0.1. Purpose of this paper

As one of the most globalized supply chains, the textile and garment sector is facing challenges in ensuring social and environmental sustainability. In response to these challenges and in recognition of the complex and multi-faceted drivers of and solutions to these issues (Beyers and Heinrichs 2020), many multi-stakeholder initiatives, tools and assessment platforms have been developed and implemented throughout the supply chain. There is a great deal of diversity in these initiatives, including differences in their focus, the actors involved, who the beneficiaries are, the longevity of the activities and how they define and measure success. For many stakeholders the number and diversity of initiatives is confusing. This paper aims to map those initiatives that specifically incorporate environmental sustainability and analyse their coverage across the sector.

Environmental initiatives play an important role in helping garment sector firms to become more environmentally sustainable in their production and consumption activities. Reducing carbon emissions is an obvious target, with key sector stakeholders committing to reducing greenhouse gas emissions by 30 per cent by 2030 and to be net-zero by 2050 (from a 2015 baseline) through the United Nations Framework Convention on Climate Change’s Fashion Industry Charter for Climate Action. But other targets, including reducing water usage and water pollution and reducing chemical intensity and pesticide use across the supply chain, are also critical in enhancing the environmental sustainability of the sector. Such system-level changes across the supply chain require collaborative and cooperative activities and partnerships across the sector. Individual firms will find it difficult to act alone; therefore, initiatives that provide opportunities for dialogue, knowledge creation and sharing, and collective action are important tools in achieving sustainability.

The Pulse of the Fashion Industry reports by the Global Fashion Agenda, the Boston Consulting Group and the Sustainable Apparel Coalition (SAC) represents one of the few data sources from a sector initiative to use performance metrics – the SAC Higg Index – to track improvements in the sustainability of participant firms (GFA, BCG and SAC 2017; 2018; 2019). For the three years that the report is available – 2017, 2018 and 2019 – a Pulse score was calculated1 for the sector out of 100 based on measurements and tracking the sustainability management and target setting of the global fashion industry on key environmental and social impact areas. The 2017 score was 32; 2018 – 38; and 2019 – 42 out of 100. While these scores showcase improved sustainability across the sector in recent years, the overall scores depict and industry that remains largely unsustainable and in need of large-scale change.

The motivation and ability to act on environmental sustainability is not evenly distributed across the sector. The Pulse reports have highlighted the continuing poor performance of smaller firms with regard to sustainability criteria. Analysis from these reports shows that the size of the firm, and not the price point at which it operates in the market, is a significant determinant of performance and improvement in sustainability (GFA, BCG and SAC 2019). This intransigency of smaller firms’ lower performance in environmental sustainability is referred to a “blind spot” for the sector in achieving enhanced sustainability.

Micro-, small- and medium-sized enterprises (MSMEs) make up the majority for firms within the supply chain and a significant proportion of employment in the sector. These firms are not often at the core of the supply chain but rather the periphery – existing through sub-contracting relationships with the larger firms (Merk 2014).

The sustainability challenges in these firm are similar to all firms in the supply chain, yet because of their smaller size (and correspondingly smaller human and financial capital resources) and position in the supply chain (periphery, with less access to knowledge and know-how), these challenges are more difficult to overcome. Therefore, a second aim of this paper is to provide further evidence of the sustainability challenges facing MSMEs and to analyse the existing set of supply chain initiatives with an environmental focus to assess their coverage and applicability to MSMEs.

The paper highlights where there might be gaps in the current offerings of initiatives, and what types of initiatives have alignment with MSMEs knowledge and learning needs, as a way to highlight where future attention in developing new or enhanced initiatives might lie.

0.2. Just Tansition Toolkit

This paper has been produced as part of the Just Transition Toolkit of the ILO Decent Work in the Garment Supply Chains in Asia project2. The Just Transition Toolkit focuses on enhancing the environmental sustainability of the garment supply chain. The Toolkit is built from inputs from constituents, including a mix of knowledge creation, knowledge diffusion and capacity-building activities for key sector actors with the aim of developing an evidence base for how environmental sustainability and the adoption of more sustainable practices in the textile and garment supply chain enhance decent work in the sector.

