Vietnamese apparel sector: ‘Race to the Top’ for sustainable growth

The Danish government, together with the governments of Vietnam and the Netherlands and several development agencies and companies, has formed the “Race to the Top” partnership to support and promote sustainable growth in the Vietnamese apparel sector. The partnership is managed by the IDH, the Sustainable Trade Initiative and aims to establish conditions to sustainably improve social and environmental impacts of the apparel industry of Vietnam.

The apparel industry plays a significant role in the global economy. It is also responsible for high environmental impacts and demand on resources. The sector is often characterised by a “race to the bottom”, where products are sourced in a downward spiral of cheap labour, low quality and exploitative, unsafe and polluting factories. To turn this around into a “race to the top”, it is crucial to create a win-win situation of increased productivity and competitiveness, as well as improved social and environmental performance. This can only be achieved through systemic change and via significant cooperation between the thousands of companies and other stakeholders in the textile industry.

Systemic change requires collaboration between stakeholders that don’t automatically partner in the current system, such as competitor brands. Through unifying efforts and defining a common agenda, a level playing field is created which can be raised by improving minimum labour, building and environmental performance standards.

Systemic change also implies collaboration between public and private stakeholders on finding innovative solutions to current system failures. Manufacturers are often confronted with the need to cut costs and deal with low margins, making it difficult for them to stop unsustainable practices and invest in sustainable ones. Here buyers, national governments, investors and other stakeholders have the potential to unlock positive change by encouraging and incentivising suppliers to produce more sustainably.

In August 2015 the Danish Embassy participated in a workshop held in Ho Chi Minh City. During the two days’ workshop stakeholders of the partnership discussed issues and opportunities, shared experiences, discovered problem-solving strategies, and presented realistic interventions with the aim to make Vietnam come out on top. As part of the workshop, the visit to Saitex International factory in Dong Nai served as an example by demonstrating that sustainable measures not only have positive effect on society and environment, but also on cost-efficiency. All in all it was a very positive workshop that can help improve the economic, societal, environmental and reputational benefits of a sustainable apparel industry here in Vietnam.

Aside the governments the following are part of the partnership: SAC, Levi-Strauss & Co, GAP, Nike, Saitex, IFC, ILO/Better Work, 3GF, the Vietnamese, the Danish and the Dutch government, will establish a ‘Race to the Top’ in Vietnam.

Suppliers, producers and brands will drive each other on better working conditions and higher environmental standards. The partnership is managed by IDH and works on a four stage roadmap which:

  • Creates a common understanding of the sector systems’ levers for change
  • Creates a package of interventions & incentives that drive system change, including a business rationale for manufacturers for more sustainable production
  • Launches the package in Vietnam as a pilot with strong involvement with that country’s government, manufacturers and the brands operating there
  • Launches the model in other producing countries with additional brands to reshape the global apparel value chain country by country.

By following the roadmap, the industry can become a catalyst for sustainable development, and actively prevent future disasters.