As environmental regulations become increasingly stringent, it is vital for the Group to actively explore the wider use of innovative alternative materials and sustainable innovations to integrate environmental sustainability into our production and operations. Failure to keep up with low-carbon transition may negatively impact the Group’s financial returns and damage our reputation. The Group monitors the impacts of its day-to-day operations with the ISO 14001-certified Environmental and Occupational Health and Safety Management System. This system allows us to effectively utilise resources and improve the environmental management practices at our production sites.
Green Product Innovations
Green Materials and Sustainable Design Along the Value Chain
There are three main areas in the cycle of sportswear products where efforts can be made to reduce environmental impact. These areas include the raw material selection, the production process, and the disposal of the product at the end of its life. At Xtep, we have been investing extensive effort in developing and adopting more environmentally friendly materials to minimise the environmental impact of our products throughout their cycles.
We are committed to steadily increasing the use of environmentally friendly materials in our production. Cotton is one of the most commonly used crops in the textile industry and is also the main natural fibre used in our apparel products. As a natural material, its cultivation is associated with different environmental and social impacts. The production and processing of cotton requires a large amount of water, and the pesticides and fertilizers used in the process can pollute the soil and water in the nearby environment. The heavy use of these chemicals also raises concerns regarding the health of farm workers and nearby populations.
To lessen the environmental impact in our production, we are currently focusing on using organic cotton, recyclable plant-based materials, and biodegradable materials as the main green material for our apparel and footwear product production.
Below are Examples of Green Materials and Their Applications:
Organic Cotton and Recycled Cotton Yard Products
We have expanded our line of organic cotton and recycled cotton yard products. During the year, we have launched several apparel products made of organic cotton and recycled cotton yarn.
There has been a growing movement in the industry to utilise recycled materials for producing fabrics and other materials for apparel and footwear products. The use of recycled materials can save plastics and other non-biodegradable materials from being sent to landfills, while bringing potential energy savings to the production process.
In 2021, we launched footwear products for Xtep, Saucony and Palladium with shoe insoles foam and bottom lining made from ECO Ortholite, recycled plastic bottles, and recycled metal accessories. Saucony launched the Jazz Court RFG made of 100% natural materials, and Palladium launched its apparel and footwear products such as Pampa Earth Collection Series and Organic Collection, which utilises organic materials aligned with Global Recycled Standards, Global Organic Textile Standards, and OEKO-TEX Standard 100 guidelines.
We continue to explore the possibility of utilising more recycled materials in our footwear products. By 2022, we expect to introduce more product components that are manufactured with a high proportion of recycled materials in selected product lines. They include insoles, synthetic leather uppers and cotton uppers.
In 2021, Xtep launched a new environmentally friendly PLA T-shirt. PLA is a biodegradable material fermented and extracted from corn, straw, and other crops containing starch. The apparel product made of PLA being buried in the soil in a specific environment can be naturally degraded within one year.
Xtep launched its first PLA products since 2020 and has advanced the use of biodegradable materials in its products ever since. We increased PLA content in our T-shirts from 19% to 60% in 2021; and further raised the PLA content in our T-shirts launched in the second quarter of 2022 to 76%. Meanwhile, the trial production of the 100% PLA windbreaker is expected to kick off in the third quarter of 2022.
We are developing eco-friendly products that use other materials to reduce our environmental impact. These materials include Tyvek®, a 100% recyclable slice-like material made of high-density polyethylene (“HDPE”) fibres and combining the performance of paper and fabrics such as lightweight, waterproof and agile.
In supporting the Group’s Sustainability Plan focusing on product sustainable innovation, we have established four targets to increase the amount of product manufactured with a high proportion of recycled materials in selected product lines. Please refer to the focus areas and targets listed in the 10-Year Sustainability Plan in “Our Sustainability Framework and Strategies” section for details.
Use of Chemicals
The Group is committed to ensuring our product safety and proactively researching alternatives to chemicals of concern, at the same time ensuring that the performance and quality of our products will not be compromised. We fully comply with our internal standards and the national use of chemicals standards in all our operations.
In supporting the Group’s sustainability plan focusing on chemical use, we have established four targets to increase the amount of product manufactured toward a toxic-free environment in selected product lines. Please refer to the focus areas and targets listed in the 10-Year Sustainability Plan in “Our Sustainability Framework and Strategies” section for details.
