An Evaluation of

SUSTAINABILITY MANAGEMENT

ACCOUNTING PRACTICES

at BRANDIX CASUALWARE

SEEDUWA PLANT

ACC 4327 – Sustainability Management Accounting

Depatment of Accounting

University of Sri Jayewardenepura

Name CPM No.

A.M.D.C.P.Gunasekara 7180

P.A.M.R.Gunawardana 7190

M.F.M. Rifan 7569

Introduction to Brandix Group

The Brandix Group has pioneered the concept of holistic apparel solutions from a unique,

customer-centric standpoint since its inceptionin the year 2002. Its unconventional approach to a

conventional sector has propelled Brandix to the forefront of the industry as the single largest

apparel exporter in Sri Lanka with a turnover of US$ 600 Mn. The public limited company’s fast

expanding network of factories andoffices span across the South Asian sub-continent. Brandix

Lanka holds 42 manufacturing facilities which include group companies, joint ventures, and

subsidiaries and leased factories. They span over three countries: Sri Lanka, India and

Bangladesh, and employ over 42,000people directly.

The Group specializes in manufacturing casual bottoms, intimate apparel, underwear, lounge and

sleepwear, bras, woven and knitted fabrics and a host of apparel industry accessories. A

backward andforward integrated operation, the company manufactures its own fabric, buttons,

thread and hangers, lending a tactical edge in the apparel sector. This core strength further

reinforces our advancedresearch and development, outstanding design, fabric printing, washing,

dyeing, wet processing, finishing, and relentless quality control services with fastest turnaround

times. Brandix has consistently been at the forefront of national and globalefforts to adopt eco-

friendly manufacturing practices.

Brandix casualware Plant at Seeduwa

The signature Brandix Eco Centre in Seeduwa made history as the first LEED Platinum rated

apparel factory in the world after redesigning the plant in April 2008. This plant is located in

a130,000 square foot land. And it has been designed according to the green factory standards.

The plants main outputs are woven bottoms, basic pants, cargo pants and 5 pocket jeans, shorts

and skirts for world’s most renowned brands.

The Brandix Eco Centre also became the first apparel manufacturingfacility in the world to

obtain the prestigious ISO 50001 EnergyManagement Systems certification. In addition to this,

Brandix won the ‘Plan A Supplier of the Year’ award in the General Merchandisecategory from

Marks & Spencer at the Plan A Conference held in London in April 2012,

FrumrFutruF.Initiatives that advance adherence to the Triple Bottom Lineconcept continue to be

rolled out at Brandix, and customer schemes such as Plan A and Green Building rating systems

like LEED, helpx duanBisto set world-class parameters and targets.

Literature Reveiw

The global textile and apparel industry is predicted to grow to US$800 billion by 2015

ascompared to roughly $700 billion today. As a sector, it not only has a large

environmentalfootprint but is also the single largest contributor to industrial waste water and the

largest user of pesticides. Some specific processes, like yarn production and dyeing, use large

volumes of water and are copious consumers of The basic drivers for energy.the textile industry

to In a global market with increasing regulation and consumer preferences for ‘sustainable

products’, move towards eco- sustainable production is gaining increasing importance.

Sustainability has typically meant looking at efficiency and both environmental and social

aspects sustainability exist. The environmental facets like sustainable sources of raw material,

optimal use of energy, minimal useEnergy prices are high of toxic chemicals; waste reduction

and preservation of land have been receiving greater focus in recent times.

The drivers for the increased focus on Sustainability are Compliance is inter-twined with risk

Brand reputation protection and risk management mitigation. As future legislation Increasing

resource (water, energy, land) scarcity in continues to develop in Europe and some of it is being

planned in the regions of production US/Canada, brands and retailers are Compliance

requirements both at a product level looking to get an idea of their supply- (which is driven

mainly by the importing market like chain risk and proactively managing REACH in the EU) or

compliance requirements at a it. In addition, emerging countries themselves are working on

looking at process level (which are driven by the production legislation on carbon emission and

region laws) water usage. This impacts Consumer pull i.e. increasing consumer preference in

manufacturers (which are mainly based in emerging countries) as well the EU and in North

