 9 3.1 The apparel supply chain and its environmental indicators ............................ 9 3.2 Evaluating the environmental sustainability of a textile product ................ 12 3.2.1 Various footprints and their distinctions .................................................................... 13 4 Results ......................................................................................................................... 17 4.1 Highlights from the stakeholder opinion assessment ...................................... 17 4.2 Findings from the case study ..................................................................................... 18 4.2.1 The supply chain of the cotton shirt .............................................................................. 18 4.3 Main findings from the literature review .............................................................. 19 4.3.1 Supply chain phases and compatible assessment tools ........................................ 19 5 Analysis ....................................................................................................................... 23 5.1 The applicability of identified footprints in the apparel supply chain ....... 23 5.2 Comparing Company X applications with preferred methods ...................... 24 5.3 A conceptual model for developing assessment strategies ............................ 26 6 Conclusion .................................................................................................................. 28 7 Recommendations for further studies ............................................................. 30 References ........................................................................................................................ 31 Appendices ........................................................................................................................... i Appendix 1 – Checklist for case study interview .............................................................. i Appendix 2 – Questionnaire of stakeholder opinion assessment .............................. ii Appendix 3 – Responses of stakeholder opinion assessment ................................. viii viii 1 Introduction 1.1 Background to the problem area The textile and apparel (clothing) industry is recurrently criticised for being environmentally and socially unsustainable. Media, the researcher community and NGO’s frequently highlight poor working conditions and unethical treatment of animals, as well as problems of environmental pollution from refinement and manufacturing processes (Paraschiv et. al, 2015; Allwood et al., 2006; Greenpeace, 2011). According to Allwood et al. (2006) the most significant environmental issues of the textile industry include energy use, toxic chemical use, release of polluted wastewater and production of solid wastes. Thiry (2011) and Paraschiv et al. (2015) state that the production of apparel goods requires large quantities of fresh water and energy, and that approximately 30-‐35 percent of the global chemical use pass through the textile industry every year. This causes severe pollution when released into receiving environments (Thiry, 2011). Furthermore, the textile industry is estimated to be the fifth largest contributor to greenhouse gases (GHG) in the US (WWF, 2013) and accounts for 2-‐3 percent of GHG emissions in Sweden from a consumption perspective (Naturvårdsverket & Kemikalieinspektionen, 2010). Moreover, from a global exporting perspective, and considering expected development of the textile industry in terms of growth, forecasts generally point towards increasing levels of production and consumption (Morris, 2011). In a vast study by the European Commission, which investigated the 12 most significant consumption categories in the world from an environmental impact perspective, the ‘clothing and footwear’ category was named the fourth most significant (after ‘food and beverage consumption’, ‘transport’ and ‘housing’) (Tukker, 2006). The study was based on seven independent studies which all compared the 12 categories according to parameters such as GWP, eutrophication, Eco toxicity and expenditure; All seven studies ranked ‘clothing and footwear’ on fourth place. In addition, in the report “International Trade statistics 2014” the World Trade Organization (2014) estimated the global export of ‘clothing’ in 2013 to be worth 460 billion USD, which is an increase of 9 percept compared to 2010. Hence, the ’clothing’ category is the second largest export category in the world, only out-‐rivalled by ‘integrated circuits and electronic components’. In the category of ‘other textiles’ (estimated to be worth 306 billion USD), an increase of 8 percent was noticed (WTO, 2014). And with a growing global population and middle class, forecasts regarding the textile and apparel industry all point in one direction; the demand for clothing and footwear will increase (Morris, 2011). According to Morris (2011) the global fibre consumption will correspond to 89.3 million tonnes in 2020 compared to 72.5 million tonnes in 2010 (an increase of 16.8 million tonnes). The above-‐mentioned challenges and circumstances emphasize the fact that in order to satisfy the textile demand of a larger share of people with less impact, the need for more sustainable solutions is not possible to exaggerate (Muthu, 2014). But in order to decrease negative impact, researchers and companies must understand what causes the environmental burdens of a product or process. Obtaining this knowledge will benefit 1 society and, from an industry perspective, increasing the knowledge regarding environmental footprints can entail some desirable effects. For example, it can allow a company to highlight wasteful and possibly harmful processes. This in turn enables pinpointed investments towards this problem area, which can result in: more efficient processes, less waste, decreased pollution and increased control over product flows. Possessing this knowledge can also facilitate communication with stakeholders, increase transparency in the supply chain and decrease vulnerability from possible threats (such as hazardous leakages etc.) (Muthu, 2014). However, the environmental burdens of products in the apparel and textile industries have been proven difficult to estimate, mostly due to lack of relevant data and of transparency in textile supply chains (Chapman, 2010; Muthu 2014). The scientific community has a rather clear idea of what indicators to evaluate, as well as what methods to use for assessments (Muthu, 2014; Čuček et al., 2012; Herva et al., 2011). Yet, the commercial and industrial community have just started to grasp the advantages of assessing the environmental sustainability of their business, and many companies lack the competence required to perform such assessments (Muthu, 2014). Consequently, there is reason to suspect that there is not yet an alignment between researchers and practitioners in terms of performing sustainability assessments. Thus, the purpose of this study is to decrease misalignment between the research and apparel industry in terms of environmental sustainability assessments of an apparel supply chain. This is to be achieved by investigating sustainability assessment tools recommended by the research community and stakeholders for application within the apparel industry. The findings are thereafter cross-‐referenced with strategies and tools applied within an apparel company. Based on the cross-‐reference analysis, a conceptual model aimed at facilitating the development of strategies regarding the environmental sustainability assessment of an apparel supply chain is developed. 2
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