The Uniqlo brand owner this month published its 2014 CSR report

The Uniqlo brand owner this month published its 2014 CSR report

Fast Retailing says it is working to raise the bar across the apparel industry, after facing criticism earlier this year of factory conditions at two of its suppliers in China. Detailing some of its efforts in its latest CSR report, the Japanese business says it has ramped up inspection efforts at its garment and textile suppliers, and set out a new initiative to spread best practices.

The Uniqlo brand owner this month published its 2014 CSR report, in which the company said it is "deeply involved" in every process of its supply chain to ensure "the highest standards are maintained".

Following the Rana Plaza factory collapse in Bangladesh in 2013, Fast Retailing said it re-inspected its own partner factories to ensure there were no serious issues. This exercise, the company said, underscored its conviction that verifying factory conditions in person and keeping track of suppliers' management practices can significantly reduce the risk of fatal accidents.

"Even from a business risk and quality standpoint, appropriate working conditions are a minimum requirement," said Tomoya Utsuno, department manager, production department at Fast Retailing (Shanghai) Enterprise Management Consulting Co. "Through daily meetings, training, and factory visits with the CSR sourcing teams, we work to build greater awareness and share information within our department."

Monitoring efforts
The Uniqlo brand owner recently outlined further plans to improve workplace monitoring, including its textile suppliers, following criticism of factory conditions at two of its suppliers in China.

The company said it would monitor working hours, and facilitate stronger dialogues between management and workers, co-operating with specialised NGOs and third party organisations in monitoring methods and training.

Fast Retailing said it has established CSR sourcing teams in the CSR department at its Tokyo head office and at various other production centres, whose core task is to work with partner factories to identify and resolve problems. The team at the Shanghai Production Office, Fast Retailing's largest production hub, visits partner factories on a daily basis to monitor working conditions, as well as the environmental performance of textile facilities.

Toshiyuki Tanaka of Fast Retailing's Shanghai CSR department, said in the report: "For factories in China, promoting better working environments is critical to meeting increasingly strict laws and regulations. We work with the production department to visit suppliers and improve conditions with them."

The company has also rolled out a new initiative with Chinese apparel manufacturer Chenfeng Group, a supplier to Fast Retailing for 21 years.

The two companies have agreed a new initiative to spread best practices to other factories. Initial discussions were held in August 2014 with Chenfeng, which has a CSR department and CSR staff for each of its regions and factories.

Chairman Yin Guoxin said of the move: "Our current reputation as a benchmark is the result of improvements we made with FR throughout the years. We want to take this special partnership with FR to the next level and offer examples that will help the entire industry develop and grow. We also believe it's our responsibility as industry leaders to help solve local challenges, such as employment, to improve technology and management standards, and to raise the bar for the Chinese apparel industry as a whole."

In 2014, workplace monitoring was conducted at 332 of Fast Retailing's global supplier factories. Of those, 'Grade D' (one or more serious violations) evaluations increased across the firm's operations from fiscal 2013. 'Grade E' (highly unethical, serious offences subject to immediate review of contract) evaluations also increased from the prior year. The number of contracts that underwent review due to a lack of improvement after the stipulated number of inspections also increased.

Contracts with factories that received a 'Grade E' evaluation in fiscal 2014 were reviewed. Contracts were terminated with factories that showed no improvement, the company said.

Supply chain environmental impacts
In 2014, Fast Retailing formulated an environmental policy to clarify its responsibilities for more environmentally conscious operations.

This involved actively working to minimise environmental impacts in all processes, from product planning and production to logistics, sales, recycling, and disposal. Additionally, the company set environmental impact reduction targets for stores, worked with partner factories to reduce the environmental impact of production processes, and actively promoted dialogue and collaboration with customers.

"Production accounts for one of the largest environmental impacts in the FR supply chain," said Yukihiro Nitta, SVP for CSR at Fast Retailing. "We conduct workplace monitoring at sewing factories, our first tier suppliers, and environmental monitoring at fabric manufacturers, our second tier suppliers and the biggest users of energy and water. Going forward, we also plan to conduct environmental monitoring at fabric suppliers for group businesses."

Starting in 2015, Fast Retailing said it will assess the status of specific impacts, decide which to focus on, and "take rigorous steps" to set targets and promote reduction. So far, the company has committed to completely eliminating emissions of hazardous chemicals from the entire product lifecycle by January 2020.

In 2014, achievements included the completion of 93 environmental inspections, the donation of 90% of its waste clothing through its All-Product Recycling Initiative to refugee camps and others in need, with 10% converted into fuel or fibre. The company also held project meetings to eliminate hazardous chemical emissions.

Fast Retailing said it is continuing to work with stakeholders to reduce environmental impacts, and in 2015 will collect quantitative data on the environmental impact generated by all processes in its SPA (speciality store or private label) supply chain.

"Because production creates the largest environmental impact, both first tier sewing factories and second tier fabric manufacturers are working to monitor impacts," the company noted. "Because fabric production uses particularly large amounts of energy and water, FR has begun dispatching third-party specialists to fabric manufacturing sites to assess their usage and assist with setting targets for reductions."

Another top priority will be reducing energy use at its stores. At Uniqlo stores in Japan, the company aims to reduce CO2 emissions, relative to floor area, by 10% by 2020. This involves upgrading all lighting to LEDs, introducing energy efficient HVAC systems with thermostat control, reducing lighting levels during pre-opening hours, and raising staff awareness by distributing energy manuals at the stores.

Other achievements by the company in 2014 included working with stakeholders to address social issues, and implementing policy shifts to promote workplace diversity.

Click here to view the full report.