Problem description
INDITEX is one of the world‘s largest fashion distributors, with eight brands -Zara, Pull and Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home and Kiddy‘s Class.
The Spanish government and European Commission have increased fines for excess CO2 emissions. INDITEX’s own CO2 emissions were considerable. INDITEX also realises the importance of brand image to consumers, especially nowadays in terms of sustainability and environmental responsibility. Moreover the Spanish government is funding companies’ efforts to become more sustainable.

With these factors in mind, INDITEX is developing a Strategic Environmental Plan 2007-2010, which is divided into five specific projects: the Sustainable Store Project, INDITEX Pro-Kyoto Project, Energy and Environmental Integration Project, The Carbon Footprint Project and The Terra Project.
The Pro-Kyoto Project is focused on logistics operations, whose sustainability is one of INDITEX’s pre-eminent business values. The Group’s commitment to sustainability, climatic change and the Kyoto agreement is specifically focused on a targeted 20% reduction of greenhouse gases generated by transportation.

INDITEX is developing a Strategic Environmental Plan 2007-2010 which is divided into five specific projects:
• INDITEX Pro-Kyoto Project
• Sustainable Store Project
• Energy and Environmental Integration Project
• The Carbon Footprint Project
• The Terra Project
We will focus in the Pro-Kyoto Project later in this case study because the sustainability of logistics operations is one of INDITEX’s key business values. The group’s commitment to sustainability, climate change mitigation and the Kyoto
Agreement is specifically focused on the reduction of greenhouse gases generated by transportation.

The solution
The main goal for the Pro-Kyoto project is to reduce transportation greenhouse gas emissions. To achieve this goal, INDITEX has established four initiatives that have already been implemented, and will be developed until 2010:
• A Bio-Diesel Programme: Zara’s entire fleet of transportation vehicles will run on bio-diesel, for which a supply network will be set up at loading points and along trucking routes. The vehicles concerned are operated by third party logistics contractors.
• Fleet driver training courses on fuel-efficient driving form part of a plan implemented in conjunction with logistic suppliers. It also stipulates that all vehicles in the Zara fleet must comply with the European Commission’s EURO 5 NOx vehicle emissions standard two years ahead of EURO 5 coming into effect in 2009.
• Zero-emissions electric vehicles will be used in factories and logistics centres to replace an older petrol–fuelled fleet.
The second project is the Sustainable Store project. It has involved developing criteria for sustainability and the efficient use of energy in retail outlets, through three main strategies:
• Eco-efficient store model: INDITEX, in conjunction with the University of Vigo, is designing an ecological energy management model for retail outlets. Lighting equipment will be changed to equipment that offers high efficiency and low energy consumption.
• Sustainability of packaging and wrapping materials: Work in this area includes eco-certification for all plastic and paper bags used by the Group, (using international standards such as FSC or PEFC) and the use of biodegradable materials in all plastic bags. It also covers all store waste management, which is carried out by authorized agents, and the re-use and recycling of materials such as cardboard boxes, hangers and computer-generated waste.
• Training for all store personnel to raise awareness of environmental impacts.
The third objective is to integrate Environmental and Energy actions in the production facilities. The aim of the Energy and Environmental Integration Project is to introduce renewable energy sources, such as wind, solar and solarphotovoltaicenergy in the Group’s logistics facilities.

INDITEX’s facilities at Arteixo (A Coruña) house the headquarters of the Group itself as well as those of the Zara, Zara Home and Kiddy’s Class brand operations, the Group logistics centre and 11 textile factories.
INDITEX has implanted a new integrated energy system at Arteixo that includes a 5,000kW cogeneration plant, a 1,500 sq ft solar installation and a 850kW wind turbine. This system covers more than 50% of the Arteixo site’s energy requirements.
The Group aims to install similar energy systems in its other main facilities. The plan involves implementing the following actions:
• Solar photovoltaic installations in the logistics centres located at Meco (Madrid), Zaragoza
and León, and in the Group’s headquarters in Tordera (Barcelona) and Elche (Alicante).
• Minimise carbon monoxide emissions by replacing oil with natural gas for heating and for the production of steam for ironing equipment at Arteixo and Sallent (Barcelona).
• A new cogeneration plant in Tordera. The Carbon Footprint Project objective is the fourth element of the plan; Inditex will measure the carbon footprint of each of their manufacturing processes and adopt strategies to reduce it.

The Terra Project is the final element in the Strategic Environmental Plan 2007-2010. INDITEX considers tree planting as one effective way of closing the energy/CO2 loop. The objective is to create the forest mass needed to absorb 100% of the emissions generated by the consumption of electricity at the central office in Arteixo. INDITEX will achieve a reduction in greenhouse gas emissions and increase the proportion of its energy demand supplied by renewable energy sources. It will maximize the efficient use of energy in manufacturing, train staff in environmental management issues and raise their awareness of sustainability.
INDITEX considers it should integrate a set of sustainable development criteria in its working practices, to ensure effective, responsible resource management and the protection of the environment to satisfy society’s requirements.

Challenges
Challenge 1: To achieve a 20% reduction of CO2 emissions. This is an important objective, because to achieve this the Group had to initiate change in several activities, including some of its logistic strategies.
Challenge 2: No commercial availability of biofuels in Spain.
Challenge 3: Scepticism of personnel and fear of technology change (vehicles running on biofuels and electrical vehicles).

Lessons learned and success factors
• Lesson 1: Logistics and environmental efficiency go together hand in hand. Thus if they are both managed in an integrated way, economic, social and environmental benefits will result simultaneously.
• Lesson 2: Sustainable corporate investment decisions on technological and productivity improvements must value and account for environmental variables.
• Lesson 3: When staff are fully involved in projects of this type, success is more easily won.
• Success factor 1: INDITEX has aligned its logistics strategy with sustainability criteria to realize environmental improvements which can enhance the image of the company communicated by media.
• Success factor 2: Truck drivers have been trained in efficient driving techniques and other employees have taken part in training to make them aware of the new strategy and to encourage their participation.
Economic
Perceptions of the Group’s service and its brands will be enhanced by the company’s environmental good practice. This practice prioritises energy efficiency in plants, warehouses and trucks but without negative implications for production volume, productivity; reduced energy consumption produces increased economic efficiency
Environmental
Group-wide CO2 emissions will be reduced by 850 tonnes per year due to the use of biofuels (accounting for 80% of the reduction), and to the use of renewable energy sources and tree planting. Emissions of CO, sulphur and nitrous oxides are also reduced by switching trucks from diesel to biofuels. Moreover, more crops are needed to produce biofuels and to plant trees for the Terra project; this has impact on land use. With the Ateixo cogeneration plant, more than 80% of the energy in the plant’s fuel is converted into usable energy. Cardboard production and office waste has been reduced packaging policies will give preference to the use of recycled and biodegradable products.
Social
The Group’s truck drivers will improve their driving techniques to enhance safety, reduce emissions, while staff in the Group’s offices and retail outlets have learned to work in more sustainable ways. These staff development measures have an impact on employment, since it has become necessary to hire new personnel to develop this ambitious project.

Transferables
Large companies such as INDITEX can afford to invest in this kind of project to protect the environment and yield profits. The renewable energy chosen depends on the geography (if there is profitable wind, sun, water, etc.) but if it is chosen carefully, at least one renewable energy source can be used.

Limitations
A project such as INDITEX’s Strategic Environmental Plan 2007-2010 can be implemented in any country and in any sector, taking into account the appropriate source of renewable energy in each case.