Being sustainable means you must charge customers a premium, right? Not so, according to entrepreneur Paul Elsibai, as he outlines his business’s approach to sustainability and becoming carbon positive.
According to Mr Elsibai, founder of Australian fashion group ABA Labels — a three-year-old business set to turn over $90 million in 2019 — there are alternatives to hiking prices in order to be more environmentally sustainable. And that involves applying the term “sustainable” more widely across the business.
“I think the word sustainable means different things to different people,” he told My Business.
“Right from the beginning... we always had in mind that we needed to build a sustainable business model, and by sustainable, we didn’t just mean environmental. We meant sustainable: had to be a good business, had to make profit and then it had to be for benefit.”
Part of that, he explained, has been getting ABA Labels accredited as a B Corporation, formally certifying it as being “profit for purpose”.
Yet more fundamentally, being sustainable as a business model and for the environment, all without attaching a price premium to consumer products, has been a thorough look into its supply chain and operations.
This has been particularly important as a fashion business, given that it has been claimed fashion is one of the least sustainable industries.
War on waste
“From the outset, we understood and we made a point of making sure that our supply chain was ethical, and our supply chain made a point of being as productive as possible, as opposed to being a cost saving-based supply chain,” Mr Elsibai said.
“By being productive, it meant we could engage the various stakeholders within that supply chain.
“One of the key things we focused on was minimisation of waste: We looked at all the different ways that we could do that, whether it was minimising samples, we built out the factory so that they could do low-volume production runs.
“We see all these fast fashion, or even not fast fashion, places doing minimum runs of 300 units for every style or 3,000 or 2,000 or whatever it might be. We took some time to develop a supply chain that could do really low volumes, and we can do it as low as 60 units on a style, which is super low for fashion. Especially when it turns it and can produce it in under four weeks.”
Walking the walk
Mr Elsibai said that another aspect has been on taking the commitment to environmental sustainability seriously, and going above and beyond the bare minimum.
“We looked at what could be improved over time. Things like having all the swing tags on the various brands being from recycled paper, do that, tick. Do we use a biodegradable bag? Tick. Are we moving from a biodegradable bag next year into a compostable cornstarch bag? Absolutely, because there’s a better way, so tick,” he said.
“In terms of all the offices locally and the fulfilment centres, they’re all green energy-certified. That was a year’s worth of really looking at them and saying, ‘How can we do this better?’ LED lights everywhere, slow-flow water taps, purchasing 100 per cent green power, do all that.”
The business then went a step further, measuring its carbon footprint and offsetting this to the point that it became “carbon positive”.
“Right now with Greenfleet, which we’re a partner of, we plant something like 180 — 187 I think the number is — native trees in Australia per month, to make us a carbon positive in business,” Mr Elsibai said.
“We’re constantly looking at those ways, how to be more sustainable. Maybe for us, rather than thinking of it as sustainable, how can we be more responsible? How can we make better decisions?
“Those decisions are for the betterment of everyone, but they don’t impact the overall business mission, which is to grow, to be profitable and to be sustainable as a business, to employ lots of people and just to do good.”
Part of the cost base
Perhaps the benefit of being a new business has been that ABA Labels was able to build this approach into its strategy from day one, rather than attempting to overhaul existing operations and supply chains.
Nevertheless, Mr Elsibai said the sustainability efforts have been fully priced into the business’s cost base, rather than effectively a surcharge passed onto its customers.
“You have to work that delicate line,” he said.
“Part of what we do is we listen to our customers, and we’ve really listened. We have so many different tools to listen and we know that our customers want us to be responsible.
“If it impacts our cost base slightly, we’re okay with that, because overall it means our customers respond better to our products and our journey as a business and within our brand. It leads to better sales, better engagement, better returning customers, and overall, that has a positive impact on the business, financially and ethically if you like.”
He added: “We understand that some things may cost a little bit more, but we’re okay with that, because the bigger piece is we have a really successful and sustainable business.”
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.
ATO’s 37% tax on Christmas festivities
By George Morice
Performance anxiety not just a bedroom thing
By Dr Louise Mahler
Accommodating older workers ‘not hard, just different’
By Kim Seeling Smith