Ethical Sourcing & MEC

China's 3.1 Upgrade - Coming Soon

The next industrial leap for China is not making more cheap clothes, cell phones, cars and just about every other knick knack.  It's IT architectecture, selling financial products and developing life saving drugs.  It's moving up the value chain currently dominated by Western economies.  This climb won't happen today but bet on it happening in our life time.

Want Not and Waste Not

The average Westerner discards about 400 KGs of municipal waste per year.  That's a lot of food scraps, old shoes, and broken or discarded stuff.  This waste is more than just a heartbreaking story about overflowing landfills or pollution.  It's also about a lifestyle of excessive consumerism.

It's dangerous to be blogging about consumerism when your employer is a retailer that is planning modest same store growth in a globally hemorrhaging economy.   After all, my employment and those of my MEC peers are directly dependent on you loosening your wallet at our cash registers.  To even hint of excessive consumerism, say at my last employer (a $7 billion retailer), I would have been quickly shut down and shipped out. 

What's the Bugaboo with China: Part 2

China is top of mind. The Olympics, Tibet, earthquakes, dog food, lead laced toys, smog spitting chimney stacks and a Chinese Milli Vanilli scandel stemming deep from the heart of the politburo make us all wonder  the suitability of China's membership to the global community. These issues are serious and they have sparked a vocal and valid concern from some Members. Here's a sampling of what they're saying: 

"You Got to Think of Our Children"

"You got to think of our children" is how Mr. Anbukani, the proprietor of our organic wovens factory in India, rationalized his dedication to his community and environment.   Mr. Abukani is one of three brothers who own and operate a handful of factories in Southern India.  Together, they manufacture apparel for MEC, premium European brands and the French military. 

WARNING: THIS PLANET IS FRAGILE & ITS INHABITANTS ARE VULNERABLE

This is not a warning label on a pack of cigarettes.  It's a subheading in an UN report on the environment titled "Planet in Peril".  In spite of being written by the world's uber diplomatic body and hence, master of diplomacy-speak, the report is unsettlingly frank.  It points to the unsustainable course we're on and its dramatic consequences if we don't alter direction. 

Beyond Your World & Engineers Without Borders

Get Beyond Your World ...

and you'll see that we humans are really all the same with similar aspirations and fears. Get Beyond Your World is a joint outreach program between MEC and Engineers Without Borders EWB.  EWB is a non profit organization dedicated to alleviating poverty in the developing world. Each year, it sends volunteers overseas to work in local communities.  This year MEC provided gift certificates to each volunteer to help equip them for their sojourn. In addition to improving the lives of the less fortunate, EWB reaches out to school kids throughout Canada. 

Ready, Set, Let's Go!

We've just hired Leslie,a chemical engineer to develop an environmental, health and safety (EHS) audit/strategy for our Ethical Sourcing Program.  She's insightful and capable, having spent the past five years with an environmental engineering consulting firm. 

There are three big deliverables for Leslie.  First, develop an environmental framework for our key trading countries (especially in the developing world) where we source.  This is imperative because we need to fully understand whats happening in these places in order to figure out how best to maximize an EHS system.  Focusing on the developing world is of tactical importance because when natural disasters hit, the poor suffer the most.  The United Nations Development Program estimates that in the past five years, 260 million people were severely affected (loss of life, living, shelter and etc.,) by climate change related disasters.  Ninety-eight percent of these victims were from emerging economies.

Second, Leslie will conduct pilot EHS audits to refine methodologies and to garner what's really possible.  And finally, we'll develop a business case and strategy for monitoring and re-mediating EHS violations in our factories. 

As this initiative unfolds, we'll provide further updates. 

Pollution, Social Ills & The Developing World

It's depressingly surprising. According to the United Nations, Canada on a per capita basis produces five times more carbon than a communist apparatchik in China or an impoverished farmer in Sri Lanka. This means the way we live, work and play are 5 times more global "warming" than most people in the Southern Hemisphere. As a country, which prides itself on being progressive, we have much to account for. See for yourself at United Nations Environment Program and United Nations Development Program.

