Hanesbrands Supply Chain Standards 2012
|Filer||Calvert Asset Management Company, Inc.|
|Subject(s)||Supply Chain; Water Pollution; Water Scarcity|
|Resolved Clause Summary||Report on supply chain standards including water|
|Status||Withdrawn; Company will address|
RESOLVED: Shareholders request that the Board of Directors issue a report describing the company’s vendor standards pertaining to reducing supply chain environmental impacts - particularly water use and related pollution. This report, prepared at reasonable cost and omitting proprietary information, shall be released by November 1, 2012.
SUPPORTING STATEMENT: We commend Hanesbrands for adopting global standards that favor suppliers who minimize environmental impacts of their operations; however, Hanesbrands does not disclose how the company will
manage its operations in water scarce regions. Nevertheless, Hanesbrand’s commitment to responsible management of water, waste and chemicals in your global manufacturing facilities positions you well to develop a more extensive water resources management program throughout the value chain.
Hanesbrands peers address their supply chain water risks. For example, Nike’s online system reports data on production, water use, discharge volumes, and wastewater quality for nearly 400 suppliers. Levi Strauss leveraged its experience in ethical labor standards to create supplier environmental standards.
Understanding that natural resource management materially impacts company value, investors increasingly seek disclosure of companies’ environmental practices - throughout the supply chain. As the largest seller of apparel
essentials in the United States, Hanesbrands supply chains create significant water demands and detrimental effects, particularly in cotton production and textile processing. Cotton is one of two principal raw materials in Hanesbrands’ product categories. ln growing cotton, 25 cubic meters of water is required on average to produce enough fiber for a single t-shirt. That cotton may be grown in arid, intensely-irrigated regions. Resultant agricultural run-off significantly harms local ecosystems and contaminates drinking water sources, and water degradation presents reputational, regulatory and liability concerns. ln response to flooding and droughts that affected worldwide supplies, the price of cotton rose nearly 50% in 2010, reaching an all-time high.
ln processing textiles, each kilogram of textile generates up to 600 liters of wastewater. Fresh water is essential for textile processing; however, a large percentage of textile/garment manufacturing takes place in water-scarce countries (including China) where local communities lack access to reliable and safe drinking water. These regions are also susceptible to climate change impacts on water resources due to changing weather patterns. Consequently, company licenses to operate may be put at risk in these communities.
Textile processing usually requires the heating of water which consumes large amounts of energy. This creates risk related to energy price volatility and evolving regulations on air pollution. Further, roughly 25% of chemical production worldwide is used in the global textile industry.
In sum, these conditions pose a number of risks to Hanesbrands, including:
Higher costs due to water shortages, rising energy prices and increasingly stringent water regulations
Price volatility for cotton supplies
Reputationai risk created when communities are harmed by supplier water practices
THEREFORE, please vote FOR this commonsense proposal for improved
water quality, access, and success of Hanesbrands long-term operations in