As the world’s largest marketer of basic apparel and selling more underwear, socks, shapewear, hosiery, and T-shirts than any other company in the United States, HanesBrands (Hanes) exemplifies how intertwining environmental stewardship into the business model creates a competitive advantage as companies must now respond to new global climate change legislation.
In 2006, Sara Lee Corporation spun off several business units and manufacturing entities into what would become Hanes. Although each former business unit had its own approach to energy management and some had tracked energy performance, there was no unifying corporate strategy to energy management. Thus, in 2007, the company established a few lofty five-year environmental goals as part of a company-wide program that would protect the environment while reducing energy costs. In 2012, Hanes successfully achieved its goals for reducing energy consumption, carbon dioxide emissions, water use, and its target usage of renewable energy sources. Its performance, as well as new goals for 2020, are detailed below.
Exhibit 1: Environmental Performance Data
As Hanes steadily worked towards its goals through the years, it has quietly built up a reputation as a socially responsible manufacturer. The U.S. Environmental Protection Agency has honored Hanes for seven consecutive years for conscientious energy management with its Energy Star Award. In addition, Newsweek ranked Hanes as number two in its 2012 list of the Greenest Companies in America (among textile, apparel & luxury good companies). Hanes considers this environmental effort as a major business strategy; to create value for employees, shareholders, and customers, the company must use “sustainable practices and conserve natural resources to mitigate [its] environmental footprint and reduce costs.” Because the company is vertically integrated (more than 90% of the apparel units Hanes sells are manufactured in its own plants or those of dedicated contractors), large energy cost savings could be achieved if there is an effective energy management process in place. As a matter of fact, these energy practices had saved the company more than $23 million in energy and water costs in 2012.
Aside from the cost savings, how does this create a competitive advantage for Hanes? As the Paris Agreement to address climate change officially goes into effect today, the next step for world leaders is to set in place the details and metrics to monitor companies’ and countries’ emissions in order to actually achieve the agreement’s goal of limiting the increase in global temperatures to two degrees Celsius. This is the first time in the history of the world that a majority of countries from a carbon emissions standpoint have agreed to legally binding limits of global temperature increases. However, even if each country accomplishes the agreement’s initial pledges, the expected temperature increase would still be over two degrees. Thus, in the next few years, each country is expected to set even deeper reductions.
However, most companies do not even know how much greenhouse gas they emit, much less be able to curb their emissions. Hanes, on the other hand, has emphasized environmental responsibility for over a decade and now has an established process and structure in place to both measure and reduce its energy consumption and emissions. Arguably, this gives the company first mover advantage and will enable Hanes to continue to focus on all aspects of its business, rather than scramble to fit an existing business model within the confines of new regulations and governance structures.
While its energy conservation program appears robust, the company should now also consider what its strategy should be to address potential raw material supply shortages. Cotton is the company’s largest raw material purchase and crop yields are extremely sensitive to water. In order to shield itself from risks with raw material price fluctuations, Hanes should also consider in experimenting with alternatives. For example, competitor VF Corp, who manufactures brands such as Wrangler, The North Face, and Nautica, has begun experimenting with less water-intensive cotton plants as well as incorporating cotton substitutes on a mass scale into its clothing lines.
In light of a dynamic and ever changing international law and regulatory atmosphere with respect to sustainability challenges such as the climate crisis, it is now more imperative than ever that businesses have the foresight to build out sustainable solutions that are also economically viable. Although Hanes had been at that forefront and should be able to reap the fruit of its labor, it must not be complacent. (735 words)
 “Sara Lee Corporation Announces Hanesbrands Inc. Spin-off Distribution Ratio and Record and Distribution Dates; Company on Track to Complete Hanesbrands Spin-off on Sept. 5, 2006.” Business Wire. N.p., 07 Aug. 2006. Web. 04 Nov. 2016.
 Bradsher, Keith. “The Paris Agreement on Climate Change Is Official. Now What?” New York Times. N.p., 3 Nov. 2016. Web. 4 Nov. 2016.
 Gallucci, Maria. “Climate Change: Global Clothing Companies Seek Alternatives To Cotton As Future Drought And Extreme Heat Threaten To Hurt Yields.” International Business Times. N.p., 05 Dec. 2015. Web. 04 Nov. 2016.