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Pitch

Establish an independent industry-backed authority that acts as the governing body of a voluntary sustainability pricing framework.


Description

Summary

A non-profit corporation, the body's mission is to drive positive global change within the textile and apparel sectors. To achieve this, it has four key areas of responsibility:

1. Enforcement of a sustainability pricing framework. Using a tax-like mechanism designed to create an appropriate price signal for organisations within these sectors to respond to. The objective is to put a financial value on sustainability using a steadily-falling cap on the total units of impact allowable across a range sustainability metrics. For each unit over this cap, an organisation is required to pay a fee to the authority.

2. Coordination of a research and development program, using funds accrued through the pricing scheme, tasked with research and development of innovative materials and processes. This is undertaken internally by working groups and externally through collaboration with other R&D and sustainability organisations (e.g. universities and research institutes).

3. Management of an international development program, using funds accrued through the pricing scheme. Using a strict criteria, the program is tasked with supporting development initiatives in countries where the sector’s impacts are greatest by utilising innovations achieved through the R&D program, as well as through maximising the reach of existing best practice technologies and systems.

4. Undertaking an advocacy and education program consisting of three streams. These are collaboration with governments (National and Local) and formal regulatory bodies; improving understanding amongst product consumers about the sector’s impacts, its progress, and how they can personally participate in making a difference; and enabling sector participants across the entire product lifecycle with the tools and skills to embed sustainable change.

Though voluntary, in order to participate in the scheme an organisation must enter into a commercial agreement with the authority for a defined period (e.g. 5 years).


What actions do you propose?

The problem with many ideas for solving global problems is that they often do not adequately deal with the core of the issue. They target only a specific component of an issue – a type of material or a specific production process input. That is, most present just a singular technical solution. They are too acute in scope and as a result do not have a broad or timely enough, and therefore meaningful, impact. More to the point, they don’t deal with the fundamental core of the problem. And that is value. The fashion and textile industry has done a poor job of taking into account the total impact it has because production externalities are not appropriately (if at all) factored into any cost-benefit analysis. Why? Because very little exists that incentivises the industry to care. A business, for all its good intentions, will only value a thing if that thing has an influence on the long-term financial sustainability of its business model.

The focus of this solution, a "Sustainable Textiles and Apparel Coalition" (STAC), is around establishing and internalising value, specifically Real Value (RV). This figure is deducted from the sale price and a dollar value figure is obtained. In order to obtain the RV of a product, the Real Cost (RC) of producing it needs to be taken into account. The only way to get the industry to value the impacts of their products, is to get them to be responsible for the RC of each product. Thus, the proverbial ledger must include a $ value for the externalities.

 

So how could the STAC idea could be implemented?

Establishment of Program Steering Committee.

As the name suggests, these representatives are responsible for setting the foundation (more philosophical than technical). This will consist of apparel and textile industry representatives (e.g. Nike, Kering, Patagonia, H&M, LVMH), academics from MIT, technical experts and advisers, an environmental sector representative such as WWF or Greenpeace, and potentially a representative each from the UNDP and FAO. The goals of this group are to:

- Establish mission and objectives, milestones and due dates, responsibilities, budget, and framework plus details

- Lead the advocacy aspect of the program.

 

Endorsement.

The scheme and its mission would require endorsement by widely-recognised “ethical” organisations (e.g. WWF, Greenpeace, UN); individuals (Richard Branson, Pope, Leonardo DiCaprio, Bill Gates); as well as key popular culture brand ambassadors and “influencers” (e.g. Serena Williams, Christiano Ronaldo, Emma Watson, Jared Leto, Pharrell).

 

Establishment of Technical Steering Committee.

The mission of the committee is to work out the nuts and bolts of the framework and program, and manage its development and evolution over time. The committee will be split into two working groups, Monitoring & Reporting and Research & Development. The former develops the details determining how the scheme’s participants will monitor, measure and report against the key impact area. The latter is focussed on developing solutions that reduce impacts across the key impact areas including how to scale their adoption and how to implement them successfully. This can include technical solutions, such as those focussed on materials and materials manufacturing processes, as well as international development (e.g. micro-banking, renewable energy, water recycling, etc)

The “impact areas” include the headline metrics such as carbon dioxide equivalent emissions, water, and land use change, but may also end up including social sustainability impact areas such as gender equality, literacy and education levels within a given region, regional GDP, health and wellbeing.

 

As development of the scheme evolves, each of the above working groups will likely need to consist of several regional sub-working groups due to the groups’ aims (e.g. technical versus international development), and the location of individuals and availability of resources (research labs, financing, etc).

