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How Saitex Prioritizes People and the Planet Without Forgoing Profits

Look around and it’s easy to acknowledge that factories make nearly everything that’s there, from the most practical wardrobe stable to the least useful widget. Why can’t they also be used to make a difference?

That’s the question Sanjeev Bahl has set out to answer. Technically, what the Saitex CEO and founder specializes in is denim and overdyed products. And in that way, his Vietnam-based factories are similar to hundreds of others. But look closer and it becomes apparent that Bahl and his team are doing things quite differently.

At the Hong Kong edition of the Sourcing Journal Summit last week, Bahl sat down with Sourcing Journal president Edward Hertzman to discuss his concerns about the status quo and the philosophy that’s driving him to reimagine the role of the supplier.

His journey began with years of working in the apparel industry, traveling through nine countries to more than 50 factories. During this time, he noticed something that bothered him.

“We lived in a very one-sided world. The one-sided nature of the business started with the relationship between factories and brands, and then the relationship between factories and workers,” he said. “It didn’t spell an equal partnership.”

In particular, he noted that “audits were a big sham.” Continuing, he said, “It bothered me. I didn’t want to be a part of this world, this vicious world of taking advantage of poverty and illiteracy.”

With these experiences weighing on him, Bahl designed Saitex on the principles of respecting people and the planet. The company is led by the 17 Sustainable Development Goals set by the United Nations in 2015, which lay out a roadmap covering a wide range of best business practices, including environmental sustainability, workers’ health and welfare, gender equality, community building and supporting justice systems. To solidify his commitment, Bahl is in the process of transitioning his company, which employs more than 4,000 workers and produces more than 5 million units a year to a B corporation, in which the B stands for benefit, and for-profit companies pledge to adhere to a host of environmental and social, transparency and performance  standards.

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Already, Saitex has achieved Silver LEED certification from the U.S. Green Building Council based on a host of initiatives like providing shuttle buses for employees, planting native landscaping to reduce water demands and the use of solar panels to generate renewable energy.

Additionally, the factory has designed practices that upend traditional denim processes for the better. According the National Resource Defense Council OnEarth blog, typical denim laundries use 37 gallons of water per pair, while Saitex uses less than a third by reducing the number of washes. Further, the water used is cleaned by biological methods, making it suitable to drink. The factory has also slashed energy usage by half simply by air drying its jeans rather than using dryers. To protect workers from the toxic chemicals often used to create wear effects on denim, the facility has replaced people with robots in some cases.

Saitex ties its environmental endeavors to its social commitments by using the solid waste the factory produces to create bricks that are then used to build homes for the homeless.

Ideally, Bahl would like to see the entire industry examine ways it can become more responsible, but he said it starts at the government level. One major step, he said, would be to de-emphasize gross domestic product (GDP) as a key metric, replacing it with genuine progress indicator (GPI), which takes environmental and social factors into account when measuring a country’s wellbeing.

“For example, you take pollution. In GDP calculations credit is given to pollution two times—once when you create It because it’s treated as a valuable byproduct of the manufacturing system, and its credited a second time when you clean it up because it’s a process,” he explained. “But with GPI reporting, you’d take pollution first and create a debit and you would continue to debit it until you clean up the pollution.”

Beyond governmental overhauls, Bahl said the current focus on low prices is detrimental to progress, too.

The need for low costs to create cheaper products, he said, is a direct result of supply outpacing demand. To insulate against the race to the bottom, Bahl said companies must turn to innovation. “I just encourage people to build IP and processes that cannot be replicated easily,” he said, using car company Tesla’s proprietary Powerwall battery as an example. “If you build your battery and you have intellectual property and have innovation behind your mechanism, there is a great chance that you’ll get the ability to demand your price.”

Echoing the sentiments of other panelists at the Summit, Bahl said the apparel industry needs to switch its focus going forward. “We went from one country to the next with bigger factories producing, producing, producing, and we didn’t focus on productivity,” he said, saying this focus on production needs to change. “My goal is to focus on building agile, innovative, customized, flexible models of manufacturing similar to software industry.”

In that spirit, Saitex is planning to open microfactories in the U.S., Europe and Japan. These new factories will allow Saitex to produce smaller quantities, meet speed demands thanks to proximity and create customized products.

Even as he makes improvements like these that benefit his business, Bahl continues to look to ways his business can benefit others.

“We live in interesting times that redefine where the world is headed,” he said. “We must be really honest and extremely responsible in how we conduct ourselves and how we operate.”