The Just Transition in the Textiles and Garment Supply Chain Toolkit consists of reports, briefs, highlights, videos, and infographics that provide specific advice for industry stakeholders to address gaps and weaknesses in national environmental regulation on country-specific levels, relevant guidance and support to help manufacturers understand and apply environment and decent work principles, and information on eco-innovation and greener production in the garment industry.

We use the term “textile and garment sector” as we are specifically interested in garment production and therefore the textiles manufactured as inputs into these garments. Textiles are manufactured for other purposes, including furniture, automotive accessories and household decoration. While environmental impacts of the production of these textiles might be similar to textiles produced for garments, these textiles are not the focus on our work in this project.

The Decent Work in the Garment Supply Chains in Asia project is a regional project with coverage of all countries across the Asian region, but activities focus on four target countries: Bangladesh, Cambodia, Indonesia and Viet Nam.

0.3. Methodology

This paper was developed through two activities: (i) desktop-based identification and documentation; and (ii) review of existing and planned environment advisory tools, activities and initiatives.

The first stage of the methodology identified existing and planned environmental tools, initiatives and activities in the textile and garment sector in Asia. Initiatives were identified using internet searches, information from previous ILO and other UN agency activities in the sector, and advice from industry stakeholders. Both current and past initiatives were identified. Past initiatives offer important information about operating models and success and impact. The result of these searches was a long list of 35 initiatives.

From this long list, 17 initiatives were selected for further analysis. The selection criteria for this shorter list include: (i) strong environmental focus; and/or (ii) geographical coverage across the region or in one of the four focus countries.

A comparative analysis framework was developed to further analyse the 17 selected initiatives. This framework included the following categories:

• General

  • Country

  • Sector/industry

  • Sustainability areas covered (such as, energy, water, chemicals, etc.)

  • Non-sustainability areas covered (such as, labour standards, gender, productivity)

  • Years in existence

  • Owner/administrator

  • Weblink/reference

• Form and implementation (picked from list)

  • Online/spreadsheet/document/other

  • Guidance/guidance + advisory/guidance + advisory+ support

  • Compliance/accredited/voluntary

• Success criteria

  • Easily expanded (into other sustainability areas/countries/sectors)

  • Uptake

• Number of organizations

• Number of countries

  • Measurement and reporting

• Evaluation of impact

• Rating system

  • Regulation/policy/government standards (picked from list)

• Includes or references government regulations/minimum standards

• Monitored/administered by government agency

The second aim of the paper is to review barriers and enablers to the uptake of eco-innovations by MSMEs in the sector. Eco-innovations are innovations that have environmental impact. Innovations need to make sense and productivity gains can be part of the benefits (for example, less chemical processing, faster production), but reduced environmental impact is the aim. Different from the much used term of “cleaner production”, eco-innovations have different barriers and enablers that are separate from those that drive productivity gains, and are worthy of focus in and of themselves, not only in relation to productivity gains but chiefly as part of the application of the ILO Just Transition guidelines3.

A literature review was undertaken to identify barriers and enablers to eco-innovation in MSMEs. Internet searches for reports and other grey literature, and searches of peer reviewed journal papers using the SCOPUS database identified a range of papers and reports covering these topics.

0.4. Structure of the paper

Section 1, in addition to this introduction and the methodology, includes background context on the environmental impacts of production activities in the textile and garment supply chain. The following section covers the comparative analysis of the shortlisted initiatives. Then, the next section summarizes the results of the literature review on eco-innovation barriers in MSMEs in the sector, and discusses the interaction of environmental initiatives in the sector with enablers for eco-innovation in MSMEs. The final section highlights conclusions and implications of this paper to future activities related to environmental sustainability and decent work in textile and garment supply chains in Asia.

