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TRANSCRIPT
An Evaluation of
SUSTAINABILITY MANAGEMENT
ACCOUNTING PRACTICES
at BRANDIX CASUALWARE
SEEDUWA PLANT
ACC 4327 – Sustainability Management Accounting
Depatment of Accounting
University of Sri Jayewardenepura
Name CPM No.
A.M.D.C.P.Gunasekara 7180
P.A.M.R.Gunawardana 7190
M.F.M. Rifan 7569
Introduction to Brandix Group
The Brandix Group has pioneered the concept of holistic apparel solutions from a unique,
customer-centric standpoint since its inceptionin the year 2002. Its unconventional approach to a
conventional sector has propelled Brandix to the forefront of the industry as the single largest
apparel exporter in Sri Lanka with a turnover of US$ 600 Mn. The public limited company’s fast
expanding network of factories andoffices span across the South Asian sub-continent. Brandix
Lanka holds 42 manufacturing facilities which include group companies, joint ventures, and
subsidiaries and leased factories. They span over three countries: Sri Lanka, India and
Bangladesh, and employ over 42,000people directly.
The Group specializes in manufacturing casual bottoms, intimate apparel, underwear, lounge and
sleepwear, bras, woven and knitted fabrics and a host of apparel industry accessories. A
backward andforward integrated operation, the company manufactures its own fabric, buttons,
thread and hangers, lending a tactical edge in the apparel sector. This core strength further
reinforces our advancedresearch and development, outstanding design, fabric printing, washing,
dyeing, wet processing, finishing, and relentless quality control services with fastest turnaround
times. Brandix has consistently been at the forefront of national and globalefforts to adopt eco-
friendly manufacturing practices.
Brandix casualware Plant at Seeduwa
The signature Brandix Eco Centre in Seeduwa made history as the first LEED Platinum rated
apparel factory in the world after redesigning the plant in April 2008. This plant is located in
a130,000 square foot land. And it has been designed according to the green factory standards.
The plants main outputs are woven bottoms, basic pants, cargo pants and 5 pocket jeans, shorts
and skirts for world’s most renowned brands.
The Brandix Eco Centre also became the first apparel manufacturingfacility in the world to
obtain the prestigious ISO 50001 EnergyManagement Systems certification. In addition to this,
Brandix won the ‘Plan A Supplier of the Year’ award in the General Merchandisecategory from
Marks & Spencer at the Plan A Conference held in London in April 2012,
FrumrFutruF.Initiatives that advance adherence to the Triple Bottom Lineconcept continue to be
rolled out at Brandix, and customer schemes such as Plan A and Green Building rating systems
like LEED, helpx duanBisto set world-class parameters and targets.
Literature Reveiw
The global textile and apparel industry is predicted to grow to US$800 billion by 2015
ascompared to roughly $700 billion today. As a sector, it not only has a large
environmentalfootprint but is also the single largest contributor to industrial waste water and the
largest user of pesticides. Some specific processes, like yarn production and dyeing, use large
volumes of water and are copious consumers of The basic drivers for energy.the textile industry
to In a global market with increasing regulation and consumer preferences for ‘sustainable
products’, move towards eco- sustainable production is gaining increasing importance.
Sustainability has typically meant looking at efficiency and both environmental and social
aspects sustainability exist. The environmental facets like sustainable sources of raw material,
optimal use of energy, minimal useEnergy prices are high of toxic chemicals; waste reduction
and preservation of land have been receiving greater focus in recent times.
