In today’s hotly competitive apparel market, businesses covet anything that gives them an edge or boosts revenue and profit. In their quest for sustainability, some companies have found a winner in textile waste.

On Earth Day, apparel manufacturer American Apparel announced a new use for its fabric waste–a collection the company calls “Creative Reuse.” The line includes accessories (headbands, bow-ties, and scrunchies), bras, and underwear.

Clothesmakers inevitably end up with excess fabric–the scraps typically fall to the floor during cutting and get discarded.

“We design pattern cuts to produce the least waste possible, but there’s always a bit left over,” an American Apparel spokeswoman told Ecouterre. “We draw inspiration from these pattern gaps, and they’ve been used to create our accessory styles.”

While American Apparel is building a new product category based on repurposed fabric, another company, LooptWorks, has developed an entire business model around excess fabric.

The company’s concept is to use only pre-consumer excess fabric to produce garments–a process they call upcycling. Looptworks estimates that factories produce 60,000 pounds of useable waste each week. The company takes the fabric scraps and creates limited edition items like hoodies, hats, t-shirts, pants, and computer covers such as the one to the right. The upcycling strategy creates garments from what already exists and reduces demand for new fabric.

“We have a unique process to create unique products,” says Gary Peck, co-founder of Looptworks. “From concept to your closet, we can assure you that no new materials were used to create our clothing and that each item is as individual as the person who wears it.”

American Apparel and LooptWorks have developed different approaches to using leftover fabric–or what’s known as “fabric liability” in the apparel industry. However, it is interesting that these approaches were developed relatively recently. While fabric waste has been around since the beginning of apparel manufacturing, it took the right business climate and a corporate focus on sustainability to turn that waste into revenue.

When companies create sustainability initiatives, they often set targets or benchmarks the organization hopes to meet. But by themselves, goals and benchmarks may not be enough to inspire employees to focus on sustainability initiatives. To boost their chances of success, some companies have added financial incentives to the mix.

companies leading the way to a greener future

Xcel Energy, the Minneapolis-based power company, ties a portion of its executive compensation to sustainability goals such as reducing green house gas (GHG) emissions.  And while earnings per share still account for 75 percent of the company’s incentive awards, including sustainability metrics in compensation calculations is an important corporate statement. Xcel also discloses the details in proxy statements, demonstrating that GHG reduction is a core business value, and not just a bullet point in a corporate sustainability report (CSR).

National Grid, a large electric power utility, has also integrated sustainability into the company’s compensation model. Like Xcel Energy, National Grid has linked executive pay to GHG reductions. The utility’s target reductions are unusually ambitious: a 45 percent reduction by 2020 and an 80 percent cut in GHG emissions by 2050.

Energy companies are not alone in tying compensation to sustainability. The Dutch banking and insurance company ING has declared that social, environmental, and ethical objectives form a portion of its top management’s pay structure. In their 2009 corporate responsibility report, they said:

ING has formulated corporate responsibility ambitions and priorities, combined with a long-term plan and concrete targets. These targets are also part of the performance objectives of our Executive and Management Boards.

Intel has made a commitment to changing its corporate pay structure. The company determines its annual companywide bonuses using benchmarks such as completion of renewable energy projects, energy efficiency, and reducing the company’s carbon footprint.

Marks & Spencer (a large British retailer) has outlined executive pay incentives as part of its Plan A program. Under that program, Marks & Spencer hopes to achieve the ambitious goal of becoming the world’s most sustainable retailer by 2015. Compensation for executives is tied to the completion of Plan A goals.

arguments against adding sustainability to the calculation

Although the companies above believe sustainability is important enough to literally pay for, not everyone is convinced. Jan Maarten Slagter, director of the Dutch shareholders’ association VEB, believes financial performance is a sufficient metric on which to base bonuses.

Slagter told the Financial Times that good companies know sustainability will help them perform better than rivals…

You can score well on three or four sustainability components and still do poorly in [building] shareholder value. You would still get some of your variable pay. We would like to see pay policies directed to [boosting] shareholder value in the long term.

Others are concerned that linking sustainability to pay would be difficult because the impact of certain policies and practices might not fully emerge for several years or even decades.

