Harvard Business Review on Greening Your Business Profitably

Don’t Tweak Your Supply Chain—Rethink It End to End

by Hau L. Lee

HONG KONG–BASED ESQUEL, one of the world’s leading producers of premium cotton shirts, faced a quandary in the early 2000s. Apparel and retail customers such as Nike and Marks & Spencer had begun asking the company about its environmental and social performance. Its leaders anticipated scrutiny from other customers as well, since more of them were demanding that a greater portion of the cotton in their shirts be grown organically. But the crop required a lot of water and pesticides, especially in poor and rapidly developing countries, where Esquel’s cotton was grown and processed.

Though Esquel’s executives wanted to strengthen the company’s already serious commitment to social ...