Andreas Streubig, sustainability division manager at the Otto Group

Andreas Streubig, sustainability division manager at the Otto Group

With pressure mounting on apparel brands and retailers to give more weight to sustainability and social responsibility in their sourcing decisions, Andreas Streubig, sustainability division manager at German mail order and e-commerce giant Otto Group, is convinced that collaboration and the "power of the many" is key to driving lasting change.

One of the largest multichannel retailers in the world with EUR12.1 bn (US$12.9bn) in annual revenues in the 2015/16 financial year (to 29 February) and a presence in more than 30 countries, Otto Group's assortments span more than 1m items sourced from several thousand suppliers in over 70 countries.

By far the largest part of its business, with revenues of EUR9.59bn, its retail operations sell fashion, footwear, homewares and technology under brands ranging from OTTO, the largest online retailer of fashion and lifestyle products for end-consumers in Germany, over Bonprix for value-priced fashions, to Witt, which targets women aged 50-plus. Its other two segments focus on financial and logistics services.

"Right now we are really in the midst of a tremendous transformation because markets are moving fast and businesses need to develop alongside," Streubig tells just-style. "We have seen a tremendous change of late, not only in Germany but worldwide, pretty much driven by technology and new opportunities deriving from that; and we need to constantly renew and reinvent what we are doing."

The challenge, he explains, is that "very often social behaviour is following the latest technology and new forms of interaction develop such as how to do business with other companies, or how to meet ever-changing customer expectations. The challenge, not only for traditional companies like Otto Group, is to keep up and adapt accordingly."

Adding another layer, Streubig says it is challenging to keep up with the massive range and diversity of issues that now fall under the umbrella of sustainability – the "complexity and the bandwidth" of which have grown "exponentially" over recent years. 

"The topics are growing year by year. When we go back 20 or 30 years to when sustainability was put on some corporate agendas for the first time, we mostly spoke about environmental issues: recycling, water and resources, and sustainable timber. Now we go from A to Z, we speak about the ecological, the social and of course the economic perspective. And in addition to sustainable resource management we also talk about working conditions, occupational hazards, health and safety, CO2 footprints, airborne and waterborne hazardous substances, and so on and so forth."

In order to best deal with this ever-increasing workload, Streubig says the only option for retailers and brands is to "have a good radar and a pragmatic but robust method to figure out what issues are most relevant for their individual businesses and how best to cope with them."

'Power of the many'

At Otto Group, which employs some 50,000 people, sustainability is embedded into every aspect of the business, with Streubig's department linking and interacting with other colleagues both from Otto Group and other players in the industry but also with suppliers to understand the challenges they face and to learn how best to move forward together. This is what he calls the "Power of the many." A sustainability department alone "would be by far too little because sustainability is an issue for all parts of the business."

He explains that Dr Michael Otto, the son of the founder of the Otto Group and now chairman of the Otto Group's supervisory board, "has always claimed that with the opportunities a company has, it also has to accept a certain level of social and environmental responsibility and to take this into account whenever a business decision is made."

The belief in the "power of the many" also feeds directly into the Otto Group's membership of the Partnership for Sustainable Textiles, founded in 2014 on the initiative of the German Federal Minister of Economic Development, Dr Gerd Muller. Its objective is to achieve social, ecological and economic improvements along the entire textile supply chain by setting mutually agreed standards, fostering industry-wide collaboration and creating more transparency for consumers on the German market. 

The Textile Partnership currently has more than 180 members, including major retailers and garment companies besides Otto Group, for instance C&A, Adidas, Puma, Hugo Boss, Rewe and Tchibo. It is striving to reach 75% of Germany's textile market volume to join by 2018.

"We [the Otto Group] have our own sustainability track record and what we learned that you really need the power of the many. As a single company you have a rather limited influence on the political landscape in countries like Bangladesh or Pakistan. There is nothing better than to have allies with whom you can really join forces and drive things forward.

Streubig believes the Partnership will impact the way companies run their supply chains and wider businesses. "We are convinced that the Partnership is a huge step forward – and we really hope it will make a difference."

Recently, all members were required to submit a roadmap detailing their company's plans for the next 12 months in precise detail. The next step includes a plausibility check of all roadmaps by the Partnership itself.

