From the Sector

Stahl, an active proponent of responsible chemistry, has been awarded the highest EcoVadis Platinum rating, placing it within the top 1% of companies assessed by EcoVadis. The award underlines Stahl’s commitment to collaborating with its partners to reduce its environmental impact and build a more responsible and transparent supply chain.

EcoVadis is a globally recognized evidence-based assessment platform that reviews the performance of more than 90,000 organizations across key sustainability criteria. These include environmental impact, labor and human rights standards, ethics, and sustainable procurement practices. The latest report from EcoVadis highlights Stahl’s positive progress across all these areas and builds on the Gold rating achieved by the company in 2021. Stahl’s 2030 target is to maintain the EcoVadis Platinum rating by working closely with its value-chain partners to help them reduce their environmental impact – including by supporting their transition to renewable feedstocks. In 2021, 80% of Stahl’s total spend on raw materials was supplied by EcoVadis-rated suppliers.
 
The new EcoVadis rating comes as Stahl accelerates its efforts to ensure a more responsible and transparent supply chain. Recent steps toward this goal have included establishing a dedicated Supply Chain Transparency division within the company’s Environmental, social, and governance (ESG) department. The division will be tasked with coordinating a new product development framework that prioritizes the responsible sourcing of raw materials. Furthermore, in July 2022, Stahl submitted a new greenhouse gas (GHG) emissions reduction target, including a specific commitment regarding the company’s Scope 3 upstream emissions. Stahl aims to reduce these by at least 25% over the next 10 years, compared with the base year (2021). Stahl expects to achieve this reduction primarily by working with its suppliers to replace fossil-based raw materials with lower-carbon alternatives.

• Integrated Sustainability Report 2021 – 2022 published

DyStar, a leading specialty chemical company released its twelfth annual Sustainability Performance Report. The report is prepared in accordance with the updated GRI Standards 2021: Core option. DyStar continues to adopt the Integrated Reporting <IR> framework to communicate how the group has successfully created tangible value across multiple stakeholder groups in six major capitals.

DyStar reports that they have inched themselves closer to some of their 2025 target of reducing the environmental footprint by 30% for every ton of product, from 2011 levels. Here are some key highlights for FY2021:

• Recorded more than 29% increase in revenue compared to 2020
• Zero workplace fatalities, high-consequence injuries, and work-related ill health
• 40% reduction in Greenhouse gas (GHG) emission intensity, compared to 2011
• 37% decrease in wastewater emission intensity, compared to 2011

The Group was able to remain resilient and steer itself toward optimistic growth and recovery from the global pandemic in FY2021. In face of recent geopolitical events and macroeconomic factors such as soaring energy costs, DyStar and the wider supply chain will continue to face challenges. As a result, the company believes it is crucial to stay committed to their 2025 Sustainability goals to continue generating value for all stakeholders in the longer term, well beyond these turbulent times.

The report communicates DyStar’s progress towards its sustainability agenda and material topics. As part of our commitment to environmental sustainability, only an e-magazine and a PDF version will be made available for download from www.DyStar.com/sustainability-reports/

• Monomaterial solution contains renewably-sourced polypropylene from the Bornewables™ portfolio of circular polyolefins
• Trexel employs its proprietary MuCell® technology to deliver a range of lightweighting benefits
• EverMinds™ in action: reuse and design for recycling are focus of value chain collaboration

Borealis and Trexel, an expert in foaming injection and blow moulded parts, announce that they have co-developed a new plastic bottle based on a grade from the Bornewables™ portfolio of polyolefins made using renewable feedstocks derived 100% from waste and residue streams. The lightweight bottle – which will be showcased at the Borealis stand at the K 2022 (from 19 to 26 October 2022 in Düsseldorf) – is reusable and fully recyclable. It boasts a significantly lower overall CO₂ footprint because it is composed of renewably-sourced feedstock and produced in the foaming process.

