Released in The Interline’s Sustainability Report 2024, this executive interview with PTC is one of an exclusive five-part series that sees The Interline quiz executives from companies who are defining what the foundations and the frontend experiences of sustainability solutions will be.
For more on sustainability in fashion, download the full Sustainability Report 2024 completely free of charge and ungated.
Last year, it emerged that “sustainability” was still a useful term for capturing a very complex set of variables and conditions. This year, we want to look at how those different elements are being arranged and prioritized. Upstream visibility and traceability, for instance, is a separate piece of the sustainability puzzle from textile-to-textile recycling, or material science, or the circular economy. With all these different parts vying for brands’ and suppliers’ attention, and legislation adding time and compliance pressure to the mix, how do you believe our readers should be thinking about prioritisation?
I think it’s critical to remember that there are two central objectives that sit above all the potentially different directions that brand and retail organizations can go. These are:
- A steep, quantifiable reduction in fashion’s environmental impact.
- Measurable progress towards more equal treatment of people upstream and downstream.
While it’s critical for every business to determine where it wants to focus its efforts, it’s equally vital that every action ladders up to a real return on investment that’s measured by one of those two yardsticks.
It’s also essential to remember that making a measurable difference is no longer optional; different stakeholders are already holding brands and retailers accountable in a way that’s trended upwards even over just the last twelve months. Investors continue to seek out brands that have clear ESG and CSR strategies, and retail partners and consumers are prioritizing “sustainable” products and brands more than ever. And of course the regulatory bar has continued to rise over the past year, with more organizations than ever falling into the reach of legislation in Europe, the UK, and the USA, and more scrutiny being applied to those companies that were already in-scope.
Most of the global retailers and brands PTC works with are preparing to satisfy the data requirements of current legislation, while anticipating the requirements of future legislation. Their most pressing task is to determine what types of material, product and supplier data they will need to collect and validate to satisfy the existing French AGEC law, and to be ready for the Ecodesign for Sustainable Product Regulation (ESPR) mandate to go into effect for all textile products sold in the EU by 2027-2028.
Although not final, it is expected that ESPR will require Digital Product Passports to include:
- The country of origin and composition of every material that goes into the product.
- The processes used to manufacture both the raw materials and the finished product.
- A full accounting of the environmental impact of those processes (e.g., CO2 emissions, water usage, waste generated).
- Applicable product and material certifications (e.g., Fair Trade, FSG).
- Full transparency of each vendor in the supply chain (e.g., compliance with Forced Labor, Living Wages, and other UN Human Rights standards).
- Product and Material Circularity information.
The first priority is for retailers and brands to identify gaps in the data they have and to evaluate the accuracy of that data. After completing this gap analysis, the priority should be developing strategies for closing data gaps and improving the accuracy of all data.
What role can PLM play in delivering that more measurable kind of value?
Every other month, 15 global companies participate in PTC’s Retail Sustainability Working Group. The purpose of the group is to develop best practice approaches for leveraging PLM to support their ESG initiatives. For the past year, the group has focused on three topics:
- Consolidating sustainability data in PLM. Most of our customers view PLM as the system of record for all material, product, and supplier data. This naturally includes sustainability data—whether it is adding traceability results to products, uploading certificates to materials, or pulling Worldly FEM scores into supplier records.
- Compliance tracking. This starts with dynamically creating a checklist of required data tailored to the specific attributes of a product (e.g., composition, where sold). Users can then track the completion of this checklist as data is brought into PLM.
- Driving eco-design decisions. As designers make decisions about which materials to include in a product BOM, retailers would like for them to see side-by-side comparisons of each material and each material supplier’s environmental impact scores.
The first two topics support regulatory compliance initiatives, while the third one supports attaining corporate ESG goals.
So as you can see, everything we’ve just talked about, in terms of measuring value, has data as a central currency. Whether it’s investing in social and ethical initiatives, or in driving down the lifecycle impact of a particular product or category, the only way to quantify improvement is to benchmark the way things stand, and to then measure how they change.
At the product and supply chain level, this is absolutely in the wheelhouse of enterprise PLM – and it’s something we know PTC FlexPLM is especially well-equipped to do. We have worked for decades, alongside the most successful names in fashion, footwear, retail and consumer products to make sure that our platforms are reliable, scalable, and extensible in a way that captures and creates business-wide value from the full spectrum of data across design, development, and sourcing.
When everything lives in a single, centralized, bulletproof source of truth – from critical product data to chain of custody information – we’re talking about making a massive difference in a company’s ability to not just measure their sustainability successes, but to execute on them in the first place.
What kind of impact can better eco-design decisions really have on a retailer or brand’s ESG goals?
Almost every retailer and fashion brand have publicly committed to GHG emission-reduction targets—typically 30-50 percent by 2030. Purchased Goods and Services is the largest source of retail GHG emissions, primarily driven by raw material sourcing and processing. This means that making a real dent in their carbon footprint requires retailers to switch to more sustainably-sourced and sustainably-manufactured materials.
