The making of a ‘business case’ for environmental upgrading: Sri Lanka’s eco-factories

Abstract

There is a growing emphasis on environmental sustainability and ‘business case’ approaches in corporate social responsibility programs. As part of an effort to become a world leader in sustainability, British retailer Marks and Spencer (M&S) piloted more environmentally friendly apparel factories. This paper examines the politics of environmental upgrading in Sri Lanka, where suppliers for M&S built three of ‘the world’s first’ apparel eco-factories in 2008. Drawing on multi-sited, meso-level research in Sri Lanka and the United Kingdom, I investigate how and why these factories originated in Sri Lanka and how a business case for environmental upgrading was formulated. However, despite cost savings and exceptionally favorable circumstances for environmental upgrading in Sri Lanka, I found that suppliers were ambivalent about whether there was a sufficient business rationale for investing in environmental upgrading. Therefore, I argue that the business case for environmental upgrading is limited by the lack of mechanisms for ensuring that suppliers can obtain a return on investments. Contributing to debates about ethical trade and upgrading in global value chains (GVCs), this case suggests that power dynamics in GVCs shape the extent to which suppliers can capture a share of the gains from environmental upgrading that is proportional to their share of investment in upfront costs.