ways the higg index creates business value.

10
WAYS T H E H I G G I N D E X
C R E AT ES B U S I N ES S VA LU E.
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Focus your sustainability strategy.
Identify opportunities to cut waste and cost, and drive innovation.
Avoid the time and cost of “do-it-yourself” approaches.
Reduce data sharing time, cost and complexity.
Drive improvement through industry benchmarking.
Optimize sourcing.
Reduce the time and costs of multiple assessments.
Support stakeholder communications.
Get out in front of regulation.
Be a better company - demonstrate impact.
01
FO C U S YO U R
S U STA I N A B I LIT Y
STR ATEGY.
The Higg Index provides a
“one-stop-shop” point of entry
for any apparel, footwear or home
textiles company to organize its
sustainability priorities - no matter
the size or level of in-house
sustainability expertise.
The number of sustainability issues
and initiatives can be overwhelming
- it’s impossible to become an expert
on everything. At the same time,
many companies face static or
shrinking budgets and must do
more with less.
sustainability strategy, complete
the Brand and/or Facility Module
(free for members and non-member
facilities), and save this money for
pursuing opportunities identified by
the assessment.
A Brand or Facility Module selfassessment can dramatically
accelerate the process to prioritize
and decide where to focus,
and how best to utilize limited
resources. Instead of paying
$25,000 - $50,000 (or more) to
hire a consultant to develop your
The Higg Index creates simplification:
Prioritizes what to measure
and how.
HIGG INDEX
Provides best-practice, vetted
guidance and resources.
Offers a ready-made agenda
and materials to communicate
and advocate for action within
your organization and value
chain.
I. FOCUS YOUR SUSTAINABILITY STRATEGY.
Creates access to a network
of industry and issue experts.
4
“We use the Higg Index within the Lenzing Group to inform
our strategy development and set targets. As a fiber supplier,
participation in working groups to develop the Higg Index
keeps us more closely connected to retail partners – creating
more awareness of the needs of the entire supply chain – and
helping us to better meet the needs of our customers.”
“SAC is our most valuable partnership for pursuing a focused
sustainability strategy. We’ve been able to eliminate $46,000
in costs because the SAC and our collaboration on the Higg
Index is a “one-stop-shop” for tools, expertise and other
resources. With the release of the Product Modules, we expect
to save even more.”
Peter Bartsch,
Lenzing.
Colleen Vien,
Timberland.
“The Higg Index Facility Module serves as TAL’s internal
environmental roadmap. We completed a company-wide
Facility Module self-assessment for every factory in about 2
weeks, and could easily identify key areas for improvement
across our facilities, including waste and chemicals
management.”
Christelle Esquirol,
TAL Group.
HIGG INDEX
I. FOCUS YOUR SUSTAINABILITY STRATEGY.
5
For Patagonia, already a
recognized sustainability leader,
the Higg Index suite of tools has
become essential to developing,
implementing and tracking
strategic goals.
For example, in just three years,
Patagonia set goals around
packaging and transportation based
on insights generated from the Higg
Index; restructured its sustainability
team to align with the Higg Index
Brand, Facility and Product Modules
(helping to better integrate Higg
HIGG INDEX
I. FOCUS YOUR SUSTAINABILITY STRATEGY.
Index measures into core business
functions); and linked annual staff
bonuses to goals derived from the
Higg Index.
6
02
I D ENTI F Y
O PP O RT U N ITI ES
TO C U T WASTE,
C O ST A N D D R IV E
I N N OVATI O N .
The Higg Index enables companies to
identify brand, facility and in the future,
product-related practices to optimize
resources and reduce associated waste
and cost. Identifying resource-hungry
processes and evaluating product design
choices can also lead to innovation
opportunities.
in potential energy savings.
HIGG INDEX
The Higg Index is not a detailed
energy or environmental
management system audit, but it can
help a company identify practices
to save money. For example, by
implementing just 5 of the energy
conservation best practices included
in the Higg Index Facility Module
- Environment, an apparel textile
mill could save between $100,000
- $400,000 every year, as well as
reduce fuel use between 11 – 19%
and electricity use between 1 – 3.9%.