The Bornewables™ portfolio of circular polyolefins helps reduce the carbon footprint while offering material performance equal to virgin polymers. Using Bornewables grades allows for design freedom and colour flexibility, and helps retain a premium look and feel. The grades – which are commercially available in Europe – help conserve natural resources because they are derived solely from waste and residue streams, for example from used cooking oil. Reusing waste already in circulation instead of fossil fuel-based feedstocks enhances the sustainability of applications made using the Bornewables grades.

The reusable new bottle developed by Borealis and Trexel retains its value over many life cycles thanks to the use of Trexel’s proprietary technology in tandem with Bornewables grades; as a material solution, the new bottle minimises the use of valuable raw materials. Moreover, converters consume less energy in the production process when using the MuCell® technology. The bottle thus helps close the loop on plastics circularity by way of design for recycling, the use of renewable feedstocks, and excellent material performance across multiple life cycles.

Monforts will highlight its technologies for special technical textile applications at this year’s ITMA ASIA + CITME which takes place at the National Exhibition and Convention Center in Shanghai, China, from November 20-24.

One of Monforts' developments is the Montex 8500 XXL stenter system for the production of technical fabrics in widths of up to 6.8 metres. Among the products made on this system are treated nonwovens for the geotextiles and filter media markets, tarpaulins, advertising banners, black-out curtains, membranes and many more.

On Montex©Coat coating lines, meanwhile, the possibilities range from the single-sided application of finishing agents for outdoor clothing and adding functionality to home textiles, to the creation of materials for sophisticated lightweight construction and automotive and aerospace components.

“Many more applications are possible, such as the overdyeing of denim, the creation of double-face coated materials, fabrics awnings, tents and medical drapes and the pre-treatment of substrates for digital printing”, explains Gunnar Meyer, Monforts area sales manager for China. “A range of different doctor blades and their combinations can be supplied to meet individual requirements, including air knife, roller knife, foam, screen and magnetic roller coating. The latter option is recommended for lines with working widths of over 2.4 metres.”

In addition, Monforts can provide the necessary explosion-proof ranges for solvent-based coatings and high temperature processes up to 320°C, such as the PTFE coating of nonwoven filter material. These lines are equipped with special burners, stenter chains, and insulation.

Global Fashion Agenda (GFA) has launched a new international edition of Global Fashion Summit. Traditionally held in Copenhagen, the new edition in Singapore will further focus on the perspectives of manufacturers and supply chain partners to deeper understand how the industry can collaborate to reduce social and environmental impact in the entire value chain. Global Fashion Summit: Singapore Edition will take place on 3 November 2022 at Hilton Singapore Orchard.

The theme of Global Fashion Summit: Singapore Edition continues GFA’s focus on ‘Alliances For a New Era’. Under this theme, the Summit will call on the industry to accelerate change - encouraging more alliances between manufacturers, suppliers, investors, brands, NGOs, policymakers and more. It will also examine cross-industry alliances, in a bid to accelerate the transition to a net positive reality.
 
By bringing the forum to Asia, the new edition will include even more manufacturer and supply chain partner voices in the programme to discuss sustainability challenges, differences, and opportunities to collaborate with brand executives on equal terms. Plenary sessions will consider topics such as:

• Renewable energy transformation – what does concrete transformation look like from tier 1-3 perspectives and what measures are needed to implement it?
• Better wage systems – how can the industry establish fair compensation, underpinned by fair purchasing practices that will help end poverty for millions of garment workers?
• Performance measurement – how can the industry accurately measure sustainability performance and tackle data credibility challenges?

Half of the programme will be dedicated to educational and action-oriented business case studies with options for direct interaction and live reactions. These will include tangible learnings and concrete recommendations to mobilise guests to take immediate action following the event.
 
The event will foster further collaboration across stakeholder groups through productive roundtable sessions that create an exchange of views among key decision makers in both the public and private sectors. These meetings will be designed and set up to drive commitments and new alliances for concrete action.

