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Sustainability Metrics for the Assessment of Textile Value Chains in South Africa 1st South African LCA Colloquium, 7 November 2016 Pippa Notten & Ilhaam Patel

OUTLINE

  Introduction   The Development Process

•  Background research •  Stakeholder engagement

  Proposed set of sustainability metrics and its application: •  The environmental and socio-economic impacts of a textile value chain in

South Africa

  Conclusions: Key insights and recommendations

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INTRODUCTION

Why a life cycle assessment of South African cotton?   Seek a competitive advantage through sustainable products

•  Many global apparel companies and retailers using LCA to enhance their brand and identify supply chain risks, e.g. Nike, Levi Strauss & Co., Patagonia, Adidas, Hugo Boss, H&M and Walmart

  Operational: Improve the sustainability of South African cotton products

•  Identify hotspots and biggest wins •  Benchmark current performance

  Strategic: Drive the SA textile sector towards most sustainable options

•  Explore trade-offs between economic, environmental and social benefits/impacts

Sustainable = efficient (lower cost, lower risk)

INTRODUCTION

Within a LCSA, the set of environmental and socio-economic metrics provide the basis for the life cycle model. These will be used in:   Benchmarking the current environmental and social performance of

textile value chains;   Identifying “hotspots” of positive or negative impacts;   Tracking changes in sustainability performance as a result of

interventions; and   Exploring trade-offs between economic, environmental and social

benefits and impacts of different value chains, both within a particular value chain, as well as across different value chains.

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THE DEVELOPMENT PROCESS Review of LCA and social assessment

studies

Review of sustainability

standards

Material issues study REVIEW AND

SYNTHESIS OF BACKGROUND

RESEARCH

Internal workshop

External workshop

STAKEHOLDER ENGAGEMENT

Master list of issues

Revised master list of

issues

Final list of sustainability

issues

FINAL ANALYSIS OF ISSUES

Final analysis and categorisation of

issues

- Industry wide issues - Issues for standards - Metrics for value chain assessment

Workshop outcomes

Final list of sustainability

issues

Final list of sustainability

issues

ENVIRONMENTAL IMPACTS ACROSS THE TEXTILE VALUE CHAIN

Fibre production

Textile production

Garment manufacture

Retail and distribution Consumer use End-of-life

Global warming

Ozone depletion

Human toxicity

Photochemical ozone creation

Ecotoxicity

Acidification

Eutrophication

Cumulative Energy Demand

Water use

Water consumption

Radioactive waste

Slag waste

Bulky waste

Hum

an

Hea

lth

Impa

cts

Eco

syst

em

Impa

cts

Res

ourc

e D

eple

tion

Was

te

Gen

erat

ion

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Fibre production

Textile production

Garment manufacture

Retail and distribution

Consumer use End-of-life

Child labour

Forced labour

Indebtedness/ agrarian distress

Gender discrimination

Low wages

Communication/ work environment

Working hours

Freedom of association & collective bargaining

Occupational H&S

Training, education and awareness

Employment opportunity

Destruction of cultural heritage

Gross domestic product or economic well-being

Worker Rights

Worker Health & Safety

Poverty Alleviation

Cultural impacts

SOCIAL CONCERNS ACROSS THE COTTON VALUE CHAIN

Economic Impacts

ISSUES RAISED IN GLOBAL SUSTAINABILITY STANDARDS

Social impact groups Issue categories Human rights Treatment of workers

Social dialogue Compensation and benefits Discrimination Employment terms Labour management Minor protection Voluntary employment Working hours Worker training and development

Worker health and safety Occupational health and safety Resource and environmental management

Resource management Energy management Water management Chemical management Pollution management Crop management Soil management Solid waste management Environmental management Climate change

Compliance, governance and product integrity

Business ethics and anti-corruption Compliance Community engagement Product integrity Supplier accountability

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ISSUES RAISED BY VALUE CHAIN ACTORS

Material Issues study undertaken by The Moss Group:   The objective of this research was to identify the key material issues

affecting the sustainability of the textile and apparel value chain in South Africa.

