It’s time to incentivise sustainability | The Daily Star
12:00 AM, March 15, 2021 / LAST MODIFIED: 01:12 AM, March 15, 2021

It’s time to incentivise sustainability

Recently it was announced that one of the world's leading online fashion companies, Boohoo, is looking at financially incentivising its leadership team for achieving sustainability targets. The business discussed this issue in a meeting with the UK government late last year and the government has now written to the company's chairman, urging him to link executive bonuses to progress on workers' rights and environmental sustainability.

We have seen talk of this kind of thing in the past but not so much in the textile and apparel industry. I believe this picture may change soon, not just because it is the only sure-fire way to ensure companies will do what they say they are going to on sustainability issues, but also because of compliance reasons.

The regulatory authorities in one of our key target markets—the EU—are more and more looking at supply chain due diligence. In other words, they are considering laws which would make companies within the EU accountable for transgressions in supply chains in Asia. So, for instance, if it was found that a brand was importing clothing that had been made using forced labour or in a factory that was polluting the environment, the brand would be held accountable and may face fines or other penalties.

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I am digressing slightly, although these issues are interlinked. Let's go back to the issue of incentives. It's my belief that all actors in the apparel industry—brands, their suppliers, even workers—need to be incentivised to behave responsibly, ethically and with the environment in mind. The challenge is that this is rarely the case right now. In fact, in many instances there is absolutely no incentive to operate responsibly.

Let me use the example of my own factory. Like many other RMG operators in Bangladesh, I set out to meet the ultimate environmental and ethical standards. I have all the water and energy saving technology, I have the accreditations, I look after my staff well and strive to meet the highest sustainability standards. My factory is far from alone in that; my story is mirrored across many other, progressive factories in Bangladesh and, indeed, in other parts of Asia.

As factory owners we have invested in some cases because we want to do the right thing but, in many cases, because we believe there will be a financial pay-off. In other words, many owners believe brands will be more likely to use our factories—and pay a premium where appropriate—if we do things the right way.

The problem comes when this does not work out; when factories which have done none of these things and basically done the bare minimum also continue to get business and thrive. Where is the incentive to invest in green business then?

All of this was brought to mind when I related the Boohoo story earlier around linking executive pay to sustainability progress. We are talking about a universal issue here and it is one of incentives. What is going to compel us all as an industry to do the right thing? How can we be incentivised as individuals and businesses to invest in sustainable practices?

Surely linking sustainable achievements with bonuses is a great start. There has been talk of this for years in supply chains, talk of purchasing managers being incentivised to purchase along green lines. The talk has never materialised into action. When I deal with buyers it is almost always price, price, price. Sustainability teams and purchasing teams still appear to operate separately after all these years. They should be one and the same thing or, if not, at least singing off the same hymn sheet.

The ability to purchase sustainably, to identify the best factories in terms of green practices, to understand different materials and production methods, to reward good suppliers should be the number one attribute of a good purchasing manager. It should supersede all else if we genuinely want to turn the needle on sustainability.

I talked about the shifting legislative environment earlier and the growing importance of due diligence. Here, again, incentives are a crucial factor. Governments have a critical role to play in ensuring that businesses which operate sustainably gain a clear commercial advantage. This can be a two-pronged approach: on the one hand, heavy fines or punishments for bad practice or serious transgressions; and rewards/incentive schemes for industry leaders. These rewards could include tax-breaks and other fiscal incentives. There must be a benefit to behaving responsibly, otherwise you create an unfair playing field whereby laggards get to cut corners and save costs with no punishment. In effect, they actually gain a commercial advantage here if all are treated the same.

I see examples of all these things playing out in the broader fashion industry. For years, we as manufacturers, have known who the best buyers are—the ones who treat suppliers the fairest, the ones who do not cut corners, who pay their bills and who can generally be trusted.

Likewise, we all know the brands which are always looking to make a saving, which drive unnecessarily hard on price and do not appear to understand sustainability issues (and that the sustainable way can sometimes be more expensive).

And yet, guess what? The public often do not know the difference. They are none-the-wiser and when I see things written about our industry, it often appears that all brands are tarred with the same brush. I come back to that word again: incentives. Where is the incentive to do right if all are treated the same?

This is the issue our industry must grapple with. There has to be a clear pathway for sustainability and a suitable reward structure for those doing good, whether that be individuals or businesses.

At the moment, there are far too many cases where people and businesses are rewarded very handsomely for practices which exploit people and the planet. As long as that remains the case, where is the real incentive to change?

 

Mostafiz Uddin is the Managing Director of Denim Expert Limited. He is also the Founder and CEO of Bangladesh Apparel Exchange (BAE).

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