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How ESG Guides Hansae’s Manufacturing Management

Manufacturers are being held to ever higher sustainability standards as brands and retailers set their sights on their own ambitious goals.

For South Korea-based apparel producer Hansae, which works with mega retailers in the U.S. and Europe, ESG (environmental, social and corporate governance) has been woven into the fabric of its operations for some time. From worker welfare to carbon reduction, Hansae is working to create fashion with a low footprint and caring culture.

“Hansae has already recognized and prepared for the importance of the ESG environment for several years,” said Kim Ik-whan, vice chairman of Hansae. “We will focus our capabilities on the environment, social contribution and governance along with the fashion market.”

Environmental impact

Hansae has been tracking its energy usage and greenhouse gas emissions since 2010. In recent years, the manufacturer has drastically cut its coal usage, and its energy consumption and greenhouse gas emissions are trending down. Now, 10 years in, the company has established new goals for improvements between 2020 and 2030, including shrinking oil by 50 percent, GHG emissions by 25 percent, water by 20 percent and electricity by 5 percent. Some of the methods for reducing GHG are LED lighting and swapping fossil fuels for biomass.

Since 2011, Hansae has been part of the Carbon Disclosure Project.

“As a global fashion clothing company, we strive to save energy and minimize pollution by establishing an environmental control system,” said Kim. “We will actively participate in global programs such as the Carbon Disclosure Project to encourage transparency. Our continuous efforts to protect the environment will create a better future for our partners and customers.”

Many of Hansae’s owned and subcontracted factories are both Organic Content Standard and Recycled Claim Standard certified. And as of 2020, more than 70 factories were using Higg’s Facility Environmental Module.

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The company has also instituted water saving and chemical safety measures. For instance, the group’s subsidiary dyeing facility C&T Vina shifted the angle of a dyeing machine to make the process less water intensive. To further reduce the water impact, C&T Vina collects rainwater and filters it for industrial and domestic use. In chemical management, C&T Vina is working to eliminate 16 Zero Discharge of Hazardous Chemical groups and keep a clean record on its wastewater.

Hansae is also focused on extending its impact beyond its own actions. In 2019, the manufacturer launched its 10 Percent for Good campaign, which donates 10 percent of profits from sales of environmentally friendly products to eco-minded organizations. The first year, the recipient was The Ocean Cleanup, a nonprofit focused on removing trash from the Pacific.

Recognizing the need for an alternative to disposable fashion, consumers and brands have become more open to recycled and renewable materials. In 2020, Hansae began investing in recycled textiles and collaborating with key players.

“We are expecting to take a larger market share as a major player in the recycled textile area through preemptive investments and collaborating with those leading companies producing recycled fibers, which will grow more and more in the future,” said Hermann Chiu, vice president of strategic sales at Hansae.

Hansae commendation
CEO Kim Ik-whan and Cho Hee-sun received a commendation from the Minister of Gender Equality and Family. Courtesy

Social good

All of Hansae’s 30,000 employees around the globe are covered by and trained in a code of conduct that governs workplace conditions. The code establishes freedom of association and outlaws child labor, forced labor and human trafficking. The company also protects workers’ well-being with a focus on building, fire and electricity safety, including safety training.

In addition to its owned factories, Hansae is evaluating subcontractors on social compliance, and will cut ties with underperforming partners.

Employees have access to a formal grievance mechanism, which resolved 639 cases in 2020. Each department has a representative whom workers can approach with issues, creating a “clear chain of communication.” A Workplace Cooperation Program connects workers with management to solve problems.

These efforts to create a healthy workplace have contributed to an 85 percent employee retention rate.

Hansae also supports professional development through worker engagement. Since 2013, the company has been using Gap Inc.’s Personal Advancement & Career Enhancement (P.A.C.E.) program centered on giving women in manufacturing life and technical skills. The company is also employing Gap’s Prevention of Sexual Harassment (POSH) training to prevent discrimination and abuse.

Corporate governance

Female career development continues at the corporate level, where 50 percent of Hansae’s senior managers are women. In 2020, the company was awarded by the Korea Ministry of Gender Equality and Family for having a gender equitable working environment. At its headquarters, Hansae has a day care that looks after about 50 employees’ children five days a week. This day care enables working parents to preserve their work rhythm as well as reducing burden, thus increasing productivity.

Hansae daycare
Hansae’s first integrated daycare center for employees’ children is located at the headquarters office. Courtesy

Hansae engages with its internal and external stakeholders—including its board, employees, buyers, suppliers, government and NGOs—and considers their interests when making decisions. This is a key element of its risk management strategy, as well as a means to better performance.

These measures have an impact not only on people and planet, but also on profit. Over the past five years, the company’s financial performance has trended up, in part thanks to Hansae’s efforts in ESG.

Click here to learn more about Hansae’s ESG efforts.