To overcome this concern, some organizations including PLATFORM and Friends of the Earth, have advocated linking pay to long-term financial and environmental performance. Under this recommendation, companies would issue bonds that are held in escrow for directors, and released after 10 to 20 years. Many companies may not want to have bonus pay that could potentially be affected by decisions that are made long after a director’s departure.

Clearly more and more companies and organizations are in the process of connecting the concepts of pay-for-performance and sustainability. Ceres, a Boston-based group of investors and non-governmental organizations pushing for corporate sustainability, wrote in its 2010 roadmap to sustainability that:

Sustainability performance results must be a core component of the evaluation of senior executive performance and compensation packages. The weighting given to sustainability performance should be disclosed in annual reports so that it is clear to shareholders and other stakeholders how executives are being rewarded.

While remuneration might not be the silver bullet that will transform a company to a completely sustainable organization, it is an important mechanism for steering the corporate culture toward that goal. We expect more companies to experiment with rewarding sustainability in the near future.

Is sustainability being rewarded at your organization?

photo credit: AMagill / Flickr

A growing number of big brands are instituting recycling programs, then highlighting those efforts in corporate sustainability reports (CSRs) and to consumers. The programs are important for the environment and for retailers. But they also are important steps toward creating a closed-loop recycling future–where new goods are produced from recycled materials, then recycled again.

The following are examples of recent recycling initiatives:

• Target plans to add recycling centers to all of its 1,740 stores. The centers will accept aluminum, glass, and plastic containers, plus plastic bags, MP3 players, cell phones, and printer ink cartridges. The retailer has faced pressure to match the sustainability efforts of competitor Wal-Mart in an ongoing battle of eco one-upsmanship.
• Electronics giant Best Buy is kicking off a new recycling goal to collect one billion pounds of electronics and appliances. The program, which began April 22 (Earth Day), invites consumers to “Recycle It On.” Best Buy officials believe the company will meet the billion-pound goal over the next few years. The program does have certain restrictions. For instance, only three items can be brought in for recycling per person, per day.
• The three largest U.S. wireless phone companies (Verizon, AT&T, and Sprint) have stepped up their recycling programs for mobile phones.
• Specialty grocer Whole Foods, which already provides customers with standard recycling bins, is expanding its program in many stores to also collect corks and #5 plastics for recycling.
• Marks & Spencer, in its updated Plan A program, unveiled a clothing recycling effort–something not commonly found beyond thrift shops and the Salvation Army.  The company plans to help its customers recycle 20 million garments.

Some of the more ardent green activists believe all products should be either biodegradable or recyclable. They want the government to impose restrictions that would prevent the production and sale of items that cannot be disposed of “properly.” Such draconian measures are unrealistic, but those environmentalists are well-intentioned. They want to see complete recycling of all goods.

We too would like to see all goods recycled in a closed-loop system. As technology and economics pave the way for more extensive recycling, we will move closer to a closed-loop reality. In the meantime, the recent surge in recycling programs could be an indication that we’re heading in that direction.

Companies with new recycling programs have an opportunity to demonstrate to consumers that retail outlets can have dual roles: as recycling collection centers as well as places to buy new goods.

Two reasons companies pursue recycling efforts are:

1. It looks good. Companies can boost their environmental credentials and strengthen their brands by highlighting recycling programs for consumers. Recycling is almost universally recognized and associated with good environmental behavior.
2. It brings people into their stores. Like coupons or loss-leaders, recycling programs can attract customers–something vital to all retailers.

Recycling programs at retail centers will increase the amount of goods that are recycled, but those programs alone will not get us to a closed-loop future. Like those ardent environmentalists, more producers of goods should focus on “end of life” (EOL) disposal strategies. We’ve done that with our ecobanner display product, and many companies are beginning to design products with recyclable materials and EOL in mind. The more ubiquitous recycling becomes, and the more companies focus on designing products for EOL, the closer we’ll move to a closed-loop future.

Which other organizations are implementing recycling programs? Share visions of recycling’s future in our comments below.

The Aral Sea is “one of the worst environmental disasters in the world,” according to Ban Ki-Moon, United Nations (U.N.) Secretary General. On a recent visit to Central Asia, Ban visited what is left of the Aral Sea, and flew over the basin to see for himself the arid salt flats left behind by the receding waters. The U.N. Secretary General suggested regional leaders need to cooperate solve the crisis.

