TAU Transformational Fund to Address Garment Factory Conditions in SE Asia

a large garment factory

It’s been awhile since I shared with you happenings in the sustainable fashion industry. And one of the biggest headlines of the summer was TAU Investment Management’s announcement that it plans to invest millions to improve and/or upgrade apparel and textile supply chains. This is hopeful news in response to last year’s tragic loss of workers’ lives in garment factories. Activists, garment factory owners, and families demanded some changes be made, and TAU responded.

The private equity firm’s senior strategic advisor, Dr. James Gifford, told those of us attending the Ethical Fashion Forum’s SOURCE webinar which steps are being taken to “transform” mid-level factories throughout Southeast Asia—including Vietnam, Cambodia, Bangladesh and Indonesia. The company will tap into its “Transformation Fund” to spend between $15 to 40 million per factory to overcome social, environmental and efficiency challenges. Continue reading to learn at least six ways TAU is hoping their investments will benefit some of the industry’s top suppliers.

Cool Fact: Tau is the 19th letter of the Greek alphabet and symbolizes life and/or resurrection.

Big Returns on Small Investments

Unfortunately, the fashion industry has gained a reputation of not being so “friendly” to its employees or the environment. Yet, optimists like Dr. James believe this is an “inflection turning point,” and it’s time we resolve past mistakes. Here’s what TAU doing to lead the charge:

  1. Overhaul Out-of-Date Machinery: A portion of investments will be used to purchase new, more energy-efficient sewing machines and generators and boilers needing less water. There also are plans to install solar panels, upgrade energy and water pipes, and purchase land for relocation when necessary. All of these changes will use fewer natural resources and limit a dangerous cycle of over-consumption.
  2. Provide Education and Trainings for Employees: Evidence shows reduced worker turnover and staff loyalty are key determinants of a business financial return. Therefore, TAU plans to offer fire and safety trainings, workers’ rights courses and health care initiatives to employees. Dr. James went on to say empowering women to managerial positions is another step towards creating better factories.
  3. Make Operational and Managerial Changes:In an effort to reach leading apparel brands, the investment firm shares their internal expertise with factory owners. This includes introducing industrial technology (IT) strategies and advanced marketing and product promotions; implementing better human resource training to attract skilled professionals.
  4. More Access to Credit: Many banks feel more confident to give loans to factory owners with TAU’s financial backing. The additional funding helps owners to accelerate their business’ growth and ultimately reach larger apparel brands.
  5. A Meaningful Minority: The daily hands-on partnership of TAU with owners helps to ensure confidence from suppliers and brands. All parties can trust the best practices are met, while owners can relinquish the majority of control of their business(es).
  6. Better Brand Relationships & Networking: With more sustainable, efficient equipment and systems in place, brands can focus on speeding up their products’ time to market and give customers what they want in terms of demand and delivery.

The bottom line is fashion brands need suppliers to produce their garments. Suppliers need investors with strategies in place to help them create clothing that doesn’t harm people or the environment.

What other changes do you think need to be made to improve fashion’s supply chains? I’d love to hear from you.

Image credit: ILO in Asia and the Pacific at Flickr cc

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