Vlisco - CDC Group

E&S
Vlisco
The Benefits of Localisation
In West Africa, the name Vlisco evokes heritage, quality and
individuality. Established more than 160 years ago in the Netherlands,
the Vlisco Group’s textiles are at the heart of fashion in West and
Central Africa.
The company designs, manufactures and distributes 70 million yards of branded fabrics
annually through its operations and retail presence in Côte d’Ivoire, Ghana, Togo,
Benin, Niger, Mali and the Democratic Republic of Congo. Vlisco also directly employs
2,700 people, 1,700 of whom are based in West Africa. Given the scope and reach of
its operations, it helps to create thousands of additional indirect jobs for salespeople,
shopkeepers and tailors. The group’s brands include Vlisco, Woodin, GTP and Uniwax.
In 2010, the company was acquired by Actis, a global private equity firm investing in Africa,
Asia and Latin America. Actis’ mantra – the positive power of capital – highlights the firm’s
focus on integrating environmental, social and governance factors into all of its investment
decisions. Actis has worked closely with Vlisco’s management team to accelerate the
development and implementation of the company’s environmental and social strategy.
This strategy is driven by Vlisco’s mission – to expand its business and make a greater
economic and social impact in African markets.
CDC’s investment at a glance
CDC is a long-time investor in
Actis, a global private equity firm
investing in Africa, Asia and Latin
America, which spun out of CDC
in 2004
Fund: Actis Emerging Markets 3
Africa
Date of commitment: 2007
Actis’ investment in Vlisco:
Deal size: US$151 million
Date: 2010
Ownership: 90%
Countries: Côte d’Ivoire, Ghana,
Togo, Benin, Central African
Republic and the Democratic
Republic of Congo
Sector: Manufacturing
E&S Positive Impact
- US$49 million in income
and 19,400 jobs supported
throughout supply chains in
Western Africa
- Operational efficiency and
reduced costs as a result of
localisation of supply chain
- Reduced environmental
footprint and costs through
lower emissions and
wastewater recycling
- Integration of underprivileged
women into supply chain and
economy through seamstress
training programme
E&S: Vlisco
E&S Integration
Integrating environmental
and social responsibility
into the business
Vlisco’s environmental and social (E&S) strategy includes
three central pillars:
Responsible sourcing of cotton
The company is increasingly sourcing materials in Africa, as part
of its efforts to localise its supply chain. These efforts include work
with farmers to increase the sustainability of production practices
(especially water and agrochemical use)
Social and community support
Employees are involved in community engagement in Holland,
while in Africa the firm is focused on providing social and
medical services, including a tailoring education programme for
underprivileged women
Sustainable use of natural resources
Water recycling and energy savings are at the heart of the
company’s environmental management systems
The company wants to contribute economically, socially and
environmentally to the markets in which it operates and sells its
products. Vlisco believes that a successful business model can
combine commercial success with social and environmental
improvements, particularly given that textile manufacturing and
printing can have a significant environmental impact.
E&S Responsibility
Building a sustainable
and localised supply
chain
“Over the past few years, we have made an effort to entrench the
company in the African reality,” said Jan van der Horst, Director of
Corporate Affairs at Vlisco and head of the CSR programme. “We are
focused on using local expertise, whether it is in cotton production or
marketing. For example, the company now uses a local marketing firm
in Côte d’Ivoire, rather than a European firm that operates globally.”
Vlisco’s activities in West Africa, through its two factories in Côte d’Ivoire
and Ghana, have generated US$49 million in value added to the local
economy and created 19,400 indirect jobs through its supply chain1.
A large part of Vlisco’s shift in strategy has occurred through an
increasing focus on the localisation of its supply chains.
West Africa is an important cotton producer and cash crop for small
farmers. However, over the past 25 years, what was once a robust
industry in cotton spinning and weaving has diminished considerably.
Consequently, sourcing cotton locally is a challenge.
Today, about 18 million yards, or 41%, of the fabric for Vlisco’s factories
in Ghana and Côte d’Ivoire are sourced in Africa (the remainder is from
Asia). Vlisco has reached this milestone through the following projects:
Vlisco milestones:
Partnership
with Cotton
Made in Africa
(CmiA):
CmiA’s mission is to help farmers earn a better
income by training them in modern and sustainable
farming methods that improve the quality and yield
of their crops2. Unlike many sustainably produced
goods that have higher costs, Vlisco purchases
cotton from certified farmers in Côte d’Ivoire
through Ivoir Coton, at world market prices, which
has a positive impact on the local economy, while
also keeping Vlisco’s lead times low. Farmers earn
approximately 20% more in income as a result
of CmiA training. Additionally, CmiA sets labour
standards, including ensuring workers’ rights
through employment contracts and adequate
health and safety practices.
Partnership
with cotton
supplier in
Benin:
Vlisco has developed an important partnership
with CBT, from whom they purchase approximately
12 million yards of cloth. Using a local supplier
benefits Vlisco’s operations in two ways: reduced
lead times for delivery of cloth to its factories in
Côte d’Ivoire and Ghana, as well as lower prices for
the cloth. Cotton is one of Benin’s largest export
products (17%) and by purchasing from a local
supplier, Vlisco adds $7 million in GDP along the
supply chain and supports farmers, who represent
one of the most vulnerable parts of society.
Developing
Vlisco is engaging with the Government of Ghana
cotton industry to help in the development of its largest cloth
in Ghana:
producer, by financing the purchase of cotton
lint. In addition, Vlisco’s factory in Ghana adds
US$11 million in value to the economy annually.