These practices are not just good
for the environment, they increase
factory productivity and are good for
the bottom line.
SOURCE: NRDC, NRDC’s 10 Best Practices for Textile Mills to Save Money and Reduce Pollution
Version 2.0. Practices referenced include: Preventative Maintenance, Optimize Compressed Air System,
Boiler Renovation/Optimization, Maintain Steam Traps, Insulate Pipes and Hot Vessels and Tanks
Starting in 2013, ANN INC. asked its key strategic suppliers to complete the
Facility Environment Module. As part of helping them complete the Higg
Index, ANN INC. provided support for the facilities to conduct energy audits.
During the audits, one facility found over $200,000 in potential energy
savings. “This helped our supplier run a better, more efficient business and
strengthened our partnership with them.” Katherine O’Hare ANN INC.
II. IDENTIFY OPPORTUNITIES TO CUT WASTE, COST AND DRIVE INNOVATION.
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Energy audits are one example
of a Higg Index practice that can
help a factory identify a range of
opportunities to cut resource use
(and cost).
China’s 12th Five-Year Plan: The
Chinese central government has
prioritized the textile sector as one
of the growing industries that need
to reduce their energy and resource
intensity and has developed
reduction goals for the industry in a
specific Five-Year Plan. In response
to requirements for energy reduction
in the 12th Five-Year Plan, running
from 2011 through 2015, the textile
industry is expected to upgrade
process and monitoring technology
to international standards; to set
national standards on energy
conservation; and to double
production efficiency relative to a
2010 benchmark. Specifically, the
current Five-Year Plan challenges
the textile sector to decrease its
energy consumption per unit GDP by
16 percent.
SOURCE: NRDC, NRDC’s 10 Best Practices for Textile Mills to Save Money and Reduce Pollution Version 2.0
Examples of possible savings include:
Lighting
Cooling
30% annual cost savings through upgrades,
including T8T5, individual switches, removal of
excess light tubes, occupancy sensors
80% annual cost savings through water curtain
installation.
Utilities
30% annual cost savings through variable
frequency drive motor installation.
Water
Replacement of traditional dyeing and finishing
machinery with more environmentally friendly
equipment can reduce water use up to 40%
SOURCE: Savings examples provided by Sustainable
Fashion Business Consortium members and based on actual
implementation of energy and water-saving best practices
HIGG INDEX
II. IDENTIFY OPPORTUNITIES TO CUT WASTE, COST AND DRIVE INNOVATION.
9
03
AVO I D TH E TI M E
A N D C O ST O F
D O -IT-YO U R S ELF
A PPR OAC H ES .
Designing, developing and
maintaining internal assessment
tools from the ground up can
take years and cost a lot.
Companies who already have
years of experience implementing
sophisticated product and supply
chain measurement tools know
that it costs hundreds of thousands
of dollars annually to develop and
maintain these systems. The Higg
Index offers a credible, fast, lowcost solution, enabling companies
to divert time, human resources
and money that would be spent
on creating content and software
toward Index implementation
and pursuing improvement
opportunities. Higg Index modules
have been developed under a
consensus-based, multi-stakeholder
process, building on best practice
approaches, and indicator content
and methodology will be regularly
updated to ensure rigor and
relevance. The assessment is easily
and immediately accessible through
a web-based interface (free with
SAC membership).
Higg Index 2.0 Web Tool
“Simply having immediate access to the Facility
Environmental Module and web tool has already
created a return on our investment in SAC
membership.”
David Kemp
Sustainability Manager
Brooks Sports, Inc.
HIGG INDEX
III. AVOID THE TIME AND COST OF DO-IT-YOURSELF APPROACHES.
11
In the future (estimated 2017),
the Higg Index Product
Footprinting Module will
dramatically reduce the
time and cost to assess the
life cycle impact of products.
Cost range to hire external consultants to perform life cycle assessment on
a single product
Through a shared data platform, the Higg Index Product Footprinting Tools
(estimated 2017) aim to make conducting product life cycle assessment
faster and more cost-effective for SAC members. These tools will include
built-in analytical capabilities and design direction for ease of use with your
own in-house resources, enabling member companies to assess hundreds even thousands - of products in a fraction of the time.
