01 Veja. Future Shapers. 'Taking Care of Business' A Decade of Innovation in Textile Sustainability ( )

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1 01 Veja 'Taking Care of Business' Future Shapers A Decade of Innovation in Textile Sustainability ( ) In 2004, the French footwear company Veja sold its first eco-friendly urban sneaker in the European market. Since its start-up, the company has been committed to creating a unified value chain in which all components of the product and each step in the supply chain emphasizes the concept of shared value, of taking care of people involved in the process and the environment. Veja fervently believes, and is willing to prove, that a different business model is possible where doing the right thing at all levels of the supply chain does not hinder making a profit. Veja works closely on the ground with its suppliers, from an organic cotton farmers cooperative in Northeast Brazil and the rubber tapping communities in the Amazon, to the NGO they engage with on business logistics.

2 Location: Head office in Paris, offices in London and Brazil Type of Business Originally, footwear (sneakers) Now includes Bags and accessories Turnover: 5 million per annum From 5,000 pairs of shoes sold in 2004 to 121,000 pairs in 2011 Number of Employees: 30 staff based in Paris, London and Brazil Commenced business: Began selling organic cotton sneakers in 2004 OC Value Chain Partners: ESPLAR (NGO) and ADEC (Farmers Association) Sustainability Collection: Canvas sneakers made from organic cotton, sustainably sourced rubber, naturally dyed suede and leather Certifications: Organic cotton certified to the European standards by IBD. Targets: Prove that the Veja business model can keep working as the company expands and prospers Future Ambitions: Further develop the unified value chain and reach out to other communities in order to create even more sustainable livelihoods p 2 Recent Recognition: Short listed for the Guardian Sustainable Business Awards 2012 (Supply Chain). Winners to be announced 30th May. Featured in British Vogue April 2012

3 In the Beginning Veja started out as a company with a mission. To disobey rules of commerce and prove that another way is possible. In 2004, Sébastien Kopp and François- Ghislain Morillion started Veja, the first eco-friendly urban sneaker company. The two young entrepreneurs began their careers by travelling the world for multi-national companies on sustainability assignments. They soon realised that, although the sustainability programmes they witnessed may be well intentioned, actual positive impact achieved on the ground was low. This observation ultimately led to the foundation of Veja a company reflecting their vision of a new economic model. They decided to focus on sneakers: a universal, fashion product of which conventional methods of production have significant social and environmental impacts. Veja s mission is to prove that a sustainable way of doing business is not in contradiction with making profits. The Journey So Far...with their Value Chain Partners The vision behind Veja is to build a unified value chain from scratch. Each step in the value chain and each part of the sneaker integrates the concept of sustainability as much as possible. Veja s most used fiber is organic cotton for its canvas shoes. The organic cotton is supplied by ADEC (Associaçâo de Desenvolvimiento Educacional e Cultural), a farmers association that began growing organic cotton in 1993 and located in Tauá, in the semi-arid regions of the state of Ceará (Northeast of Brazil). In 2005, Veja entered a 3-year contract with ADEC committing to buy the Association s organic cotton at a fair price, enabling ADEC to pay farmers more than double the price offered on the conventional market. From 2005 to 2011, Veja increased its purchase of organic cotton from 3,000 kg to 23,000 kg. This collaboration has become increasingly strong over the years and is an inspiring example of a successful partnership between a brand and a farmers association. p 3

4 was immediate on both sides. When the collaboration started, 250 farmers were producing agro-ecological cotton this has increased to 350 farmers today and more keep on joining the group, attracted by the stable income and the healthy farming practices. p 4 Materials Organic cotton In 1993, ADEC started growing cotton using agro-ecological methods. This shift was prompted by ESPLAR, an NGO based in Fortaleza (capital of the Ceará region), which provides technical support to organic cotton farmers by helping them to implement an agro-ecological farming system. Agro-ecological cotton refers to cotton produced to organic standards but not necessarily certified as organic. Like organic, agro-ecology encourages crop rotation in order to maintain soil fertility, critical for successful land management in this semi-arid zone. The early days were challenging for ADEC as the volume of output was too low for companies to be able to commit to buying their harvest. ADEC needed to find a longterm partner that could commit to buying their organic cotton. In Veja, a supportive partner was found and the commitment Rubber Veja sources its rubber from the Chico Mendes reserve, deep in the Amazonian rainforest at the border of Brazil, Peru and Bolivia. There, Veja works with 40 rubbertapping families in an effort to create a sustainable business for these communities, which in turn helps reduce deforestation. Supporting rubber tappers to make a decent living avoids them moving towards tree felling or other forms of unsustainable income. Veja also works with these communities to increase their knowledge of handling the resin of the rubber in order to be able to model the rubber themselves instead of sending it to a factory to complete this process. By reducing the number of intermediaries, the revenues these communities make from rubber are further increased. Leather and Suede The suede and leather materials used for the shoes are vegetable-tanned. This means that, instead of using heavy metals such as chrome, natural agents such as acacia extracts are used in the tanning process. This considerably decreases the pollution of the waters surrounding the tanneries. Alongside this, Veja is researching and developing natural dyes to reduce the impact of its dying process even further.