The drivers for the increased focus on Sustainability are Compliance is inter-twined with risk
Brand reputation protection and risk management mitigation. As future legislation Increasing
resource (water, energy, land) scarcity in continues to develop in Europe and some of it is being
planned in the regions of production US/Canada, brands and retailers are Compliance
requirements both at a product level looking to get an idea of their supply- (which is driven
mainly by the importing market like chain risk and proactively managing REACH in the EU) or
compliance requirements at a it. In addition, emerging countries themselves are working on
looking at process level (which are driven by the production legislation on carbon emission and
region laws) water usage. This impacts Consumer pull i.e. increasing consumer preference in
manufacturers (which are mainly based in emerging countries) as well the EU and in North
America (which are the largest as brands and retailers. markets) for sustainable labels. One-
upmanship On account of the above factors, Sustainability is now being looked at by the apparel
and textile brands not as a mere CSR activity but more as a market differentiator and business
enabler. The major brands and retailers across the globe have entered into a healthy competition
in order to outdo the other andM&S aims to become entice the consumer towards them. Some of
the path-breaking initiatives taken by the major brandsthe first major retailer recently areto
collect information As part of its Plan ‘A’ commitment to become the world’s most sustainable
major retailer byfrom the extended 2015, Marks & Spencer (M&S) signed a deal with supply
chain traceability specialist Historicsupply-chain, Futures to develop a full ‘raw material to store’
traceability on every single clothing item. This would allow M&S to become the first major
retailer to collect information from thedescribing where and extended supply-chain, describing
where and how every product is made, including thehow every product is source of the raw
materials such as cotton and wool. The full traceability will enable an evenmade, including the
greater ability for M&S to differentiate its products. As an example, for its t-shirts, it will
givesource of the raw information on where: cotton is grown; yarn is spun; fabric is produced;
fabric is dyed. Etcmaterials such as Related to this, M&S have launched the ‘Look-Behind-the-
Label’ campaign in a few of itscotton and wool stores, which informs shoppers as to the way the
group sources its products. In 2010, Sportswear giant Puma became the first company to release
an Environmental Profit and Loss (EP&L) statement, which measures the full economic impact
of the brand on 1 Report Excerpt.
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Current Environmental/Sustainability Management Practices
Brandix casual ware plant was converted into an eco centre on April 2008 and it was awarded
with the platinum rating certificate The plant received Platinum rating in August in the same year
under the Leadership in Energy and Environmental Design (LEED) Green Building Rating
System of the US Green Building Council (USGBC). They are awarded with this certificate
since the plant was designed and operated in such a way that is environmental friendly under the
green building concept. During our plant visit we identified that they were adopting numerous
environmental and sustainability management practices to achieve four main goals
01. Reducing the Carbon Foot Print by 80%
02. Reducing the energy Consumption by 46%
03. Reducing Water Consumption by 58%
04. Zero solid waste to Landfill
Therefore we presented their environmental and sustainability practices under these four goals
01 .Reducing the energy consumption by 46%
The vision of the plant’s energy management plan is “to replace all non- renewable sources with
renewable sources” and they are using three main strategies to achieve this goal.
01. Introduction of Energy Efficiencies
02. Introduction of new green technology
03. Replacing Fossil fuel with renewable energy sources
The company is implementing these strategies through following practices,
01. Lighting System
Fluorescent lights are replaced by Light Emitting Diode (LED) task lights at the needle
point of the sewing machines which has largely contributed to the reduction of energy
consumption.
Introduction of special sky lights made of prismatic materials letting in the solar light
without letting in the solar heat. This helps to get the maximum utilization of the sunlight
in the day time while saving the energy consumed for air conditioning system by
reducing the cooling load.
Large windows which are built using special glass material which let in sunlight without
heat embedded, installed in the production areas channel sunlight into the factory floor.
These help to reduce the energy consumption and also increase the efficiency of the Air
conditioning system which in turn contributes to the reduction in energy consumption.
02. Air conditioning system
Use of inter locking paving blocks instead of the tarter roads to reduce the heat building
up around and prevents heat coming into the factory which in turn helps to increase the
efficiency of the air conditioning system
New sophisticated Air Conditioning system reduces the energy consumed by the plant
03. Increase of boiler efficiencies and Installation of Bio Mass Boilers
Increasing the Boiler Insulation
Replacing the efficient steam taps for increased efficient condensate recovery
Regular Inspection of steam leaks
Installation of heat recovery units such as heat exchange or economizer
Installation of Bio Mass Boilers instead of the Fossil Fuel Boilers
04. Use of Electrically powered vehicles
They use electrically powered car, truck and a tour bus which are powered by the plant’s
windmill for the transportation within the factory premises for the delivery of samples
and short hold of stocks
05. Building up a monitoring system
A web based real time monitoring system which continuously tracks the plants over all
activities helps to reduce the energy consumption by generating real time data of the
energy consumption of each activity of the plant.
Reducing the water consumption by 58%
The vision under water management plant is “to achieve zero water wastage”and the company is
adopting three main strategies to achieve this goal
01. Minimize water usage
02. Recycle/ Reuse water
03. Increase the use of green water sources through rainwater harvesting
The following are the water management practices used by Brandixcasualware plant in order to
fulfill this goal.