The Higg Index came along at the right time for Gap Inc., a global retailer that set out in
2011 to assess the environmental impacts of its supply chain. SAC’s launch of the first
version of the Higg Index enabled the retailer to use a suite of sustainability assessment
tools that were created by and for the retail industry, creating an immediate return on its
investment in SAC membership.
In early 2013, Williams-Sonoma wanted to create an environmental assessment for its
vendors, but lacked the resources and time to embark on a DIY project of this kind. By
September 2013 the retailer began sending the Higg Index Facility Module - Environment
to its suppliers to complete, and by the end of the year 125 vendors representing 175
factories returned a completed module. By using the Facility Module – Environment the
company avoided the need to spend time and money on content development for an
in-house assessment tool.
HIGG INDEX
III. AVOID THE TIME AND COST OF DO-IT-YOURSELF APPROACHES.
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04
R ED U C E DATA
S H A R I N G TI M E,
C O ST A N D
C O M PLE XIT Y.
The Higg Index web tool allows
partners to easily connect with each
other and share and receive modules
through the click of a button, avoiding
the burden of managing hundreds of
separate emails and spreadsheets.
With a small team of two focused
on environmental sustainability at
Brooks Running, the Higg Index
Facility Module is enabling the brand
to do more with less. Brooks was
able to quickly adopt the Facility
Module. After joining the SAC in
March 2014, the team connected
with and requested a number of
key suppliers to complete the
environmental self-assessment and
received responses within a month.
These completed assessments
helped to guide discussion about
performance during in-person
visits to those facilities in the
following month.
“If we had to manage all of this with emails and spreadsheets,
the process would’ve been a lot more time consuming and we’d
have missed the opportunity to begin this important dialogue
with our suppliers.”
Manufacturers
post modules
once annually, for
all customers.
Time to
manage
Response
rates
The standardization of questions and online access has
made it easier to collect responses from global vendors
in a commonly accessible web platform. Now in its third
year of working with key vendors on the Higg Index
Facility Module, Gap Inc. is experiencing a roughly 50%
response rate – a more than 30 percent increase from
previous years.
HIGG INDEX
David Kemp, Sustainability Manager
Brooks Sports, Inc.
“The Higg.org platform developed by Schneider Electric has
reduced the amount of time required by VF to manage Facility
Module data by an estimated 40%, and has saved the company
more than $20,000 by eliminating the need for our own online
survey platform.”
Pete Higgins, VF Corp.
IV. REDUCE DATA SHARING TIME, COST AND COMPLEXITY.
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05
D R IV E I M PR OV EM ENT
TH R O U G H I N D U STRY
B EN C H M A R K I N G .
The Higg Index is enabling the apparel and footwear industry
to aggregate data on industry-wide sustainability practices for
the first time ever. Manufacturers and brands can benchmark
their Higg Index performance against peers and develop action
plans to close the gap between high and low-performing areas
that may be a source of hidden waste and cost, or opportunity
for innovation. Facilities can be compared based on issues that
matter most to their company or customers.
The Higg Index vision: Peer-to-peer
benchmarking is proven to drive action.
Metrics verified by benchmarking data can
lead to some significant improvements for
those involved. There is positive evidence of
this within the Leather Working Group where
on average leather manufacturers have seen
energy and water consumption per unit area
reduce by 18% and 42% respectively since
the start of the program.
The benchmarking universe is vast – and
expanding. As of October, 2014:
• >60 Brand Modules posted
• >1,500 Facility Modules
(a growth rate of 200% since January 2014)
HIGG INDEX
Big data = big opportunities. Scaled up use of
the Index will identify common improvement
priorities at the industry-level, creating
opportunities for brands, retailers and
manufacturers to potentially pool resources
to drive action – saving time and resources
and maximizing impact.
