10 January, 2019

A company’s ability to take control of its supply chain is more important than ever before, especially in the apparel industry. The sector is inherently built on a complex web of relationships between buyers, suppliers and factory operators, often with limited transparency, making it difficult for companies, as well as consumers, to know if they’re buying goods that meet ethical and environmental standards.

In China, the manufacturing sector accounted for nearly 30% of the country’s GDP in 2017 and has come under particular scrutiny. Globally, clothing production has doubled between 2000 and 2017 to surpass 100 billion items annually for the first time in 2014. China is also the world’s largest producer and exporter of textiles and clothing, but while the garments may leave China, the environmental degradation and human cost do not. 

Many companies today recognize that global sourcing brings challenges to ethical compliance and potential legal and regulatory issues. No matter how big the process, they need to keep track of every step of their supply chain and ensure that they are operating responsibly and within the legal framework. If not, they expose themselves to escalating risks.

Taking action

Netherlands-based apparel companies are responding by collaborating on a joint agreement to make the apparel sector more sustainable. Together with industry associations, trade unions, civil-society organizations and the Dutch government, the apparel companies signed the Dutch Agreement on Sustainable Garment and Textile (AGT). The aim is to make textile supply chains more transparent and sustainable in accordance to the OECD Guidelines for Multinational Enterprises.

Following this agreement, Arcadis has recently received a grant from the Dutch government to develop programs to improve environmental and social performance in the Chinese wet processing industry, with a focus on dye houses on the Yangtze River Delta, where the largest environmental risks and impacts occur. Part of this work is also to strengthen the occupational health and safety of Chinese factory workers.

More specifically, Arcadis will support the Netherlands Consulate-General in Shanghai to interview stakeholders within the textile sector, like organizations supporting the improvement of the textile supply chain, apparel companies and universities, in order to identify and screen the Chinese supply chain. Site visits to selected dye houses will also be conducted across China to understand current practices, provide training on sustainable practices around environment, water, energy and social issues, and make recommendations on how they can improve.

The program that will span around three-years will provide technical knowledge and tools to support the Chinese dye houses in becoming more sustainable and responsible through improved operations in China. These include taking measures to improve the management of polluting sources and occupational health and safety. Very basic awareness of the importance of environmental, health and safety management is limited within the dye industry, making the focus on how to manage potential risks the basis of this program.

Water is also a precious resource, and as a global population we consume five trillion litres of it each year for fabric dying alone. Implementing improved processes, adequately monitoring and tracking the resource consumption of dye houses will give the first incentive to actively pursue more sustainable solutions. This new approach will also show that changing these processes is not only about the environment, but it’s a cost investment that can create significant returns. 

The road ahead

China’s textile manufacturing industry will continue to face a number of challenges, including oversupply at home, ensuring labour welfare and rising global protectionism. However, by introducing measures to drive sustainability, Chinese suppliers can remain ethical, and competitive, in a time where companies and consumers are demanding for greater transparency and accountability.

For many suppliers, an immediate area for improvement is simply being able to accurately assess their current performance and increase organizational awareness around key issues. Clearly defining where responsibility lies internally can help companies prioritize and address their biggest problem areas.

Scrutiny from companies, consumers and media on issues in the apparel industry is only increasing. The adoption of sustainable practices will help businesses take better control of their supply chain and carve out a lasting competitive advantage while also doing the right thing for our people and the environment.

Contact Us

Joe Chan

Head of Cost & Commercial Management, China +86 21 6026 1552 Ask me a question
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