0.5. Background context

Environmental impacts of the textile and garment supply chain Asia accounts for some 60 per cent of global exports of garments, textiles and footwear. The industry has rapidly grown over the past two decades, employing more than 40 million workers, with the majority being women in many countries (Sharpe 2017). Environmental impacts are concentrated at certain points in the supply chain, particularly in four areas:

• weaving, dyeing and finishing processes in textile manufacturing;

• energy use throughout the supply chain, but concentrated in textile manufacturing and to a lesser extent garment assembly;

• textile waste associated with garment assembly; and

• transport emissions throughout the supply chain as materials and then final products are shipped globally.

The most significant impacts, however, are within the first two areas, with the main impacts stemming from the use intensity of water resources; chemical use, including toxic chemicals; waste water discharges and lack of treatment processes; and energy use and the carbon intensity of electricity.

Textile manufacturing is very water- and chemical-intensive. The growth and sustainability of the sector is highly dependent on how resources are managed. The textile industry in general has an enormous water footprint, ranging from agricultural water consumption for cotton farming, to water consumption in textile printing, dyeing and finishing. The sector is one of the largest users of fresh water in the world, consuming an estimated 79 billion cubic meters of fresh water annually across the entire value chain (United Kingdom 2019). As the textile production is located in some countries that already have insecure water suppliers, a water crisis is forecast in textile producing countries, including in Bangladesh, Cambodia, India, Indonesia and Viet Nam.

The sector is also responsible for severe water pollution by discharging large volumes of wastewater containing hazardous substances into rivers and watercourses without appropriate treatment. It is reported that 20 per cent of industrial water pollution globally is attributable to the dyeing and treatment of textiles (EMF 2017).

The carbon footprint from the sector is also significant, accounting for 6–8 per cent of total global emissions (Niinimaki et al. 2020). In 2015 this equated to emissions of 1.7 billion tonnes of carbon dioxide (United Kingdom 2019), which is more than all international flights and maritime shipping combined (Sumner 2019). The numbers are not surprising given the fact that over 60 per cent of textiles are used in the apparel industry and a large proportion of apparel manufacturing occurs in China and India. India, in particular, relies heavily on hard coal and natural gas for electricity and heat production, sharply increasing the carbon footprint of each apparel product. Switching to renewable energy, such as solar, hydro or wind power, can significantly change carbon dioxide emissions and improve sustainability linked to textile production.

Moreover, the increase of fast fashion has stimulated demand for fast, cheap and low-quality goods. Both the growing volume of garment production and how these garments are used and disposed of have increased the climate change impacts from the sector. Between 2005 to 2016, the climate impact of various production stages in the apparel sector increased by 35 per cent, and is projected to continue to increase under a business-as-usual scenario (Quantis 2018).

1.1. Reach and targets of initiatives

The initiatives analysed were available in a range of locations around the world. Seven of the initiatives were country-specific and the remainder were implemented in a large number of countries or available in any country. Nine of the initiatives were specific to the textile and/or garment sectors, one was specific to cotton, another for leather and three were for various manufacturing sectors. Most of the countryspecific initiatives were more narrowly focused on a specific part of the supply chain, for example, wet processing. Country-specific initiatives also addressed policy and institutional capacity context in the countries in which they worked. For example, PaCT in Bangladesh and STWI in India. Where initiatives operate across multiple countries and regions, wider supply chain issues are the focus. These initiatives usually include programmes for both brand companies where corporate activities occur and the textile factories and mills in the supply chain.

Table 2. Country and sector focuses of initiatives

Figure 2 shows where the environmental initiatives are operating globally. There is wide geographical reach of the various environmental initiatives analysed, as shown in table 3. The three categories of initiatives identified are also useful in understanding organizational reach. For performance standards initiatives, the broad reach of many organizations across many jurisdictions would be necessary for the associated performance standard to have an impact on environmental sustainability. In the case of programme offer initiatives, deep engagement with a smaller number of organizations and countries is the target. For social dialogue, knowledge sharing and advocacy initiatives, reaching a certain number of individual organizations is not the target, rather the target is around developing consensus and networks among organizations for social and environmental sustainability. Table 3 below outlines the number of organizations (unless otherwise labelled) or countries in which each initiative has been implemented.