 

Launch of the scheme.

The scheme is launched at a large event such as a fashion gala during one of the three large international fashion weeks (Mila, Paris or New York). It would set out the scheme’s mission and key actors are. It could also be used as a showcase for innovative materials and product lines developed to date, highlight important international development projects, and provide panel discussions around key topics at the nexus of industry and sustainability. The launch would mark the commencement of the baseline monitoring period. To build and maintain momentum, the following year a series of side events (e.g. “Impact Fashion Events”) could take place alongside each of the major fashion weeks + 2 smaller ones (e.g. Sydney, Tokyo).

 

Reporting

The first reporting period would be two years in length. Baseline year would be the second year after the initial launch of the scheme. The first year is a practice run, the second is the real deal and this will be the year against which each participant’s results will be measured in order to track their progress against the key metrics.

This is acknowledgement of the long lead times it can take to design and create new product lines, supply systems, or manufacturing processes. It also acknowledges the huge effort that will be required to establish comprehensive supply chain monitoring and data collection and collation systems and processes. After this initial two year reporting period, all reporting periods will reduce to 12 months.

Participating entities would be required to align their monitoring, measuring and reporting systems with a raft of international standards including but not limited to: ISO 14001, ISO 14040, ISO 14044, ISO 14046, and ISO 14051.

At the end of each reporting period a state of the industry report is produced, removing all company-specific identifiers. The report is written at the macro-level, reporting on performance across the primary and secondary impact areas, highlighting key trends, progress areas, roadblocks, and providing case studies into impacts on the ground and innovative technological solutions and business models developed during the reporting period.

An annual awards ceremony could be established to take place shortly after the release of the industry report. The purpose would be to recognise and promote outstanding achievements across the key areas of sustainability impact, as well as R&D and development projects, across three industry scales (large, medium and small enterprise).

 

Auditing and Certification

Performance data will need to be independently third-party assured according in accordance with international standards. The scheme itself would carry out the audits, with assistance from accredited third-party auditing firms (e.g. TruCost). Participants would also be encouraged to also to have their systems, processes and facilities audited and certified.

 

Marketing

Establishment of a product labelling system is to commence, but only after the first reporting period has finished. Participants would be actively encouraged to leverage their involvement in their scheme in their own marketing collateral.

 

Advocacy

Members of the steering committee, along with representatives from participating entities would be expected to work closely with government – national, state and local – to obtain support for the scheme and assistance with effecting change. They will encourage all parts of the industry to go well beyond standard practice, using their market influence where possible.

Both the steering and technical committees will actively contribute to policy development where relevant, as well as work to establish strategic partnerships with other global organisations and initiatives that share similar values and goals, and leveraging these to extend the reach of the scheme’s impact and awareness amongst all stakeholders

 

Research & Development

To ensure the continuing success of the scheme, the establishment of research and development working groups is required. The Technical Steering Committee will determine annually the focus of each R&D team, and financed via a pool of funding obtained via the scheme’s penalty fee system, with possible in-kind contributions from R&D partner organisations. Open knowledge sharing platforms would be created to disseminate the innovative systems and technologies developed by the working groups. The platform will also be available for sharing advances developed outside of the official program (though this will be restricted so the platform does not become a marketing platform).

The scheme would also provide sponsored ideation retreats focussed on radically challenging long held notions of product design and manufacture. Eventually the scheme would (ideally) be in a position to create and provide a range of education and training programs to industry participants – whether that be apparel designers, materials engineers, or environmental management and international development professionals.

 

The technical working groups would work in tandem with the marketing and advocacy branches to develop the most impactful means of demonstrating the economic and ecological value of creating a sustainable fashion and textile products, supply chains and end-of-life systems to industry and consumers.

 

Where the MIT Alumni fit in:

The Alumni will be most useful in applying their skills and experience in business, governance, accounting, education, finance, marketing, and development, to the scheme. Their knowledge and experience will be invaluable to the development and establishment of the scheme – from both a technical and governance perspective. If only a small portion of the enormous MIT Alumni network leveraged their own networks to lobby for support and fundraising, the impact would undoubtedly give the scheme the best chance of succeeding in creating a lasting positive impact on a global scale.

The below is a shortlist of high-profile MIT Alumni that would likely be able to provide meaningful support, in some shape or form, to the scheme. These have been grouped by which aspect of the scheme their involvement would generate the most impact.