Adient, a supplier of seating systems for the automotive industry, has entered into a cooperation with Swedish steelmaker H2 Green Steel (H2GS) to reduce the carbon footprint in its value chain.
 
On 1st September Michel Berthelin, Executive Vice President Adient EMEA, and Henrik Henriksson, CEO of H2 Green Steel, have mutually signed an agreement to supply fossil-free steel with low carbon footprint from 2026 on and subsequently use it in Adient's metal products.

Michel Berthelin explains the background to the cooperation: “As a company, we are committed to the Science Based Targets Initiative, a collaboration between leading global institutions to set a science-based climate target. We also support the Carbon Disclosure Project, which helps companies and cities to understand and disclose their environmental impacts. The decision to shift parts of the steel volume sourced for our production to a steel with low carbon footprint is part of our sustainability strategy. It is our goal to reduce emissions at our production sites that are caused directly by our own sources or indirectly by our energy suppliers by 75% by 2030. In parallel, we aim to reduce emissions along our supply chains by 35% over the same period. In doing so, Adient actively fosters the industry's transformation towards a more responsible use of natural resources.”

Steel from H2 Green Steel is produced with up to 95% less CO₂ emissions compared to conventional steel production. The company achieves this by replacing coal with green hydrogen in production and by the use of electricity from non-fossil sources. In this way, mainly water and heat are produced as waste products.

The second annual Ryan Young Climate+ Awards will take place this November 2022 at the annual Textile Exchange conference. Nominations are open until August 31, 2022.

The late Ryan Young, Textile Exchange COO from 2017-2020, is the inspiration behind Textile Exchange’s Climate+ Strategy, which is for the organization to serve as “a driving force for urgent climate action,” with a goal of 45% reduced CO2 emissions from textile fiber and material production by 2030. Ryan’s bold and courageous spirit defined what Textile Exchange and its members must do to tackle the climate crisis.

In honor of Ryan and his vision, TE will again be awarding Ryan Young Climate+ Awards to outstanding individuals and teams who show a clear commitment to the Climate+ vision along with other leadership traits.

Winners will be announced at the 2022 Textile Exchange Conference which will take place virtually and in person in Colorado Springs, U.S. from November 14-18, 2022.

The 2022 award categories and criteriaare listed below:
Nominees may be brands, retailers, farmers and/or ranchers, and raw material suppliers.
Winners will receive one free full-access pass to attend the Conference (travel not included).

Three Ryan Young Climate+ Award Categories:

1. Overall leadership – individual
2. Overall leadership – team
3. Rising star – individual with less than 5 years of industry experience

Award recipients will meet the following criteria:

• Commitment to Climate+ – involved in accelerating Climate+ action in the apparel, textile, and footwear industry.
• Collaboration – reflective of Ryan’s vision and determination to collaboratively move the industry forward.
• Impact – driving innovative, scalable, transparent programs with measurable impact reduction and/or beneficial impacts on climate, water, soil health, and/or biodiversity at the raw materials level. Achievements/solutions are backed by trusted data and/or reporting.
• Leadership and Inspiration – clearly demonstrating leadership and vision for industry climate solutions over the past year and beyond

The world’s largest fashion brands and retailers must increase transparency to tackle the climate crisis and social inequality, according to the latest Fashion Transparency Index.

The seventh edition of the Fashion Transparency Index ranks 250 of the world’s largest fashion brands and retailers based on their public disclosure of human rights and environmental policies, practices, and impacts, across their operations and supply chains.