V. DRIVE IMPROVEMENT THROUGH INDUSTRY BENCHMARKING.
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As a vertically integrated manufacturer, Esquel has been able to use the environmental Facility
Module of the Higg Index at both the garment and fabric mill levels of the supply chain. Working
through the Higg Index assessments has helped raise further awareness around sustainability
throughout Esquel’s operations, and comparing the scores across facilities has created a race
to the top among factory management teams. This company-wide benchmarking exercise
revealed areas where some facilities shined – and others fell behind. Related discussions led
to the formation of a Higg Index “improvement team” made up of production site management
from the highest scoring facilities and corporate sustainability staff. The improvement team
is tasked with helping the lower-performing facilities improve their systems further and report
back to the Esquel Sustainability Council, which is chaired by one of Esquel’s independent
board members. “As a result of the Higg Index scores gaining visibility throughout our
organization, we’ve been quite pleased with ongoing improvements. We sincerely hope the
index will soon become THE globally accepted industry standard.”
Tammy Rodriguez, Esquel Group.
In 2014 the company began working with a targeted group of seven vendors (representing
approximately 50 facilities) in India to benchmark water use performance using the Facility
Module. The results quickly highlighted those facilities using best water management practices,
which Gap Inc. then shared anonymously with other participating facilities. With this information,
vendors and their facilities are able to more clearly understand their performance relative to
competitors and peers, and learn what measures other facilities are taking or investing in to
reduce their environmental impact. These best practices show real ROI to vendors, and help
them to see both the true cost and environmental impact reduction through these efforts. Gap
Inc. plans to continue to work with vendors to help set water reduction goals, and develop
strategies to help them achieve the goals.
Even for Patagonia, a recognized leader of social and environmental stewardship, the Higg Index
identified opportunities for improvement. “The Brand Module benchmarking exercise ignited
several departments within our organization who saw they needed to do more,” said Cara
Chacon, Patagonia’s Director of Social and Environmental Responsibility. The Higg Index has
prompted Patagonia to document daily practices that improve environmental performance and
embed them into policies that can be shared around the company, rather than passed as tribal
knowledge. For example, Higg tools confirmed there was room for improvement in packaging –
leading Patagonia to create its first formal packaging policy. For a growing company, even one
the size of Patagonia, capturing and formalizing environmentally beneficial operating procedures
is a critical precursor to continued scalability and expansion of responsible business practices.
HIGG INDEX
V. DRIVE IMPROVEMENT THROUGH INDUSTRY BENCHMARKING.
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06
O PTI M IZE
SO U R C I N G .
The Higg Index can enable a
company to source from business
partners with the lowest possible
environmental and social risk and
highest possible environmental
and social performance.
Target is in its third year of
using the Higg Index to perform
self-assessments of more than
3,000 facilities that produce
Target-sourced owned brand
product, with a response rate of
Brands and manufacturers can
share scores with customers to
demonstrate stand-out performance,
or convey improvement plans
and progress. Buyers can utilize
benchmarking results to compare
potential business partners in order
to inform purchasing decisions and
other business relationships.
Higg Index scores are already being
used as a factor to award business,
with many more companies planning
to integrate Higg Index results into
purchase decisions in the future.
“ The Higg Index is a best-in-class, industry accepted resource
that helps us efficiently and effectively measure environmental
performance in our supply chain. The assessment results have
been incorporated into our vendor scorecard and are used to
inform business decisions.”
Scott Lercel
Director Social Responsibility and Sustainability
Target Sourcing Services.
HIGG INDEX
VI. OPTIMIZE SOURCING.
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INCREASED ADOPTION = INCREASED VALUE.
With broader industry-wide implementation of the entire suite of
tools and verification of results, the Higg Index has the potential to
generate exponential value.
07
R ED U C E TH E
TI M E A N D C O STS
O F M U LTI PLE
AS S ES S M ENTS .
The goal of the Higg Index is
to serve as the single standard
for environmental and social
assessment in the apparel,
footwear and home textiles
industry.
A common assessment will drive time
and cost savings for manufacturers by
dramatically reducing the number of
assessments (and ultimately, audits)
required, and by reducing or eliminating
duplication and/or inconsistencies.
Brands and retailers will also benefit by
coordinating and collaborating on outreach
and requests to partners - providing one
clear request with zero inconsistencies,
ultimately leading to better quality data,
higher response rates, and less time spent.
Once stricter verification mechanisms
are in place, the costs of assessment are
expected to be reduced even further as
one set of 3rd party verified results could
be accessed by multiple partners.
