Environmental upgrading of apparel firms in global value chains: Evidence from Sri Lanka

Abstract

Buyer firms in the apparel industry are using environmental standards to coordinate their global value chains (GVCs). In turn, supplier firms are complying with environmental standards as a way to increase their competitiveness. This article addresses the nascent gap in the GVC literature in relation to firmand chain-level responses to environmental concerns, which enable apparel firms to upgrade. The article examines the drivers and conditions under which apparel firms embrace environmental upgrading in Sri Lanka. Findings suggest that GVCs represent both the drivers of environmental upgrading and the means by which to obtain the knowledge needed to upgrade particularly for firms in relational networks. The strategic intent and capability of the suppliers to assimilate the transfer of knowledge and upgrade are critical. However, upgrading does not necessarily yield higher profits for supplier firms. The incentive for upgraded firms to maintain their environmental performance is competitive advantage arising from reduced costs.

Environmental Upgrading in Pakistan’s Sporting Goods Industry in Global Value Chains: A Question of Progress?

“…Empirical definition of environmental upgrading is it "occurs when a firm, within a particular GVC, improves its environmental performance through changes in technological, social and organizational processes and by extension avoids or reduces its overall environmental impacts" (Khattak et al, 2015, p. 331). A limited number of research has been conducted so far and all are exploratory in nature with the aim to understand the construct of environmental upgrading along with its processes and core dimensions in GVCs (see De Marchi, Di Maria, & Micelli, 2013;De Marchi, Di Maria, & Ponte, 2013;Goger, 2013;Khattak & Stringer, 2016;Khattak et al, 2015;Poulsen, Ponte, & Lister, 2016). All these researchers emphasize the role of lead firms in environmental upgrading in GVCs, which supports our view that governance mechanisms are crucial factors influencing upgrading.…”

“…Recent debates have highlighted concerns that the environmental dimension of the globalization of production are still in its infancy (Gereffi & Fernandez-Stark, 2011;Khattak et al, 2015). Whilst a well-defined construct of 'environmental upgrading' did not exist in the GVC literature until very recently.…”

“…Hence a typical supplier firm is embedded in a wider institutional network including local, international and regional networks. Here it is worth mentioning that lead firms encourage their suppliers to adopt environmental friendly management practices due to possible future environmental rules and regulations in their countries (Khattak et al, 2015).…”

“…According to Khattak et al (2015) there are four major areas in a typical apparel sector where environmental initiatives or improvements can take place: energy, water, waste management and carbon emissions. In the context of this study all the interviewees mentioned that the environmental impact of the manufacturing of sporting goods, in particular football was not detrimental.…”

Nationalising local sustainability: Lessons from the British wartime Utility furniture scheme

“…Contemporary neo-liberal discourses do much to celebrate the capacity of globalised markets and supply chains to deliver 'environmental upgrading', in which attention to environmental standards is seen to improve firm competitiveness (see, for example, Khattak et al, 2015). Developed from broader conceptualisations of production upgrading within global value chains (Gereffi et al, 2001), more recent literature has foregrounded the ways in which upgrading might involve moves towards environmental sustainability (Goger 2013;de Marchi, di Maria and Micelli 2013; on the furniture industry in particular, see Handfield et al, 1997;Kaplinsky et al 2009;Høgelvold 2011;de Marchi, di Maria and Ponte 2013).…”