  The research followed a two-pronged approach:

•  Desktop research •  Interviews with companies across the value chain

  Issues identified grouped into 5 key challenges (included in Master List)

•  “Money, money, money” •  “Shaky human capital” •  “The Wild West” •  “Dodgy Ethics” •  “The Poor Cousin”

MASTER LIST OF ISSUES

Decision metrics: •  Measures of system performance (qualitative

and quantitative)

•  Allow for comparison between options

•  Emphasis changes for different decision types: •  Strategic decisions •  Operational decisions •  Technical decisions

•  Emphasis changes for different value chain stages:

•  Agricultural •  Manufacturing •  Retail

Industry challenges: Issues that are material to doing business, but would not be used to assess particular textile value chains, e.g. lack of skilled workers, corruption in the workplace etc.

Standards: •  Minimum performance criteria •  Any options that don’t meet

certain performance are excluded

e.g. compliance with health and safety legislation, no child labour etc.

Large number of sustainability issues identified in the background research – delineate into:

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ELICITING STAKEHOLDER INPUT

Value chain actors

Workers

Local community Society

Consumers

•  Buy-in critical for ensuring acceptability of outcomes

•  Identify anything you may have missed

•  Provide data

ELICITING STAKEHOLDER INPUT

Two half-day workshops were held to gain outside input into the sustainability metrics set.   Internal workshop – held for members of wider project team

•  allowed the project team to test their approach and to gain feedback •  gain input on sustainability issues from those with a different perspective to

the immediate project team

  The external workshop – involved stakeholders of textile industry •  aimed to identify stakeholder input regarding what is important in assessing

the environmental, social and economic sustainability of the textile industry in South Africa.

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HIGH LEVEL SUMMARY OF MASTER LIST (1) Category

Sustainability Issue Issue raised in:

(Appendix section number) Standards Life cycle textile

studies Material Issues study Stakeholder workshop

Human health & ecosystem damage Climate change

M, S

(A.1) Water pollution (effluent)

M, S

Air pollution Solid waste M, S Use of toxic substances M, S Land use, biodiversity and soil Biodiversity

M, S

(A.2) Soil fertility M, S Food security,

competition for land

M

Resource depletion; access to resources (A.3)

Water scarcity M, S Use of fossil fuels & mineral resources

Labour rights & decent work

Decent work, attractive work

M, S

(A.4) Training, education, skills development

M, S, I

Wages and benefits M, S Diversity & equal

opportunities

Labour/management relations S, I

Treatment of workers & minors

S

Job creation & community development (A.5)

Job creation (number, type)

M, S, I

Effect on local communities

M, S, I

Health & safety (A.6) Safe, hygienic & healthy working conditions

S

HIGH LEVEL SUMMARY OF MASTER LIST (2) Category

Sustainability Issue Issue raised in:

(Appendix section number) Standards Life cycle textile

studies Material Issues study Stakeholder workshop

Consumers & society (A.7)

Consumer health & safety

M, S, I

Affordability & availability of textiles

M

Compliance & governance

Business ethics & anti-corruption S, I

(A.8) Compliance with laws & legislation S, I

Supplier accountability M, S, I

Economic sustainability (A.9)

Indebtedness and cash flow M, S, I

Economic risks, energy security M, S, I

Strategic direction & competitiveness (A.10)

Government support for industry I

Industry competitiveness M, I

Key to shading and symbols used in the table:

Indicates issues was raised through this channel

Indicates issue was raised in 10 or more standards or studies

Indicates issue was raised in 20 or more standards

Indicates issue was raised in 30 or more standards

M Issue raised as a “Sustainability metric”

S Issue raised as an “Issue for standards”

I Issue raised as an “industry-wide issue”

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PROPOSED SET OF ISSUES TO BE CONSIDERED Category Issue Environmental Social Economic Environmental:

Human health & ecosystem damage

Climate change

Water pollution (effluent)

Air pollution

Solid waste

Use of toxic substances (e.g. pesticides)

Land use, biodiversity and soil Biodiversity

Soil fertility

Food security, competition for land

Resource depletion; access to resources Water scarcity (process water, drinking water)

Use of fossil fuels & mineral resources

Socio-economic:

