By Richard Edwards
 
Marks & Spencer is pushing ahead with its ground-breaking green factory programme as it looks to ensure the ethical credentials of its global supply chain. Central to the strategy is Mike Barry, it’s head of sustainable business. 
 
Next month, M&S opens its fourth eco-factory, this time in China, just over a year after MAS Intimates Thurulie – situated 60km north east of the Sri Lankan capital, Colombo – threw open its (environmentally friendly) doors to an admiring global audience. The company now supports two such factories in Sri Lanka, as well as a similar operation run by its furniture supplier, Westbridge, in Wales.
 
Such has been the success of these schemes that the company’s Welsh site, post-conversion, now emits 48% less CO2, leading to electrical energy savings of 56% and a reduction in water consumption of almost 30%. 
 
“We have a responsibility to give leadership and that’s exactly what we’re doing with these green factories,” Mike Barry, head of sustainable business at M&S, tells Sustainable Sourcing.
 
It’s now over two years since M&S launched its Plan A sustainability programme, which set out 100 environmental and ethical commitments. It was a process that procurement was, and still very much is, heavily involved in.
 
“The team that put plan A together included the head of technology for food, the head of technology for clothing and the head of procurement,” Barry says. “Procurement and sourcing was placed right at the heart of delivering the plan.” 
 
Of course, the major concerns for those firms involved in the fashion industry – as some of M&S’s competitors have already found to their cost – are the ethical credentials of a supply base that leans heavily on the Asian sub-continent. And while the company’s eco-factories ensure that the company’s own house is in order, Barry admits that challenges remain.
 
“We have incredibly tight controls on our food business – our coffee and tea, for example, is fair-trade and fully traceable,” he says. “On the cotton side it’s often impossible to fully trace the origin but it’s a journey and, as the biggest buyer of fair-trade cotton in the world, we’re doing all we can.”
 
Also integral to M&S’s approach is a supplier exchange network that has so far enabled up to 1,500 of the firm’s suppliers to share best practice.
 
When Plan A was originally unveiled in January 2007 the company estimated that its implementation and running would cost £200m up until 2012 – the reality, however, has been somewhat different. 
 
“We decided to do it because it was the right thing to do,” says Barry. “But now we’re really seeing the cost benefits too – to date Plan A has been cost neutral. In the short-term it can help the company through the tougher times, it also means you can start preparing for a very different future.”
 
And while many companies appear ill-equipped to deal with that future, Plan A should ensure that M&S is well-placed to thrive in a drastically altered business environment.
 
“We’re going to be operating in a much more constrained world in terms of carbon and commodity prices – there’s simply not enough stuff to go round,” says Barry. “Whether or not you like it as a business, this is what you have to do. Mid-2010 I think people are really going to start focusing on what the next decade looks like and 2010 to 2020 is going to be an interesting bridging period as companies plan for the future post-2020”.
 
“We’re very clear that M&S has only just begun climbing a mountain called Everest”, he adds.
 
However, while M&S insists that it is still in the foothills, the success of Plan A suggests that the firm is far closer to the peak than many of its competitors – and has little need to consider a Plan B.

Richards Edwards

The High Street’s biggest names still need to place a focus on ethical sourcing – despite coming under pressure to cut costs as the economic downturn continues.

A number of high profile investigations have brought ethical sourcing sharply into focus, while discount retailers recently came under fire from Stuart Rose, executive chairman of Mark’s & Spencer.

“How can you sell a t-shirt for £2 and pay the rents and pay the rates and pay the buyer and pay the poor boy or girl who is making a living wage? You can’t. I don’t care what anyone says about margin structure, about the efficiency of the business, or about a low-cost business. You can’t do it,” Rose told the Daily Telegraph.

Julia Hawkins from the Ethical Trade Initiative (ETI), however, argues that retailers need to continue to place ethical considerations at the forefront of their sourcing strategies, despite procurement being placed under huge pressure to cut costs.

“The pressure is on for companies to squeeze their suppliers on cost but I would say that there are an increasing number of companies who realise that the value of the product goes beyond cost,” Hawkins tells Procurement Leaders.

“Obviously price is an issue but it would be too simplistic to say that all cheap companies are bad because there may be retailers selling more expensive clothes who are not sourcing as ethically as they should be.

“What we’re seeing is that companies are now taking responsibility for workers in their supply chain – ten years ago that wasn’t happening.”

Discount retailer Primark, which recorded an 18% rise in profits in the fourth quarter of 2008, has been the subject of a number investigations into its labour practices on the Indian subcontinent in the past 12 months and recently came under fire when it was revealed that workers at its Manchester-based knitwear factory TNS, were being paid less than the minimum wage.

The company has though, announced a series of appointments aimed at repairing its battered reputation.

Katherine Kirk, former head of accessories at Gap, has been appointment as the company’s ethical trading director – a first for the firm – while Primark is also thought to be considering a number of other ethical trading posts in its major sourcing markets of India, China and Bangladesh.

Richard Edwards

A common code of practice governing ethical sourcing practices in countries such as India is needed in order to reduce confusion and improve standards.

That’s the view of one of the world’s largest retailers, which believes that the bewildering array of ethical codes governing procurement across the world does nothing to help those who should benefit most from global sourcing.

The sourcing policies of a number of leading retailers have come under increasing scrutiny after a series of high profile investigations involving labour practices on the Indian subcontinent. Primark and Tesco are just two companies facing criticism after questions were raised over the ethical standards of their suppliers.

Multiple codes

Terry Babbs, Tesco’s international law and trading director, however, believes that current legislation makes it very hard for retailers to ensure that their suppliers are adhering to a multitude of demands. “There are more than a thousand labour codes in existence, and it would help greatly if there was a single code,” he said.

Despite the ongoing financial crisis, increasingly environmentally-savvy consumers are continuing to demand cheap goods that are produced to exacting ethical standards. “At the top of our customers’ minds are price and availability, particularly in tough economic times, but they also expect us to take care of the ethical dimension on their behalf,” said Babbs.

A leading figure in the Indian retail industry also claimed that ethical demands and intensive auditing are also marginalising skilled workers in the very poorest areas. “The audits are an incentive to do everything inside the factory and to use machinery, “ said Rajan Sanhi, owner of Panorama Exports, a garment factory in Havana near Delhi. “It is a headache to do anything outside.”