Environmental issues arise at all stages of the textile and apparel supply chain. The expansion of apparel production and consumption has contributed to increasing pollution, water shortages, fossil fuel and raw material depletion, and climate change (Textiles Intelligence, 2008). Each step in the apparel production process carries the potential for an environmental impact (Claudio, 2007; Potoski & Prakash, 2005).
The apparel industry, like many others, is increasing its realization that â€śthe environment is not a minor factor of production, but rather an envelope containing, provisioning, and sustaining the entire economyâ€ť (Hawken, Lovins, & Lovins, 1999, p. 9).
Widely accepted environmental standards do not exist in the apparel and footwear industry. â€śThis means that brands are running in a race with different finish lines. Industry development and adoption of a common set of environmental metrics is key to ensure that consumers have consistent and comparable information when making purchasing decisionsâ€ť (The Timberland Company, 2009). As such, it is valuable for apparel brands and retailers to understand the expectations of various stakeholders.
This research focuses on U.S.-based stakeholder groupsâ€™ expectations for environmental performance of apparel brands and retailers. It brings to light the interests and concerns of the various groups that are affected by the business decisions of the apparel industry or can affect these decisions, the industryâ€™s stakeholder groups.
According to Max B. E. Clarkson (1995), primary stakeholders consist of groups or associations required by the corporation to exist on a daily basis. Examples of primary stakeholder groups include investors, trade associations and employees, while secondary stakeholders are defined as â€śthose who influence or affect, or are influenced or affected by, the corporationâ€ť but who are not engaged in formal transactions with the organization (p. 108). These groups play a supporting role in effecting change in the business activities of brands and retailers. Examples of secondary stakeholder groups include non-governmental organizations, the media and competitors.
Taking into account the varied stakeholder groups within the apparel industry, this research sought to fully bring to light the interests, concerns, and expectations of three stakeholder groups through case study research. In order to identify important stakeholder groups within the apparel industry, professionals currently working in the area of environmental sustainability were asked to identify stakeholder groups they felt were influential.
Taking these suggestions into account, it was decided to develop case studies on the American Apparel & Footwear Association, Organic Exchange, and Ceres. These three organizations represent both primary and secondary stakeholders. The case studies were compiled using data collected through website analysis, semi-structured interviews, and archival records searches.
The American Apparel & Footwear Association
The American Apparel & Footwear Association (AAFA) is the national trade association representing apparel, footwear and other sewn–products companies before the U.S. government on policy matters and trade agreements (AAFA, 2009). AAFA was formed in August 2000 through the merger of two highly regarded trade associations, the American Apparel Manufacturers Association and Footwear Industries of America.
As of 2010, AAFA boasted more than 400 member companies. Drawing from a broad, diverse and technically strong membership base, AAFA member companies produce more than 80 percent of apparel and footwear sold at wholesale each year in the United States (AAFA, 2009). AAFA staffers are assigned to cover issues such as the Central American Free Trade Act- Dominican Republic (CAFTA -DR), childrenâ€™s wear, supply chain leadership, licensing, and labeling. Many staffers have a portion of their assignment focused on addressing environmental issues, such as restricted substances, safety concerns with the manufacturing of childrenâ€™s sleepwear or the carbon footprint issues that arise out of supply chain management.
AAFAâ€™s mission â€śis to promote and enhance its members' competitiveness, productivity and profitability in the global market by minimizing regulatory, legal, commercial, political and trade restraintsâ€ť (AAFA, 2009). To accomplish this mission, AAFA has divided its work among 15 committees and councils including the Environmental Committee (EC). AAFA representatives we interviewed noted five environmental concerns on which their members are currently working: water usage, carbon foot printing, product safety and restricted substances, regulatory compliance and sustainability. The ECâ€™s strong leadership, large membership, collaborative nature and educational focus are assisting AAFA to fulfill its mission.
Organic Exchange (now Textile Exchange)
Organic Exchange (OE) is a non-profit, non-governmental organization (NGO) committed to expanding the amount of farm land dedicated to organic agriculture, with a specific focus on increasing the farming production and commercial use of organically grown fibers such as cotton (OE, 2010). OE is comprised of 211 organizations that span the entire supply chain from farmers, to spinners, to mills, to production factories, to branded retailers, to sourcing agents, to other non-governmental organizations working on almost every continent around the globe.
OEâ€™s mission is to â€ścatalyze market forces to deliver sustained environmental, economic and social benefits through expansion of organic fiber agricultureâ€ť (OE, 2010). In order to fulfill its mission, OE has developed various fiber source and labeling standards, as well as logos.