To reduce our ecological footprint, the Canadian government has devised an array of taxes to make us pay for our pollution. For example, when I bought my car three years ago, I paid a battery and tire tax to handle their future disposal. Truthfully, I'm not fond of our onerous taxes but I do support these ones because they allocate a price to an outcome that historically was not considered, namely pollution. In the past, we could dump batteries and tires with abandon. Let someone else bear the cost. Let the environment absorb the waste.  But with our planet in peril, we can no longer.  Now I pay a tax for harming our environment. And the more I pay of these taxes, the more careful a consumer/polluter I will be become. Brilliant. Consumers are price sensitive. Make polluting costly and maybe we can lower our per capita global warming status from five times to four.

Economists call pollution an externality. Something that is a spill-over from an activity like driving a car. Historically, spill overs were not accounted for. Imposing taxes on consumer spill-overs should make us more disciplined polluters.

Not all externalities are environmental. They can also be social. Take when I lived in Toronto, the city issued daily health warnings on air quality. Car emissions on hot muggy days posed serious challenges to individuals with respiratory illnesses (like my asthmatic daughter).  Respiratory disease caused by car fumes is a social externality

The big challenge facing government is finding similar policy instruments to reduce industry driven externalities. Carbon taxes on corporations is the next logical step. On this front, our government is non committal.  However, public officials have introduced with some success, policy tools to control other externalities like waste water discharges and unemployment. For example, in our contract wash facilities (a wash facility is a commercial laundromat that washes garments before they're shipped to MEC), a city official will audit its water discharges monthly for compliance to municipal standards. To meet those standards, the facility is required to treat and monitor its liquid waste.  This is costly.  On another front, the same facility must pay a "employment insurance" tax to finance a government social safety net to support retrenched workers (a spill-over from industry restructuring).   Again, this adds to the facility's operating costs.  These and other legitimate taxes to protect our local water supplies and to make losing ones job less harsh are admirable and necessary.  But there is a downside, namely an inability to compete with Asian factories where costs are low and externalities not regulated.

MEC, like all retailers, is shifting increasingly to the developing world to secure more competitive goods.  But there is a negative.  Namely, by buying abroad, we "export" our externalities to impoverished countries where environmental and social standards are weakly enforced.  This became evident on my last visit to Asia.  Many if not all of our suppliers send their waste materials to landfills which for the most part are poorly regulated.  This is extremely problematic.  For countries like China and India, where fresh water is increasingly scarce, possible toxins from land fills will eventually leach local water tables and worsen shortages.  At this moment according to the UN, there are 1 billion people who don't have secured access to drinkable water.  If we don't mitigate the spill over effect of manufacturing, we'll soon be adding to this number.     

A second example is social benefits. The majority of suppliers don't fully subscribe to their host country's pensions. Thus, when a worker is injured or retrenched, inadequate funding makes their social safety nets unworkable.  The incapacitated worker has little recourse.

Sourcing in the developing world is financially attractive.  Labour is inexpensive like most other things.  But this low-cost has a negative outcome.  And that is pollution and social ills spilled over by factories are absorbed by workers and impoverished communities.  They are not passed on to Western consumers nor reflected in the price of gear in our stores. 

Canadians have a huge environmental footprint. Five times more than the average person in the southern half of the world.  This isn't sustainable given our planet is in peril.  Neither is our reliance on low cost factories in the developing world.  They may sustain our material needs but they do so by mortgaging their local environment and workforce.   It's unsustainable to the developing world.  Let's stop and reflect on all of this.  And let's find our conviction to foster change.      

The Wages of Sin is Death & Excess Money Supply

"The wages of sin is death" wrote Saint Paul to the Romans. He meant if we live excessively and without moral parameters, we’ll die spiritually. He was not only bang-on concerning how we treat ourselves and one another, he was also prescient, unknowingly, about the dangers of excessiveness in the material world.