• Brands achieved an average score of just 24%, with nearly a third of brands scoring less than 10%
• The majority of brands (85%) do not disclose their annual production volumes despite mounting evidence of clothing waste around the world
• Most major brands and retailers (96%) do not publish the number of workers in their supply chain paid a living wage

The Index reveals insights into the most pressing issues facing the fashion industry, like:

• As new and proposed legislation focuses on greenwashing claims, almost half of major brands (45%) publish targets on sustainable materials yet only 37% provide information on what constitutes a sustainable material.
• Only 24% of major brands disclose how they minimise the impacts of microfibres despite textiles being the largest source of microplastics in the ocean.
• The vast majority of major brands and retailers (94%) do not disclose the number of workers in their supply chains who are paying recruitment fees. This paints an unclear picture of the risks of forced labour as workers may be getting into crippling debt to accept jobs paying poverty wages.
• While many brands use their channels to talk about social justice, they need to go beyond lip service. Just 8% of brands publish their actions on racial and ethnic equality in their supply chains.

Despite these results, Fashion Revolution is encouraged by increasing supply chain transparency among many major brands, primarily with first-tier manufacturers where the final stage of production occurs, e.g. cutting, sewing, finishing and packing. Nine brands have disclosed their first-tier manufacturers for the first time this year. It is encouraging to see significant progress across market segments including luxury, sportswear, footwear and accessories and across different geographies.

Fashion Revolution’s co-founder and Global Operations Director Carry Somers says: “In 2016, only 5 out of 40 major brands (12.5%) disclosed their suppliers. Seven years later, 121 out of 250 major brands (48%) disclose their suppliers. This clearly demonstrates how the Index incentivises transparency but it also shows that brands really are listening to the millions of people around the world who keep asking them #WhoMadeMyClothes? Our power is in our persistence.”

More key findings from the Fashion Transparency Index 2022:

Progress on transparency in the global fashion industry is still too slow among 250 of the world’s largest fashion brands and retailers, with brands achieving an overall average score of just 24%, up 1% from last year
For another year, the initiative has seen major brands and retailers publicly disclose the most information about their policies, commitments and processes on human rights and environmental topics and significantly less about the results, outcomes and impacts of their efforts.

Most (85%) major brands still do not disclose their annual production volumes despite mounting evidence of overproduction and clothing waste
Thousands of tonnes of clothing waste are found globally. However, brands have disclosed more information about the circular solutions they are developing (28%) than on the actual volumes of pre- (10%) and post-production waste they produce (8%). Brands have sat by as waste importing countries foot the bill, resulting in serious human rights and environmental implications.

Just 11% of brands publish a responsible purchasing code of conduct indicating that most are still reluctant to disclose how their purchasing practices could be affecting suppliers and workers
Greater transparency on how brands interact with their suppliers ought to be a first step towards eliminating harmful practices and promoting fair purchasing practices. The poor performance on transparency in this vital area is a missed opportunity for brands to demonstrate they are serious about addressing the root causes of harmful working conditions, including the instances where they themselves are the key driver.

Despite the urgency of the climate crisis, less than a third of major brands disclose a decarbonisation target covering their entire supply chain which is verified by the Science-Based Targets Initiative
Many brands and retailers rely heavily on garment producing countries that are vulnerable to the impacts of the climate crisis, yet our research shows that only 29% of major brands and retailers publish a decarbonisation target covering their operations and supply chain which is verified by the Science Based Targets Initiative.

Only 11% of brands publish their supplier wastewater test results, despite the textile industry being a leading contributor to water pollution
The fashion industry is a major contributor to water pollution and one of the most water intensive industries on the planet. Only 11% of major brands publish their wastewater test result, and only 25% of brands disclose the process of conducting water-related risk assessments in their supply chain. Transparency on wastewater test results is key to ensuring that brands are held accountable for their potentially devastating impacts on local biodiversity, garment workers and their communities.

Most major brands and retailers (96%) do not publish the number of workers in their supply chain paid a living wage nor do they disclose if they isolate labour costs
Insufficient progress is being made by most brands towards ensuring that the workers in their supply chain are paid enough to cover their basic needs and put aside some discretionary income. Just 27% of brands disclose their approach to achieving living wages for supply chain workers and 96% do not publish the number of workers in their supply chain paid a living wage. In response, we have joined forces with allies across civil society to launch Good Clothes, Fair Pay. The campaign demands groundbreaking living wage legislation across the garment, textile and footwear sector.

