Wouldn’t it be great if a group of Western brands sharing the same manufacturers in Vietnam would say: “Hey, let’s collaborate to switch out fossil energy and invest in solar power on the rooftops of the Vietnamese facilities!” Good news: this is already happening.
Last spring, the sustainability team of the Swedish footwear brand Icebug got a tip that colleagues at Arc’teryx were involved in a project to install solar rooftops at factories in Vietnam. Icebug got in touch and found out it was a pilot study to scale the switch to renewable energy among Vietnamese manufacturers working with the apparel and footwear industries. Did Icebug want to participate too? For David Ekelund, Co-CEO and Co-founder of Icebug, the decision was easy.
“Having identified power as the biggest source of emissions, we had had been looking for this opportunity for a while,” shares David Ekelund.
“With all the sun in Vietnam the case seemed quite straight forward, and we had set up a goal of 50 percent renewable energy in Tier 1 already in 2022. But to actually move to action required more specific knowledge about solar and local energy policy than we had. This was an opportunity to reach our goal.”
Like many outdoor brands, Icebug is working with life cycle assessments when it comes to greenhouse gas emissions and looking at the full supply chain. Exactly how much emissions were connected to its scope 3 in Vietnam?
“Over 85% of our total life cycle emissions are caused before the shoes leave the factory gates. Energy is part of material emission data, so we don’t have an exact count on where energy comes from in the entire supply chain. But it’s safe to say that even if Icebug had already switched to avoid coal entirely, energy is still the main emission cause.”
Saving energy and switching to renewables is where Icebug and other brands with production in places where the energy is largely fossil based – which goes for most of the world, not just Vietnam – is seen to get the best climate effect.
“This is a no-brainer – if suppliers phase out coal and move as much as possible to solar, the industry will be able to cut emissions significantly,” explains David Ekelund and adds:
“We don’t need innovation to cut emissions by 50% in our industry. The solutions are already there. We just need the will to scale them.”
Team based in Vietnam
The pilot study was initiated by two organizations based in the U.S, the Clean Energy Investment Accelerator (CEIA) and the Apparel Impact Institute (Aii), and IDH Sustainable Trade Initiative from the Netherlands – all three with an international network. The price would be between 25,000–50,000 USD per brand, depending on how many brands and manufacturers they would involve. Icebug joined together with Arc’teryx, Columbia, Gap Inc, Lululemon Athletica and the retailer Target.
CEIA has previously worked with similar projects in both Vietnam and countries like Mexico and Colombia. Their local team in Vietnam handles the project management. The team is led by Dr. Hang Dao and Tung Ho, working together with Supharat Torne, Deputy Director at the clean energy advisory firm Allotrope Partners, one of the stakeholders of CEIA. Dr. Hang Dao shares the main reasons behind the project:
“Apparel manufacturing is among the largest global energy consuming sectors: emitting 1.2 billion tons of CO2 per year and approximately 10 percent of all global carbon emissions. In Vietnam, the apparel sector accounted for 16% of the GDP in 2021, and the sector is one of the world’s most energy intensive.”
The first steps in a transition towards solar power can be fairly uncomplicated because a lot of solutions already exist on the market, also in Vietnam. But these solutions seldom cover more than 20 percent of the demand, explains Supharat Torne.
“We aim to apply the relatively mature rooftop solar with technology areas that could help achieve 100% renewable energy, such as battery storage and on-site thermal operations.”
At the same time, the goal is to cut costs for the manufacturers. The key factor behind this is collective procurement – if a group of factories invest and buy together, supported by the brands they produce for, the group will get better prices, share project management and legal counselling, have more impact when discussing with authorities etc. The project is divided into three parts. In 2021, the team from CEIA worked with scoping and recruiting participants. Beside the brands, 10–20 of the Vietnamese manufacturers they work with were invited. Together they would form a group request for proposals directed to solar power providers.
In the second part, which is ongoing at the time of writing, this procurement is implemented. The team also develops the methodology, tools, best practices etc. so that the project can be successful – and replicated together with other stakeholders.
“In April, we published the request for proposals and invited a list of experienced and highly qualified solar vendors in Vietnam pre-vetted by CEIA and the buyer group. We expect submissions with highly qualified and competitive bids that will also offer energy cost saving to the buyers,” shares Tung Ho from CEIA.
In phase 3, scaling is the main focus. This involves sharing know-how and replicating the methodology and approaches with the goal to spread solar solutions across the textile supply chain in Vietnam as well as expanding to other manufacturing regions, suppliers, and brands.
Obstacles on the road
But what might seem like a no-brainer in theory, can always be more complex in reality. At the beginning, the CEIA team identified several major obstacles among the manufacturers: Limited technical expertise and ability to assess both the technical and business aspects of the presented cases. Also, a limited understanding of vendors and standard contractual issues. And last but not least: Inadequate building structures and infrastructure for larger solar power solutions. Can the rooftop even support the construction load?
Halfway through the project, David Ekelund from Icebug sees another obstacle: Business-as-usual. The company’s suppliers in Vietnam now receive visits from the solar rooftop providers and then quotes and price estimates. The factory owners can choose to either invest themselves, or let the power company invest, with a long-term contract saying that the factory will buy its electricity for several years.
“Even though this second alternative is without investments and could cut their energy costs with 10–20 percent, the process has been slow, even though we have put this on top of the agenda with our factory partners.”
David Ekelund points out that with all the problems, being in the wake of the pandemic is one overarching factor that slows down decision-making.
“But there’s also a certain audit and sustainability project fatigue. Now we brands want them to spend time and resources and make a commitment that will last for several years. Can they trust that we will stay with them, and not move to another manufacturer next year? All this adds up to business-as-usual maybe seeming like a better solution. David Ekelund believes that it is precisely this apathy that brands and suppliers must unite against and take what should be a “no-brainer” to the next level.
“To build trust – we as brands need to make the same long-term commitments that we demand from our suppliers and we need to get more brands on board,” shares David Ekelund, before concluding:
“At our main manufacturer, Icebug is responsible for around 20 percent of the production. If all the brands producing there would be ready to invest time and resources, that would send an even clearer message.”
About the Project
The long description of the project is “Decarbonizing Apparel Manufacturing in Vietnam – On-Site Rooftop Solar Group Procurement Pilot.”
In three steps clean energy experts, outdoor, sports and fashion brands and suppliers in Vietnam are searching for ways to buy solar power together and find technical and economical solutions that will enable it. The project was initiated by three organizations: the Clean Energy Investment Accelerator (CEIA), the Apparel Impact Institute (AII) and the Sustainable Trade Initiative.
Lead photo: Chillim // iStockphoto.com