01. Use of water efficient fixtures & fittings
Introduction of push taps which prevents taps from opening up for a longer
periods
Toilets are equipped with water efficient flush buttons
Toilets, Canteens and Kitchens are fitted with water efficient faucets that
dispenses minimal amount of water (Ex: use of push taps)
02. Leak Detection
Inspections for water leakages are carried out periodically but since most of the
pipes are laid underground meter records are used to track the leaks
03 Recycle/ Reuse of water
They retreats wastes water using water filtration systems and use the majority of
the treated water in gardening and toilet flushing. They strictly adhere to the
water quality Para meters set by the Central Environmental Authority of Sri
Lanka and water testing is done periodically in order to certify those parameters
are achieved.
04 Increase the use of green water through rain water harvesting
The roof of the Brandix casual ware Plant in such a way that 75% of the roof
captures rain water. This water are then sent to two rainwater harvesting pits
underground and utilized for various uses except for drinking.
Use of rain water percolation pits helps water soak back into the grounds and this
has reduced the use of water for gardening purpose.
Zero Solid waste to Landfill
This one is the least achieved goal by the Brandixcasualware factory. Their solid waste mostly
includes the Cut fabric waste, defective garments and food waste.
The vision under the waste management system is to achieve zero material waste
They use 3R strategy to achieve this goal
01. Reduce
02. Reuse
03. Recycle
They have adopted the following waste management practices to achieve this target
01 Paper neutral Policy
The objective of this policy is to maximize the recycling of paper and minimizing
the paper usage. This is a group level policy which allows them to purchase paper
only for the value they have recycled. This leads them to reduce the paper
consumption and to make sure that all the waste papers are directed to recycling.
02. Diversion of Land Filling through Reuse or Recycle.
Fabric cut waste- these are sold to local buyers for home industries and sent to
small scale garment manufacturing facilities where yarn is extracted from them to
make carpets, drapery and socks
Defective Garments – Most of the garments they produce are brand protected
therefore any defective garments become useless and the company sell them to
local buyers by shredding them for various purpose such as handicrafts, cleaning
and etc.
Thread Cones- these are 100% sold to American and Efrid Lanka and Coats who
are the tread manufacturers
Food wastage – Food waste is categorized according to the digestibility and then
used to create bio gas which is used for the work in the kitchen
Reducing the carbon footprint by 80%
They have begun their carbon foot print reporting effort in 2008 when they receive the LEED
platinum certificate.
Green areas within the plant have been increased in order to reduce the GHG effect and there are
two indoor green patches within the plant which are using 100% organic fertilizers.
Other than above the all the other environmental practices categorized under energy management
such as new air conditioning system, bio mass boilers, use of electrically run vehicles and the
waste management practices such as bio gas production has contributed for the reduction of
carbon foot print of the company.
Description of the physical/monetary accounting practice of brandix
casualware Seeduwa Plant
They are mainly using GRI as the sustainability reporting framework and they are adopting
group policies for to account for the environmental impacts for the previously discussed
practices
Accounting for the impacts of the energy management system
Mainly they are accounting for the investment and the savings in terms of Dollar value as
monetary accounting practices and the saving in energy in terms of Giga Joule (GJ). During the
year 2011/2012 they have invested around $ 597,000 in the casualware cluster for the energy
management projects and had gained a cost saving of $ 149,000 with an energy saving of 5449
GJ.
Followings are the methods they are adopting for the measurement of energy saving in both
physical and monetary terms.
For the calculation of the electricity saving by introducing the LED task lights they have
compared the number of GJs per hour of Fluorescent lights with the number of GJs per
hour of LED task lights and the difference has been multiplied by the total machine
hours. For the cost calculation purpose they have compared the Cost of energy
consumptions per hour use of Fluorescent lights and Cost of energy consumptions per
hour use of LED lights and difference is multiplied by the total number of machine hours
They have measured the energy saving of the use of sky lights by the energy combustion
of the number of lights that have been replaced by implementing this practice. This
practice has contributed for 10% of the total energy saving of the plant.
For the Air conditioning system also they are comparing the energy consumption before
implementing the new A/C unit and the energy consumption after implementing the A/C
unit. Building Management System monitors the overall performance of the A/C Unit
and it is used to measure these data. This practice has resulted in 40% reduction in
electricity consumption
For the calculate the energy efficiency of the Bio Mass Boilers they compares the number
of liters of furnace oil and the number of Kgs of Bio Mass which has replaced the
furnace oil. The cost saving is calculated by placing monetary values to the above two
measurement according to the price trends of one kg of Bio mass and one liter of furnace
oil. This cost saving is compared with the Initial Investment made to calculate the
payback period of this project. By implementing this practice they have been able to
reduce the plant’s overall energy consumption by 26%.