• Growing geographic separation between cotton production and textile manufacturing since the 1990s

The United States Department of Agriculture (USDA) released a comprehensive study about Chinese cotton in August 2022. The authors, Fred Gale and Eric Davis, concentrate on textiles, imports and Xinjiang.

China is the world’s largest textile manufacturer and the largest cotton consumer, but changes in China’s economy are reshaping the geography of its cotton-textile sector. Nearly all of China’s cotton is produced in the Xinjiang Uyghur Autonomous Region (XUAR), also known more simply as Xinjiang.

Their study reviewed the regional patterns of China’s cotton textile industry development and identified growing geographic separation between cotton production and textile manufacturing since the 1990s using data from Chinese sources. The study investigated spatial patterns of demand for imported cotton by analyzing lists of Chinese companies applying for a share of the import quota from 2016 to 2022. Multiple regression analysis was used to control for potentially confounding influences when investigating whether companies in coastal provinces were more likely to use imported cotton than similarly sized companies in other regions.

Textile manufacturers — the main consumers of cotton — are concentrated in coastal and central regions where the share of China’s cotton production fell from over 50 percent to 10 percent during 2011–21. These geographic changes are a factor influencing global trade in cotton and textiles. Additionally, the use of forced labor in Xinjiang attracted more attention to the industry, prompting the United States and other countries to ban products produced in the region.

This study reviews the economic, geographic, and policy factors reshaping the industry and influencing the global trade of cotton and textile products. The study also examines data on Chinese companies applying for a share of China’s cotton import quota to gain insight about the demand for imported cotton.

China became the world’s largest producer, consumer, and importer of cotton soon after joining the World Trade Organization (WTO) in 2001. Despite adopting a tariff-rate quota (TRQ) system for cotton imports and issuing supplemental quotas in most years, the large number of cotton goods manufacturers that request shares of the quota suggests demand for imported cotton exceeds  the quota.

While the TRQ was intended to protect China’s cotton farmers, many farmers abandoned the labor-intensive crop as wages rose rapidly in many other industries and other crops produced higher returns. In response, officials encouraged cotton production in the relatively remote region of Xinjiang to prevent China from becoming reliant on imported cotton. Xinjiang growers receive a subsidy payment for cotton, and subsidies for machinery and seeds. A transportation subsidy induces textile manufacturers in eastern and central regions to purchase cotton from Xinjiang, which is about 2,200 to 2,900 miles from most of the country’s textile manufacturers. Financial support and other incentives encourage manufacturers to shift operations to Xinjiang.

Textile manufacturers in China are highly interested in importing cotton due to its lower price and quality. China imports about 20 percent of its cotton, and the United States is a chief exporter of cotton to China. While imported cotton is used in all provinces, manufacturers near the eastern seaboard show a greater propensity for imports. Nevertheless, in all regions, domestic cotton has the largest share of mill use.

Between 2016 and 2022, 1,581 companies applied for a share of the TRQ, and 265 companies applied in all 7 years. Most of these companies also applied for supplemental quotas issued with slightly higher tariffs. This large number of applicants suggests that imports could be even greater if quotas did not limit them. The operation of the quota application process is not public information, but data submitted by applicants suggests access to imported cotton is uneven. About 14 percent of applicants said imported cotton comprised over half of the cotton they used. Another 20 percent of companies requesting import quota did not use any imported cotton, suggesting that many applicants are unable to import. Textile manufacturers coped with limits on cotton imports by increasing their use of synthetic, chemical-based fibers or by importing cotton yarn. From 2000 to 2020, China’s yarn imports doubled from under 1 million metric tons to around 2 million metric tons with Vietnam supplying about 45 percent of that total in 2020.

