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Sustainability and value in the global fashion industry A Deloitte presentation of how a sustainable business approach may contain significant opportunities for companies operating in different part of the extensive fashion supply chain. The presentation connects one value opportunity to each part of the fashion value chain though many of the value opportunities is relevant in different parts of the value chain as well. For more information contact DK Deloitte Sustainability Manager, Bahare Hagshenas, [email protected]
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Business opportunities in sustainable fashionA value chain perspective
2 © 2014 Deloitte
Sustainable fashion:Understanding the business case
Design
SourcingM
anufacture
Distribution
Ret
ail
Use
Discard
Value chain
3 © 2014 Deloitte
Designing sustainabilityAttract and retain future talent
75% of the global workforce will in 2025 be members of the ‘millennial’ generation (born in 1983 or later).
78% of the millennials are influenced by how innovative a company is when deciding if they want to work for them.
Millennials believe business can do more to help society
Resource scarsity
Climatechange
Incomeinequliaty
68% 65% 64%
Source: Deloitte. 2014. Big demands and high expectations. The Deloitte Millennial Survey
“Talent is the energy that powers our
Group. Without talent we would not be
here…Sustainability is key to talent
management.”
Source: http://www.kering.com/en/talent/empowering-talent
“I’m also really happy to see that
our…colleagues show such interest in
sustainability. This opens great
opportunities to…attract and retain the
talent we need for our continued
growth.”Karl-Johan Persson, CEO
4 © 2014 Deloitte
Sourcing sustainabilityIncrease resilience against externality risks
Polyester
Since polyester is a petroleum product it has a significant climate change impact (27 kg CO2 eq/kg).
Again, since polyester is a petroleum product and petroleum is a non-renewable resource, polyester presents a high impact on resource availability ($US157/kg)
During the production stage polyester requires 18.3 kilowatt hour per pound of fiber
Cotton
2,4% of the world’s cultivable lands is covered with cotton, but cotton production accounts for 24% of the world’s use of pesticides and 11% of the world’s use of insecticides. Accordingly cotton has the highest level of freshwater eco-toxicity of all the most common textile fibres.
Cotton is one of the thirstiest crops. The production of 1 kg of cotton takes between 7.000 and 29.000 litres of water.
During the production stage cotton requires 8.6-9.4 kilowatt hour per pound of fiber
Sources: European Commission. Environmental Improvement Potential of Textiles (IMPRO-textiles)Danish Ministry of the Environment – Danish EPA
5 © 2014 Deloitte
Manufacturing sustainabilityMitigate supply chain risks
A Deloitte report on how 600 manufacturing and retail executives view the growing challenge of supply chain risks shows that…
48% find that the frequency of ‘risk events’ in the supply chain has increased.
53% think that the costs associated with ‘risk events’ has increased.
56% see ‘macro-environment’ and CSR/sustainability risks as the biggest threat.
Source: Deloitte. 2014. The Ripple Effect. How manufacturing and retail executives view the growing challenge of supply chain risks (n=600)
6 © 2014 Deloitte
Distributing sustainabilityLower your costs
GHG emissions connected with shipping a container of apparel from a
Chinese field to an American store
Xinjiang to Shanghai Shanghai to Los Angeles Los Angeles to Denver
Truck Rail Ship Air Truck Rail
Miles 2435 2744 6591 6488 1032 1163
Kg of CO2 eq
3656 1357 950 96.618 1550 575
Kg of Nox 12.7 16.5 17.0 418.8 5.4 7.0
Kg of PM10
3.7 0.6 2.7 12.7 1.6 0.2
Transport
Source: Natural Resources Defense Council. 2012. Clean By Design: Transportation
Packaging
20 million MJ of energy
8.500 tonsof paper
1 million litres of water
500.000 litres of diesel
1 millionlitres of fueloil
275 tonsof plastic
…saved annually Source: PUMA. Clever little Bag Infographic
7 © 2014 Deloitte
Retailing sustainabilityBenefit from emerging market opportunities
63% of respondents under the age of 40 said in a global survey that they are willing to pay more for socially-responsible products/services.
Source: Nielsen. 2012. The Global Socially-Conscious Consumer
53% 66%2012 2013
Percentage of consumers who consider transparency and honesty important when dealing with a business or buying from a brand.
Source: Cohn & Wolfe. 2013. From Transparency to Full Disclosure
84% of the world’s most influential shoppers – the millennials – believe it is their duty to improve the world.
Source: World Economic Forum. 2013. Engaging Tomorrow’s Consumer
78% growth in 2012 salesof organic cotton
69% growth in 2012 salesof organic cotton
Source: Textile Exchange. 2013. Organic Cotton Market Report
8 © 2014 Deloitte
Use sustainabilityIncrease customer engagement and brand identification
60% of respondents in a global survey among executives asserted that they see customer engagement as very important to their strategy.
60% of the respondents believed that a strategy of creating deeper customer engagement will have a strong positive impact on their company’s future growth.
Source: Economist Intelligence Unit. Beyond Loyalty. Meeting the Challenge of Customer engagement
“The recession was starting to hit
hard. It was an important shift. People
were investing in more expensive
products that would last a long time,
rather than disposables. We wanted to
engage with these people – these were
our people. Engaging around quality
products is a great way to lower the
impact of our products.”
Rick Ridgeway, VP Environmental Affair, Patagonia
“I think material re-capture enhances
the brand because it speaks to the
long-term quality. Many consumers
feel good about the program because it
speaks to the long term value of the
product.”Chip Bergh, CEO, Levi Strauss & Co.
9 © 2014 Deloitte
Discard sustainabilityInternalize product value
25.000 tons of clothes were in 2012 handed in for recycling in Denmark. Mostly to thrift shops. This equals an average of 7 pairs of jeans per person.
Source: Statistics Denmark
3650 litres of water
3 kg of chemicals
400 MJ energy
13 m2 land
Source: Deloitte. 2013. Fashioning Sustainability
$1.9 billionwas in 2009 the value of global used clothes exports from the OECD countries.
Source: UN Comtrade Data. 2011
4.200 tons in 2013
10 © 2014 Deloitte
Sustainable fashion:Understanding the business case
Design
SourcingM
anufacture
Distribution
Ret
ail
Use
Discard
Attract and retain future
talent
Increase resilience against
externality risks
Mitigate supply chain risks
Lower your costs
Benefit from emerging market
opportunities
Increase customer
engagement,and position
brand
Internalize product value
Value chain
© 2014 Deloitte
Bahare Haghshenas
Manager
Deloitte Sustainability
Tlf.: 31 31 04 31
Deloitte Touche Tohmatsu LimitedDeloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.
© 2014 Deloitte Statsautoriseret Revisionspartnerselskab. Member of Deloitte Touche Tohmatsu Limited