D’AMATO: Good morning. During this lecture we will have the opportunity to discuss with Enrico Degara, general manager of YKK Europe, what sustainability is for YKK and how the company is embedding sustainability in its procurement, manufacturing and distribution processes. So, Enrico, thank you very much for being here. Can you briefly explain to us which are the main priorities of the sustainability agenda of YKK? DEGARA: First of all, we have to split sustainability approach into two main areas. One is related to the social and human being respect, and the other one is the environmental respect. Both are very important to us even if we recognize that customers now are more attentive to the environmental issues. In the first study of the social aspects, we can list many activities. Just to name some of them, the enforcement of human rights and fair labor practices and equal opportunities and the implementation of global compliance criteria. And environmental topics, especially, we are concentrated in improving more and more the production processes, so that the impact to the environment will be diminished and also to improve the products in themselves and to compensate the emissions that we somehow produce during the manufacturing processes. We aim at becoming a low carbon impact company by the end of academy term, which means March 2021. D’AMATO: YKK is famous for its cycle of goodness. Can you briefly explain what do you mean by cycle of goodness and when did sustainability become a key strategic objective for your company? DEGARA: Yes, cycle of goodness is the basic philosophy of our company, and it dates back to the foundation in 1934. It states that no one can progress without rendering benefits to others. So the concept of giving back is a pivotal point. For us, the role of a company is to create value for all stakeholders in order to circulate the benefit to everyone involved in its activity. In a sense, we can say that the sustainability concept became a strategic point in the very moment of the company's foundation, but if we want to set a precise date, we can say that the 20th of September of 1994 when our chairman, Mr. Tadahiro Yoshida, proclaimed that the environmental earth and safety pledge is a first priority for the whole group, is the date of our beginning in sustainability activities. D’AMATO: Now, let's see how your company implements the sustainability in its main supply chain management processes. Let's start with the processing one. How does your sustainable sourcing program work? DEGARA: Yes, in 2013 YKK designed and explained to all suppliers the procurement principles. Substantially, all suppliers are requested to abide by YKK’s principles, which include the respect of YKK fundamental values and the management of environmental, social and chemical set of rules and a self assessment scheme and, of course, the consequent audit program and implementation of corrective actions in case of discrepancies. D’AMATO: When was the sustainable sourcing program introduced? How many suppliers did you inform and how did they react? DEGARA: Well, in the very first year more than 700 suppliers were involved, and this number is increasing year by year, and to be honest, not all of them reacted very properly at the beginning, but this is understandable because some of them, especially the small companies, were suspicious that we were trying to get undue profit from this approach. But because YKK really believes in a long-term relationship approach, eventually almost all strategic suppliers decided not only to accept the case but also to progress together with us in the sustainable program. D’AMATO: Moving to the production activities, how do you guarantee sustainability in your manufacturing processes? DEGARA: The main strategy of YKK is claimed in the sentence “technology oriented value creation.” It means that we aim at creating value to be redistributed to all our stakeholders through the continuous improvement of production processes and products and technologies. Most of the machineries that we use in our manufacturing activities are designed, developed and produced by ourselves. This, of course, gives us a boost in not only controlling the quality of our products, but also in continuously developing new ways and new sustainable ways of production. Of course, this is not enough, and we have to continuously relate to third parties, customers and supplying partners and universities and nonprofit organizations. They give us the possibility to keep the pace with innovation, so that we understand how the world is developing and how we can develop with it. For instance, we import, let’s say, or copy the ideas of innovation from other industries. Just to name an example, some of the plating innovations that we introduced are coming from the luxury wristwatches and glass frames sectors. D’AMATO: What about the reduction of chemical used in your manufacturing processes? DEGARA: Yes, of course, the reduction of chemicals is one of the important aspects of sustainable activities. We refer to Higg heat Index 2.0 to measure our activities in this reference. This gives us the possibility to commit to the reduction of chemicals even when they are very difficult. So, for instance, the DHC program requires to eliminate 11 chemicals that have been just as hazardous by the end of 2020. And we already eliminated seven of them, and for the remaining four, we are committed to get rid of by the end of 2020. D’AMATO: Concerning logistic and transportation activities, how does your model impact on your environmental