A Southern-centered perspective on climate change in global value chains?

By Peter Lund-Thomsen

◦ 2 min read ◦

The garment and textile industries account for around 10% of global CO2 emissions, and their fast fashion approach consumes huge amounts of water in production and processing stages. While the fast fashion model incentivizes the overproduction/consumption of clothes, more sustainable solutions lie in the configuration of value chains towards slow fashion (durable products produced on demand) and the introduction of circular business models. Such a transformation will have consequences for the environment, workers’ conditions, and economic development.

This is particularly the case in the light of COVID-19, which led to a temporary disruption in the global garment and textiles value chains as stores closed in Europe and the United States in the spring of 2020. The cancellation and non-payment of garment orders particularly affected suppliers and workers in Bangladesh, leaving hundreds of thousands of workers without jobs and possibly facing destitution. 

This is the focus of a new research and capacity-building project on ‘Climate Change and Global Value Chains’ coordinated by the CBS that has recently been funded by the Danish Development Research Council. In this research project, we will be working with colleagues from the University of Aalborg and Roskilde University in Denmark as well as BRAC University and the University of Dhaka in Bangladesh. Private sector partners include the Danish Ethical Trading Initiative and Danish Fashion and Textile. 

I think that a key challenge in this new project is how we approach ‘climate change’ in the context of global value chains.

In the Danish debate on climate change, it is almost universally accepted that climate change should be at the top of the political and corporate sustainability agendas. However, both employers and workers in the Bangladeshi garment and textile industries may not perceive climate change mitigation as an immediate priority.

First, the purchasing practices of major brands sourcing garments from Bangladesh tend to result in downward price pressures, seasonal fluctuations in demand, and shorter lead times while, at the same time, these brands are also imposing ever greater environmental and labor standard requirements on their suppliers (not only in Bangladesh but elsewhere in the global South). Economic value is very unevenly distributed along the textile/garment value chain, with major brands reaping up to ten times higher economic value than suppliers – and even less reaching workers.

Hence, Bangladeshi suppliers often perceive the environmental and labor requirements of brands as adding to their costs without bringing additional business benefits.

In this context, suppliers may have very few, if any, incentives to address climate concerns in their value chains, while workers in the industry are trying to survive in a context of economic uncertainty.

In my view, a critical aspect of this new project is therefore that we will not only look at climate change from a Northern-centered perspective; that is, we are not only concerned with how brands and factories engage in the process of decarbonization. We will also zoom in on the importance of climate change adaptation, which I would label a more Southern-centered perspective on climate change in global value chains.

In fact, Bangladesh is one of the countries most affected by global climate change whose coastal areas and ports are prone to flooding, resulting in disruptions of the garment/textile value chain and economic losses for local manufacturers and workers.

Moreover, garment factories in greater Dhaka have extremely high lead and CO2 emissions, while many factory workers live in parts of the city that have unhygienic water supplies and must cope with living conditions that affect their health. Hence, integrating climate change and global value chain analysis from a Southern-centered perspective, I would argue, involves looking at the ‘business case’ for climate change adaptation – in other words, we must understand how can climate change adaptation can help in securing the future viability, competitiveness, and jobs in the garment industry and textile industries of Bangladesh. 

About the Author

Peter Lund-Thomsen is Professor at the Department of Management, Society and Communication at Copenhagen Business School. His research focuses on sustainable value chains, industrial clusters, and corporate social responsibility with a regional focus on South Asia.

The Business (and Politics) of Business Cases

By Esben Rahbek Gjerdrum Pedersen.

Business cases are an important, but often overlooked, tool for pitching CSR/sustainability within the organisation. Failure to meet internal business case requirements for e.g. payback time has a direct, negative impact on the level of CSR/sustainability activity in the organisation. However, the business case tool is also a flexible document which leaves room for a variety of internal politics.

Business Cases in Academia and Business

The academic literature is swamped with references to the “business case” for CSR/sustainability. The ‘business case’ is mostly used as a generic term for all the corporate benefits from ‘doing good’. In the quest to find the business case for CSR/sustainability, a large number of empirical studies have also explored the link between corporate social performance (CSP) and corporate financial performance (CFP) and various factors affecting this relationship (size, industry, R&D, slack resources etc.).

In business, the ‘business case’ has a quite different meaning. The business case is simply a tool for pitching a new investment. For instance, when a factory manager wants to invest in a new energy efficient technology, a proposal (‘business case’) has to be prepared and sent to top management for approval. The proposal often competes head to head with other investment ideas from the organisation. Therefore, even financially sound CSR/sustainability projects may be turned down if there are other projects with a stronger business case.

The Case of Water

The academic literature is not blind to the different meanings and uses of the “business case”. However, research on the practical use of business cases for CSR/sustainability has been largely neglected at the expense of general discussions of hypothetical benefits and CSP-CFP studies based on available database sources.

Evidence from two new studies on water management in the European food sector indicates that business cases have a distinct influence on the level of water management activities. The findings (still work in progress) are showing that growing emphasis on the business case tool has a negative influence on the level of water management activity. Moreover, the maximum acceptable payback time for the investment also has a negative influence on the level of water management activities.

Even though the business case tool influences the level of water management activities, the business case tool is also subject to various types of politics. Evidence from interviews indicates that business cases is sometimes bended, twisted and packed in different ways and that formal and informal negotiations take place before, during and after the formal approval process. As noted by one of the interviewees (our translation):

”If we lumped all our business cases together, then our earnings would exceed our sales. And with faster payback time. I have looked at this almost all my life (…). Anyone can make a business case and say anything”.

A Call for Practice-Based Perspectives

The results show that practitioners use business cases as a “hard” tool to prioritise investments as well as a “soft” instrument for various types of internal politics. Either way, the evidence indicates that researchers need to pay close attention to the tools and frameworks used by businesses, as they have a very direct impact on CSR/sustainability work. Especially practice-based studies could provide a valuable supplement to the existing literature by focusing on how actors actually ‘do’ things, in this case CSR/sustainability.

Esben Rahbek Gjerdrum Pedersen is Professor at the Department of Intercultural Communication and Management at Copenhagen Business School. He researches CSR, Corporate Sustainability, Non-financial Performance Measurement, Supply Chain Management and Process Management.

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