Decarbonization Strategies: Leaving the Stratosphere

Last week the Asia Garment Hub hosted its June Supplier Meet-Up. Supplier Meet-Ups are informal and unrecorded sessions open exclusively to suppliers (any tier), held on the first Thursday of every month.  Each month a relevant speaker is invited to kick-start the conversation.

Given a magic wand, what would the manufacturers in the room wish for to help them decarbonize? Whereas May’s conversation focused on the challenges manufacturers face vis-à-vis decarbonization targets, this month’s chat was focused on defining “the ask.” Though manufacturers certainly aren’t a monolith, and though defining “the ask” remains a work in progress, some themes emerged.   

First, we can’t define “the ask” without talking about how (and by whom) the problem is defined.  Why aren’t all manufacturers decarbonizing? Manufacturers in the room expressed frustration that this question tends to be answered at a stratospheric level. In the words of one supplier: “the problem is generalized to such an extent that we lose our ability to see the contours.” The barriers to decarbonization will be different in different contexts.

And yet, one theme persisted: decarbonization requires a candid conversation about how we collectively deal with uncertainty and how we distribute financial risk. Several manufacturers expressed that the biggest barrier to decarbonization isn’t access to finance, it’s having to take on even more financial risk and the fact that the model for many buyer-supplier relationships doesn’t make it easy to invest. Put crudely: when products don’t sell, it’s manufacturers who disproportionately pay for unsold inventory because they are the ones fronting the cost of production.  I’m reminded of a recent conversation with Bradley Abbott of GGGI Cambodia and the EU Switch Program, who said: “a factory’s real costs are labor and materials. So how do we link those risks to energy?”  One concrete suggestion put on the table was that perhaps brands should be buying RECS for their manufacturing partners.

Speaking of concrete suggestions, several suppliers highlighted that we need a better process for deciding how funds intended to support suppliers decarbonize should be used. Specifically, how do we come up with a framework for ensuring that money going towards decarbonization efforts are used to achieve collective rather than individual goals? Others suggested that the decision-making process should be bottom-up rather than top-down. Still others pointed to vulnerability: how do we make sure that those who most need the money are the ones who get it?

Have your own thoughts? Join next month’s conversation. We’ll be continuing the conversation by brining in someone who can speak to how these challenges are approached in other sectors, and hopefully, get one step closer to defining “the ask.”