3 Real Business Benefits for Suppliers Using the Higg FEM

The apparel and consumer goods industries face ever-growing scrutiny about their manufacturing practices and their impact on the planet, and the sources of this scrutiny span far beyond industry insiders. For example, take Netflix’s new documentary Buy Now!, which harshly criticizes the apparel industry for overproduction at the expense of the environment and human lives. With pressure to implement systemic changes growing stronger, companies are increasingly realizing tangible benefits to measuring and managing environmental performance and setting goals to improve. 

There are plenty of reasons brands and their manufacturing partners should (and do) care about protecting the communities where they operate. Some view sustainability as a good approach to branding and marketing. Others are primarily concerned about adhering to new regulatory requirements. Some businesses approach sustainability altruistically — they see it as the right thing to do. These reasons for prioritizing sustainability aren’t mutually exclusive: The most forward-thinking companies succeed in all three of these areas. 

Fortunately, you don’t have to search hard to find examples of how doing what’s right for people and the planet aligns with the best business practices for companies that want to be successful. 

From helping businesses secure better financing to reducing operational costs, expanding market opportunities, and reducing risk, prioritizing sustainability helps businesses thrive in today’s landscape. The best solution to help businesses understand and track their environmental sustainability impact is the Higg Facility Environmental Module (Higg FEM), part of the Higg Index developed by Cascale, and available exclusively on Worldly.

What is the Higg Index? 

The Higg Index is the most widely used standardized measurement framework within the apparel and footwear industry. Developed by Cascale, the Higg Index features five tools — including Higg FEM — that brands and suppliers can use to assess, measure, track, and improve their social and environmental impact and performance throughout the value chain. 

Over 40,000 organizations across the globe use the Higg Index tools, making it the most utilized measurement framework within the apparel and footwear industry. It’s also widely used across many other consumer goods brands and manufacturers including home furnishings, luggage and bags, and sporting goods. By using the Higg Index, every stakeholder across the value chain can measure their performance and monitor their progress across environmental indicators like water use, energy use, greenhouse gas emissions, fossil fuel use, waste, and much more. 

Because the Higg Index is so widely adopted, manufacturers that use it can often satisfy multiple customers’ sustainability requirements by completing the social and environmental facility assessments. This economy of scale, however, is only the tip of the iceberg in terms of the benefits companies can realize by using the Higg Index. 

Benefit 1: Access to preferential financing 

Sustainable manufacturing practices may save money in the long-run, but they aren’t without their own upfront costs, which typically fall to manufacturers. Expenses associated with upgrading a facility’s technology and infrastructure can be substantial, and potentially out of reach for suppliers that want to make dramatic changes to their operations or are asked to do so by their brand partners. 

The costly nature of investing in environmental sustainability has led more lenders to offer sustainability linked loans (SLLs), which tie financial aspects such as interest rates to the borrower’s performance in measures such as Higg FEM. By linking more favorable financial terms to more environmentally sustainable outcomes, lenders can reward companies that want to improve directly with capital.

The Hongkong and Shanghai Banking Corporation Limited (HSBC) recently granted a US $65 million loan to Viyellatex Group, an apparel manufacturer and exporter in Bangladesh. The loan is linked to measurable performance measures including an 8.6 percent improvement in Viyellatex’s Higg FEM score by 2025. 

As loans like this become more common, manufacturers that already complete an annual Higg FEM assessment will be well positioned to receive the funds they need to continue improving their operations – and their Higg FEM scores.  

Benefit 2: Expanded market access 

Suppliers that verify their Higg FEM assessments gain a competitive advantage with brand customers that encourage or require proof of sustainability.

More brands than ever are committing to science-based sustainability targets, and that trend will increase sharply as they prepare for regulatory requirements and respond to consumer interests. In doing so, these brands are increasingly seeking suppliers that can prove their environmental credentials.

A verified Higg FEM provides exactly the type of standardized, credible proof that brands need when selecting and evaluating their suppliers. This verification can open doors to new customer relationships, expand business with current customers, open access to premium market segments, and nurture long-term partnerships. 

Benefit 3: Comprehensive risk management

Using the Higg Index to quantify environmental management practices helps companies stay ahead of compliance and on top of new regulations and market demands. This in turn helps them reduce risk both in the short and long term.  

As environmental regulations become stricter and more widespread, facilities that already track and improve their environmental impact will be better positioned to preserve business relationships than those scrambling to catch up. 

Companies that already complete and verify their Higg FEM may see benefits related to: 

• Regulatory compliance: By completing the Higg FEM, companies are already collecting much of the data they’ll need to comply with new regulations. Investing early, and starting now rather than later, helps prevent sudden costs and operational disruptions that facilities might encounter if they suddenly have to meet new requirements. 
• Reputation: Environmental incidents can severely damage a facility’s reputation and relationship with its brand customers. The systematic approach of the Higg FEM helps facilities identify and address potential environmental risks before they become problems.
• Insurance costs: Some insurance providers are beginning to consider environmental management practices when determining premiums. Facilities that can demonstrate strong environmental management through verified Higg FEM scores may be viewed as lower-risk clients. 
• Future-proofing operations: As climate change and resource scarcity become more pressing issues, facilities that have already optimized their resource use by taking action in areas they identified through completing their Higg FEM will be better prepared to avoid potential disruptions.

Worldly helps manufacturers realize these benefits and more

As sustainability becomes increasingly central to business success in the apparel and consumer goods industries, the Higg FEM offers a roadmap for improvement and a verifiable demonstration of environmental performance. For manufacturers that want to maximize these benefits while minimizing the time and effort spent on reporting, Worldly’s platform provides the tools needed to efficiently complete, verify, and share Higg Index data with stakeholders throughout the value chain.

Ready to measure your impact and achieve real business benefits? Learn more about Worldly and get started today.