Reducing Footprint Along the Operations
Energy Efficiency and Carbon Reduction
As a leading running shoe brand in the industry, we are committed to reducing our carbon emissions and other air pollutants and support the move to a low-carbon future through environmentally friendly energy sources. We are working on the following initiatives to improve energy efficiency in our operations.
At the Group’s production facilities, we continuously adjusted and upgraded the lighting controls and manufacturing equipment at our production facilities for energy saving. During the year, we have invested more than RMB3 million in replacing and upgrading our manufacturing equipment with more energy-efficient models in our headquarters and production site operations.
In addition, we also made efforts to adopt cleaner energy sources. All boilers at our production sites are currently running on natural gas, improving energy efficiency and reducing air pollution and greenhouse gas emissions. The Group also conducts regular maintenance for the boiler to reduce any potential waste of resources due to equipment aging or failure. We also trailed renewable energy at our Hunan factory by installing solar panels. The solar panel system helped reduce our use of grid electricity and even generated excessive renewable electricity at times that could be sold back to the grid.
We continuously promote energy conservation at our retail stores, factories, and headquarters by posting energy-saving guidance and internal communication materials such as posters to increase our employees’ awareness in energy conservation. In addition, the Group regularly monitors electricity consumption at all of our operations to promptly identify abnormalities.
In supporting the Group’s sustainability plan focusing on energy saving and air emissions, we have established four targets on responsible energy use to improve the environmental footprints at our production sites. Please refer to the focus areas and targets listed in the 10-Year Sustainability Plan in “Our Sustainability Framework and Strategies” section for details.
Energy Consumption in 2021 (kWh)
Total Energy Consumption by Location (kWh)
Carbon Emissions in 2021 (tonne CO2e)
The majority of the Group’s water consumption occurs during the production process and its dormitories. We have adopted water-efficient appliances in our factories and dormitories and put several measures to improve water efficiency at our factories and dormitories, including process improvements and water recycling and reuse measures.
In 2021, we continuously adjusted the water pressure of our living quarters and installed timers to control the flushing frequency of the washrooms in our factories and dormitories, which reduced the water flowrate and subsequent consumption. We will continue to upgrade the flushing control system at our employee dormitories to improve water efficiency in the coming years.
In supporting the Group’s sustainability plan focusing on water management, we have established two targets to address and improve water efficiency in our production. Please refer to the focus areas and targets listed in the 10-Year Sustainability Plan in “Our Sustainability Framework and Strategies” section for details.
Water Consumption by Location (m3)
Packaging Materials and Waste Management
The Group has introduced sustainable packaging into our products to lessen the environmental impact since 2020. We have replaced the tags and quality certificates of the Xtep brand’s apparel and accessory products. We also provided shoe boxes with handles for our customers to reduce the use of plastic bags in 2021.
The most common hazardous wastes we produce during manufacturing are used industrial glues and their containers. We source all glues from qualified international suppliers, and all glues have passed relevant environmental testing for hazardous chemicals and odour. For the limited hazardous waste generated, we appoint qualified third-party companies to properly handle and dispose of the waste to ensure that local laws and regulations on hazardous waste disposal are followed. The Group is extremely careful about managing our hazardous waste. We have set a goal of “zero chemical and explosion incidents” and are fully compliant with regulations in hazardous waste disposal.
As many of our workers live in the dormitories, a considerable amount of domestic waste is generated each day. In managing general waste, we uphold the principles of reducing, reusing, and recycling throughout the different functions of the Group. All recyclable waste is categorized and recycled centrally. Other general waste from our operations is properly disposed of in accordance with local requirements. External contractors are appointed to handle and dispose of general non-recyclable waste properly.
In supporting the Group’s sustainability plan focusing on waste management, we have established two targets to minimise waste production and achieve 100% harmless treatment of hazardous substances.
Air Emissions and Wastewater Discharge
The Group adheres to the “6S management system” and requires all our employees to conserve the use of electricity and water. A certain amount of air pollutants is emitted from the boilers and other equipment in our production process. To reduce such air emissions, we have switched from using diesel for powering our boilers to natural gas, resulting in less air pollution and greenhouse gas emissions and improved energy efficiency. Before being emitted into the atmosphere, the exhaust gas from our production process is treated by activated carbon filters and ultraviolet (“UV”) photocatalysis to remove and decompose pollutants safely before emission.
Our wastewater discharge is not subject to any specific requirements from the government as the wastewater is mainly domestic with insignificant levels of chemicals. We discharge such wastewater into the municipal wastewater network in compliance with local requirements in all our operations.