America (which are the largest as brands and retailers. markets) for sustainable labels. One-

upmanship On account of the above factors, Sustainability is now being looked at by the apparel

and textile brands not as a mere CSR activity but more as a market differentiator and business

enabler. The major brands and retailers across the globe have entered into a healthy competition

in order to outdo the other andM&S aims to become entice the consumer towards them. Some of

the path-breaking initiatives taken by the major brandsthe first major retailer recently areto

collect information As part of its Plan ‘A’ commitment to become the world’s most sustainable

major retailer byfrom the extended 2015, Marks & Spencer (M&S) signed a deal with supply

chain traceability specialist Historicsupply-chain, Futures to develop a full ‘raw material to store’

traceability on every single clothing item. This would allow M&S to become the first major

retailer to collect information from thedescribing where and extended supply-chain, describing

where and how every product is made, including thehow every product is source of the raw

materials such as cotton and wool. The full traceability will enable an evenmade, including the

greater ability for M&S to differentiate its products. As an example, for its t-shirts, it will

givesource of the raw information on where: cotton is grown; yarn is spun; fabric is produced;

fabric is dyed. Etcmaterials such as Related to this, M&S have launched the ‘Look-Behind-the-

Label’ campaign in a few of itscotton and wool stores, which informs shoppers as to the way the

group sources its products. In 2010, Sportswear giant Puma became the first company to release

an Environmental Profit and Loss (EP&L) statement, which measures the full economic impact

of the brand on 1 Report Excerpt.

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Current Environmental/Sustainability Management Practices

Brandix casual ware plant was converted into an eco centre on April 2008 and it was awarded

with the platinum rating certificate The plant received Platinum rating in August in the same year

under the Leadership in Energy and Environmental Design (LEED) Green Building Rating

System of the US Green Building Council (USGBC). They are awarded with this certificate

since the plant was designed and operated in such a way that is environmental friendly under the

green building concept. During our plant visit we identified that they were adopting numerous

environmental and sustainability management practices to achieve four main goals

01. Reducing the Carbon Foot Print by 80%

02. Reducing the energy Consumption by 46%

03. Reducing Water Consumption by 58%

04. Zero solid waste to Landfill

Therefore we presented their environmental and sustainability practices under these four goals

01 .Reducing the energy consumption by 46%

The vision of the plant’s energy management plan is “to replace all non- renewable sources with

renewable sources” and they are using three main strategies to achieve this goal.

01. Introduction of Energy Efficiencies

02. Introduction of new green technology

03. Replacing Fossil fuel with renewable energy sources

The company is implementing these strategies through following practices,

01. Lighting System

Fluorescent lights are replaced by Light Emitting Diode (LED) task lights at the needle

point of the sewing machines which has largely contributed to the reduction of energy

consumption.

Introduction of special sky lights made of prismatic materials letting in the solar light

without letting in the solar heat. This helps to get the maximum utilization of the sunlight

in the day time while saving the energy consumed for air conditioning system by

reducing the cooling load.

Large windows which are built using special glass material which let in sunlight without

heat embedded, installed in the production areas channel sunlight into the factory floor.

These help to reduce the energy consumption and also increase the efficiency of the Air

conditioning system which in turn contributes to the reduction in energy consumption.

02. Air conditioning system

Use of inter locking paving blocks instead of the tarter roads to reduce the heat building

up around and prevents heat coming into the factory which in turn helps to increase the

efficiency of the air conditioning system

New sophisticated Air Conditioning system reduces the energy consumed by the plant

03. Increase of boiler efficiencies and Installation of Bio Mass Boilers

Increasing the Boiler Insulation

Replacing the efficient steam taps for increased efficient condensate recovery

Regular Inspection of steam leaks

Installation of heat recovery units such as heat exchange or economizer

Installation of Bio Mass Boilers instead of the Fossil Fuel Boilers

04. Use of Electrically powered vehicles

They use electrically powered car, truck and a tour bus which are powered by the plant’s

windmill for the transportation within the factory premises for the delivery of samples

and short hold of stocks

05. Building up a monitoring system

A web based real time monitoring system which continuously tracks the plants over all

activities helps to reduce the energy consumption by generating real time data of the

energy consumption of each activity of the plant.

Reducing the water consumption by 58%

The vision under water management plant is “to achieve zero water wastage”and the company is

adopting three main strategies to achieve this goal

01. Minimize water usage

02. Recycle/ Reuse water

03. Increase the use of green water sources through rainwater harvesting

The following are the water management practices used by Brandixcasualware plant in order to

fulfill this goal.

