Making Jeans is Bad for the Planet.  Kim Bhasin & John Boudreau

A river of toxic blue sludge flows through a factory 18 miles outside Ho Chi Minh City, one of 165 plants inside a massive industrial park that makes everything from shoes to food and electronics. The ooze swirls into a hazy mixture as it wends its way through giant vats and filters. Nearby, Sanjeev Bahl puts an empty glass up to a spigot, where the now cloudy, colorless liquid trickles out. He lifts it to his lips and gulps it down.

“It’s great stuff,” he says. “It’s cleaner than World Health Organization water standards.”

The 55-year-old chief executive of Saitex International was there on one of his regular visits, a very long flight from his home in New York. Dressed in a blue denim shirt and white jeans, Bahl explains that his jeans-making operation recycles 98 percent of the water it uses. But that’s just one aspect of what he considers a tectonic shift for an industry that dumps waste all over the globe.

Saitex invested $2 million in the water system alone to prove it’s not only possible to make environmentally safe blue jeans, but you can turn a profit doing it. And it’s not just recycling: His solar-powered plant doesn’t use fossil fuels, relying instead on biomass generators that burn wood shavings and coconut husks. Eco-friendly washing machines bleach fabric with minimal water. In sum, Saitex uses less than a liter to make a pair of jeans where traditional processes require 80 times that much. The factory even received LEED certification from the U.S. Green Building Council, the only jean-maker in Vietnam to earn it, Bahl says.

Saitex (named for the guru Shirdi Sai Baba) isn’t some new startup—its products bear the tags of Ralph Lauren, Calvin Klein and Tommy Hilfiger. What Bahl wants now is to spread the news about a manufacturing strategy he hopes all textile makers will adopt.

“This is what we want to deploy in the U.S.,” he says as he walks among some of his 4,500 employees during a November check-in. They rush around him, crisscrossing a spotless factory floor illuminated in part by natural light from transparent panels in the roof.

And the bottom line for all this high-mindedness? Saitex’s green strategy is in the black. The company saves $1.7 million each year compared with similar-size competitors, Bahl says. “It would be quite easy for other entrepreneurs to follow this methodology,” he says, “if they understand that this is profitable.”

Textile mills, cut-and-sew garment factories and denim wash-houses are profitable businesses for thousands of operators all over the world, many of which aren’t all that strict when it comes to saving the planet. The industry is notorious for capitalizing on rock-bottom labor costs and lax environmental standards. Retailers often don’t know the provenance of their clothes because strained factories job out work to smaller plants—where quality control, labor practices and human rights aren’t always priorities.

It’s unclear exactly how much pollution can be attributed to the global garment industry, but there’s universal agreement that it’s a lot. Mountains of fabric scraps pile up at garbage dumps in China, India, Bangladesh and Southeast Asia. Worldwide, such discarded material comes to 92 million tons per year, a number projected to reach 148 million tons by 2030, according to a recent study from the Boston Consulting Group and Global Fashion Agenda.

The use and pollution of water represents an equally colossal problem. The study estimates the industry consumes 79 billion cubic meters of it annually—almost as much fresh water as the Nile discharges into the Mediterranean in the same period.

Though most of that usage comes from growing cotton, garment processing is also water-intensive. Almost all dyes and chemicals are applied to textiles through water baths (with some factories sending the noxious waste back to the water supply). Outside Dhaka, one of the world’s biggest textile hubs, a toxic stench rises from polluted canals and wetlands surrounding an industrial area infamous for a factory collapse that killed almost 1,200 people in 2013.

For Bahl, these facts were never far from his mind. But a report last fall from the United Nations warning of a climate crisis that’s only 20 years away reaffirmed his desire to expand as soon as possible.

“It’s a very scary moment right now,” says Bahl. “I look at my kids and think, what’s this place going to look like?”

Bahl exudes the unflappability of a seasoned executive, yet his words are laced with the bile of a disappointed environmentalist. Born in India, he went to business school at Symbiosis International University in Pune, and by the late 1990s, found himself in Hong Kong working in apparel sourcing. He ordered product from factories around the world to be sold by major international retailers.

He says he opened his first garment factory because of mistreatment he witnessed—forced overtime, physical abuse, discrimination. “I thought I was living in a world of modern-day slavery,” he says.

The first Saitex factory, opened in 2005, was a more traditional operation. But by 2010, Bahl decided to make the move to sustainable manufacturing. The current plant is in Bien Hoa, a tree-lined, 1,700 acre industrial park near a congested highway. A U.S. base during the Vietnam War, the zone was established in 1994 as a joint-venture between Thailand’s Amata Corp. and a state-owned company. The nearby river is so polluted from industrial waste that local authorities want to replace some of the park with commercial development.

Michael Preysman, CEO of online clothing retailer Everlane, has emerged as one of Bahl’s biggest boosters. Looking to get into the denim business, Preysman spent three years searching for a partner before discovering Saitex. Most factories are decades-old, with owners not inclined to spend money on a planet-friendly retrofit. “It took 6 or 7 years for somebody like Everlane to spot us,” says Bahl. But now the word is out.

