Critical Analysis of Zara Corporation's Sustainability Report

Introduction

Zara has maintained its position to be among the largest fashion retailers in the world. It is estimated that they have more than 7200 stores and 41 online markets. The company was founded by Amancio Ortega Gaona in the year 1975 (Ruddick, 2017). It has more than 162000 working members from more than 99 countries who work to make the innovation, changes and helping hand by being friend with the environment and society. Mission statement of Zara states that “Through Zara’s business model, we aim to contribute to the sustainable development of society and that of the environment with which we interacts”. Strategies are also meant for distribution process. Zara sell affordable clothes with high quality materials producing continuously with the changing fashion around the world. They manufacture 1000 new styles in one month.They focus one 3 different business model which are customer relation management, infrastructure management and product innovation business(Anwar, 2017).

Sustainability Report

Zara has focus on environment issues when manufacturing its highly quality garments. Zara always wants to maintain its strong sustainable relation with society and environment. Under the corporate social responsibility (CSR) policy, developing the environment has always been the part of it. Zara uses framework released by Global Reporting Initiative (GRI) for making its sustainability report (Caro and Gallen, 2010). It is their marketing strategy with sustainability rather than maximising profit.

Sustainable Development Goals (Di Benedetto 2017)

• Ensure healthy lives and promote well-being for all at all ages.
• Ensure inclusive and quality education for all.
• Achieve gender equality and empower all women and girls.
• Promote inclusive and sustainable economic growth, employment and decent work for all.

Relationship with Stakeholders

Zara maintains its relationship with the stakeholders by being transparent and more communicable(Caro et al., 2010). This relationship helps them to tackle with the problems and gain the opportunities from the day to day work which creates the sustainable value. Zara continuously take reviews from its stakeholders along with advisor called Social Advisory Board which helps them to face the sustainability issues. Zara do the promotion of human rights by maintaining conversation with its stakeholders.

Social

So in the social sector unlike other industries that are very advanced in high tech work, Zara throughout history has been very intensive in the human capital and labour that is required from it that is invested in constructing the garments. Zara has meant to be a very transparent company in terms of sustainability. Sustainable Apparel Coalition (SAC) is the leading alliance of sustainable production which is working to minimize the environmental and social impacts of the fashion world. The commitment of Zara with SAC includes goals to bring down the consumption of energy in their production processes and in stores. Tokatil (2008) says that Zara has committed to boycott Uzbek cotton. Zara has also joined hands with the Better Cotton Initiative (BCI) to encourage sustainability and better application for workers and environment in the cotton industry. In 2016, Zara market 36.7 million 100% organic cotton and 318% more organic cotton by weight. It also claims that there TENCEL Lyocell recycle almost every chemical and water bacteria. In 2015, Zara was charged with Racial Profiling. Black Customers in the New York stores have been identified as latent shoplifters by Zara employees. This made a big loss in business for Zara in America and big criticism was faced by the company. Another incident takes place in 2015 when “lawyers of Ian Jack Miller, the first and only corporate attorney of Zara’s US and Canada business, filed a $40 million discrimination suit in New York Supreme Court alleging he was fired because he’s Jewish, American and gay.” (O’Connor, 2015)

Environmental

Today consumers are buying products with their impact on the environment. Companies are changing their practices to feel customers more eco-friendly. Zara claims to be the single company with a green web page that has done sustainability efforts. Sustainability goals were published by Zara which includes reduction of greenhouse gas effusion by 20% of 2005 levels by 2020. “In 2011, Green peace’s Toxic Threads investigation found that 6/10 Zara samples tested positive for NPE’s and 2 tested positive for cancer-causing amines released by azo dyes” (Elrod, 2017) Care for the environment is another constant concern guiding the interrex way of doing business and the company makes great efforts to ensure that all of its operations are sustainable. The main line that Zara follows is the incorporation of the environmental variable into all of Inditex business strategies, from design down to retailing. Inditex has rolled out a sustainable store model through which every last detail of its stores is analyzed to minimize water and energy consumption and ensure that the materials used are environmentally friendly.

Financial

Zara has well oiled fast fashion giant. How they are able to keep costs down is to hire cheap labour. In 2011, Zara was embroiled in a scandal in Brazil where one of their contractors was using modern ways to reduce their clothing and their employers were getting paid the minimum wage. INDITEX even accept the responsibility officially which is problematic because now it seems that they are capitalizing on the sustainability break even on the main stream. In fact a year later Brazilian government found that Zara was still using contractors who in return utilize modern plants to meet demand and production deadlines. In 2017, Zara employers found unusual notes in their clothes from the workers stating that they are not getting paid of their work.

Climate Related Issues

Zara makes sure that they manufacture the environment friendly products which offers customer safe and healthy products which are made passing the policies related to management of sustainability. Stores are eco-efficient which saves energy and reduces the emission of CO2 gas which helps to lower global warming resulting in no climate change.They have an automatic sensor which dims the lights by 80% when there is no one at the store. They also have controlled escalator which automatically slow down when no one is on it reducing the consumption of energy. They have a target to reach the 100% of all stores to be eco-efficient by 2020(Sull and Turconi, 2008). Moreover, they use recycled raw materials which saves the available resources. Zara falls on the A lists of the CDP climate change and CDP forest. They follow the environmental strategy by maintaining commitment to NGOs. According to the strategy, Zara respect the environment while manufacturing their product, it protects the biodiversity and maintain sustainable management of natural resource.

Critical Analysis of Sustainability Report

Based on their value chain, Zara makes sure that it is committed to human rights protection and sustainability. They have their own indicator of quality and quantity which measures the requirement of sustainable development goals (SDGs). These indicators are coordinated by Un global compact resulting in sustainable development. Zara promotes recycled nylon and recycled polyester which reduces the excess use of available resources including water, energy and so on. They encourage their supplier to offer them sustainably managed woods which are used to make the high-quality garments. Zara also uses organic cotton which is cultivated with 90% less water and 60% less energy. In addition, it uses recycled cotton which uses 80% less water than any normal (Annual report, 2016). Zara have their own animal welfare policy which deals with ethical use of animal-related products. It ensures that animals through which the animal-related products are made should be treated responsibly and ethically. It never tests its products on animals. Thus, Zara works treating the society and environment in ethical way.

Conclusion

Businesses cannot be run on single strategies as they are made to be changed with good or bad circumstances and situations faced during the time. Therefore the management have to take certain decisions to boost up Zara’s sustainability and progress and to lead the fashion world by example. Assessment needs to be made by the management team before taking any further steps in future. Without planning nothing can be achieved. Before taking any steps forward the management need to plan well in advance. Proper planning is also required in logistics (Banarjee, 2013)