Labour rights & decent work

Decent work, skilled work, attractive work

Training and education, skills development

Wages and benefits

Diversity & equal opportunities Labour/management relations Treatment of workers, protection of minors

Job creation & community development Job creation (number, type and skill level)

Development of, and effect on, local communities

Occupational health & safety Safe, hygienic & healthy working conditions

Consumer & society Consumer health & safety, product labelling

Affordability & availability of textiles

Economic sustainability Indebtedness and cash flow Economic risks, energy security

Industry competitiveness Value addition & innovation, industry responsiveness

APPLICATION OF SUSTAINABILITY METRICS

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THE LIFE CYCLE MODEL

Important considerations:   Goal and scope of the study

•  Two pilot value chains of Integrated Supply Chain project: t-shirt and towel

  The life cycle product system •  Cotton product system boundary: what is included, what is excluded? •  Data collection and data sources •  Modelling choices (allocation)

  Sustainability impact categories •  Environmental impact categories and models •  Socio-economic impact categories •  Methods chosen for aggregation and interpretation

Smallholder dryland farm

Cotton gin

Spinner

Knitter

Dyehouse

CMT

Consumer use (washing,

drying, ironing)

Retail & distribution

Commercial irrigated

farm

Commercialdryland farm

Cotton fibre production

Integrated mill: weaver,

dyehouse, CMT

Consumer use (washing,

drying, ironing)

Retail & distribution

Yarn production

T-shirt production

Towel production

Land

Water

Fossil fuel resources

Mineral resources

Emissions to air

Emissions to soil

Emissions to water

Manufactured materials:

agro-chemicals; chemicals for textile refinement; dyes; packaging; etc.

End-of-life (disposal)

End-of-life (disposal)

Landfill of textile wastes

Energy inputs:

electricity; diesel; petrol; LPG; heavy fuel oil

LEGEND

From/to environment Processed inputs to systems Textile waste streams Transport steps

COTTON LIFE CYCLE SYSTEM BOUNDARY

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  Labour rights and decent work •  Hours of work •  Training and education •  Skills development •  Wages and benefits •  Freedom of association and collective

bargaining •  Labour-management relations •  Protection of minors and vulnerable

persons •  Diversity and equal opportunity

  Job creation and community development

•  Magnitude and stability of employment •  Poverty reduction and impact on the

local community •  Impact on community health and safety

  Occupational health and safety •  Safe, hygienic and healthy working

conditions •  Commitment to occupational health

and safety

  Product quality and economic sustainability

•  Product labelling and certification •  Feedback mechanisms and customer

satisfaction •  Value addition and innovation •  Indebtedness and cash flow •  Economic risk

Socio-economic impacts

SUSTAINABILITY INDICATORS

EMPLOYMENT INTENSITY (T-SHIRT VALUE CHAIN)

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

Permanent Temporary Full-time equivalent

Num

ber o

f job

s

Number of jobs per 10,000 t-shirts

Retail

CMT

Dyeing

Knitting

Spinning

Ginning

Farming

•  Full-time equivalence assumes temporary jobs are 10 weeks in duration

•  T-shirt mass of 150 g

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GENDER DIVERSITY IN EMPLOYMENT (T-SHIRT VALUE CHAIN)

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

Men Women

Num

ber o

f job

s

Permanent jobs, per 10,000 t-shirts

Retail

CMT

Dyeing

Knitting

Spinning

Ginning

Farming

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

Men Women N

umbe

r of j

obs

Temporary jobs, per 10,000 t-shirts

AGGREGATION OF IMPACT CATEGORIES

Constructed scales serve a number of purposes:   Condense the large number of socio-economic indicators so as to provide a

visual overview   Protect data confidentiality   Synthesize inconsistent and/or data deficient data sets into a consistent output

Defined in this study   Four sets with a colour rating system, intention is to highlight the socio-

economic strengths and weaknesses across the supply chain   Should ideally be constructed together with stakeholders and decision-makers

GOOD FAIR WEAK POOR NO INFO

GIVEN

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CONSTRUCTED SCALES

CATEGORY GOOD FAIR WEAK POOR

LAB

OU

R R

IGH

TS A

ND

DEC

ENT

WO

RK

Hours of work

Workers not exceeding 45 hours per week or 9 hours per day;

