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Esprit Focuses on Narrow Base Supply Chain and Greater Transparency to Improve Sustainability

Esprit wants to be sure it’s doing business responsibly, and the retailer has plans to be very transparent about it.

Releasing its second sustainability report Wednesday, Esprit said sustainability is part of its core culture.

And as group CEO and executive director Jose Manuel Martinez Gutierrez said, “In times of increasing pollution, climate change and social injustice, we see it as our responsibility to act towards greater sustainability and transparency in everything we do.”

The company is boiling its focus in fulfilling that responsibility down to three key areas: social sustainability, sustainable materials and environmental sustainability. The three focus areas will be backed by a social compliance strategy that the company says will ensure it maintains international and local social standards and labor rights for a responsible supply chain.

Collaboration, Gutierrez said, will be the way to get there.

Beyond just partnering with leaders in the industry in an effort to get closer to achieving systemic change, Esprit had its own social and environmental sustainability team partner with its risk management, fabric management and quality assurance teams, to form a committee that works together to implement national and international requirements and standards. That non-siloed effort is one many companies have yet to take and some are suffering for it.

“We want to gather the knowledge of various departments across the company to holistically and most effectively deal with the challenges and risks in the fields of social compliance, sustainability and product safety,” Gutierrez said.

Social sustainability will drive overall sustainability

To ensure social sustainability, Esprit said it keeps track of its operations with an internally established compliance monitoring and reporting system, and by collaborating with the Business Social Compliance Initiative (BSCI), Better Work and the Bangladesh Accord on Fire and Building Safety.

The retailer also joined the Action Transformation Collaboration (ACT) program in September last year to address working toward a living wage in the textile sector, a topic Gutierrez said is “critical” to achieving long-term social compliance and sustainability in the company’s supply chain.

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Sustainable materials take precedent

Esprit developed a “Sustainable Fabrics – Esprit Decision Tree” to encourage design teams and suppliers to choose more sustainable materials. It helps product teams determine whether fabrics under consideration for new collections has the right composition to be the most sustainable.

While the goal was to help raise awareness of more sustainable materials, Esprit couldn’t prove whether the tool contributed to much of a change and instead turned its focus toward using more sustainable cotton and viscose.

In fiscal 2015-16, roughly 40 percent of Esprit’s products contained more than 90 percent cotton, which is part of what led the retailer to become a learning member of the Better Cotton Initiative in February, giving the company one year to incorporate BCI fibers into its supply chain and set targets for coming years.

Nearly 14 percent of Esprit’s products were made of more than 80 percent viscose over the same period, so the retailer looked to partner with Canopy, a non-profit aimed at making a more ethical, sustainable viscose supply chain.

Environmental sustainability efforts increase

As many retailers have, Esprit joined the Zero Discharge of Hazardous Chemicals (ZDHC) effort to eliminate hazardous chemicals from its supply chain by 2020.

After mapping its Tier 1 suppliers, Esprit has since taken on—and finished mapping—its Tier 2 suppliers (subcontractors like dye houses, weaving and spinning mills, laundries and other processors) and developed a supplier audit protocol based on the ZDHC’s Manufactured Restricted Substances List.

“In the coming year, we will start the audit program and improve the environmental performance of our Tier 2 suppliers in order to stay on track with the criterias in the Detox solution agreement with Greenpeace,” Gutierrez said.

Adding to its goal of greater transparency, Esprit has taken to sharing its sustainability efforts and achievements as part of the Higg Index, an apparel industry self-assessment standard for determining environmental and social sustainability in the supply chain. Esprit has also been forthcoming, not just about it achievements, but about areas where it could stand to improve.

Esprit narrows supplier base by 36 percent

Esprit produces most of its product in China (28.86%) and Bangladesh (28.77%), followed by Vietnam, India and Turkey and some production out of Africa, among other countries.

More than 97.6 million garments, 6.5 million accessories and 3.3 million pairs of shoes were produced in 25 countries for Esprit in fiscal 2015-16, and the retailer said keeping that supply chain more sustainable has means building better relationships with suppliers.

As such, Esprit said it has spent the last year concentrating on a narrow base supply chain model.

“Our narrow base supply chain model strategy, furthermore, means that production is concentrated on a few high performance suppliers,” Esprit said. “With this strategy, we want to build sustainable, long-term partnerships with suppliers.”

With that in mind, the retailer decreased its supplier base by 36 percent in the last year, producing all of its finished garments, shoes and accessories in 501 factories.

What’s more, having a clear eye on who those suppliers—and their suppliers are—has allowed the company better control of its supply chain, the report noted.