earning its stripes

You may not have given much thought to the carbon footprint of that T-shirt or Armani suit you're wearing, but apparel makers are paying a great deal of attention to their garments' environmental impact these days.

That might strike some as odd—after all, jackets, running tights, and jeans are hardly in the same league as a Hummer when it comes to environmental impact.What many people don't realize, however, is that apparel items often have a surprisingly large carbon footprint—particularly if they were manufactured in a country thousands of miles away.

There are a couple of reasons for that. For one thing, apparel is typically supply chain more eco-friendly. manufactured in low-cost countries where the factories are likely to run on coal-generated power and use antiquated—and highly polluting—equipment. For another, these garments typically travel long distances from the point of manufacture to the store shelf. The farther they travel, of course, the more fuel is burned and carbon dioxide emitted.

As Americans become more and more concerned about global warming, some garment makers have been taking aggressive steps to clean up their act—particularly their supply chain act. Take athletic footwear and apparel maker Adidas, for example. "It's pretty clear that global warming, emissions, and energy efficiency are in everybody's mind," says Marcus Kuerner, senior environmental manager at Adidas. To help battle global warming, Adidas has established a far-reaching cradle-to-grave environmental program for its products. Its multifaceted initiative includes strategies to reduce the environmental impact of its merchandise from design and sourcing to production and packaging to end-of-life disposal and recycling.

Cleaning up the factories
One of the primary fronts in Adidas' war on pollution is the network of plants that produce its footwear and apparel. "Our programs are ... focused on the environmental impact we can most influence, which is during manufacture at the supplier sites of our mostly Asian-based factories," says Kuerner.

That's an ambitious undertaking for an operation of Adidas' scale. Adidas outsources production to approximately 1,280 independent factories in 65 countries, with the majority located in China, India, Indonesia, Thailand, Turkey, and Vietnam. In some cases, it contracts directly with its suppliers. In others, it works with them through intermediaries. The amount of influence it has with any given partner varies according to the type of relationship it has and the volume of business Adidas does with that company.

In working with suppliers to reduce pollution at their plants, Adidas has opted for the soft sell approach—offering advice and support rather than handing down mandates. For example, to encourage its suppliers to upgrade their equipment to lower-emissions machinery, Adidas recently joined with a number of other international companies to promote a public-private sector partnership known as "P2E2."

P2E2 (the name stands for "pollution prevention and energy efficiency") is essentially a government- backed match-making program that seeks to bring together environmental services companies, banks and other investors, and Asian factories, according to an article in The Wall Street Journal. "Banks and equity investors provide the funding and loans to environment and energy service companies, as they are called, which then strike deals with the [Asian] factories, offering to upgrade their equipment free of charge," the newspaper reported. "The factories will pay back the environmental service companies over time by giving them a cut—to be agreed on between the two parties—of the savings the plants are achieving on energy costs." Though the focus has been on Chinese factories, factories in other Asian countries are also eligible as long as the business has a legal or financial presence in Hong Kong.

Attitude adjustment
Though the P2E2 program has both the U.S. and the Chinese governments' backing, persuading Asian factories to participate in the initiative will likely take some doing. Adidas is well aware of the challenges it faces. "It's a daunting task when you think about all of the factories, especially the 300 or so in China, that need to be educated about the program," says Lyn Ip, Adidas' areas manager for the environment for the Asia-Pacific region. "We can't force them to change because that's not part of the Adidas culture. You can change the equipment, but not the mindset."

Ip and other Adidas executives have set out to educate the management of supplier companies about the benefits of going green as well as the financial benefits—mostly from potential energy savings—they can reap by installing new equipment. Education must come before implementation, Ip says, especially since so many manufacturing sites have done things the same way for years and are reluctant to change.

"What we want to try to do is change the cultural thinking that the factory management has and help them visualize what the economic benefits are," says Ip. "There are environmental benefits as well, but at the end of the day, they are businessmen. They have to see the economic sense in it. If they don't, you will see resistance to making any changes in the factory.

"We've moved more away from a compliance effort to more of really partnering with our factories," she adds. "We'd like to see them succeed. It's a win-win situation for both parties."

Taking the sea route
Even as it works to raise environmental awareness at suppliers' factories, Adidas is also scrutinizing other links in its supply chain for opportunities to become greener. One of those areas is transportation.

To reduce the amount of carbon emitted in the distribution process, the company has made it a priority to cut down on the distances its goods must travel. For example, Adidas is making a conscious effort to locate raw material suppliers around the big factory locations in Asia to reduce transportation between these links in the supply chain.

It also tries to use factories in China that are located close to ports, cutting down on the trucking required to get products to the docks. In cases where it can't find a suitable factory within easy driving distance of a port, Adidas uses railroads for transportation.

The company is also looking at the way its products are transported to market. Specifically, Adidas makes it a point to ship by ocean whenever possible. Shipping via ocean container is more cost effective and more fuel efficient (and therefore, more environmentally friendly) than the alternative, shipping by air.

Although the company occasionally resorts to air freight (see sidebar), it has largely achieved its objective of shipping mainly by sea. In 2006, 97 percent of the shoes and sneakers made by Adidas were moved by ocean containers.

Kuerner says he's optimistic that ocean transportation will soon become even more eco-friendly than it is today. He points to recent experiments using giant computer-controlled sails on container ships to take advantage of wind power. Advocates of the wind sails say use of the devices could cut diesel usage by up to 20 percent.

As for the future, Kuerner says that Adidas is in the process of surveying its primary carriers to learn what environmental management systems, if any, they have in place. Adidas will review the idea of creating a scorecard for its carriers to measure their performance against a set of green metrics. To show that it's serious about going green, Adidas might even consider getting tough and shifting business to those carriers that follow the best environmental practices.