Technical (member of Technical Committee or a R&D working group): Suh Nam-pyo, ex-president of KAIST; John Maeda, current Design Partner and Kleiner Perkins Caufield and Byers, and former Professor at MIT Media Lab; Ray Kurzweil, Futurist; Yet Ming-Chiang, Professor in Materials Science at MIT.

Governance (member of the Steering Committee or an administrative working group): Hal Varian, Chief Economist at Google and Emeritus Professor UCBerkley; Dr Thomas P. Gerrity, former dean of Wharton School of Business; Megan Smith, CTO for United States and ex-VP of Google X; Oliver Smoot, ex-President of International Standards Organisation (ISO); Amy Smith – founder of the D-Lab at MIT; John W. Thompson, Chairman of Microsoft and ex-CEO of Symantec.

Education and Advocacy: Salman Amin Khan, founder of the Khan Academy; Ubolratana Manidol, Princess of Thailand; Kofi Annan, UN Secretary General; Andrea Wong, successful TV producer; Eric Wilhelm, CEO of Instructables; Jonah Peretti, founder of BuzzFeed & co-founder Huffington Post; Paul Krugman, columnist at NY Times and former Professor Economics at MIT.

 

It goes without saying that such a scheme is extremely ambitious and an enormous undertaking. Simply to design and develop it will require significant financial and other resources. To implement it successfully will require strong support from the fashion and textile production industries, their associated suppliers, governments, research institutions, and consumers. Nothing worth doing, is simple or easy. We are so close to the point of no return, huge, world changing and impacting efforts are needed. The time for piecemeal efforts (i.e. single product lines) has passed. The only way to do this is to facilitate a major paradigm shift in how industry actors take into account the Real Value of the products they produce through a comprehensive scheme such as this. 


Who will take these actions?

Key actors and their roles can be grouped as per the below.

Producers – of fashion and apparel. Predominantly the large fashion houses and other high profile brands. Their position within global culture, control over product design and purchasing power means they need to be the driving force behind the scheme. Members of this group could include Nike, LVMH, Kering, Inditex, and Patagonia.

Suppliers – producers of the raw materials. A broad group including suppliers of materials and inputs used in the production process, as well as other key stakeholders. Materials and inputs covers a broad range of things from cotton and other textiles, to chemicals, and energy. As such, membership could be very broad and include Cargill Cotton, country-specific energy suppliers, agricultural groups, Bayer AG, and government representatives from key supply nations (e.g. Vietnam, Bangladesh).

Technical and Advisory – these are entities that can play an administrative, governance and/or implementation advisory role, or assist with systems and technological development. Its membership is likely to be very diverse and range from organisations such as WWF, CERES, UNEP and FAO, to subject matter experts such as TruCost, Thinkstep, SASB, GRI, Sustainable Supply Chain Standard, The Economics of Ecosystems and Biodiversity initiative, and the MIT Sloan School of Management.

 

Convincing for-profit organisations to participate in a voluntary scheme appears insurmoutable. However, the solution lies in demonstrating the significant future costs to their fiscal stability due to supply chain disruption (e.g. labor strikes, changes in rainfall in commodity producing regions, inundated shipping ports due to sea-level rise), and sovereign risk (i.e. increased liabilities under new regulations). In addition, other benefits arise through increased market relevance and positioning (particular for the larger players) as well as appeal to an increasingly disaffected Gen-Y/Millennials.


Where will these actions be taken?

The headquarters for the organisation administering the scheme would likely need to be in a location that facilitates the meeting of its objectives, especially collaboration and lobbying. This means it would need to be in proximity to organisations such as the United Nations, WWF, and the Global Reporting Initiative to name just a few. It is essential to select a location that is viewed as being apolitical or free from any one set of agendas (whether real or perceived). With these in mind, the organisation could potential be headquartered in The Netherlands, Switzerland or Belgium.

 

The real actions relating to product design, supply chain and resource re-capture will occur wherever these need to. If the design of a garment takes place in Paris, the raw materials are grown in India, the materials are processed in China, the fabric is turned into the final product in Vietnam, and ultimately it is sold in the US, then this is where these actions will need to occur.

 

The location of research and development branch of the scheme will largely be determined by the location of partner research institutions. However, this does not preclude work being conducted elsewhere by member companies themselves or other private enterprises that are contributing.

 

The marketing and advocacy will be taking place globally, in boardrooms and classrooms, to the halls of power of national governments. It will occur at all levels, from the national down to the local.


What are other key benefits?