Table 3. Organizational and country reach of each initiative

Figure 2. Summary of country-level focus of the selected initiatives

1.2. Characteristics of initiatives

This section analyses the initiatives across a number of characteristics including the actors and institutions involved in administering initiatives, governance arrangements, funding models and their focus of change.

1.2.1. Actors

The environmental initiatives were owned or administrated by a variety of organizations. Several initiatives were established through aid organizations of international organizations or bodies, such as the International Finance Corporation (PaCT and China Water) and European Union (Ecoleban via Switch Asia Program). By far the largest category of actors was not-for-profit organizations and foundations that were established to manage and deliver the environmental initiative. These consisted of larger international non-profits such as Better Cotton, Sustainable Apparel Coalition, Fairtrade, Stockholm International Water Institute and Bluesign, as well as smaller non-profits such as GOTS, Sequa and the Stichting ZDHC Foundation. The final category of actors were government agencies within the countries of operation, including China, India and Viet Nam. These government run initiatives were often associated with one-off funding and information on the initiatives was outdated and the status of the initiative at the time of research was uncertain. Table 4 provides summary data on the administration arrangements for each of the initiatives, and figure 3 shows the length of time these initiatives have been in operation.

Table 4. Administration arrangements of the selected initiatives

Figure 3. Duration of operation of the selected initiatives

1.2.2. Governance

There are a variety of governance structures for the various environmental initiatives reviewed. Generally, the larger initiatives worked across the supply chain collaborating across fashion brands, manufacturers, suppliers (for example, chemical suppliers), factories and laboratories. Often the fashion brands or related businesses are founding members. Those initiatives funded by international bodies (such as the European Union (EU) or the International Finance Corporation) have an established operating unit or non-profit organization that delivers the initiative. Partners also include other non profits in developed countries and banks that facilitate green lending. In the case of Fairtrade, the Sweden Textile Water Initiative and the Higg Index, there is a non-profit or foundation that works alongside an established private company to deliver the operational aspects of the initiative. Partnerships with local industry associations and research centres are also common within some of the initiatives.

1.2.3. Funding

The funding of the initiatives fell into three categories:

• privately funded via participation, membership, license or sponsorship fees;

• funding from international bodies (for example, the EU);

• private funding (table 5).

Table 5. Funding arrangements of the selected initiatives

1.2.4. Focus of change

The sustainability elements addressed by each of the initiatives is varied. Across all the initiatives there is naturally a strong focus on water (including water intensity and waste water pollution) and energy (including greenhouse gas emissions). Chemical use and management are also a focus. See table 6 for further details.

Analysing the focus on change using the three initiative models – performance standards; programme offer; and social dialogue, knowledge sharing and advocacy – draws out some patterns. The programme offer initiatives and the more complex and comprehensive examples of the performance standards initiatives operate across multiple sustainability elements. Integrating multiple sustainability elements is obviously more effective, and this integration will look different in different parts of the sector. For example, in textile manufacturing, integration would include the water–energy–chemical nexus. In garment assembly, the energy–waste nexus would be more relevant.

In each case, how these environmental sustainability elements are combined with social sustainability and decent work criteria are also critical. Yet, in very few initiatives are social and environmental elements closely integrated. The Higg Index is an exception, although here the focus is on complying with a performance standard, and in the context of most participants in the sector in Asia – this is a high standard. The focus of the Higg Index is on compliance, rather than building capacity for compliance. This limits the success of the initiative, as from the limited evidence available, compliance is simply out of reach for many firms, especially smaller, less resourced firms.