The Worldly FEM assessment includes normalized GHG emissions data for each factory (kg CO2 per unit). Passing this data to factory records in PLM allows sourcing managers to see the per unit impact of choosing one supplier over another. In an analysis of several hundred identical materials with multiple suppliers, PTC found that choosing the material supplier with the lowest normalized CO2 leads to a 51 percent average reduction in CO2 per unit.
What’s fundamentally unique about PLM that isn’t achievable, for instance, with spreadsheets and databases? And what can companies potentially build on top of PLM that they couldn’t otherwise?
This is something forward-thinking PLM companies have been talking about for a long time: the idea that there’s a difference between what I’ve referred to as “digital dead-ends” and engines for digital transformation like PLM. The urgent drive for sustainability is bringing this discussion back to the forefront, but it’s not a new conversation.
For a brand that hasn’t systematized their key product data or their information and insights they will need to achieve their sustainability objectives, the key data will usually live in spreadsheets, emails, static PDFs, and other repositories that are disconnected from the rest of the product lifecycle. However, a company at that stage of digital maturity chooses to prioritise their investments in sustainability, each initiative will, by definition, have to start with understanding where the information actually lives – and the answer will almost always be that it lives in too many different places to be fit for purpose.
So the next step will always be to understand whether that data can be centralized, normalized, and understood. This is a necessity for anything a business wants to accomplish in the realm of transparency, accountability, and disclosure. As a company, you have to have confidence in your knowledge base before you can make confident outward commitments about it.
This is something that enterprise PLM has been extremely good at, at scale, for a while. We know that more than 300,000 people use PTC FlexPLM every day, for example, to work with properly centralised and systematised product data, bills of materials, supplier information, planning data, and other vital content. Our team is also actively working with some of the leading brand and retail businesses in the world to make sure that the same capabilities can be seamlessly extended to the full spectrum of new data points that will matter in the sustainability age.
And finally, companies looking to build AI, analytics, and insights platforms on top of disconnected data sources will encounter a series of roadblocks, whereas PLM users will be starting from the best possible foundations. This is something we’re also seeing first-hand, as our users get deeper into new functionality like our Flex Insights platform and other ways of building new possibilities on top of foundational data that is clear, consistent, and centralised.
We’ve focused on value and data so far through a very brand-specific lens, but what is your perspective on how technology (particularly PLM) can support the supply chain actors who will be essential to delivering on sustainability targets – but who are also at the most risk of both environmental and ethical impacts?
It’s critical to understand that, when we talk about “risk” in fashion and retail, we as an industry tend to concentrate exclusively on the risk to brands and retailers themselves. But as you pointed out, there can be business continuity risks for companies throughout the supply chain that range from commercial to existential.
At PTC, we believe the right way to start building resilience against those risks is to provide those supply-side companies with the same foundational technology support and the same access to actionable information – allowing them to communicate and collaborate with their brand and retail customers in a way that’s secure, connected and accountable.
This has always been our philosophy, and it’s the reason that PTC FlexPLM is used by more companies across the global supply chain – from manufacturing businesses and sourcing offices to mills and material development partners – than any other PLM platform. Today, there are more than 75,000 FlexPLM users in the extended worldwide value chain, and that number is increasing every day.
With sustainability destined to bring sweeping changes to many different parts of the fashion value chain, it seems inevitable that some (or many) current ways of working will have a limited shelf life. Where do you see the industry changing the fastest and most acutely? What do we take for granted today that’s unlikely to be viable in the future? And how can fashion businesses get ahead of that shift?
Many retailers we have been working closely with acknowledge that change management is a big issue for both their internal product teams and their suppliers.
Internally, a greater focus on reducing emissions in raw materials and material construction will require capturing and analyzing processes at the fibre-level. This means that material designers and material suppliers will need to enter a whole new set of attributes–such as denier and yarn formation method–for each fibre that goes into each material into PLM. Visibility will require adding tier three, tier four, etc. suppliers to supplier libraries, while traceability will require connecting those supplier tiers to the materials and products being produced. Capturing each of these new data points in PLM is no small task for retailers with tens of thousands of existing materials and thousands of tier one and tier two suppliers.
Suppliers are already expected to complete social compliance audits and factory assessments like the Higg FEM. As adoption of traceability solutions becomes mandatory, much of this additional data collection will also fall on the suppliers. It does not stop with just collecting data: more and more retailers are pushing their suppliers to make tangible commitments to reduce their emissions.
We’re already seeing a strong trend towards those companies looking to build visibility where it doesn’t exist, and to bring information and insights back in-house, so I think it’s fair to say that the companies making those investments (and many of them are FlexPLM customers who value our role as an enterprise-grade, solution-agnostic technology partner to the most iconic brands in the world) are the ones getting ahead of the game.