Right now there’s way too much money circulating in China and it’s created a building bubble. Speculators, motivated by abundant cheap borrowing have invested billions to build buildings, all with the dream of finding buyers and tenants. But as with all bubbles, hope and speculation rarely materialize. Along a 25 KM stretch from Shenzhen City to our factory in Pingshan Town, I counted 52 empty residential high rises and office towers. (And these were only the structures visible to the eye while driving along the freeway. Imagine what lies beyond the horizon!).  These buildings, enveloped by bamboo scaffolding and green synthetic mesh, were half finished with their structural frames complete but empty throughout. There were no construction workers or cranes in sight. It was eerie looking at rows and rows of temporarily abandoned towers.

The first time I witnessed this excess was last spring in Beijing. From my hotel room on the 17th floor, I could spy into the cavernous offices of two beautifully finished but vacant office towers in the city’s financial district. At that time I found it odd but thought no further. Just yesterday, while driving to our factory in Qingdao, I spotted similar empty or half finished buildings throughout the region, comparable to what I’ve witnessed in Shenzhen and Beijing.

Building bubbles are worrisome because they encourage inflation. Picture fifty-two buildings along a 25 KM stretch competing simultaneously for construction workers, building materials and services (e.g., engineering, architecture). The more everyone wants of one particular thing, the higher its price becomes. Eventually, this phenomenon takes a life of its own and spreads to other sectors of the economy.  

Construction bubbles also have a negative impact on the environment. They encourage wasteful consumption of natural resources (e.g., for building materials) and they unnecessarily add to global warming (e.g., carbon emissions from making building materials).

The building craze has a direct impact on factories. Every factory I’ve met on this trip, whether in the south or north, is having a hard time finding workers. Unimaginable if one considers there are over 1.3 billion people in China. But due to the construction bubble, restrictive migration policies and other economic realities, workers are becoming scarce or at least temporarily. And as workers are harder to find, wages will rise. As they currently are within our supply chain.

Saint Paul saw the light at Damascus and he immediately understood the necessity of constraint. Right now China could benefit from someone like him. Not only to encourage moral parameters but to shrink the supply of money. Because the wages of sin is spiritual death and the consequences of too much money in circulation are inflation, waste and climate change.

"I wanna, I need it", the Rights of Man & Global Warming

The toughest thing about business travel is the time away from my daughter.  On average, I spend three months of the year out of the office.  I've been doing this since she was born and she's now four.  My time away makes me acutely aware of all the rapid changes she undergoes as she matures from a baby to a toddler.  For the first few years, the changes were notably physical like being a bit taller or having a thicker mop of hair.  In the past six months the changes have become more conceptual.  Currently, she's fascinated with arranging her collection of chestnuts or acorns according to either their likenesses, dissimilarities or what ever fancies her at that moment.  Each time I come home the best moment is discovering her differences.  But good things fade and my excitement dims as we inevitably return to the all familiar toddler whining of "Why? Why? But I wanna, but I need it".  Nonetheless, it's all painfully good and for sure the next time I'm traveling I'll be missing her.

Right now, I'm sitting on an Airbus heading for Hong Kong.  It's a four turbine engine emitting 2.4 tons of carbon per passenger (return fare).  The flight one way takes about 14 hours flying at an altitude of 10,500 meters over a distance of 10,000 KLMs.  If you add up all the discharges of my flights, and my direct carbon emissions (car, heating) and indirect (supply chain discharges to produce and ship my food, clothes and etc.,), my household generates about 40 tons of carbon per annum (the average American home produces 55 tons). 

According to the UN, this is almost six times more carbon than the average household in Africa, Asia and South America.  Wow, If this is true, we ought to ask why we are so hot and bothered by the environmental practices of China or any of it's non democratic peers?  After all, we North Americans reportedly cause way more global warming than anyone else.