5 Factories Veja works with factories in the Sao Paolo region for the spinning and weaving of their organic cotton. The assembly of the final product takes place in a factory in South Brazil. Veja s factory partners, ensure that employees enjoy good working conditions. Indeed, Veja has always felt strongly about workers freedom to associate, uphold their rights, achieve a good standard of living, receive social benefits, and the right to free speech. The average wage of the factory workers is higher than Brazil s legal minimum wage for the shoe industry, and overtime is limited and paid accordingly plus the factories ensure that workers get an annual bonus. These factories have now been thoroughly audited by the Fair Labour Organisation in Veja s efforts to become Fairtrade certified. Logistics In order to reduce the environmental impact, all goods are shipped via boat from Brazil to Le Havre in France. The goods then travel to Paris by barges where they are handled by Ateliers Sans Frontières (ASF), an association whose mission it is to enable socially excluded people to gain employment. ASF stores the sneakers, prepares the orders and dispatches the goods to Veja s retail partners all over Europe. Additionally, ASF handles the logistics of Veja s e-shop orders. Beyond this partnership with Veja, ASF tries to involve its employees in other tasks, including collecting old sports material and computers, repairing them and sending them to developing countries. Certification Organic For Veja, certification was never the ultimate goal. The cotton first bought by Veja was grown under agro-ecological methods, i.e. the cotton was grown organically but not certified as such. But Veja realized that certification was an efficient tool to back-up their claims and to be verified by competent third party auditors who can give advice for improvement. Fairtrade Five years ago, Veja started the process of becoming Fairtrade certified which has so far been a substantial undertaking for all their partners in the supply chain. The certification is expected to be completed in summer or fall In addition, 97 percent of ADEC s farmers growing organic cotton are certified by the third party auditing company IBD who has been carrying out audits on the ground. "We want the small-scale producers with whom Veja works to live with dignity and to be environmentally responsible, this is non-negotiable" p 5 François-Ghislain Morillion, co-founder of Veja

6 Key Success Factors: Growing organically and achieving a unified value chain with all suppliers/partners. Building a long-term relationships on the ground with partners. Becoming a Fairtrade certified company. Implementing a zero zero strategy: zero advertising and zero stock. Promoting and advocating slow fashion and sustainable consumption through Veja s cultural pillar. p 6 Making a Difference Veja s most meaningful investment is the commitment to the supply chain it has organically built up. The company works in close relationship with its different producer groups, rubber tappers, and factory partners with the help of nine Veja employees based in Brazil, continuously involved on the ground. However, the company is firm in its belief that only economic viability will help them show that another business model is possible. Making a difference like Veja aspires to, involves taking risks and acknowledging that fashion is linked to farmers and their challenges on the ground. This can even have an effect on the availability of the products in stores. In 2009, ADEC farmers lost half of their organic cotton harvest due to violent floods (the output dropped from kg to kg). Veja had to ask their retail customers to reduce their orders because they could not produce and deliver enough shoes that year. As a result and as a measure to reduce risk, the company now buys more cotton than needed in years in which yields are high in order to compensate for less productive years. Advocacy and Leadership In the first few years of its existence, Veja worked hard to strengthen its economic, social and environmental pillars, which involved many hours spent on the ground building up the chain. Now that the company has begun to experience steady growth, they decided it was time to develop their last pillar the cultural pillar. The cultural pillar focuses on showcasing a different way of consumption and crystalizes in the concept of a Centre Commercial (or Shopping Mall as translated from French). Opened in December 2010, Centre Commercial is a cross between a store and an exhibition centre, where shoppers can find fashion and lifestyle collections built on the ecological and sustainability values of the exhibiting brand. The Centre advocates slow and sustainable fashion, a concept at the heart of Veja s mission. For more information, please visit: www. centrecommercial.cc

7 Telling the Story Veja is very careful about the way it tells the story behind its sneakers as they want customers to buy their products for the design, the quality, and the price point rather than for Veja s mission, which should only come as a nice add-on. The communication starts on the shoebox where the customer is introduced to the Veja world and to their work at the different stages of their unified value chain. Veja goes even further and has a no advertising policy. Advertising represents a significant budget (up to 1/3 of the turnover) in the sportswear and footwear industry. A shoe produced under the Veja model costs 3 to 4 times more than most other footwear brands given their inbuilt sustainability measures. But Veja's policy on advertising makes it possible to sell sneakers at the same price as competitors. Transparency is essential for Veja and the company openly discloses the limitations of its efforts. For example, they are aware that Brazil is a big country and that moving raw materials from North to South for final manufacturing means carbon emissions. Nor do they hide the fact that some parts of the sneaker, like the shoe laces or the mould used to maintain the ankle are not (yet) eco-friendly. Where to Next..? With an annual growth of about 20 percent, Veja is a successful company but their ultimate ambition is to continue their growth and make the business successful in the coming years to prove that it is possible to do business in a different way. However, they acknowledge that they do not want to become so big that they lose the unification they have achieved in their supply chain. As Veja s business is growing and the need for organic cotton is increasing, the company is looking to diversify its organic cotton supply chain. The two founders of Veja have increased their regular travels to Brazil to find new cooperatives to collaborate with in association with their key NGO partner, ESPLAR. Future expansion is in the pipeline, and Veja is definitely a successful company doing innovative work. One to keep an eye on! "Today, the farmers not only get a better price, but they also know their cotton goes towards producing sports shoes for Veja" p 7 Pedro Jorge B.F. Lima. Agronomist, ESPLAR

8 Future Shapers A Decade of Innovation in Textile Sustainability ( ) For more information on Veja, please visit Textile Exchange inspires and equips people to accelerate sustainable practices in the textile value chain. We focus on minimizing the harmful impacts and maximizing the positive effects of the global textile industry. Our signature program focuses on organic cotton value chains; improving lives for farmers, stimulating markets, and supporting best practice. Website: farmhub.textileexchange.org/ Copyright. All rights reserved.