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The Path to Righteousness
By Robert Carey
February 2009

When it comes to creating, distributing or buying socially-conscious and environmentally-friendly goods, some firms only pay lip service while others actually back it up. It’s time for distributors to examine business operations and practices throughout their supply chains to keep themselves legally compliant – and keep their reputations intact.  
The Path to Righteousness

When Eric Lerner, CEO of distributor Action Plus Ideas, talks about the eco-friendly movement in the ad specialty industry, it’s accompanied by a sarcastic chuckle. "We certainly get a lot of requests for ‘green’ products," he says. "But it’s often by people who roll up to my shop in their SUVs, who work for companies that barely recycle in their own operations, and who’ll simply take my word for it that a product is environmentally sound. In other words, many companies just want to be able to market themselves as dealing in green products."

Bill Bloomstein, office manager for distributor Apparel Source, sees similar behavior. "A lot of customers are socially conscious just until it pinches their wallet," he says. "You tell them, ‘This is the price for items that we know are created in socially and environmentally responsible ways,’ and suddenly they aren’t so adamant about it."

And don’t get Lerner started on some of the suppliers. "The ‘eco-friendly’ movement has become very problematic; that term doesn’t even mean anything," he says. "Any bag, even polypropylene, is called ‘eco-friendly’ by many suppliers if that bag can be used again – it doesn’t have to be made from recycled materials or be recyclable, just reusable. And here’s another issue: trying to certify items as 100% organic when we rely heavily on facilities throughout Asia. There are just way too many factories to monitor; even the big suppliers find it hard to do, so how could I do it?"

Fortunately for distributors, though, more suppliers are stepping up to take on this difficult task, and are indeed making progress in cleaning up the murky nature of the apparel industry’s social and eco movements. Of course, there are tangible reasons why this is happening: ever-more-comprehensive industry certifications and widely publicized social/eco movements among Fortune 500 and other high-profile customers top that list of reasons.

And as more end-users follow the lead of the high-profile buyers by implementing their own corporate social responsibility (CSR) initiatives, distributors must now be more active players in the process. Because while "manufacturers may be able to raise prices a bit or even reduce some costs through making their operations socially or environmentally sound, distributors must consider their own economic well-being from the angle of risk reduction," says Jerry Wheeler, president of ecoCentric Ltd., which helps create sustainable and ethical practices in the apparel industry. "In other words, what are the costs of false-advertising claims if their products are touted as green or fair labor/fair wage, but it’s not true? There’s also product-recall possibilities, where the distributor might face some liability if it didn’t ask for specific information it should have gotten from suppliers."

What’s more, "with cell phone cameras and instant coverage in the Internet, it’s getting easier for word to get out about abusive labor tactics or poor environmental practices during production, and in an instant any company that does business with that operation can be tarred," Bloomstein says.

But beyond mitigating risk, "there’s the benefit of better-quality product and the ability to market that quality," adds Wheeler, who for several years has worked with apparel makers to improve organic cotton and recycled polyester practices, as well as carbon footprinting of operations and supply chain tracking. For suppliers and distributors alike, "improved profits can come from brand integrity," he says.

Climbing The Chain
The largest suppliers have started to make it easier for distributors to find the information to satisfy their most inquisitive customers. For instance, companies such as Fruit of the Loom, Alstyle Apparel & Activewear (asi/34817), American Apparel (asi/35297) and some others have detailed pages on their Web sites – and, if asked, will provide letters – that attest that certain goods are organic, and made by workers in a safe workplace and for fair pay.

Some end-users are going to such lengths as to ask even about the nature of dyes used in material – and many suppliers are making the grade in this area too, Bloomstein says. "I’m seeing more documentation, not only about the cotton but also the low-impact fiber-reactive dye, which is compatible with the global organic textile standards set out in the Control Union Certification," a Netherlands-based watchdog.

At the high end of compliance, American Apparel and Continental Clothing Co. USA (asi/46410), now promote that they’re fully vertically integrated in the sustainability of their operations, meaning that all processes "from seed to store" are socially and environmentally sound. (To see how much work goes into the creation of a "seed-to-store" tracking initiative, see the Continental Clothing USA case study below.)

