Hong Kong-based apparel manufacturing giant Crystal International has embarked on its third set of five-year sustainability targets, adding new social indicators to the goals it hopes to accomplish by 2022.
The company, which floated on the Hong Kong Stock Exchange in a near $500m IPO last November, makes denim, athleisure wear, sweaters and intimates for brands and retailers including Uniqlo, H&M, Victoria’s Secret, Abercrombie & Fitch, Marks & Spencer, Puma, North Face, Levi’s, Gap and Under Armour.
Included in its Third Global 5-year Sustainability Targets for 2018-2022 are plans to:
- Reduce carbon footprint per garment by 10%;
- Reduce fresh water consumption per garment by 8%;
- Plant 1 million trees;
- Empower 40,000 females through its CARE (Crystal Advocates Respect and Engagement) learning and development programme;
- Engage employees in 10,000 volunteering hours.
“The latest targets are more comprehensive,” explains Catherine Chiu, general manager, corporate quality and sustainability at Crystal International. “It’s the first time that we incorporate social indicators to make known our emphasis on the development of Crystal talents, as well as giving back to our communities.”
Crystal International was ranked the world’s largest apparel maker by production volume in 2016 by research firm Euromonitor, and second by production value, with market shares of 0.4% and 0.3% respectively. It employs around 70,000 workers globally, and produces around 350m pieces of apparel a year at 20 factories in China, Vietnam, Bangladesh, Cambodia and Sri Lanka.
Its new sustainability targets have been set out following the successful completion of its previous five-year goals, which ran from 2013 to 2017, and have seen its factories achieve “a notable improvement on carbon, energy and fresh water intensities.
“With a view to reducing our environmental footprints, factories in different product types – lifestyle wear, sweater, denim, intimate, sportswear and outdoor apparel – adopted extensive energy and water saving measures.”
On carbon and energy saving, in addition to replacing inefficient equipment, factories also implemented heat recovery projects and improved cooling systems. This helped achieve a 26% reduction in energy consumption per garment (far exceeding the target set at 5%). The carbon footprint per garment also tumbled 14% (against a goal of 6%), and 54% more recycled water was used for production.
On water conservation, Crystal factories have invested in various advanced washing, laser and printing technologies, as well as replacing traditional washing machines. Its denim factories in particular have increased the use of recycled water in production. This has contributed to a 33% drop in fresh water consumption per garment, beating the original goal set at 10%.
With regard to global greenery, more than a million trees were planted in the past five years. And in terms of renewable energy usage, the company achieved a significant result of 42%, far exceeding the target of 5-10% due to extensive use of renewable fuel.
Crystal International also says it has completed the Higg Index FEM 3.0 implementation this year at all Crystal factories. The Facility Environmental Module (FEM) is a self-assessment tool that helps factories assess their sustainability performance and easily share results with supply chain partners in areas including water use, waste, emissions and chemicals management.
“We are currently working on toolkit package development to assist factories in implementing improvement actions,” Chiu adds.
Sustainability drives growth
Crystal International’s CEO and executive director Andrew Lo has previously told just-style that sustainability is not purely an altruistic move, but also comes with a strong business case. And this appears to be borne out in its last full-year results, which saw strong demand from major apparel retail markets around the world help the company to a 23.5% jump in revenues to to US$2.18bn in 2017, and a net profit increase of 20.1% to US$149m.
Indeed, double-digit revenue growth was seen in all markets, with Asia Pacific, its largest market, up 21.5%; the US, its second-largest market, up 30.8%; and a rise of 15% in Europe. Significant growth was achieved in its denim and intimate segments during the year, with sales of denim up US$76m or 15.7% to US$560m. This was due to more orders from existing customers under the group’s co-creation business model, which provides the right product at the right time at the right cost – but also its environmentally friendly and sustainable denim manufacturing techniques, and supplier consolidation by customers.
Intimates revenues surged US$84m or 28.6% to US$378m, largely on the back of increased demand from customers for commercially successful co-creation products.
The group’s 20 owned and operating manufacturing facilities play a large part in its success, “enabling us to shift our production base from the PRC to other Asian countries to take advantage of their relatively lower operating costs” and “benefit from large economies of scale across the industry value-chain.”
It adds that its diversified product portfolio “has given us an important competitive advantage, offering us significant potential in cross-selling and co-creation with our key customers,” and that the addition of new product categories as well as new products is “strengthening our existing relationships and winning us new customers.”
Looking ahead, “we will continue to grow our business through focusing on our co-creation business model for growth opportunities and profitability, strengthening cross-product innovation and cross-selling capabilities for further customer penetration, with on-going improvement of our product mix and development of new product categories for future growth,” Lo says.
“Meanwhile, the group will continue to expand to low cost countries to leverage local expertise and enhance efficiency for margins expansion, coupled with upstream vertical expansion into fabric production for better margins. We will also continue with our focus and dedication on human capital and environmental consciousness for sustainable growth of the company.”