footprint? DEGARA: From the very first years of its activity, YKK decided to have a geographically fragmented supply chain scheme. We are now present in 73 nations in the world, with more than 90 production factories. Our aim is to produce as close as possible to where our customers need the goods. This means that, of course, we can improve our service to customers by proximity, but also we reduce the pollution generated by the transportation of goods around the globe. It is easy to understand that if, for instance, a customer has five locations, production locations in the world, supplying those five locations from local factories reduces dramatically the transportation mileage compared to, for instance, one single production location exporting all over the production facilities of the customer. D’AMATO: Are you able to design for sustainability? In other words, have you been able to include sustainability in new product design and development processes? DEGARA: Oh, yes, indeed. We already spoke about the improvement of production processes in order to reduce the environmental footprint, but also products can include in themselves sustainable concepts. For instance, we offer a full range of slide fasteners under the commercial name of Natulon, made out of recycled or recyclable materials. In general, when R&D departments design new products, they try to keep in mind the impact on the environment in all steps of their lives, from the design offered to the production and the use, and eventually the disposal. D’AMATO: Are your customers asking for more sustainable products? Did you experience any trend in the last years? And on which aspect of sustainability are they focused? DEGARA: Definitely, yes, we are experiencing higher and higher appetite for sustainable products and especially for products that can be declared as sustainably manufactured. And also a trend that we are recognizing in the recent months, or very limited number of years, is the recycling of garments. So, major brands introduce this concept, in the more general concept of circular consumption. We notice that the request for sustainable products is somehow trickling down from north to south Europe, and actually also from west to the east of the world, following the different shift in awareness of consumers toward sustainable ideas. We expect this trend to reinforce in the next years and on the increase of consumers’ awareness, and it is somehow also involving new designers who live and breathe every day the idea of sustainability. D’AMATO: I heard about a very interesting project called Passive Town. Can you tell us something more about it? DEGARA: Passive Town is an example of how YKK wants to be sustainable not only in its production processes, but also in other aspects of life. Passive Town is a residential district that YKK real estate is building in Japan exactly in the city of Kurobe, where the main production facilities of YKK in Japan are located. It is based upon the concept of a passive design. It means that the buildings passively exploit the resources that the nature is giving in availability. So the wind, the sun, the ground water, etc are passively exploited by the buildings themselves, without, or with a very limited need for additional energy based on fossil sources. In a sense, YKK is trying to move in every aspect of its life from the century of energy to the century of environment, to its own benefit, but also to the benefit of the whole global community. D’AMATO: Which are the main challenges that you see in the process of improving the sustainability level of your industry? DEGARA: I would name two main challenges. One is more technical, and the other one is more, let’s say, commercial. The first one is related to the proliferation of sustainable standards. We see every now and then new standards coming on the market, and some of them are overlapping the existing ones, some of them are introducing new requirements, but the number of standards is becoming really huge, and part of that, also, single nations, and even single regions in some nations, are enforcing laws concerning the respect of environment. Altogether, this is creating a lot of confusion, and we really long for a centralized coordination of this in order that all these standards combine into one or few globally recognized standards for all actors in the supply chain. The second one, the more commercial one, is related to the consumer’s awareness. Consumers are improving, actually. They are more and more aware of the sustainability issues, but they are far from understanding what is behind the creation of a sustainable piece of apparel. One of the ways to include the sustainability of garments is to prolong their useful life. It is logical, but this goes against the business scheme of fashion itself. Fashion is to make itself obsolete every day by improving the performance of garments and the design, in order to induce a continuous purchase. But if they prolong the useful life of garments, this will be a kind of boomerang for them. So what we really believe is that consumers must become more and more aware of what purchasing sustainable garments means. They at a certain moment in time must become available to pay for the premium price, otherwise this would not work, and companies only cannot make the whole effort, otherwise, it would be somehow frustrated or vanished, alone, without the real involvement of consumers. D’AMATO: So, thank you very much for your contribution, and let's look for a more sustainable future. DEGARA: Thank you for your invitation.