Table 6. Sustainability elements of the selected initiatives

2.1. Innovative activity in Asia

Asian firms show high innovation potential. Analysis of a survey of 27,000 firms in developing Asia finds that 53 per cent innovate to produce new products, processes or both (see figure 4). Highly innovative industries include information technology and high-tech manufacturing industries such machinery and equipment, electronics, and chemicals, with textiles and garments showcasing a lower degree of innovative activity. Innovative firms are usually larger, older and active exporters (Asian Development Bank 2020).

In Asia, two-thirds of large firms report introducing either product or process innovation, compared with 55.6 per cent of medium-sized firms and 41.6 per cent of small firms. Large firms were found to have statistically significant higher shares of both product and process innovation (Asian Development Bank 2020).

A study in Indonesia identified that new technologies can bring innovation to companies and workers in textiles clothing and footwear industries, but that individual firms lack absorptive capacity to adopt these new technologies. Absorptive capacity essentially means the internal know-how to translate new information and knowledge into something useful for the firm. Using LinkedIn data, a recent survey by the Mandiri Institute (2020) found that many firms struggle to find workers with the right competencies in software and information technology services, inducing them to move to other countries. The challenge of growing a tech-savvy workforce goes beyond expanding access to education (which is low across Asia, with only 16 per cent of the population having a tertiary education) to building knowledge and awareness of new technologies (Asian Development Bank 2020).

Figure 4. Innovative activity in Asia by sector

2.2. Eco-innovation in the textile and garment sector

For multinationals and small- and medium-sized enterprises (SMEs) the pressure to move toward sustainability and innovative operational change is now constant and considerable, yet the resources available to do so, including absorptive capacity, are vastly different. In the Textile and Garment sector there is a lack of research that analyses the implementation of eco-innovations in SMEs and more broadly in enterprises in developing country contexts, where most of the production of the sector is located (Islam, Perry and Gill. 2020). This section provides an overview of the available literature analysing ecoinnovation adoption in the textile and garment sector, including drawing on analysis of the sector in Africa and South America, as well as Asia.

In a study of SMEs in Botswana and Colombia’s textile and leather industries (via interviews with experts in the field), key barriers for SMEs identified included (Bhamra et al. 2018):

• lack of awareness about environmental legislation and social impact;

• lack access to knowledge and skills transfer networks;

• communication gaps in supply chains; X low savings rates; poor infrastructure.

In addition, lack of success with sustainability measures was highly related to the socio-economic situation of the business and the strain on SME owners’ “social position”, such as:

• a belief that the current status quo is the only way of making money;

• a follower mentality – the notion that something is feasible only if proven to be successful elsewhere (Bhamra et al. 2018).

In these countries it was mixed as to whether companies analysed were adhering to any sustainability standards or certification frameworks. Those companies that did not adhere to any sustainability standards expressed that a lack of skills was the main barrier to doing so, and those that were adhering to such standards stated that the lack of a coherent business strategy outlining the businesses innovation intentions was a barrier to accessing the full benefit of adhering to these standards (Bhamra et al. 2018).

In Colombia, the study highlighted that SMEs are so immersed in their day-to-day routines that they have neither the time nor the resources to think about improving their practices, using their resources more efficiently, and decreasing costs. In many cases, SMEs depend on external help from government programmes or professionals from consultancies to carry out these important tasks as knowledge intensive service activities (KISAs)5. The experts interviewed in the study highlighted the linkages between developing an underlying business strategy that identified the trajectory of the business and the ability of the firm to subsequently develop innovative products and services. In general, the MSMEs involved in both studies were unable to articulate their business strategy, objectives and long-term vision. The experts highlighted that this is common with MSMEs in their countries because of the way these small factories work. Running these businesses is very demanding, and major decisions are the responsibility of a single individual – usually the owner or head of the family. The priority is to survive, and there is often little time available to think in longer terms, even though longer-term investments and pay-back periods are possible in family-owned firms.