E&S: Vlisco
Vlisco has also been sourcing items for its ready-to-wear collection
from small workshops in Côte d’Ivoire and Ghana, which employ
20 to 40 people. The value of this approach to Vlisco is significant
because it reinforces its brand promise to offer its customers unique
African textiles and products, with a distinct cultural identity. In addition,
Vlisco is helping the workshops to meet labour and health and safety
standards through a sourcing code of conduct, thus improving the
lives of the artisans.
Overall, the socio-economic benefits of building a localised supply
chain include:
• Improving the livelihood of small farmers: 3,100 farmers are
now engaged in cultivating cotton to meet Vlisco’s demand
• C
reating jobs: 8,600 jobs have been created in Benin, Côte d’Ivoire
and Ghana as a result of Vlisco’s cloth sourcing
• Eliminating the use of child labour: CmiA-certified cotton is not
a product of exploitative child labour
• Decreasing negative environmental impact through
sustainable farming methods: CmiA-certified cotton has a
smaller ecological footprint as a result of reduced use of pesticides
and lower greenhouse gas emissions
“Vlisco is an amazing business that is able to contribute across the
entire value chain from the farmer to the seamstress, coupled with
a portfolio of trusted brands which inspire millions of people across
Africa and beyond,” said Murray Grant, the partner at Actis responsible
for acquiring Vlisco and a current board member. “Like any business
it is only as good as its people and the values they hold. They are
passionate about how they can improve the way their business
engages in the countries and communities they operate in and this
in turn reinforces the value of their brands. It has been a privilege
to challenge and empower this business to go even further.”
1 “Socio-economic impact of Vlisco’s grey cloth sourcing in Western Africa,” Steward Redqueen, June 2014.
2 http://www.cotton-made-in-africa.com/en/
Vlisco and the
environment
Vlisco has introduced environmental initiatives in
order to reduce the company’s environmental footprint
and costs:
• Wastewater
treatment and recycling: given the
scarcity of freshwater in Ghana, Vlisco is increasing
its use of recycled water in the production process,
resulting in a reduction of its water bills
• R
esponsible use of pesticides and water:
Farmers for CmiA-certified cotton are trained on
the efficient use of rainwater and careful use of
organic fertiliser and pesticides, thus creating more
sustainable supply chains
• E
nergy savings: at its headquarters and factory
in Helmond, the company is reducing emissions
and using greywater recycling, both of which are
lowering costs.
E&S
Vlisco
The Benefits of Localisation
Empowering
underprivileged
women
One of the defining characteristics of Vlisco is that women are at the centre of its
business – as customers, distributors and, importantly, as the focus of one of the
company’s social initiatives.
The Democratic Republic of Congo (DRC), which is one of Vlisco’s key markets,
remains politically and economically fragile following civil war, and humanitarian
emergencies persist in parts of the country. It is estimated that the country has 2.3 million
displaced persons3.
Monique Gieskes, Group Director of Brand Protection at Vlisco, met a group of women in
the DRC whose lives had been overturned by the civil war. “The stories were devastating.
When I heard what type of hardships and difficulties these women had experienced,
I thought we could do something through Vlisco,” said Monique.
In 2012, Vlisco launched a tailoring programme for underprivileged women in Goma, in
eastern DRC, to help them attain financial autonomy. Thirty women have completed the
six-month training programme, where they learned basic tailoring skills, enabling them
to earn a living and begin rebuilding their lives. The programme also includes financial
and commercial training, to assist these women to go on to work independently as
seamstresses and entrepreneurs. Vlisco is working with a technical institute, the l’Institut
Supérieur des Arts et Métiers, to expand the training programme across the country.
For Vlisco, the benefits are two-fold. Firstly, the seamstress academies support the
company’s drive to empower African women, by helping them to build the skills needed
to become a part of the supply chain and benefit economically. Secondly, the value of
such an initiative to Vlisco’s brand and reputation is significant, despite the fact that it
is a well-established company in West Africa. In addition, through social reintegration,
the women can begin to contribute to the wider economy in DRC, which is one of Vlisco’s
key markets.
The programme has been expanded, with the launch of a tailoring academy in Ghana
in collaboration with a fashion school, targeting young women who have been unable to
pursue a tailoring career due to socio-economic constraints. The initiative is also expected
to roll out in Nigeria in late 2014.
Looking ahead
With Actis’ support, CSR has established itself in Vlisco’s business principles. “There is a
momentum within the company now,” explained Jan.
There is work left to be done. The company’s labour, environmental and local sourcing
programmes will continue to develop, as it sets new goals and expands its African footprint.
“There is no question that being active in CSR takes more effort,” said Jan. “It is more
work and it requires extra support, but we are gradually winning over hearts. The effort
is worth it.”
1 http://www.worldbank.org/en/country/drc/overview
CDC
CDC is the UK government-owned development
finance institution that uses its own balance sheet
to invest in the developing countries of Africa and
South Asia. It has net assets of £2.9bn.
CDC’s mission is to support the building of
businesses in Africa and South Asia, creating
jobs and making a lasting difference to people’s
lives in some of the world’s poorest places.
Under its strategy, announced in September
2012, CDC provides debt and direct investment
to businesses as well as acting as a fund-offunds investor. CDC also now only makes
new investment commitments in Africa and
South Asia.
Find out more at www.cdcgroup.com