To make their jobs easier while still satisfying their customers, distributors would be wise to learn about customer sensitivities before orders are taken. "When someone comes to us with CSR questions, we find out two things: what their hot buttons are in the social and environmental arena, and who they are trying to outfit," Bloomstein says. "If it’s a trade union, of course we’re going to get certified American-made and union-made items. But I might not get garments for that particular client from, say, American Apparel – that supplier fits the CSR criteria, but their garments might not fit the physical shape of those customers as well as other brands. You have to satisfy customers in every way to keep them coming back."

As a rule of thumb, "it’s just easier to work with companies that not only make quality products, but who also make it easy to do business because they respond to my needs with regards to each customer’s CSR requirements," Bloomstein adds. "I’m just not going to work with suppliers who are hard to communicate with on these things."

Keeping Up Isn’t Easy
The latest wrinkle in social consciousness relates to the security of goods in transport. As a result, some firms now attest that their materials and garments are transported according to the latest rules outlined in the voluntary C-TPAT certification from U.S. Customs and Border Protection, which seeks to prevent smuggling and terrorist acts at every point in the shipping of goods.

So between the social, environmental and security-related movements, it’s surely not getting easier for suppliers to monitor overall CSR compliance. Just ask Andrea Engel, vice president of merchandising for Broder Bros. Co. (asi/42090). She heads a CSR team made up of employees from the human resources, sourcing and marketing departments. The task: to constantly revisit CSR compliance for Broder as well as sister divisions Alpha Shirt Co. (asi/34408) and NES Clothing Co. (asi/72808) – plus to ensure that firms Broder distributes for, such as Gildan, are monitoring compliance up their own supply chain and providing Broder with correct information for customers. "CSR isn’t something you address once and then are done with," Engel says. "Things are evolving constantly – besides something like the recent C-TPAT issue, there are always changes among production facilities, or with product-safety regulations, or other aspects. So it’s just a continuous part of doing business today."

Besides providing updates regarding all of their CSR initiatives on its brands’ Web sites, Broder is also training its reps to talk knowledgably about CSR to their customers. "Our own certifications are becoming more comprehensive, but we can only certify those products we manufacture," Engel says. "We have trade and retail vendors whose products we resell, such as Adidas and Columbia and Gildan, and they have good CSR policies and practices. But it’s a matter of my team getting all of that information together and educating our sales force on it."

Engel can see how keeping up on CSR could be a hardship for distributors. "For firms that don’t have their own line of products, this could burden them because they probably don’t have the in-house expertise that firms with a manufacturing component have," she says. "There are trade attorney companies they can use for guidance, and importers have different responsibilities versus pure resellers, so they’ll have to use a third-party testing company. But having compliance experts at your disposal in some fashion is simply critical now, because they must cover many more things than even just a few years ago. And our customers do get nervous sometimes, because they have Fortune 500 clients with huge orders who are demanding answers. If you have just one slip-up in one area, people are going to question your entire program."

"I don’t think a distributor absolutely must hire a compliance person," Wheeler says. "But they do have to have a point person who has the support of a team – maybe someone from human resources, from finance, and from sales and marketing, to identify where emerging risks might be. And every so often, that marketing person could say, ‘OK, here’s how we can put a message of our latest risk-mitigation and due-diligence CSR efforts into the marketing campaign.’ This way, the CSR monitoring effort can make you some dollars rather than simply cost you dollars."

In fact, there might finally be a critical mass of customers who put social and environmental concerns on par with, or a bit ahead of, cost considerations. "This industry has mushroomed so much that it’s not just big clients and big events that drive the business anymore," Bloomstein says. "Lots of mom-and-pop businesses are doing design at home, doing screen printing on their own, trying to get into retail stores.

These are the little bricks in our business models that we need to fill in around our big clients – and more of them are becoming amenable to paying a little more for the garment that’s certified as organic and was made using fair labor and wage standards."

Robert Carey
is a NY-based contributing writer.

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