Blog: Leonie BarrieEco-index gains momentum

Leonie Barrie | 7 March 2011

Leading apparel and footwear brands, retailers and manufacturers including Nike, Gap Inc, H&M, Levi Strauss, Marks & Spencer and Walmart last week came out in support of a new initiative to improve sustainability across the entire sector.

Working under the umbrella of the Sustainable Apparel Coalition, the firms want to develop an industry-wide index that measures everything from water and energy use to greenhouse gas emissions, waste and labour practices.

The ultimate goal is for the index to be adopted globally - and to be used by companies throughout the industry to reduce the environmental and social impacts of their products from design through production to recycling.

Also on the sustainability front, just-style's latest management briefing looks at how green production can help to cut costs and deal with factory waste, and the way regulations are pushing the sector towards sustainability.

The latest forecasts from an inter-governmental group also suggest there is likely to be some relief from the current record levels of cotton prices thanks to higher worldwide cotton production next season. But the International Cotton Advisory Committee (ICAC) warns, however, that prices are likely to stay substantially higher than the average of 60 cents per pound that prevailed during the past decade.

This is good news for German sporting goods giant Adidas Group, which says it is keeping a close eye on margins during 2011, after forecasting higher sales and earnings for the year ahead. In its full-year results report last week, it warned that rising raw material costs and capacity constraints are leading to a "significant" rise in sourcing costs.

Likewise, budget fashion retailer Primark has not only warned that rising cotton prices are set to hit profit margins but has also seen depressed trading since the start of the year. During its most recent trading update, the retailer flagged up the rise in VAT in the UK, together with soaring input costs, as its main concerns.

But UK clothing retailers planning to raise their prices to combat higher input costs are likely to be caught between a rock and a hard place. Consumers are already battling expenditure issues of their own says retail analyst Verdict Research, and with a gloomy outlook for the high street, the prospect of increasing ticket prices seems set to bring a volume hit on sales.


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