Further, in many cases, businesses are founded by entrepreneurs with no formal business education. As a result, they do not necessarily have the knowledge and tools to define a formal strategy and grasp the broader forces shaping their business environment. This again reinforces the focus on survival, rather than seeking new opportunities by implementing new innovative practices (Bhamra et al. 2018). The role of government support is also critical. This support comes in the form of two activities: (1) establishing legal frameworks and regulations that act as the minimum performance standards; and (2) creating incentive schemes that encourage businesses to go beyond minimum levels of compliance. Bhamra et al. (2018), concluded that SMEs in both countries studied (Botswana and Colombia) would benefit from a legal framework defining:

• the environmental standards that companies should comply with if they want to operate; and

• the parameters of fair commercial agreements that address the interests of all parties involved.

Other research highlights the importance of government regulatory frameworks in encouraging environmental sustainability in SMEs in developed countries (Aragon-Correa et al. 2008), but the evidence of regulations shaping environmental intentions is less clear in developing countries. In part this could be the result of weaker regulatory institutions. For example, in Tunisia, SMEs noted that public authorities did not exercise the necessary controls when granting technical assistance, support and grants (Gherib and Ghozzi-Nékhili 2012).

Competitors have been identified as the single stakeholder group that influences the formation of environmentally friendly intentions among owner-managers in developing country contexts (Tounes et al 2019). Other studies from other sectors have concluded that environmental organizations and associations influence owner-managers to undertake environmental initiatives (Flannery and May 2000; Papagiannakis and Lioukas 2012). This variety could suggest that environmental intentions are not as concerned with managing external stakeholders in emerging markets. In other words, that institutional pressures does not represent significant coercive force to the same extent in emerging markets. This is especially true when regulatory devices are limited in number and not sufficiently known or adopted by businesses, as is the case in Africa and Asia.

2.3. Innovation enablers

Access to finance, particularly debt finance, is an important innovation enabler for MSMEs. The lack of access to finance is an identified issue in the adoption of sustainability practices – both environmental and social in SMEs (Gadenne et al. 2009; Labaronne and Gana-Oueslati 2011). Public policy has a role to play in ensuring and encouraging access to finance for MSMEs for environmental investments, including providing financial incentives for enhanced environmental practices, particularly practices that go beyond minimum standards.

Activities that overcome information barriers are also useful in encouraging the implementation of sustainable practices in MSMEs (Sleg and Vlek 2009). However, information needs to be contextualized, specific and adapted to the circumstances of the individual firm or sector. There is a close link between awareness of environmental issues and intentions to adopt environmentally sustainable practices. Civil society organizations and government actors can both play a role in this awareness raising. Training and educational providers also contribute, and environmental sustainability should be integrated into technical and vocational education and training programmes across the sector.

For example, a study of eco-innovation among batik6 SMEs in Indonesia found that the higher economic and financial returns of producing environment-friendly products provided motivation to shift to cleaner production (Aryantol, Wismantoro, and Widyatmoko 2018). To date, however, the market for these sustainable textiles and garments is mostly in the international market; so export capabilities and experience are needed alongside knowledge of environmentally sustainable practices. In fact, business success in textile and clothing firms is strongly related to a strong relationship between innovation and internationalization, and access to external suppliers of knowledge, in particular leading industrial and commercial partners is critical (Zuchella and Siano 2014).

While analysis of this more integrated and holistic view of sustainability (including the social and environmental aspects) of garment supply chains in Asia is limited, a study of five Indian textile units located in South India identified influential enablers for sustainable supply chain management, and revealed that five enablers dominate the industry's practices (Diabat, Kannan and Mathiyazhagan 2014):

• adoption of safety standards;

• adoption of green practices;

• community economic welfare;

• health and safety issues; and

• employment stability.

The combination of working standards, job security, community welfare and green practices provides further support for an integrated approach to environmental sustainability that includes the social and gender aspects of the sector’s workforce. These enablers match closely to the requirements for a just transition, and as the ILO Guidelines for Just Transition highlight, require a holistic and coordinated view of development and sustainability.