Responsible Sourcing Initiative

S. Keane, NRDC, November 2008S. Keane, NRDC, November 2008 11

Responsible Sourcing Responsible Sourcing InitiativeInitiative

Susan Egan KeaneSusan Egan Keane

Natural Resources Defense CouncilNatural Resources Defense CouncilNovember 10, 2008November 10, 2008


NRDC has been in China for 10 NRDC has been in China for 10 yearsyears


Our goal: dramatically improve Our goal: dramatically improve environmental performance of environmental performance of

factories in Chinafactories in China


What are Major What are Major Incentives for Improvement? Incentives for Improvement?

Standards: not enforcedStandards: not enforced Liability: not thereLiability: not there Information disclosureInformation disclosure: developing: developing Customer requirementsCustomer requirements Cost savingsCost savings: theoretically self-: theoretically self-

sustainingsustaining


What are Practical Barriers to What are Practical Barriers to Improvements?Improvements?

KnowledgeKnowledge – do factories know how to – do factories know how to improve performance?improve performance?

CostsCosts – is there a way to make – is there a way to make improvements without major investments?improvements without major investments?


Create a committed group of multi-national Create a committed group of multi-national companies to focus on supply chain companies to focus on supply chain

Identify Identify cost-savingcost-saving and low-cost actions and low-cost actions Improve transparencyImprove transparency Improve Chinese government capacityImprove Chinese government capacity

NRDC’s Responsible Sourcing NRDC’s Responsible Sourcing InitiativeInitiative


Why Apparel?Why Apparel?


Biggest polluting facilities in Jiangsu Province

cement, 1%

chemical , 23%

commercial, 3%

electronics, 4%

food, 5%

glass, 2%

metal plating, 9%

metals, 1%

mining, 1%

misc., 11%

textile, 23%

paper, 2%

power, 1%

iron/steel, 5%

leather, 1%lighting, 1%machinery, 4%

wwtp, 2%


Energy use is concentrated in a few big Energy use is concentrated in a few big industries…industries…

Industrial Energy Use in China(2006 & 2007 data)

0

50

100

150

200

250

300

350

400

450

Iron

and

Steel

Chem

ical M

anuf

actu

ring

Cemen

t / C

oncr

ete

Petro

leum

Pro

cess

ing a

nd C

okin

g

Alumin

um &

Non

ferro

us M

etals

Textile

s

Food

prod

ucts

proc

essin

g

Paper

Electro

nics M

anuf

actu

ring

Plastic

Pro

ducts

Rubbe

r Pro

ducts

Clothe

s, sh

oes a

nd h

at m

anuf

actu

ring

Furnit

ure

An

nu

al E

ner

gy

Use

(m

illio

n t

on

s o

f co

al e

qu

ival

ent)

Other

Natural Gas

Coal

Electricity

But they don’t export much.


Our Work So FarOur Work So Far

Initial fact finding at about a dozen fabric Initial fact finding at about a dozen fabric mills and dye housesmills and dye houses

In-depth opportunity assessment at one In-depth opportunity assessment at one fabric dye housefabric dye house

Work with multinational retailers and Work with multinational retailers and brands to identify key opportunities at brands to identify key opportunities at supplier factoriessupplier factories


Major Findings of Factory ToursMajor Findings of Factory Tours The bad newsThe bad news: production poorly operated, : production poorly operated,

environmental performance suffers.environmental performance suffers.

The goodThe good newsnews:: considerableconsiderable opportunitiesopportunities for low costfor low cost improvements.improvements.


In-depth Opportunity AssessmentIn-depth Opportunity Assessment


Initial ImprovementsInitial Improvements

Recycling the waterRecycling the water at desizing process. Total at desizing process. Total water saving 4 tons/machine/hour x 4 machines = 16 water saving 4 tons/machine/hour x 4 machines = 16 tons water per hour.tons water per hour.

Reusing energyReusing energy by recycling hot water captured from by recycling hot water captured from steam from the drying section back to the desizing tank. steam from the drying section back to the desizing tank.

Reusing alkaline waste waterReusing alkaline waste water from desizing from desizing process, to neutralize the acidic emissions from the process, to neutralize the acidic emissions from the boilerboiler


ResultsResults

Less water, less waste water =Less water, less waste water = reduced loading to water treatment plant reduced loading to water treatment plant compliance with environmental requirementscompliance with environmental requirements

Savings achieved:Savings achieved: 35% water consumption 35% water consumption 10% coal consumption10% coal consumption 5% electricity consumption5% electricity consumption


Other opportunitiesOther opportunitiesfrom In-depth Assessmentfrom In-depth Assessment

Line CleaningLine Cleaning

Dye SelectionDye Selection

Production EfficiencyProduction Efficiency

1616

Original order of 20 jobs

Pink

Orange

Blue

Orange

Black

Rice

Khaki

Rice

Light Brown

Dark Brown

Dark Yellow Green

Coffee

Khaki

Charcoal

Khaki

Light Brown

Grey

Army Green

Khaki

Pink

Rescheduled into Groups of 5

Pink

Orange

Orange

Blue

Black

Dark Brown

Light Brown

Khaki

Rice

Rice

Khaki

Khaki

Dark Yellow Green

Coffee

Charcoal

Light Brown

Grey

Army Green

Khaki

Pink


Right First-time DyeingRight First-time Dyeing


Collaboration with Retailers and Collaboration with Retailers and BrandsBrands

Created collaborative group:Created collaborative group: The GapThe Gap H&MH&M Levi Strauss IncLevi Strauss Inc NikeNike Wal-MartWal-Mart

Identified common suppliers and screened for Identified common suppliers and screened for possible participationpossible participation

Preparing to perform opportunity assessmentsPreparing to perform opportunity assessments


Next StepsNext Steps

Identify priority actionsIdentify priority actions Disseminate and promote findingsDisseminate and promote findings Use to help develop supplier policiesUse to help develop supplier policies

Responsible Sourcing Initiative

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