OE representatives identified two issues as top priorities for the organization—chemical and water usage. The issue of product integrity, another environmental concern for OE, was identified through archival record searches and involves the ability to trace the actual origin of fibers. Since its inception, OE has focused on working with the apparel industry. OE has been able to use the groupâ€™s clout and reputation to influence the development of organic standards in countries around the world.
Ceres consists of a network of environmental organizations, non-profit groups, and public interest groups working together with companies and investors to address climate change and sustainability issues. Formed in 1989 as a direct result of the Exxon-Valdez oil spill, Ceres is working to bring about positive collaborations on climate change within the business community.
Ceresâ€™ mission is to â€śintegrate sustainability into capital markets for the health of the planet and its peopleâ€ť (Ceres, 2010). Ceresâ€™ companies make commitments to in-depth stakeholder engagement, information disclosure, and continuous improvement. A Ceres representative noted two environmental concerns on which the group is currently working: water usage, which includes water consumption rates as well as wastewater quality, and materials use. A representative from a Ceres member company we interviewed also shared that measuring and reducing carbon footprint is a key issue on which Ceres is able to provide assistance. Ceres has had a notable impact on advancing the conversations on sustainability and gathering stakeholder engagement through the establishment of the Global Reporting Initiative and the development of the Ceres coalition.
Expectations for Environmental Performance and Issues of Concern
The three stakeholder groups investigated for this research shared commonalities in their expectations for environmental performance for the apparel industry. Each group placed importance on being knowledgeable about environmental issues impacting a companyâ€™s supply chain. The AAFA expects all its members to be â€śknowledgeable about the issues and how they may affect their businessâ€ť (AAFA Interview 2). Likewise, OE representatives state with clarity that they expect apparel brands and retailers â€śto learn their supply chains more deeplyâ€ť (OE Interview 1). Ceres shared the broader expectations of coming together â€śas an industry [to] come up with the best practices and then really put their competitive instincts to the side so they are able to promote and maintain those best practicesâ€ť(Ceres Interview 1).
Apparel brands and retailers are currently not meeting these stakeholder groupsâ€™ expectations for environmental performance. Ceres believes the apparel industry has made progress on various climate change issues. However, in keeping with its commitment to continuous improvement, a Ceres representative shared that they are not completely satisfied. â€śWe are impressed with the progress we have seen thus far and think there is a lot more work to be doneâ€ť (Ceres Interview 1). This quote echoes the sentiments OE and AAFA representatives shared.
Three common issues expressed by AAFA, OE and Ceres, which brands and retailers should consider, are water usage, chemical management and product safety, and carbon footprint reduction. Companies that choose to tackle carbon footprint reduction first may be able to begin impacting the other two issues of chemical management and water use. By accurately accessing, measuring and tracking their carbon footprint, companies will also have visibility into their chemical use as well as water consumption rates within their supply chain.
From this research, it is possible to reach three conclusions. The first is that key stakeholder groups believe that apparel brands and retailers need to address the issues of water usage, chemical use and management, and carbon footprint measuring and reduction. This research also sets base line expectations for environmental performance, of which brands and retailers need to be aware. Apparel brands and retailers could seek to collaborate within the industry as well as engage with stakeholder groups to develop best practices on these issues.
A second conclusion is that in-depth supply chain management is a key practice stakeholder groups are looking for from brands and retailers in order to tackle these environmental issues. In-depth supply chain management includes company representatives familiarizing themselves with each layer within their supply chain, from the farm to the factory to the store. Companies that invest in their supply chain through clear communication, capacity building, education, training, steady order placement and stakeholder engagement will have plenty of information they are confident reporting to the public. Public reporting about how the company is addressing environmental concerns may in turn improve media relations, employee morale, and public opinions of the company.
A third conclusion that may be of interest to academic researchers involves the trend of collaboration between primary and secondary stakeholders within the apparel industry. The AAFAâ€™s EC, which has members at various levels of the supply chain, is able to host education conferences for suppliers that meet the needs of various apparel brands and retailers. This demonstrates that a trade association (primary stakeholder group) may have an impact and influence suppliers (primary stakeholder group).
As part of OEâ€™s membership benefits, brands and retailers may utilize OEâ€™s approved suppliers lists and farm management practices. This speaks to the ability of an NGO (secondary stakeholder group) to impact suppliers.
Ceresâ€™ coalition, which consists of a network of public agencies, environmental groups, and investors, engages directly with companies on environmental and social issues. This coalition blends together the impacts primary and secondary groups have on other primary as well as secondary groups. Through these examples, it is possible to note a new type of collaboration and partnership to consider when studying stakeholder theory and stakeholder engagement.
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2. Ceres. (2010). About us. Retrieved February 9, 2010 http://www.ceres.org/Page.aspx?pid=415.
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