Li&Fung: A System-Based Approach

By Harsh Saini 18 April, 2011

Harsh Saini explains how Li & Fung is looking to work sustainability into its company-wide operations.

China Water Risk recently spoke to Harsh Saini, Senior Vice President for Compliance and Sustainability at Li & Fung, a Hong Kong-based consumer goods sourcing and logistics company. With just two months on the job, Harsh has been tasked to tackle some of the company’s sustainability issues. Sourcing products for companies such as Esprit, Walmart, Debenhams and Gap, Li & Fung operates an extensive global network covering about 240 offices and distribution centers with 27,000 employees across the Americas, Europe, Africa and Asia. Last year, the company sourced 25 percent of clothing in China – slightly lower than in the previous year with rising prices in China pushing market share to Bangladesh and Vietnam.

CWR: How is Li & Fung looking to work sustainability into its operations?

We are looking at working more closely with suppliers, vendors and our customers to consider how we better manage overall sustainability within the supply chain. This could involve anything from labor to environmental impact. We are considering where best to put our resources so they have most impact.

At the same time, we are considering how best we can support our customers’ global strategies around their own sustainability initiatives. This is, of course, is happening in the context of greater limitations being placed on our business, the stress on raw materials such as water, the concerns around climate change.

We are in a unique position where we can really connect the dots and use our leverage as an Asian company working in sourcing to do this work to a level where it starts to have great impact.

When we discover violations and bad practices we don’t believe in walking away, rather we need to work with suppliers to address the issues and make a sustained change. Many are small businesses without the means to act. Our role is to educate, to supply know-how, facilitate a connection with experts who are able to help suppliers make change. In this case, we see ourselves as facilitators. Overall, we are looking at the areas of environmental impact and managing the supply chain to a higher level.

CWR: Li & Fung is part of the initial Sustainable Apparel Coalition group of companies. What is the thinking behind this initiative, announced just a month ago?

SAC is made up mostly of leading brands and retailers. The idea is to develop an index that is a platform for everyone to use. This would be something that can help individual companies assess the environmental impact of the whole product, from creation to disposal.

Everyone has their own metrics now and this is confusing. This new initiative would be one index applicable to huge number of global brands, suppliers, retailers and allow us to measure more effectively.

CWR: There seem to be a growing number of eco labels out there attempting to provide consumers with guidance.  In your view, are any better than others?

My focus is on getting the process right and being able to manage compliance within the supply chain. The end result in terms of labeling is something the industry as a whole needs to decide on. There are some good practices being developed but it’s something the industry needs to tackle rather than the individual company. We need to consider how to instill checks and balances to make sure that suppliers and vendors are meeting acceptable standards. Eco-labeling is not something that is on the agenda for us as a company. We are more interested in a systems-based approach to change that is sustainable.

CWR: What is your biggest challenge?

Perhaps that any sustainability initiatives make sense for the business or they won’t be sustained.

CWR: With brands now moving from China to Bangladesh and Pakistan to source clothing, are we just shifting the problems elsewhere where they will be harder to tackle?

We should have the same standards everywhere. Production anywhere else shouldn’t be different if the right systems are in place.