OR 45 hours per week with overtime of not more than 3 hours per week paid at a wage premium

Workers occasionally exceeding 45 hours per week or 9 hours per day, with overtime paid at a wage premium and total hours per week not exceeding 60;

OR Workers exceeding 45 hours per week but only for relatively short defined periods (e.g. cotton pickers)

Workers exceeding 45 hours per week or 9 hours per day, with overtime paid but not at a wage premium, and total hours per week not exceeding 60

Workers exceeding 45 hours per week or 9 hours per day with overtime not paid;

OR Total hours per week exceeding 60

Training and Education; and Skills development

10% or more of the workforce receives skills development training;

OR 5% or more of annual working hours are spent on training or skiils development;

OR 5% of more of operating spend is on training;

OR 5% or more of the workforce made up of learnerships or apprenticeships

More than 2% of the workforce receives skills development training;

OR More than 2% of annual working hours are spent on training or skills development;

OR More than 1% of operating spend is on training;

OR More than 0.5% of the workforce is made up of learnerships or apprenticeships

2% or less of the workforce receives skills development training;

OR 2% or less of annual working hours are spent on training or skills development;

OR 1% or less of operating spend is on training;

OR 0.5% or less of the workforce made up of learnerships or apprenticeships

No formal skills development training (possibly some on the job training) and no learnerships

Wages and benefits Wages and benefits above sector standards/union agreements

Wages and benefits aligned with union agreements;

OR Wages at or above appropriate sector minimum wage with some additional benefits given

OR Workers paid on production scheme rather than fixed rate and where, on average, it is possible to exceed sector minimum wage

Wages at appropriate sector minimum wage with no additional benefits given;

OR Workers paid on production scheme rather than daily rate and where, on average, it is possible to attain a daily wage close to sector minimum wage

Wages below appropriate sector minimum wage (whether fixed rate or production based)

EXAMPLE: HOURS OF WORK Value chain stage Survey response

COTTON FARM

Permanent workers not exceeding 45 hours/week; temporary workers (82% of workforce) possibly are but their time is not monitored (they work weekends)

Permanent workers not exceeding 45 hours/week; temporary workers (96% of workforce) possibly exceed this but their time is not monitored

Permanent workers sometimes given overtime to compensate for slow periods; temporary workers (96% of workforce) possibly exceed this but their time is not monitored

GINNING 45 hours per week normal period; overtime 10 hours per week during production period (assume not paid at wage premium)

SPINNING Office and "basic" workers under 45 hours per week; total working hours do not exceed 60 hours per week (including overtime), overtime paid at double or triple hourly rate.

KNITTING 42.5 hours per week; overtime paid but not explicitly stated whether this is at a wage premium. Working hours never exceed 60 hours per week.

DYEING

45 hours per week; paid overtime for work on Sunday and public holidays; overtime voluntary; not explicitly stated that regular plus overtime hours do not exceed 60 hours per week; overtime paid double but statement that this might not apply to all workers

GARMENT MANUFACTURE (CMT)

44.25 hours per week, 9.25 hours Mon-Thurs; overtime voluntary; not explicitly stated that regular plus overtime hours does not exceed 60 hours per week; overtime "incentives" in contract

45 hours per week; sometimes 60 with overtime; overtime "incentives" in contract

44 hours per week; 58 with overtime (Saturday and Sunday)

44 hours per week; hardly any overtime.

MANUFACTURE & DYE 28 employees whose working hours (incl. overtime) exceed 60 hours/week (11%)

RETAIL & DISTRIBUTION

Sectoral Determination for the Wholesale and Retail Sector (45 hours per week, less than 10 hours per week paid overtime)

Hours of work

Workers rarely exceeding 45 hours per week or 9 hours per day; OR overtime not more than 3 hours per week and paid at a wage premium

Workers occasionally exceeding 45 hours per week or 9 hours per day with paid overtime not exceeding 15 hours per week (60 hours total); OR workers exceeding 45 hours per week for relatively short defined periods (e.g. cotton pickers)

Workers exceeding 45 hours per week or 9 hours per day with overtime paid but not at a wage premium; total hours not exceeding 60 hours per week