When the staff time to manage a social
compliance audit is taken into account, the
true price of an audit could be 10 times
the price paid to the auditing firm. This
is time that could be spent on improving
factory environmental and social /
labor management practices as well as
productivity.
More than $1 billion USD is estimated to be spent on social compliance audits annually
in China alone – not including indirect costs (e.g. staff time). Reducing the number of
audits to only 1 per year from 5 could save an estimated $800,000,000 – enough to
install energy and water sub-meters in 16,000 – 26,000 apparel and footwear factories
throughout China, or retrofit over 3,700 factories with LED tubes.
spent on compliance audits
SOURCE: Estimates provided by GAFTI and RESET Carbon, Ltd.
HIGG INDEX
VII. REDUCE THE TIME AND COSTS OF MULTIPLE ASSESSMENTS.
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“At Patagonia, we aim to develop and implement an industry-wide assessment
tool – the Higg Index – to measure environmental and social performance in a
single module. Once fully developed, the Higg Index toolset will perform both its
current function, providing a high-level social and environmental indicator to
assess a supplier’s sustainability “journey,” and it will act as a detailed audit
instrument to assess supplier compliance comprehensively. Accessibility is a critical
aspect of this approach, as companies will give up their own tools only when
an audit tool incorporates the highest common denominator standards across
our industry – allowing for the reduction of audit redundancy, a win-win for
brands and suppliers alike. We free up time and resources for everyone to reduce
social and environmental impacts on a deeper scale.”
Cara Chacon
Patagonia’s Director of Social and Environmental Responsibility.
“The time, and consequently the cost, associated with multiple
redundant audits on factories is huge. The Higg Index offers a
tremendous opportunity to significantly reduce the number of
duplicative social and environmental audits conducted at factories
today. With the addition of a robust verification mechanism
comes the invitation to brands and retailers to converge on a
single approach – this will be win-win for us, our suppliers and
our customers.
Christelle Esquirol, TAL Group.
HIGG INDEX
VII. REDUCE THE TIME AND COSTS OF MULTIPLE ASSESSMENTS.
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08
S U PP O RT
STA K EH O LD ER
C O M M U N I CATI O N S .
The Higg Index will provide
a credible, comprehensive,
industry-relevant, and verifiable
approach for companies who
want to communicate results
and demonstrate progress to
key stakeholders, including
customers.
Companies can also use Higg Index results
to attract potential funders (e.g. grantmaking organizations, lenders, investors)
as well as inform corporate acquisition
decisions by providing insight into a
business’s sustainability performance and
potential level of risk. More and more,
savvy investors are using companies’
environmental, social and governance
(ESG) data to identify sustainability leaders
– with winning results. “In a resource
constrained world, markets recognize
and reward resource efficient behavior.”
– Osmosis Investment Management’s
“Investment Thesis.” By picking the most
efficient sectors, investment management
firm Osmosis has been outperforming for
the past nine years.
SOURCE: Greenbiz.com
“The Higg Index currently in development provides a unique opportunity
to measure the sustainability impact throughout the value chain and to
communicate that impact to our customers and stakeholders in a robust,
comparable and credible approach.”
Erik Karlsson,
H&M.
“Our collaborative participation in the EU Product Environmental
Footprint pilot (footwear) will allow us to gather insights for future Higg
Index development, as well as to determine the best and most accurate
way to publicly communicate sustainable product data.”
Alexis Haass,
Director Sustainability, adidas.
HIGG INDEX
VIII. SUPPORT STAKEHOLDER COMMUNICATIONS.
25
09
G E T O U T I N FR O NT
O F R EG U L ATI O N .
The Higg Index was created under the
guiding principle of improving sustainability
performance “beyond compliance.” Smart
companies already have robust systems and
protocols for tracking and ensuring compliance
with existing policy and regulation. However,
state, local and national regulation will require
increased transparency and compliance on a
growing number of environmental and social
issues, many of which are already measured
in the Higg Index. Insights generated through
broad adoption of the Higg Index, and through
participation in efforts such as the EU Product
Environmental Footprint pilot (footwear), will
also enable our industry to potentially influence
emerging policy and legislation.