For the calculation of the energy efficiency of the electrically run vehicles they track the
no of kilo meters run by the vehicles and they calculate the amount of fuel they would
have been incurred if they had not implemented this project. The Monetary values are
assigned to this data by assigning fuel prices for the number of liters they would have
consumed if they run those vehicles by using fuel.
Accounting for the impacts of the water management system
As per the group policy they are required to fit water meters to the every activity of
the plant and daily total water consumptions are monitored & total water consumption
is compared before implementing and after implementing the water management
system.Thereby they calculate the total saving of water by the plant (amount of cubic
meters)
As per the guidelines given by the GRI they calculate the number of cubic meters of
water which are recycled which is measured at the point of water treatment system.
And also they measure the direct and indirect blue water, green water and grey water
foot print of the plant.
In addition they account for the number of cubic meters of water which is used by the
plant by rain water harvesting.
Accounting for the impacts of the waste management system
According to the groups paper neutral policy they prepare monthly reports of the paper
consumption and paper recycling data. Accordingly they calculate the number of tress
they have saved and the amount of water they have saved by calculating the ecological
rucksack of paper.
They compute the number of Kgs of fabric cut waste and shredded defective garment
before selling them to the local buyers and they account for the revenue generated by
selling those solid waste
Additionally they measure the amount of Bio Gas produced by recycling the food waste
and they calculate the saving they made by using them in the plant’s kitchen.
Accounting for the Green House Gas Emission of the Plant
The carbon footprint reporting has been complied with the green house gas protocol corporate
standard which is a part of GHG protocol initiatives. The GHG protocol takes into account six
major gases covered by Kyoto Protocol. The operational boundary was selected in order to
include as many as operations as possible that emit GHGs. They are reported under 03 main
scopes.
01. Direct GHG emissions from sources that are controlled by the factory (i.e. by the fuel
used in the generators, boilers etc.) – To reduce this impact they have set up a Bio Mass
Boiler for the steam generation.
02. Indirect GHG emission generated from the use of purchased electricity consumed by the
plant – To reduce this impact they have adopted energy consumption reduction practices
03. Other Indirect GHG emissions arising as a result of the activities of the plant but not
owned or controlled by the plant namely 3rd
party transportation.
They perform green house gas verification and obtain an assurance certificate from independent
third party in order to account for the carbon foot print of the company,Other than they use the
plants building management system to monitor the GHG emission of each activity which they
can use for strategy implementing purpose.
Recommendations or suggestions for improvements
Adoption of life cycle analysis
Company is currently identifying environmental analysis only for the production face of
the product life cycle. They do not consider the environmental impact of other phases
starting from raw material extraction to the end customer use. However they are reporting
the CO2 emission for the whole life cycle of its products to some extent but it will be
more effective if they can analyxe and assignmonetary values for entire product life cycle
impacts.
For example they consider their waste as cut fabric waste and defective garments but they
do not consider the waste created by the end customer at the end of the use of the
product. So they can promote environmental friendly products to their customers and
acknowledge the end customers through the entire value chain since their end customers
are world famous brands such as Makers and Spence. Just as the case study of Levis.
Development of KPIs for water management
As per our study we identified that they have set KPIs for energy management and waste
management and green house gas effect. Therefore we recommend them to set KPIs
relating to water management also.
Investment in replantation projects
Since they are operating Bio mass boilers they can invest replanting projects to reduce the
environmental impacts and green house gas effect.
Refferences
duanBis Crupruamirn (2012), Srxmainabilimy uFprum 2011/12.
ckinFmicx (2011), Maucr mr xrxmainabilimy,(2013).
http://www.slideshare.net/ckinetics/march-to-sustainability-2011-9493301
http://www.ckinetics.com/publications.htm
Caravan, R.d. (2004), Ecr fibFux anB Fcr fuiFnBly mFsmilFx,
http://www.slideshare.net/nega2002/eco-fibres-and-ecofriendly-textiles-ms-univ-
21204-final.
http://www.brandix.lk/brandix/casualwear.php
Contact details of the person who assited us in the process
Mrs. Manojini Rathnayake
Environmental Analyst
0773652030
0114727777 Extensions - 7739