01. Use of water efficient fixtures & fittings

Introduction of push taps which prevents taps from opening up for a longer

periods

Toilets are equipped with water efficient flush buttons

Toilets, Canteens and Kitchens are fitted with water efficient faucets that

dispenses minimal amount of water (Ex: use of push taps)

02. Leak Detection

Inspections for water leakages are carried out periodically but since most of the

pipes are laid underground meter records are used to track the leaks

03 Recycle/ Reuse of water

They retreats wastes water using water filtration systems and use the majority of

the treated water in gardening and toilet flushing. They strictly adhere to the

water quality Para meters set by the Central Environmental Authority of Sri

Lanka and water testing is done periodically in order to certify those parameters

are achieved.

04 Increase the use of green water through rain water harvesting

The roof of the Brandix casual ware Plant in such a way that 75% of the roof

captures rain water. This water are then sent to two rainwater harvesting pits

underground and utilized for various uses except for drinking.

Use of rain water percolation pits helps water soak back into the grounds and this

has reduced the use of water for gardening purpose.

Zero Solid waste to Landfill

This one is the least achieved goal by the Brandixcasualware factory. Their solid waste mostly

includes the Cut fabric waste, defective garments and food waste.

The vision under the waste management system is to achieve zero material waste

They use 3R strategy to achieve this goal

01. Reduce

02. Reuse

03. Recycle

They have adopted the following waste management practices to achieve this target

01 Paper neutral Policy

The objective of this policy is to maximize the recycling of paper and minimizing

the paper usage. This is a group level policy which allows them to purchase paper

only for the value they have recycled. This leads them to reduce the paper

consumption and to make sure that all the waste papers are directed to recycling.

02. Diversion of Land Filling through Reuse or Recycle.

Fabric cut waste- these are sold to local buyers for home industries and sent to

small scale garment manufacturing facilities where yarn is extracted from them to

make carpets, drapery and socks

Defective Garments – Most of the garments they produce are brand protected

therefore any defective garments become useless and the company sell them to

local buyers by shredding them for various purpose such as handicrafts, cleaning

and etc.

Thread Cones- these are 100% sold to American and Efrid Lanka and Coats who

are the tread manufacturers

Food wastage – Food waste is categorized according to the digestibility and then

used to create bio gas which is used for the work in the kitchen

Reducing the carbon footprint by 80%

They have begun their carbon foot print reporting effort in 2008 when they receive the LEED

platinum certificate.

Green areas within the plant have been increased in order to reduce the GHG effect and there are

two indoor green patches within the plant which are using 100% organic fertilizers.

Other than above the all the other environmental practices categorized under energy management

such as new air conditioning system, bio mass boilers, use of electrically run vehicles and the

waste management practices such as bio gas production has contributed for the reduction of

carbon foot print of the company.

Description of the physical/monetary accounting practice of brandix

casualware Seeduwa Plant

They are mainly using GRI as the sustainability reporting framework and they are adopting

group policies for to account for the environmental impacts for the previously discussed

practices

Accounting for the impacts of the energy management system

Mainly they are accounting for the investment and the savings in terms of Dollar value as

monetary accounting practices and the saving in energy in terms of Giga Joule (GJ). During the

year 2011/2012 they have invested around $ 597,000 in the casualware cluster for the energy

management projects and had gained a cost saving of $ 149,000 with an energy saving of 5449

GJ.

Followings are the methods they are adopting for the measurement of energy saving in both

physical and monetary terms.

For the calculation of the electricity saving by introducing the LED task lights they have

compared the number of GJs per hour of Fluorescent lights with the number of GJs per

hour of LED task lights and the difference has been multiplied by the total machine

hours. For the cost calculation purpose they have compared the Cost of energy

consumptions per hour use of Fluorescent lights and Cost of energy consumptions per

hour use of LED lights and difference is multiplied by the total number of machine hours

They have measured the energy saving of the use of sky lights by the energy combustion

of the number of lights that have been replaced by implementing this practice. This

practice has contributed for 10% of the total energy saving of the plant.

For the Air conditioning system also they are comparing the energy consumption before

implementing the new A/C unit and the energy consumption after implementing the A/C

unit. Building Management System monitors the overall performance of the A/C Unit

and it is used to measure these data. This practice has resulted in 40% reduction in

electricity consumption

For the calculate the energy efficiency of the Bio Mass Boilers they compares the number

of liters of furnace oil and the number of Kgs of Bio Mass which has replaced the

furnace oil. The cost saving is calculated by placing monetary values to the above two

measurement according to the price trends of one kg of Bio mass and one liter of furnace

oil. This cost saving is compared with the Initial Investment made to calculate the

payback period of this project. By implementing this practice they have been able to

reduce the plant’s overall energy consumption by 26%.