Saitex’s biggest clients include J. Crew, Target, G-Star Raw, Madewell, Edwin and Outerknown, Bahl says. Donna Perri, an executive at women’s clothing label Eileen Fisher, says she was intrigued by Bahl’s effort to make what are, in effect, clean jeans. Eileen Fisher placed its first orders with Saitex for its fall and resort collections last year.

“There’s a lot of noise out there about sustainability,” says Perri. “They go way beyond what most of the factories do.”

Outside the Saitex plant, solar panels collect energy and fountains harvest rainwater. Inside one of the buildings, there are 1,300 machines for stitching pockets and seams. The most conspicuous part of the production line, however, is fairly anachronistic. High in the air, thousands of pairs of jeans dangle from a conveyor belt. It curves around and up toward the ceiling—almost as if you’ve arrived at the world’s largest dry-cleaner, except all that denim is simply being air-dried, aided by heat rising from the factory floor.

Down below is more modern equipment. Bahl replaced traditional “belly” washing machines with vertical jet washers that reduce water usage by 75 percent, down to only a few liters per kilogram of jeans. He deployed lasers to create the “whiskering” and sanding effects to make them look distressed. The process is much less labor-intensive and reduces carbon dioxide emissions and other airborne particles. It takes a little over 30 seconds to sand a pair of jeans, about four times faster than if a troop of workers sat down to do each by hand.

Then there’s that cloudy recycled water. All the usual gunk that comes from making blue jeans—dye, sand, pumice and fabric—is removed using a five-step, reverse osmosis filtration technique. It’s mixed with concrete and dried into bricks (so that none of it can seep back into the environment) and used as building material, Bahl says. As for the water, he’s trying to get a license from the local government to bottle some of it for drinking in drought-stricken areas of the Vietnamese countryside.

Having slashed its annual $700,000 water bill by half, Saitex broke even on the recycling investment in just six years.

Until 2018, Saitex was funded by private investors and profits were funneled back into the business. Then, in May, Navis Capital, a private equity firm based in Kuala Lumpur, took a stake of undisclosed size. Tau Investment Management, which specializes in clothing supply chains, was an adviser on the deal. Bahl declined to share how much total funding his business has accrued thus far and wouldn’t talk revenue. But he contends Saitex is “very profitable” and debt-free.

Being able to show your Earth-friendly bona fides isn’t just good retail manners, or simply an acknowledgement of the existential threat of climate change. It’s also very big business. Consumers are increasingly rewarding companies that show they’re on the side of the planet, from organic foods to power-saving appliances to electric cars. It’s reasonable to think the garment industry, one of the biggest retail segments out there, would fall into line, too. But it hasn’t.

“The problem is that everyone’s banging on about technology as the knight in shining armor, but it’s not going on at an industrial scale,” says Christina Dean, the founder of Redress, a Hong Kong-based environmental group working to reduce textile waste.

Sustainability standards are improving, Dean says, pointing to retailers such as H&M, Burberry and Kering (owner of Gucci, Stella McCartney and Saint Laurent). Many eco-friendly jean labels have popped up in recent years, too, including Boyish, Warp+Weft, DL1961 and Blanche.

Even Levi Strauss & Co. said last February it’s embarking on what it calls Project F.L.X. (Future-Led Execution), an effort to automate the denim-finishing process and reduce the use of chemicals. The blue jeans-giant has pledged to achieve zero discharge of hazardous chemicals by next year.

For Saitex, selling jeans to American companies isn’t enough—it wants to make them there, too. Bahl wants to open two garment factories in the U.S.—one in Los Angeles this year, and a second in the New York area by the end of 2020. It’s rare for new clothing production to come to the states. For example, the country’s last selvedge denim operation, the Cone Mills White Oak plant in Greensboro, North Carolina, shut its doors at the end of 2017 after more than a century in operation, effectively ending all production of the high-end, self-finished fabric on U.S. shores.

Bahl sees his foray into America as part of a bigger goal of encouraging sustainable manufacturing at a critical point in history. But will consumers pay a premium for clean jeans? Unless prices are comparable to the dirty kind, there may not be enough buyers, says Dean.

In order to spark real change, companies such as Saitex must show they are a viable business that can be replicated, she says. Fashion brands have yet to get the message across to shoppers about why they should care where their clothes come from, and how they were made.

For everyone involved—from the cotton farms to fashion boutiques—it comes down to a simple, non-environmental axiom. “Profits talk loudest,” Dean says.

Bahl remains confident his experiment will succeed, even as he prepares to begin operations in California, where the $11 minimum wage is astronomically higher than in Vietnam.

“Entrepreneurs have the choice to make,” he says. “Do they invest into long-term value creation or do they go after the low-hanging fruit? The minute they understand that the long-term value creations are actually profitable in the long term, it would definitely influence the thinking to adopt a different path.”

Bloomberg, January 16, 2019