But the developing world is catching up.  Not in the next few months but within the decades to come.  They aspire for our middle class lifestyle.  They want comfortable homes with cars, flat screen TVs and stylish furnishings.  They want predictable food supplies, basic health care and proper schools.  They want good jobs.  In effect, they want the security, opportunity and leisure you and I have probably known for all our lives. 

Unfortunately, what they want and what we have are no longer sustainable.  The planet can't absorb the environmental costs of North America's households and lifestyles let alone the introduction of several hundred million Asian families mimicking our habits and estates.  It can't be done.

Everyone of us has an undeniable right to a safe home, good schooling, decent job and spare time to do nothing.  Ironically, this very fundamental right is driving global warming and keeping Al Gore sleepless at night. 

I'm impatient for my daughter to leave her "Why? Why? But I wanna, I need it" stage.  She's eternally adorable but nerve shattering at times.  Unless, we find some new technologies or natural resources, the middle class lifestyle we all want will end up destroying our planet.  Because I seriously doubt that anyone of us either in the Western World or in Asia will grow out of our collective phase of "Why? Why? But I wanna, I need it".  Unlike long suffering parents who must always remain at their child's side, our fragile planet has finally lost its patience with our demands.   In due time the rage of its temper will literally be visited on our shores and skies.

To understand this google GEO4 (UN Global Environmental Outlook 4) and to change this madness check out David Suzuki.  We can do it! 

 

Tragedy of the Commons

Remember the Tragedy of the Commons lecture in your first year economics course?  Essentially, it goes something like this (roughly).  Within a village there's a whole bunch of grasslands open to all (or the commons).  Since it's not restricted, it permits the local sheep farmers to graze their livestock for free.  And because it's at no direct cost to any of the villagers, it results in over grazing.  In a few short seasons, the commons are depleted and everyone loses.  This is the Tragedy of the Commons and it's happening right now on a planetary scale.

Like the farmers, we're treating our planet like the commons.   We consume our resources as though they're limitless and we then discharge the by wastes as if there are no boundaries.   There are limits and if we continue to "overgraze" we'll invite catastrophe.  Kind of like the sheep farmers and their depletion of the grasslands.   

So, who exactly are the farmers today?  It's you, me and everyone else.  You wouldn't think this though if you've read all the recent press on the environmental foolishness of Asia.  Let's be angry with such shortsightedness but before we let our emotions run away or demand sanctions, let's explore our role. 
According to the United Nations Environmental Program (2002 Global Environment Outlook 3):

• North America's ecological footprint is almost six times greater than Asia's.  An ecological footprint is the pressure you and I place on the environment through our transportation needs, food requirements, cities, lifestyles and etc.,)
• The richest 20% of the world's population (read developed world) accounts for 86% of total private consumption (TV's, clothing, knick knacks and etc.,), consumes 58% of the world's energy, 45% of all meat and fish, 84% of paper, and owns 87 percent of cars and 74% of telephones

If we look at this honestly and speak in non United Nations diplomatic lingo, we're part of the problem.  Our Western lifestyle has a much bigger environmental consequence than all the wood burning stoves or emission challenged cars of the developing world.  And our appetite for the vast majority of everything manufactured or grown drives a good portion of the factories and commercial farms in the developing world.

The developing world also bears responsibility.  In its modernization and economic catch-up, they've made many of the same mistakes we have.  Flip through any major paper and you can read the latest.  We won't dwell on them here.

However, in a recent article from the New York Times on the developing world's perspective on global warming, the journalist highlighted a prevailing sentiment in some Asian sectors that argue carbon taxes and other initiatives are just updated colonial tactics to keep the poor poor.  Accordingly, the West earned its immense wealth by depleting fisheries, leveling forests and polluting freely.  Now that the developing world is on the upswing, the Western Nations are demanding standards they themselves never respected.  Worse yet, some are even threatening sanctions.   