The number of textile manufacturers in Xinjiang applying for a share of the cotton import quota rose from 37 to 68 between 2016 and 2022. However, imports constituted less than 2 percent of  the cotton Xinjiang applicants reported using—and 66 percent of them reported using no imported cotton—suggesting that applications from Xinjiang textile companies were often denied.
Analysis found that applicants in coastal provinces used more imported cotton than similarly sized applicants in other regions. Each location of a multi-plant company must apply separately for tariff-rate quotas. Textile manufacturers in Xinjiang that requested a share of the import quota included branches of some of China’s largest textile companies, but the analysis found that Xinjiang applicants used less imported cotton than similar manufacturing plants located in other regions. China’s role as a cotton importer appears to have peaked, while other countries are increasing their share of imports.

USDA baseline projections suggest that by 2030 Vietnam, Pakistan, Indonesia, Bangladesh, and Turkey will together account for 47 percent of the world’s cotton imports while China will only account for 24 percent. The study cam be downloaded from the USDA website.

Cotton Incorporated published its monthly economic letter of August and shared new insights of the cotton prices:

Cotton prices continue to be caught between the two competing storylines that have been in play for the past several months.
On one side, there is the deteriorating global macroeconomic situation.  The International Monetary Fund (IMF) lowered its projection for global economic growth in both 2022 (3.2%) and 2023 (2.9%) in the updates released in late July.  Current IMF forecasts are significantly beneath those from January (called for 4.4% growth in 2022 and 3.8% growth in 2023) and April (called for 3.6% growth in 2022 and 3.6% growth in 2023).  The evolution in the macroeconomy was a likely factor contributing to the shift in investors’ outlook on the commodity sector, which led to a collapse in prices for cotton and a range of other commodities in June and July.

Beyond the weakening macroeconomic environment, there also may be factors associated with cotton supply chains that could affect demand during the 2022/23 crop year.  Downstream consumer markets for cotton can be viewed as more discretionary than other spending categories, such as food, energy, and lodging, that experienced some of the sharpest effects of inflation.  Given price increases for necessities, consumers may have less income to devote to apparel and home furnishings.

In the U.S., consumer spending on clothing has been flat for the past year.  However, it has been holding at levels that are 25% higher than they were in 2019.  If U.S. consumers pull back on clothing purchases, it may hit the market just as retailers have caught up with consumer demand after the onset of the shipping crisis.  In weight volume, the cotton contained in U.S. apparel imports was up 22% year-over-year in the first half of 2022.  Relative to 2019 (pre-COVID and pre-shipping crisis), the volume in the first half of 2022 was up 23%.  Given strong import volumes, if there is a dip in consumer demand, inventory could build both at retail and upstream in supply chains.  This could lead to cancelations, potentially all the way back to the fiber level, where contracts signed at prices higher than current values could be particularly susceptible.

Tight U.S. supply is on the other side of price direction arguments.  Cotton is drought tolerant, and that is why it can be viably grown in perennially dry locations like West Texas.  However, cotton requires some moisture to germinate and generate healthy yields.  West Texas has had very little rain over the past year, and drought conditions have been extreme.  As a result, abandonment is forecast to be widespread.  It remains to be seen exactly how small the U.S. crop will be, but the current USDA forecast predicts only 12.6 million bales in 2022/23 (-5.0 million fewer bales than in 2021/22).

Meanwhile, demand for U.S. cotton has been relatively consistent, near 18 million bales over the past five crop years (an average of 15.5 million bales of exports and 2.7 million bales of domestic mill-use).  A harvest of only 12.6 million falls well short of the recent average for exports alone, and U.S. stocks were near multi-decade lows coming into 2022/23.  All these statistics suggest shipments from the world’s largest exporter may have to be rationed in 2022/23.  If cotton is not readily available from other sources, the scarcity of supply from the U.S. could support prices globally.

Simultaneously, there is weakness from the demand side.  The market has struggled to find the balance between the weakened demand environment and limited exportable supply in recent months.  The conflict between these two influences makes it difficult to discern a clear direction for prices and suggests continued volatility.