Leslie Johnston: ‘Sustainability is not a matter of goodwill, but a business opportunity’

Leslie Johnston joins us in the Kaaitheater in Brussels on September 25 for the MO* lecture If entrepreneurs can change the bottom line, they can also change the world. Johnson herself is not a social entrepreneur, her foundation is not an entrepreneurship either. ‘C&A Foundation focuses on the transformation of the industry. For this we call upon social entrepreneurs amongst others.’

What does social entrepreneurship mean for the C&A Foundation?

Leslie Johnston: Social entrepreneurship is an innovative way of tackling deeply rooted challenges within the industry. The C&A Foundation focuses on the megaindustry of clothing, one of the most polluting sectors in the world.

This pollution is only getting worse. C&A and C&A Foundation try to look for solutions, but a company cannot do something like this on its own. The role that social entrepreneurs can play excites me because of this. They think differently, offer new solutions.

Is the industry ready for entrepreneurs that want to make companies sustainable?

‘Sustainability is a business opportunity’

Johnston: Entrepreneurs don’t develop this sustainability themselves, they see a business opportunity in sustainable entrepreneurship. It are the companies that feel pressured by sustainable development goals and by NGO’s that urge them to do better. Companies attract social entrepreneurs to improve the conditions, and those entrepreneurs take their chance to do so.

What does this mean for our economy? Is it really becoming more sustainable?

Johnston: For the textile industry this is partially true. At the fashion top in Copenhagen, the Boston Consultancy Group (BCG) released an article wherein it states that, if companies were to become more sustainable, this would bring in 160 billion dollars (134 billion euros).

BCG also says that “business as usual”- or even business as usual with slightly better conditions- is not enough to create added value. For that innovation is necessary. Without the innovation that social entrepreneurs can offer, companies will remain trapped in business as usual.

‘We buy more and more clothes and wear those clothes less and less.’ This trend is unstoppable.’

The industry itself continues to grow. People buy more and more clothes and wear those clothes less and less. Considering the population explosion in India, China and eventually also Africa, this trend will not decrease. We need to start thinking differently to create less waste, because sadly it is therefore that our sector is know.’‘The sector itself is structured in a very traditional manner. The industry is decentralized and focuses primarily on finding the lowest possible production cost. With time this will no longer be possible. The race to the bottom cannot last forever, because if not soon enough no countries will be left.

Automation

‘But I do think that change is on the way. Technological developments are crucial: artificial intelligence and automation will change everything. In these developments entrepreneurs play a prominent role.’

‘Automation would be very positive, as labourers would no longer have to sew for low wages. At the same time more high-skilled jobs would appear. The labourers can become educated, attain other skills, upgrade, away from their precarious wage.’

Is automation not equal to loss of employment possibility?

Johnson: ‘That is the obvious question. C&A Foundation wants to be there for the workers, so we want to support trends that actually benefit them. Many reports have been written about this issue already, also positive ones, such as the one by the International Labour Organisation.’

‘We want to look at how we can link automation to positive change. It is not like we can reverse technology: automation is effectively gaining ground.’

How well developed is the automation of the textile production?

Johnston: ‘Robots that sew shirts on the conveyer belt, that doesn’t exist yet. A simple T-shirt is however very easy to make. For people at least. A robot cannot do the same as a pair of hands. The technology that is necessary for this, will not be there tomorrow. But we do see progress and via Fashion For Good, one of our initiatives, we support this.’

Philanthropy versus CSR

When we speak about positive changes within business life, we often hear the term corporate social responsibility. How does C&A Foundation think of CSR? Is this term still relevant?

Johnston: ‘This term is dated. Let me compare it with quality within company management. Ten years ago a separate department existed for this, one that guaranteed good quality within companies. Quality has by now become inherent to the management of companies, without that a separate department should exist for this.

‘I think the same is happening with sustainability, it is no longer restricted to CSR. Within the sector many fashion labels have taken steps to make their production more sustainable, for example by using biological cotton.

C&A is the largest purchaser of biological cotton. Does the foundation help to decide about such purchases?

Johnston: ‘C&A Foundation supports research to different fabrics that are interesting for C&A. Biological cotton is one of these. But the market for biological cotton is almost defect. It is expensive and difficult to produce. To be certain that the clothing is made of biological cotton, you have to follow the fabric throughout the whole chain: no sinecure. And actually there is only little biological cotton available: only 10.000 ton.’

