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Enabling Sustainable Value Chains in Asia’s Apparel Frontier: Riding the Power of Total Resource Productivity

Economic progress over the past three hundred years has been driven by a linear logic: economic growth largely results as a function of one-time use of additional factors of production. This model served humanity well until the mid-twentieth century, when the finite nature of resources and the impact of human activity on the planet came to the forefront. Looking ahead, estimates indicate that from 2010 to 2025, global food caloric consumption could increase by 24 percent, food spending by 57 percent, packaging by 47 percent, and end-of-life materials by 41 percent. What this trajectory means for the current population growth scenario of 9 billion by 2050 is not promising, but it will most likely mean good news for residents of Myanmar, a country that is abundant in natural resources and near universally has the lowest population density of its neighbors (80 people per square km of land area; only Laos has a lower population density with 20 people per square km).

The Circular Economy May Be around the Corner

Production in a variety of industries is now gradually shifting to a circular model, from cradle to cradle instead of cradle to grave, as a response to growing resource scarcity. This means that attention is increasingly focusing on the total resource productivity of the factors of production through materials, product and process innovation, and the avoidance of unnecessary waste (e.g. in packaging, as well as the reuse of waste and extension of the lifespan of products). Not only would this improve the industry’s environmental footprint, it would also allow for greater resource independence.

The textile and garment industry is traditionally known as being energy-intensive with a heavy environmental footprint. The current model for the industry is similarly structured so that raw materials are utilized to manufacture goods that are then sold, used, and discarded as waste. The advent of “fast fashion” has led to even greater throughput of resources via apparel value chains, and two new circular models are now gaining traction as a result: optimizing end-of-use by raising collection rates and recycling, and experimenting with ways to have clothes circle longer via collaborative consumption models.

While these innovations will no doubt gradually run their course, there is a lower hanging fruit for the apparel industry in Myanmar: radically greater resource efficiency in the production process. A redesign of apparel production processes, paired with better infrastructure and training can save up to 20 percent in chemical inputs, one-third of energy, and up to 50 percent of water, while at the same time providing the economic foundations for humane working conditions and an improved environmental footprint.

The new report released by Impact Economy—a global impact investment and strategy firm—titled Creating Sustainable Apparel Value Chains provides an evidence-based assessment of the prospect of sustainable textile and garment value chains and the levers needed for sustainable industry transformation, including the lever of total resource productivity.

Learn from Best Practice Producers

To get a sense of what is possible in terms of environmental performance and resource productivity, consider Mas Holdings in Sri Lanka.Operating under the motto “change is courage”, Mas Holdingsis the largest apparel and footwear company in Sri Lanka. The firm is profitable and focused on sustainability, efficiency, as well as low environmental impact. Mas Holdings’ top factory is the LEED Platinum certified Mas Intimates Thurulie factory, a 10,000 square meter facility with 1,300 employees that cost $2.66 million to build (or 25 percent more than conventional factories in Sri Lanka). Key features included in the construction of the factory:

•           Passive design reduces heat loads; efficient evaporative cooling equipment maintains an indoor temperature of 27° to 29.5°C (compared with 35° to 36°C in an average factory), while consuming only 25 percent of the cooling energy of an average factory.

•           Trees planted around the building ensure shading of the building and grounds and keep the building an estimated 1 to 2°C cooler.

•           A thermal roof load, the largest contributor to heat gain and indoor discomfort in the tropics, is controlled by a combination of green roofs, photovoltaic roofs, and cool roofs. Green roofs cover 1,757 square meters of the building. They are installed on concrete decks over short span spaces in the administrative wing. Covered with turf and plants, the high thermal mass of this roof absorbs heat without transmitting it into the building. The cool roof is a lightweight metal roof assembly over the long span production halls. The white metal, with a solar reflectivity index of 79, reflects nearly 80 percent of the solar energy that reaches the roof.

•           The energy sources are photovoltaic and hydroelectric power, which are renewable and carbon neutral. The rooftop photovoltaic system covers ten percent of the plant’s power needs and has an output of 25.6 kilowatts. A small hydroelectric power plant connected to the public grid provides the other ninety percent of the factory’s power.

•           Smart lighting is used as well. Work areas are illuminated with task lighting—high-efficiency
T5 tubes and LED lamps mounted on the sewing machines—focusing the correct amount of light for needlepoint. This system requires about half the normal number of light fixtures. Design optimizes natural light use.

•           Sewing machines with direct-drive servo-motors were chosen for energy efficiency, yielding a 15 to 30 percent reduction in energy use caused by sewing.

•           Every drop of water that enters the site is carefully managed though rain water catch systems. Consumption of potable water is about half that of comparable plants.

•           Generated energy from solar and hydro power not used by the factory on holidays and weekends is sold back into the main power grid of Sri Lanka.

Adding up Two and Two

Enormous value-creation opportunities are waiting to be tapped—opportunities that will provide the economic and social basis for changing business as usual, while keeping the environment intact. This is good news. Myanmar’s environmental protection legislation covers air, land and water pollution, and environmental degradation regulations include industrial waste water and sewage and apply to all construction and investments in the country. The one challenge, though, is enforcement. Moreover, the shortages and unreliability of the supply of electricity has been a serious obstacle for the garment sector in recent years, according to a study by the Japanese Institute of Developing Economies. Optimized resource productivity can provide a powerful boost—water may be abundant, but energy and chemicals both pollute and cost money.

A systemic approach that pulls the levers identified in the report is critical, but truly leveraging this opportunity in Myanmar will also require investment, which is the focus of the final post in this series.

About the Author:

Dr Maximilian Martin is theFounder and Global Managing Director of Impact Economy. He also serves as Founding Faculty in Residence at Ashoka U and Lecturer in Social Entrepreneurship at the University of St. Gallen. He previouslyserved as founding global head and managing director of UBS Philanthropy Services, head of research at the Schwab Foundation, senior consultant with McKinsey & Company, instructor at Harvard’s Economics Department, and fellow at the Center for Public Leadership, Harvard Kennedy School. He holds an MA in anthropology from Indiana University, a MPA from Harvard University, and a Ph.D. in economic anthropology from the University of Hamburg.

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