10
B E A B E T TER C O M PA N YD EM O N STR ATE I M PACT.
Demonstrating impact creates value for
customers, employees and communities. The
Higg Index provides a simple mechanism to
measure, guide and track progress on impact
reduction, all under one umbrella.
Impact reductions at Charming Trim
2013 vs. 2012 baseline
Electricity Consumption – reduced by 6%
CO2 Emissions – reduced by 6%
Water Consumption – reduced by 2.8%
Solid Waste – reduced by 23%;
all solid waste is 100% recycled by a 3rd party
Show improvement over time.
80
2013 Higg scores
2014 Higg scores
60
40
“We anticipate that 2014 will show further
reductions as we have made the Higg Index part
of our continuous improvement efforts – in other
words – it has become part of our daily processes.”
Rich Ringeisen, Charming Trim.
20
0
“The Higg Index enables us to put all of Pratibha’s
sustainable initiatives on a single platform. Topmanagement buy-in and perceived benefits through
Higg Index usage have created a buzz across the
organization.”
Dhawal Mane, Prathiba Syntex Ltd.
Aggregate Higg facility module scores have increased
significantly from 2013 to 2014
HIGG INDEX
X. BE A BETTER COMPANY-DEMONSTRATE IMPACT.
Response
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A R E YO U D O I N G A LL YO U CA N TO :
SAVE MONEY.
SAVE TIME.
RUN A BETTER BUSINESS.
MAKE AN IMPACT?
H IGG .ORG
H I G G I N D E X BY T H E N U M B ER S
200%
Growth rate in Higg Index Facility Modules posted between January and
September 2014.
More than $1 billion USD:
Estimated amount spent on social compliance audits annually in China alone – not
including indirect (e.g. staff time) costs.
$800,000,000:
Impact reductions achieved after Higg Index implementation by SAC member
Charming Trim (2013 vs. 2012 baseline):
Electricity Consumption – reduced by 6%
CO2 Emissions – reduced by 6%
Water Consumption – reduced by 2.8%
Paper Consumption – reduced by 6%
Amount that could be saved by reducing the average annual number of social
compliance audits per factory from 5 to 1.
Solid Waste – reduced by 23%; all solid waste is 100% recycled by a 3rd party.
16,000 – 26,000:
$200,000:
Number of apparel and footwear factories in China that could be fully equipped
with networked energy and water sub-metering solutions with $800,000,000.
Sub-metering is a critical first step to accurately measure and improve resource
consumption in a factory.
Amount of potential energy savings identified during an energy audit for one of
ANN, INC’s suppliers. As part of helping the company’s key strategic suppliers
complete the Higg Index, ANN, INC. provided support for the facilities to conduct
energy audits.
97%:
$375,000:
Percent of Target’s 3,000+ owned-brand facilities that completed the Higg Index
Environment Facility Module in 2014.
40% and $20,000:
The amount of time and money the Higg.org platform developed by Schneider
Electric has saved SAC member VF to manage Facility Module data.
$10,000 - $40,000:
Estimated reduction in annual energy costs that would typically be identified
during an energy audit of a mid-sized Chinese dye mill with a $2.5 million annual
energy bill.
$100,000 - $400,000:
Estimated amount an apparel mill could save every year by implementing just 5 of
the energy conservation best practices included in the Higg Index Facility Module
- Environment.
Cost range to hire external consultants to perform life cycle assessment on a
single product.
$46,000:
Through a shared data platform, the Higg Index Product Footprinting Tools
(estimated 2017) aim to make conducting product life cycle assessment faster and
more cost-effective for SAC members. These tools will include built-in analytical
capabilities and design direction for ease of use with your own in-house resources,
enabling member companies to assess hundreds - even thousands - of products
in a fraction of the time.
$25,000 - $50,000:
Amount SAC member Timberland has eliminated in costs because the SAC and
collaboration on the Higg Index is a “one-stop-shop” for tools, expertise and other
resources.
Average amount spent on a consultant to develop a sustainability strategy.
$0:
Cost to SAC members to use the Brand and/or Facility Module to develop your
own strategy.