Creates a positive feedback loop, as organisations steadily improve and reduce their impact each reporting period, cumulative impacts go down not just from them implementing change within their own sphere of influence, but also from the development investment fund then contributing further to change through the “fees/fines” paid.

Benefits that will be catalysed by the scheme include:

- Materials innovation and/or substitution

- Supply chain innovation and security

- Production process innovation

- Reduced environmental impact (water, emissions, land, resources)

- Improved health and wellbeing of people throughout the life cycle, both directly involved (i.e. workers) and those adjacent (local communities)

- Increased SROI

- Consumer education and improved choice/options

- More comprehensive internal risk assessment processes that will allow decision making to be more informed

- Enhanced corporate reputation through evidence of ‘walking the talk’


What are the proposal’s costs?

Significant financial contributions are likely to be required in order to achieve successful implementation of the program. The scheme’s costs can be broken into two phases – the establishment phase; and the operational phase.

 

The majority of funding necessary for the establishment phase will undoubtedly be contributed by the scheme’s founding members – primarily the global fashion and apparel houses, key materials suppliers, and research institutions. Some funding is likely to come from programs such as UNEP, non-governmental organisations such as the World Business Council for Sustainable Development, and possibly certain supportive national governments such as the United States and Norway. It is likely that a reasonable level of pro-bono input will be required – monetary and other. For example, member organisations as well as those wishing to support, may choose to bare the majority of any costs associated with organising and running an awareness event (e.g. fashion show, industry roundtable, public pop-up event).

 

It is very difficult to ascertain the likely costs of running such a scheme. It is reasonable to assume that at a minimum, the scheme’s annual operational costs are likely to cost several million dollars. As a guide, proxies have been used here. For the 2014 and 2015 financial years, the Green Building Council of Australia’s total expenditure were AU$7.9M and AU$6.4M respectively (GBCA, 2015). In contrast, the US Green Building Council had total expenditures of US$61M and US$71.4M and in 2013 and 2014 respectively (USGBC, 2015). Given the global nature of such a scheme, it is likely that once full operational with strong industry traction, total annual operating expenditures are going to be at the higher end of the spectrum. However, potential exists for a not insignificant portion of this to be “self funded” via the penalty component of the scheme.


Time line

If similar schemes are anything to go by, it is likely to be operating for at least 20 years.

The year 2020 is ‘Year Zero’ – i.e. the launch of the first report covering the previous two years of performance data. There will be an interim report that covers only a smaller set of performance metrics, due at the mid-point of this period. This will provide critical feedback to both participants and the governing on body and allow monitoring systems and processes, as well as guidance documents, to be refined.

 

The end of the first reporting period will be June 2020 (FY20). Thus, the supporting framework and governance systems must be finalised by end of FY18. Meaning, there will be a maximum of 18 months available to secure founding members, establish the steering and technical committees, procure external support and funding, and develop technical guidance materials.

 

Leading up to the scheme launch, the focus will be primarily on setting the reporting framework and associated systems and procedures (i.e. methodologies for quantifying footprints and their subsequent impacts), as well as growing industry, media and consumer awareness of the scheme.

 

From the launch of the Year Zero Report onwards is where the other streams of the scheme – the R&D and international development (‘Impact Development’) will commence implementation. Their development will commence during the first reporting period (i.e. July 2018 to June 2020).

 

Once the scheme is fully operational, reporting will take place on an annual cycle, with reports published prior to the peak fashion event season. The figure below illustrates how the scheme will function. Data is collected over a 12 month monitoring period, with the results are verified and submitted to the governing body within three months of the monitoring period’s end. Using this information, participants in the scheme, as well as the R&D branch of the scheme, will be able to make informed design decisions that seek to reduce the impact of products.


Related proposals

Events such as the “Impact Fashion Festival” proposal could be incorporated into the marketing and awareness component of the scheme.

 

Something akin to the 'Boro' (or the already established ‘Blue Sign’) product labeling system would be required to provide consumers with easy to access and understand information concerning the impacts of the product they considering purchasing. This could be done very simply via an ‘impact rating’ that tells the consumer immediately where a particular product sits on a scale of high negative impact through to high positive impact (i.e. regenerative impacts). Supporting this rating number a QR code could link to further information


References

GBCA (2015), ‘General Purpose Financial Report – For The Year Ended 30 June 2015’, Green Building Council of Australia.

 

USGBC (2015), ‘USGBC 2014 Annual Report’, United States Green Building Council, http://www.usgbc.org/articles/usgbcs-2014-annual-report-now-live