For the calculation of the energy efficiency of the electrically run vehicles they track the

no of kilo meters run by the vehicles and they calculate the amount of fuel they would

have been incurred if they had not implemented this project. The Monetary values are

assigned to this data by assigning fuel prices for the number of liters they would have

consumed if they run those vehicles by using fuel.

Accounting for the impacts of the water management system

As per the group policy they are required to fit water meters to the every activity of

the plant and daily total water consumptions are monitored & total water consumption

is compared before implementing and after implementing the water management

system.Thereby they calculate the total saving of water by the plant (amount of cubic

meters)

As per the guidelines given by the GRI they calculate the number of cubic meters of

water which are recycled which is measured at the point of water treatment system.

And also they measure the direct and indirect blue water, green water and grey water

foot print of the plant.

In addition they account for the number of cubic meters of water which is used by the

plant by rain water harvesting.

Accounting for the impacts of the waste management system

According to the groups paper neutral policy they prepare monthly reports of the paper

consumption and paper recycling data. Accordingly they calculate the number of tress

they have saved and the amount of water they have saved by calculating the ecological

rucksack of paper.

They compute the number of Kgs of fabric cut waste and shredded defective garment

before selling them to the local buyers and they account for the revenue generated by

selling those solid waste

Additionally they measure the amount of Bio Gas produced by recycling the food waste

and they calculate the saving they made by using them in the plant’s kitchen.

Accounting for the Green House Gas Emission of the Plant

The carbon footprint reporting has been complied with the green house gas protocol corporate

standard which is a part of GHG protocol initiatives. The GHG protocol takes into account six

major gases covered by Kyoto Protocol. The operational boundary was selected in order to

include as many as operations as possible that emit GHGs. They are reported under 03 main

scopes.

01. Direct GHG emissions from sources that are controlled by the factory (i.e. by the fuel

used in the generators, boilers etc.) – To reduce this impact they have set up a Bio Mass

Boiler for the steam generation.

02. Indirect GHG emission generated from the use of purchased electricity consumed by the

plant – To reduce this impact they have adopted energy consumption reduction practices

03. Other Indirect GHG emissions arising as a result of the activities of the plant but not

owned or controlled by the plant namely 3rd

party transportation.

They perform green house gas verification and obtain an assurance certificate from independent

third party in order to account for the carbon foot print of the company,Other than they use the

plants building management system to monitor the GHG emission of each activity which they

can use for strategy implementing purpose.

Recommendations or suggestions for improvements

Adoption of life cycle analysis

Company is currently identifying environmental analysis only for the production face of

the product life cycle. They do not consider the environmental impact of other phases

starting from raw material extraction to the end customer use. However they are reporting

the CO2 emission for the whole life cycle of its products to some extent but it will be

more effective if they can analyxe and assignmonetary values for entire product life cycle

impacts.

For example they consider their waste as cut fabric waste and defective garments but they

do not consider the waste created by the end customer at the end of the use of the

product. So they can promote environmental friendly products to their customers and

acknowledge the end customers through the entire value chain since their end customers

are world famous brands such as Makers and Spence. Just as the case study of Levis.

Development of KPIs for water management

As per our study we identified that they have set KPIs for energy management and waste

management and green house gas effect. Therefore we recommend them to set KPIs

relating to water management also.

Investment in replantation projects

Since they are operating Bio mass boilers they can invest replanting projects to reduce the

environmental impacts and green house gas effect.

Refferences

duanBis Crupruamirn (2012), Srxmainabilimy uFprum 2011/12.

ckinFmicx (2011), Maucr mr xrxmainabilimy,(2013).

http://www.slideshare.net/ckinetics/march-to-sustainability-2011-9493301

http://www.ckinetics.com/publications.htm

Caravan, R.d. (2004), Ecr fibFux anB Fcr fuiFnBly mFsmilFx,

http://www.slideshare.net/nega2002/eco-fibres-and-ecofriendly-textiles-ms-univ-

21204-final.

http://www.brandix.lk/brandix/casualwear.php

Contact details of the person who assited us in the process

Mrs. Manojini Rathnayake

Environmental Analyst

Manojinir@brandix.com

0773652030

0114727777 Extensions - 7739