An Aditya Birla Group Commitment 45 Strategic Stakeholder Engagement BUILDING A SUSTAINABLE BRAND Expert Opinion Expert Opinion The sustainability commitments made by leading apparel and footwear brands will change the course of the entire industry over the next decade. Inspired by the Paris Climate Accord, Nike, VF, H&M and others committed to 100% renewable energy. Inditex and H&M committed to move away from today’s model of fast-fashion with inherent environmental challenges towards a circular model where renewable energy and recycling technologies enable clothing that otherwise would go to a landfill to become tomorrow’s latest fashion trend. Nike committed to double its growth while halving its resource use. These commitments will fundamentally differentiate sustainability leaders from sustainability laggards and will impact everything from the relationships with consumers to the bottom line of business. In a landscape increasingly defined by requirements to reduce CO2 emissions and pricing pressure on raw materials, those companies who invest in sustainability and use it as a source for innovation will be rewarded in the marketplace. Crystal Group, now one of the world’s leading denim manufacturers, didn’t start out that way. After watching an Inconvenient Truth in 2007, Crystal’s Chairman of the Board decided to invest heavily in new technologies to be a part of the solution to the global climate crisis. Not only did this investment reduce their energy costs by over 20% and their material waste by 18%, but the costs savings from these efficiency improvements catapulted them into the leading position in the marketplace. When Nike challenged its designers to design a pair of shoes that used less materials they reimagined the archetype of athletic footwear with Flyknit. Instead of gluing pieces of leather together, Flyknit weaves thread together while reducing labour costs by 50% and material usage by 20%. Yet Flyknit still provides world-class athletes with the performance they demand. Flyknit is now ubiquitous throughout Nike’s footwear offerings and has been a runaway success with its values-oriented millennial customers and athletes alike. For industry leaders like Nike and Crystal Group, competition and innovation don’t just happen in a vacuum. They are part of a larger discussion happening across the entire industry in part facilitated by the Sustainable Apparel Coalition about how the industry can harness innovation and competition to create measurable change. By using the industry’s common measurement tools called the Higg Index, the supply chain can make sustainability investments confident that they will be rewarded by all of their customers. Companies can communicate their sustainability performance in a common language relevant to all stakeholders including eventually, consumers. Higg creates common success metrics for the entire industry that allows sustainability to rapidly scale. As sustainable business practices continue to demonstrate competitive advantage, and market leaders make good on their bold commitments, those who haven’t embraced the need for a sustainable world will find themselves playing catch-up, if they can. Yet for both leaders and laggards it will be this combination of competition and collaboration that will be required for healthy businesses and a healthy planet. Jason Kibbey CEO Sustainable Apparel Coalition