‘The market for biological cotton is almost defect.’

 

‘Besides we also invest in “better cotton”, via Better Cotton Initiative. This cotton is not biological, but it is cultivated in a more sustainable manner that regular cotton.’

‘As an alternative for cotton, C&A chooses viscose. For this the foundation cooperates with Canopy, an NGO that wants to make the fabric more sustainable. A good starting point, but viscose remains hard to trace. We are doing research into this.

‘We do not avoid partnerships with NGO’s, like big companies sometimes do, but let NGO’s enter our story and help them by funding them. So we don’t see ourselves as CSR-players. Our working is philanthropic. We have room to take risks and to think long term.’

Why does C&A need a philanthropic working? Can it not become more sustainable within its own label?

Johnston: ‘The working of C&A and C&A Foundation is completely different, it are two separate but complementing entities. Where C&A has to react more to the market, the foundation thinks about how the industry can and has to change. Biological cotton is actually a good example of this: if C&A wants to invest in such a fabric, after the appeal of the market , the foundation can finance research into more efficient cotton cultivation.

‘As a private foundation we have the advantage that we have access to the textile chain to test our research, via our partner C&A. And the budget. In 2016 we had a budget of 55,5 million euros at our disposal. That money comes from different sources, not only from C&A. Our sources go beyond the textile industry, but the work that we do is linked only to this sector.’

Voice of the Labourers

‘Another project, together with LaborVoices, wanted to let the voice of the workers be heard in Turkish factories, to track possible abuse. We have revealed this data. As foundation we think transparency is very important. If you work transparently, you create more accountability and in this way you can eventually transform the industry.

Was some hidden material revealed during the investigation?

Johnston: ‘Thanks to the project we knew that minor labourers would be employed in the factories. We immediately took action with this information.’

‘There is not a single factory in the sector that operates according to the standards that clothing brands such as C&A would want to impose.’

Is transparency the biggest challenge in the textile sector?‘Because the investigation worked in such a transparent manner, we were warned immediately for the working of the factory- even if there is not a single factory in the sector that operates according to the standards that clothing brands such as C&A would want to impose.’

Johnston: ‘I think that accountability- and the lack thereof- poses a bigger challenge. I envision that transparency leads the way.

‘The sector remains decentralized, but is little by little becoming more transparent. Twenty years ago brands would have hidden behind their suppliers and would have made pronunciations such as “we don’t own our suppliers” and “we only place our orders with them”. Now suppliers have become strategic partners. These partnerships make that the industry is becoming automatic and a lot more transparent.’

Consumers and Employees are also in Charge

Johnston: ‘Yes, there is accountability on every level: from governments untill labourers.’

The labourers have most to win, but their voice are least heard. If they emancipate, also with help from this data, they can negotiate more for their rights. That is what they would have to do, that is what they are accountable for themselves.’

‘Labourers do not stand strong enough to negotiate for their rights. They cannot enter into a dialogue with their managers.’

‘This is (partially) the reason why so many people died when the Rana plaza collapsed. There were many labourers who had seen the cracks in the walls. They wanted to stand up, run away, but their bosses forbid them from doing so. So they stayed. If labourers don’t feel empowered to follow their instincts, than things like this happen. That is why it is crucial for them to know their rights.’

After the disaster, the C&A Foundation has compensated the victims and the bereaved (for 1 million dollars) in the compensation fund, the Rana Plaza Arrangement. Why was this the task of C&A Foundation and not of C&A?

Johnston: ‘We wanted to do something, because we want to prevent something similar from happening again. But C&A itself does not produce in Rana Plaza, it was not associated with the disaster. So C&A donated this money, as part of our budget for emergency aid.’

Emergency aid is not necessarily linked to the textile sector. Why do you have a separate budget for this?

Johnston: ‘80% of our budget is dedicated to the transformation of the sector. But as a foundation you also have to look at what is important for our company. In our case this includes emergency aid, in partnership with Save The Children.’

‘I don’t think that emergency aid will change our industry, but we especially help in countries where C&A produces, also with preventive measures. In that way it remains relevant.’

Liveable Wage

In which countries does C&A produce and does it pay a liveable wage there?