For the Otto Group, its roadmap is a combination of both traditional programmes, including its commitment to Cotton made in Africa (CmiA) and climate protection, and new initiatives. "There will also be additional efforts from our side, including diving into our deeper supply chain and increasing our activities to eliminate hazardous substances."

"You can't manage what you can't see"

Perhaps the most important task for any brand or retailer in building a more sustainable supply chain is to have more transparency, especially in the upstream processes. Not only is this necessary to drive improvements, but it is another area where technology has a key part to play.

"There are at least two ideas that come to mind when speaking about technology and the supply chain. Firstly, transparency and data management. The better the techniques and technology we have to cover the supply chain, from raw materials to ready-made garments, the better for us as retailers because then we really know where our goods are produced and the conditions under which they are made.

"Secondly, there is a lot of technological development going on concerning special production steps within textile supply chains, including raw material production or spinning, wet processing and dye-houses. For example, a lot of research is done on how to improve technologies used to dye our garments, with the goal to reduce the ecological impact within supply chains.

"We have to know what is going on; to know where the flaws are and the challenges, and to improve the landscape step by step. If you do not have transparency, if you do not know where your goods are produced, where the accessories come from, what the special problems are, then you cannot improve or develop." 

He adds there is truth in the old adage "you can't manage what you can't measure," and says the same rule applies to transparency in the supply chain. "If we tweak it a bit, I would say you cannot manage what you cannot see. If you are not aware of your supply chain and the conditions under which this supply chain runs, you have no chance to influence it for the better."

In terms of how brands and retailers can increase transparency in their own supply chains, Streubig again says it comes down to collaboration; a need to exchange information in a "pre-competitive" manner. "I think there are still a lot of players in textile supply chains that do not want to share information and would rather keep it to themselves."

Sustainable foundations

As part of its ongoing sustainability strategy, the Otto Group is working towards a number of goals including halving its CO2 emissions from locations, transport and mobility by 2020, completely switching its range of wooden furniture to Forest Stewardship Council (FSC) certified articles by 2020, and increasing the share of FSC certified paper to at least 50% for catalogues and advertising materials by 2018.

And under its textile strategy, the globally operating retail and services group is also working to switch the entire volume of cotton used for its own and licensed brands to sustainably cultivated cotton by 2020. It's already well on the way to achieving this goal, with close to 50% of its cotton last year coming from sustainable sources – and Streubig is confident the group will reach 100% within the next three years. To achieve this, the Otto Group is relying on cotton produced under the Cotton made in Africa (CmiA) initiative as well as on cotton from certified organic cultivation.

Dr Michael Otto, currently the chairman of the board of trustees of the Otto Group, is the founder of the Cotton made in Africa (CmiA) initiative, which works to train smallholder farmers in modern, efficient and environmentally friendly cultivation methods that allow them to increase the quality of their cotton, their crop yields and incomes.

The goal of the Otto Group is to ensure CmiA production fits smoothly into the existing supply chain. "We cannot afford to change the whole set-up of our supply chain, to skip our vendors and to look for new ones. We have to make it work within the existing set-up."

Having started with African cotton more than 10 years ago, the company is deepening its connection with Africa. It began sourcing clothing from the continent around two years ago with the first orders in Uganda, Ethiopia and Kenya and is now planning next steps with other textile assortments.

Looking ahead, Streubig says that while he sees Ethiopia, Uganda, Kenya and Tanzania, for example, as having particular potential, the challenge remains in the underdeveloped textile infrastructure and vertical integration. 

"You do not find the entire value chain in Africa. For example, for accessories almost everything needs to be imported: every woven label, every zipper and every button. They do mostly circular knit or flat knit but the surrounding industries are still missing."

Speaking at a panel discussion in London last year on importing apparel from sub-Saharan Africa, Streubig said: "We have to be patient because there are a lot of things African producers have to learn about how German or Western retailers work.

"Why it is important, for instance, to have measurement charts, sizing samples, photo samples, all these things that are daily business for us, we need to explain...and have the patience to wait for good results. We do not only have to invest money, we have to share our knowledge; this may change the game."

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