The Aral Sea, once the world’s fourth-largest lake, has been disappearing since the 1960s, when planners from the former Soviet Union began siphoning water to grow cotton in what is now Uzbekistan. Now 70 percent smaller, the Aral Sea is incredibly salty, containing six grams of salt per liter–three times the safe limit for human consumption. No plants or crops can grow in such salty water. As the evaporation continues, the remnants of agricultural and industrial pollution are left behind.

When the wind blows in Uzbekistan, a mixture of dust, salt, sand, and chemical pesticides threatens the health of plants, animals, and humans. Because the dust clouds are filled with contaminants like heavy metals and DDT, villagers say everyone is ill. Many people have respiratory diseases, and the surrounding areas have the world’s highest instances of tuberculosis. In some places, infant mortality is higher, and people are developing liver and kidney diseases.

While news outlets like Reuters, UPI, and the Huffington Post have reported on Ban’s April visit and the environmental devastation, none went into detail about the real cause of the disaster: cotton farming.

Let us first say that we don’t have a problem with cotton. It is a global staple, and a vital commodity. Even so, cotton is an extremely thirsty crop, requiring over 700 gallons of water to grow enough cotton for a single shirt. And while growing cotton is necessary, in times of increasing water scarcity it is difficult to justify cotton farms in the middle of a desert.

It’s also important to keep in mind that after the Aral Sea began to dry up, the Soviets had to use more and more chemicals and fertilizers to grow the cotton. These additional chemicals have been left behind as the waters have receded, and in the span of 40 years, a former fishing and resort town has turned to a desolate village full of sick children.

Unfortunately, those errors aren’t limited to the former Soviet Union. Here in the United States, we are growing cotton in the deserts of California, Texas, and Arizona. It might seem strange that a nation would grow such a thirsty crop as cotton in the middle of a desert. However, these states represent the main cotton growing regions in the U.S., and all three states have suffered major droughts in the last five years.

The world will continue to grow cotton, and we will most likely continue to do so in these water-scarce regions. However, the lesson we should take away from the Aral Sea is that water resources can and do disappear. This “environmental disaster,” as Ban calls it, is not an beyond our control, rather the result of deliberate actions. Without discussing the causes of a disappearing lake, how can we prevent the same thing from happening in someplace like, say, Lake Mead?

Textile pollution is getting some mainstream attention. CNN recently posted an article on its website about the pollution problems in China’s Pearl River delta. While the communist nation’s pollution woes have been highlighted in the media before, CNN’s piece goes a step further, specifically demonstrating how textile and denim dyeing is a major cause of the Pearl’s pollution.

In the town of Xintang, textile and denim dyeing is a big business. According to the Chinese government, Xintang produces 200 million pairs of jeans or roughly half of the jeans sold in the U.S. annually.

Denim starts as white cotton thread which is boiled in giant vats of indigo-blue dye before being woven into fabric. The water used in the dyeing process needs to be drained, but instead of treating and recycling all of  it (which is expensive), the wastewater flows through pipes into the Pearl River. The pollution is so bad that local residents and satellite images alike reveal that the river water is black in areas adjacent to denim factories.

“The number one problem (China) face(s) is water pollution,” Deborah Seligsohn of the World Resources Institute told CNN. “The textile industry is one of China’s larger industries and one that uses a lot of water, so it’s traditionally had a lot of wastewater problems.”

In several posts (here and here) on this blog, we have discussed the pervasive nature of China’s textile pollution and shown photos of the cancerous effects on local residents. The Chinese government knows this is a problem; we know it’s a problem; and if you follow this blog, you know it’s a problem. Now readers of CNN.com know it too, and that’s an indication that the issue is gaining wider recognition among the public.

Companies that source goods from offending dye-houses should recognize the potential for textile pollution to become a public relations nightmare. We believe water pollution will be the new sweatshop issue for the industry–garnering mainstream media attention, and eventually, spurring change.

Top executives whose companies rely on those dye-houses may assume they would be shielded from blame and bad PR if a controversy erupts over water pollution–after all, they might argue that they are merely customers, and don’t own the dye-houses. We suggest they talk to Nike about how that defense worked a few years ago.