Johnston: ‘I am obviously not a spokesperson for C&A itself, but I know that the brand produces in a lot of countries. The most important are Bangladesh, India, China, Cambodia, Brazil and Turkey. In these countries the foundation works to improve the labour conditions.’

‘C&A Foundation itself is not able to negotiate liveable wages.’

‘Rewarding is part of this. Because of this we do this project with LaborVoice, to know what labourers themselves have to say about this. We also investigate the wages in cooperation with another NGO, Microfinance Opportunities. Via Fashion Revolution we reveal the information that we gather about wages to the broader public. C&A Foundation itself not able to negotiate liveable wages, so we try to empower labourers to do so themselves.’

C&A is a very big player. Should you not, as a brand, have a voice in the wage negotiations?

Johnston: ‘Again: I don’t speak for the brand. My experience in the industry teaches me that the liveable wages demands responsibility and effort of all the stakeholders. Governments have to impose a minimum wage. Suppliers have to be more aware of the wage cost and pay a proper price. Factories need to work more efficient, for example by wasting less fabric on the production floor. And labourers need to dare to negotiate.

‘For brands themselves it is possible to know how much exactly they have to pay. Investigation to this has been done, but this resulted in a very complicated calculation.You have to make a certain multiplication: if you want to increase the wages in a factory: then the price of the product will rise more than the proportional sum. In this calculation we have to include all the other costs that cohere with the increase in wage. Fair Wear Foundation (FWF) is one of those organisations that help brands to comprehend and apply this effect better.

‘What actually has to happen, is that during negotiations, suppliers keep the wages of labourers separate from the rest of the price. FWF strongly encourages this principle.’

Is C&A a member of the multistakeholders organization FWF?

Johnston: ‘C&A Foundation collaborates a lot with FWF. But C&A is not a member. Few big players are actually. The foundation would want to impel big brands to become members.’

Is it actually possible to change the life of labourers on the big scale?

Johnston: ‘For change on big scale, big brands will have to collaborate, with each other and with local authorities. If one brand establishes one project, it does not matter how good this project is: as long as it is not adopted by other brands, it will barely have any impact.’

‘It is therefore that C&A collaborates with foundations of other brands. In this way we can make more of a difference.’

More Than Goodwill

Do you see a lot of good will with big brands to leave traditional, decentralized forms of business management behind?

Johnston: ‘I don’t think it is about goodwill. Companies are not charity institutions, they don’t invert in sustainability because that is “right.” They do so because there is no other option. That is what the BCG report demonstrated: to make sure that your company profits, you have to start working sustainably.

‘C&A Foundation also invests in the circular economy for example. You can extract a lot of value from this: if you can stop the production of waste and at the same time produce something new, then you have created an added value.

‘I think that Rana Plaza could have been prevented’

Johnston: ‘I am very eager to help others achieve their true potential. I actually work for the millions of people that are dependent on this sector. For the victims of Rana plaza that were forbidden to run away.

‘According to me, the disaster of Rana Plaza could have been prevented entirely, if the industry would have worked more transparently. The brands didn’t know at all that the production was taking place in such a small and dangerous factories. This is mainly the reason why the disaster happened.’

After the disaster the Banglash agreement for Fire and Building Safety was founded, that many brands, also C&A signed: In May 2018, a little more than five years after the disaster, the agreement expires. Yet, a new agreement is on the way and C&A has signed it again. What does such an agreement mean in practice and have certain improvements been added to the second agreement?

Johnston: ‘Many brands came together in the agreement, the safety issue was tackled collectively. A very positive change, because it demonstrates that collaboration within the industry is possible.’

‘Suppliers play a big part in the industry. If they place too big of a delivery, then it becomes outsourced to unsafe factories like Rana Plaza.’

‘But I am not worried about the factories that are inspected by the agreement and its American counterpart, the Alliance. I am worried about the factories that still slip through the net. Those factories like Rana Plaza.’

‘Also here suppliers play a crucial role. If they place too much attention on one factory, then surely they should know that the factory owner will outsource to another (often not inspected) factory? Or that he makes his employees work overtime without payment, because the delivery will not be ready if not?’

‘Despite all the positive evolutions, the problem is far from solved. A long road is ahead of us if we are to transform this industry thoroughly.

Translated by Louise Hantson