Pointing fingers at one another will not alter the course we're on.  Let's be angry with the toxic factories around Shanghai or Bangalore but at the same time let's be equally irate with our own intrusive habits and lifestyle. 

Our planet is the "grasslands" and it's been "over grazed" by us all for far too long.   Our collective failure to accept this is the Tragedy of the Commons.  And our universal instinct to blame one another is a common tragedy.
 
[MEC is discovering a lot about the environment and its supply chain.  We want to hire someone to reflect on this and then do something about it.  You'll be on a one year contract and you'll get to work with some cool people who are doing amazing things (my opinion) on the environment, eco products and retailing.  If you're articulate, passionate and can think about the next generation of solutions hyperlink yourself here and then drop your CV there (jobs@mec.ca).  Cheers]

Breaking Up: Canadian Arctic & Product Sustainability

The Canadian Arctic is breaking up.  The Sept 13 Wall Street Journal writes of a yachtsman sailing his boat through the mighty Northwest Passage.  The same route that only a double clad iron and steel coast guard ship could navigate ten years ago.  The implications of losing our polar caps are both substantive and depressing.  See for yourself at NASA.

Retailing and consumerism are major factors to our warming planet.  Retailers exist to sell you merchandise.  The more you buy the better we do.  You buy for both practical and emotional reasons.  Regardless of the why, you're consuming more and more.  You want the freshest look, newest features and greatest variety (and lowest price).  The mindset of retailers to sell and consumers to buy feeds off one another and directly drive the 1000's of cargo ships crossing the oceans and hundreds of coal burning plants powering low cost manufacturing zones.  The ice is melting and its because of retailers and consumers. 

Everything we do has a footprint.  Whether its ecological (warming planet) or social (poor factory conditions).  Short of retreating to a cave and swinging a club like our forbearer, the cro-magnon man, we're here to stay and will continue to stomp a print.  There's hope.   If we get our act together we can lighten our footprint.  Google the Suzuki Foundation for real ways. 

At MEC, there are two steps to this.  Step One is the realignment of our retailing model to minimize our imprint on this earth.  This involves brick and mortar tactics like greening our operations to more abstract strategies like influencing unbridled consumption via Gear Swap and etc.,  We're well prepared in this area and we anticipate a long path ahead to be even better.  Step Two is less developed.  It's about holding a deeper meaning of social sustainability which must include tackling the immense social misery steps away from our storefronts or in the factories that sew our products.  Like Step One we need to creatively build the equivalent brick and mortar or abstract tools to reduce our social footprint.  We've taken our first steps and we'll soon find our stride.

There were two life defining steps in my career and each one involved a MEC product.  In 1989, I left my family on the Coast and relocated to Toronto.  The first thing I did was buy a olive and tan Serratus pack.  It carried all my belongings to the unfamiliar city.  Six years later, I relocated overseas and this time I purchased a blue fleece jacket.  That soft-shell served me well in the office and while trekking through three continents. 

I still have the fleece and pack.  The latter sits in my garage  largely unused and the fleece is always worn when I work outdoors.  Both look tired but remain structurally sound.  Looking back at those two life changing moves, I bought the MEC items because I knew they would endure the hardships of travel.  But more notable than their durability was the reassuring comfort they gave while living in the complete unknown - they spoke of home, Vancouver.         

Making products that don't break after a few uses is one strategy our head-office in Vancouver is employing to reduce our footprint. By having you not replace that fleece each year, we hope to bridle consumption (and reduce global warming).  But if you must replace it, we want to exhaust its life by connecting you to a buyer (via gear swap) or recycling it into something completely new.  All of this is product sustainability.

An ice-less Arctic within my lifetime is a real possibility according to Environment Canada. The immensity of such a loss makes me gasp.  I'm not worried for our generation.  But I am for my daughter's.  And likewise, I believe you're equally concerned for yours.    Starting today, let's act together.