Responsible Sourcing Strategies Must Begin by Considering Suppliers

The environmental toll of the fashion industry is astounding. Each year the fashion industry creates an estimated 92 million tons of textile waste while creating nearly 20 percent of the world’s water pollution. Sixty percent of apparel products today aren’t recyclable, so most of them are dumped in landfills or burned. And it gets worse: Since so much apparel is made from polyester and other oil-based products, fashion now accounts for up to 10 percent of all global carbon dioxide output.

Consumers have stopped looking the other way. Gen Z in particular has been vocal about its demand for more sustainable brands. Three-fourths of Gen Z consumers say sustainability is more important to them than brand name, and their values are trickling up and shifting the attitudes of their Gen X parents as well. Ninety percent of Gen Xers now say they would be willing to spend extra for more sustainable products, a number that’s more than doubled within just a couple of years.

Fashion brands and retailers haven’t been quick enough to respond to these seismic shifts. They need to begin preparing for not only more socially minded consumers but also better educated ones. Within the next five years, for instance, we’re likely to see widespread implementation of fashion sustainability QR codes. Consumers will be able to simply scan a code on a tag and get a full account of not only the materials used and the country of origin, but also a product’s water usage and its carbon footprint. Companies that either hide or can’t provide that information will increasingly be left behind for ones that can.

As brands and retailers scramble to implement long-overdue sustainability strategies, too many are neglecting some of the most important stakeholders in the product development process: the suppliers that actually manufacture their apparel. The success of fashion retailers’ responsible sourcing initiatives hinges on their ability to align with their suppliers.

Setting and Measuring Sustainability Goals

When sourcing offices are working with suppliers in countries such as China, Vietnam, and Bangladesh, they need to give consideration to cultural barriers. For decades these factories have operated with one unwavering objective: to make products as cheaply as possible in order to remain competitive. These suppliers don’t follow the same headlines as their buyers do about social and environmental responsibility and consumer trends. They’ve been hardwired to compete on price alone.

That’s why fashion retailers need to communicate not only their objectives to their suppliers, but also their rationale for wanting to source responsibly — even if that results in products that cost more.

Brands and retailers need to commit to increasing business with responsible suppliers, but they also need to commit to setting clear goals for their suppliers and helping them meet them. This process takes time. It’s unrealistic to expect a supplier to upend decades-old business models overnight. Companies should share two- and three-year vision plans with their suppliers, and then plan check-ins every six months to see if they're meeting milestones.

That’s a big undertaking, especially for businesses that depend on hundreds or even thousands of suppliers. But as is often the case with matters of the supply chain, technology can make it a lot easier. Supplier relationship management (SRM) software can save procurement and compliance teams the work of having to manage communications with each vendor individually.

SRM software creates a window into an enterprise’s entire supplier base, from vendors to factories to raw material providers. It also saves retailers and brands time by automating the onboarding process for vendors and factories and ensuring that all new suppliers have read and consented to the company’s terms. This way from the very earliest stages of working with a supplier, it understands your ESG standards and expectations.

This software also enforces a company’s social and environmental standards by preventing merchandisers from booking orders with noncompliant suppliers and preventing shipping departments from booking shipments with these vendors. If you talk to many compliance officers, they'll say one challenge with enforcing ESG standards is that it’s too easy for merchandisers to look the other way when it’s convenient. SRM software safeguards against the kinds of shortcuts that could do irreparable harm to a brand’s reputation.

Another major benefit of supply chain management software is the transparency and traceability it enables. Through supply chain mapping, businesses are granted a fuller understanding of their environmental footprint, including where their yarns and fabrics come from, how much carbon they’re emitting, and whether they’re making progress toward reducing water and cotton consumption.

That information is invaluable, not only for helping companies make the most responsible decisions, but also for communicating their efforts to the consumers and governments demanding fuller accounts of their business practices. Digitalization not only helps brands and retailers collect and manage the data they need to reduce their environmental footprint, but it enables them to back up their sustainability claims, which has become essential after so many years of rampant greenwashing. Now when a company says it's reducing waste, it will be able to prove it.

Rejean Provost is the team lead, ESG strategy for TradeBeyond, a company that connects retail supply chain operations from product development to delivery.