Workers exceeding 45 hours per week or 9 hours per day with overtime not paid; OR total hours exceeding 60 hours per week

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EXAMPLE: HOURS OF WORK Value chain stage Survey response

COTTON FARM

Permanent workers not exceeding 45 hours/week; temporary workers (82% of workforce) possibly are but their time is not monitored (they work weekends)

Permanent workers not exceeding 45 hours/week; temporary workers (96% of workforce) possibly exceed this but their time is not monitored

Permanent workers sometimes given overtime to compensate for slow periods; temporary workers (96% of workforce) possibly exceed this but their time is not monitored

GINNING 45 hours per week normal period; overtime 10 hours per week during production period (assume not paid at wage premium)

SPINNING Office and "basic" workers under 45 hours per week; total working hours do not exceed 60 hours per week (including overtime), overtime paid at double or triple hourly rate.

KNITTING 42.5 hours per week; overtime paid but not explicitly stated whether this is at a wage premium. Working hours never exceed 60 hours per week.

DYEING

45 hours per week; paid overtime for work on Sunday and public holidays; overtime voluntary; not explicitly stated that regular plus overtime hours do not exceed 60 hours per week; overtime paid double but statement that this might not apply to all workers

GARMENT MANUFACTURE (CMT)

44.25 hours per week, 9.25 hours Mon-Thurs; overtime voluntary; not explicitly stated that regular plus overtime hours does not exceed 60 hours per week; overtime "incentives" in contract

45 hours per week; sometimes 60 with overtime; overtime "incentives" in contract

44 hours per week; 58 with overtime (Saturday and Sunday)

44 hours per week; hardly any overtime.

MANUFACTURE & DYE 28 employees whose working hours (incl. overtime) exceed 60 hours/week (11%)

RETAIL & DISTRIBUTION

Sectoral Determination for the Wholesale and Retail Sector (45 hours per week, less than 10 hours per week paid overtime)

Hours of work

Workers rarely exceeding 45 hours per week or 9 hours per day; OR overtime not more than 3 hours per week and paid at a wage premium

Workers occasionally exceeding 45 hours per week or 9 hours per day with paid overtime not exceeding 15 hours per week (60 hours total); OR workers exceeding 45 hours per week for relatively short defined periods (e.g. cotton pickers)

Workers exceeding 45 hours per week or 9 hours per day with overtime paid but not at a wage premium; total hours not exceeding 60 hours per week

Workers exceeding 45 hours per week or 9 hours per day with overtime not paid; OR total hours exceeding 60 hours per week

  Potential damage to human health •  Substances toxic to humans (cancer

and non-cancer effects) •  Substances that destroy the ozone

layer •  Substances that cause smog and lead

to respiratory illnesses

  Potential damage to ecosystems •  Substances toxic to ecosystems •  Acidifying substances •  Excessive macronutrients (nitrogen and

phosphate)   Global warming potential

•  Greenhouse gases leading to climate change

  Water scarcity •  Water use that deprives others of

freshwater

  Land use •  Potential biodiversity loss •  Loss of biotic production potential (soil

organic carbon)

  Non-renewable resource depletion •  Use of fossil fuels •  Use of mineral resources

