Last July, we reported here on the Sustainable Apparel Coalition (SAC), an industry-wide group of leading apparel and footwear brands, retailers, suppliers and NGOs, and its new Higg Index that measures the environmental performance of apparel products. This coalition includes over 60 members, including the latest addition that was announced last week – ANN INC., the parent company of the leading women’s specialty retail fashion brands Ann Taylor and LOFT.
ANN’s decision to join the SAC was described in the press release that followed the announcement as a win-win move – it “underscores the Company’s commitment to environmental stewardship” as well as “widens the scope of the SAC within the apparel industry.”
With 962 stores and $2.2 billion sales, I have no doubt that ANN is a significant addition to the SAC, which includes both large (Walmart, VF, Nike) and smaller (Loomstate, Patagonia) companies. At the same time, I was curious what ANN’s environmental record was so far, and if the company was one of the leaders or the laggards before taking “a leadership position in joining the SAC” as Paula Zusi, Executive VP and Chief Supply Chain Officer at ANN, put it in the announcement.
The first place to look for evidence on ANN’s efforts was the retailer’s sustainability website ResponsiblyANN.com. Presented on the homepage, the company’s commitment is very straightforward: “We act responsibly. The Ann signature stands for more than fashion and style. It signals our commitment to operating our business responsibly and thoughtfully. This commitment means that our clients can look great and feel great about the clothes they wear and, it means as a business we are holding ourselves to high standards.” Well said, but is it well done?
The company’s sustainability journey, which started in 2011 with the formalizing of its social compliance program and code, has transformed into efforts and activities in three main areas: supply chain, environment and communities.
When it comes to its supply chain, ANN has “rigorous programs, policies and procedures in place to provide a positive impact on the lives of the workers who make our products.” The company is working closely with its suppliers to ensure their compliance with its global supplier principles and guidelines and reports that 93 percent of the factories that produce branded apparel for ANN were reviewed in 2011. At the same time, it doesn’t report how many cases of incompliance with its guidelines were found in these audits.
Another supply chain program that is worth mentioning is At Connect. This is a program for select top tier suppliers who work with ANN’s special compliance teams to create specialized worker engagement projects for their factories. These projects, ANN explains, “targeted reducing worker turnover and improving worker morale, resulting in increased productivity and reduced working hours.” In 2011, this program included 70 percent of the supply chain (in terms of business).
Under environment, the company mainly makes efforts to reduce its carbon footprint, conserve energy, eliminate waste and, in general, develop more efficient approaches to its operations. Most of these commitments do not have quantifiable goals and are presented in general terms – for example, “we are investing in our knowledge to better understand water impacts throughout our business” or “at our prototype stores, we continue to test more sustainable materials and procurement practices.” Only energy efficiency and carbon emissions are presented with figures, showing some progress in both cases between 2008 and 2010.
The last area, communities, includes the company’s work with communities and employees to promote various causes, from breast cancer research to children in need to relief funds helping Haiti after the 2010 earthquake or the Philippines after it was hit by typhoon in 2009. ANN’s charitable work also includes collaborations with organizations and programs such as Good360, Goodwill Industries and Materials for the Arts.
From all the above you can see that ANN is no stranger to sustainability. But how advanced is it in its efforts compared to other retailers? To find the answer, I looked at CSRHub, which provides CSR and sustainability data and ratings. According to CSRHub, ANN’s CSR ratings are very similar to the average ratings of retail and specialty retail industries. The main differences are in the areas of governance, where the company’s rating is 65 compared to 57 for both specialty retail and retail, and environment, where the company’s rating is 41, 4-5 points lower than both industries, mainly due to a low grade on policy and reporting.
In other words, ANN is neither a leader nor a laggard when it comes to sustainability compared to its retail peers. Nevertheless, joining the SAC and using its Higg Index can provide the company with a great opportunity to improve its sustainability performance and become a leader.
For example, ANN can use the Higg Index to enhance the environmental sustainability of its supply chain, where its efforts are currently mostly focused on compliance with guidelines concerning employees’ working conditions. It can also use the Higg Index to enhance its work on making the materials it uses more sustainable, as right now it seems that this area is also lagging behind. In other words, SAC can help ANN move to the next level. Hopefully, the company will take advantage of this opportunity.
Raz Godelnik is the co-founder of Eco-Libris and an adjunct faculty at the University of Delaware’s Business School, CUNY SPS and the Parsons The New School for Design, teaching courses in green business, sustainable design and new product development. You can follow Raz on Twitter.