  Energy use •  Cumulative energy demand

Environmental impacts

SUSTAINABILITY INDICATORS

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COMPARISON OF IRRIGATED AND NON-IRRIGATED COTTON

-4

-2

0

2

4

6

8

10

12

Irrigated Non-irrigated

kg C

O2e

Global warming potential (net), 1 kg t-shirts

Disposal

Retail

T-shirt production

Yarn production

Fibre production

0E+00

1E-06

2E-06

3E-06

4E-06

5E-06

6E-06

7E-06

Irrigated Non-irrigated

DA

LY

Human health damage potential, 1 kg t-shirts

Retail T-shirt production Yarn production Fibre production

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

Irrigated Non-irrigated

CTU

e

Ecotoxicity, 1 kg t-shirts

Retail

T-shirt production

Yarn production

Fibre production

0.00

0.01

0.01

0.02

0.02

0.03

0.03

0.04

0.04

Irrigated Non-irrigated

kg N

equ

ival

ents

Eutrophication potential (N), 1 kg t-shirts

Retail

T-shirt production

Yarn production

Fibre production

COMPARISON OF IRRIGATED AND NON-IRRIGATED COTTON

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

Irrigated Non-irrigated

cubi

c m

etre

s

Water depletion potential, 1 kg t-shirts

Retail

T-shirt production

Yarn production

Fibre production

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

Irrigated Non-irrigated

squa

re m

etre

s.ye

ar

Biodiversity stress index, 1 kg t-shirts

Retail

T-shirt production

Yarn production

Fibre production

0

5

10

15

20

25

30

35

40

Irrigated Non-irrigated

kg c

arbo

n

Biotic production potential, 1 kg t-shirts

Retail

T-shirt production

Yarn production

Fibre production

0.0

0.1

0.2

0.3

0.4

0.5

0.6

Irrigated Non-irrigated

$

Non-renewable resource depletion, 1 kg t-shirts

Retail

T-shirt production

Yarn production

Fibre production

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AGGREGATION OF IMPACT CATEGORIES

Constructed scales   There are four sets with a colour rating system, consistent with that used for

socio-economic impact categories

  Significance of environmental impacts – based on normalised results using the ReCiPe LCIA method (Goedkoop et al., 2009).

Category Significance Fossil Carbon Footprint Moderate Human toxicity High Particulate matter formation Moderate Terrestrial acidification (in SA) High Freshwater ecotoxicity Moderate Freshwater eutrophication Very high Marine eutrophication Very high Water Stress Index, SA (SA data) Very high Fossil fuel depletion High Land & biodiversity Minor

Relative size / significance of the impact Contribution of stage/process to overall supply chain impact

Small / minor significance <2% 2 - 5 % 5 - 10 % > 10% Moderate significance <5% 5 - 10 % 10 - 25 % >25% High signficance <10% 10 - 25 % 25 - 75 % > 75% Large / very significant <20% 20 - 50 % 50 - 90 % > 90%

SIGNIFICANCE AND CAUSES OF ENVIRONMENTAL IMPACTS

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COMPARISON OF THREE COTTON FARMS

Sustainability Indicator Cotton farms

Commercial, irrigated

Commercial, non-irrigated

Smallholder, non-irrigated

Environmental: Human health and ecosystems Impact on global climate change Potential human health effects Potential impacts on ecosystems Environmental: Resources Consumption of scarce water resources Impact on land resources Consumption of non-renewable resources Socio-economic: Labour rights and decent work Hours of work Training, education & skills development Wages and benefits Collective bargaining; labour relations Diversity and equal opportunity Socio-economic: Job creation and community development Magnitude and stability of employment Poverty reduction and community impact Socio-economic: Commitment to occupational health and safety Working conditions, commitment to OHS Socio-economic: Product quality and economic sustainability Product quality and innovation Indebtedness and cash flow Energy, water and waste cost sensitivity

KEY GOOD FAIR WEAK POOR

Overview of sustainability performance

CONCLUSIONS

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KEY LEARNINGS

Collecting sustainability information is challenging •  Little or no appetite for sustainability initiatives (especially environmental) •  Challenges included long turn-around times, information gaps and language

barriers •  Indicators need to be kept to a minimum and tailored, where possible, to existing

record-keeping •  Data needs thorough auditing and checking Socio-economic information has its own challenges •  Possibly high biases by engaging only with business owners and management •  Often information not available or no standard format for recording •  Reluctance to divulge costs and other financial information

FUTURE DIRECTIONS

Usefulness of life cycle approach to capture sustainability performance of textile value chains demonstrated   Larger sample size needed for results to represent SA’s textile industry   Indicators point to interesting trade-offs between different regions and farming

approaches that could be explored with a larger sample size   Possible model improvements, e.g. chemical compositions, wastes   Wider-ranging interviews for more robust benchmarking of socio-economic

performance Taking the life cycle model forward   Further refinement of sustainabilty indicators

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THANK YOU www.tgh.co.za | pippa@tgh.co.za Tel: +27 (0) 21 671 2161 | Fax: 086 638 3692

Ubunye House, 70 Rosmead Ave,

Kenilworth, 7708, South Africa