Summary Analysis - Hot Button Report

Hot Button Report 2023 Summary and Analysis

The CanopyStyle initiative provides a path for brands, retailers, and MMCF producers to help address the dual crises of climate change and biodiversity loss by reducing the sectors’ pressure on forests. The need to protect vital forests has never been clearer—forests are home to more than three-quarters of the world’s life on land. Last year, reports illuminated the fact that global animal populations have declined, on average, 69% in the past 50 years. And this year, with the hottest summer on record, we continued to witness the devastating impacts of extreme weather, including fires, floods, and hurricanes, consistent with what has long been predicted to happen under climate change.

Since 2016, the Hot Button Report has provided an annual incentive for continual improvement towards sustainability and a vehicle for engaging a supply chain that was previously not very well understood.

The percentage of global fibre production from producers earning green shirts has risen, from 50% in 2021 to 53% in 2022 to over 54% in 2023, and we are continuing to see new MMCF producers work hard to attain higher ratings. The majority of the MMCF producers are actively engaged in eliminating Ancient and Endangered Forests from their supply chain.

50 Shades of Green

Three more MMCF producers attained a new green shirt rating in 2023: Formosa, Nanjing Chemical Fibre Co., as well Shandong Hongtaiding, who were assessed for the first time this year.

The top performers in this year’s Hot Button Report, are Aditya Birla with the highest score, Lenzing with the second-highest, and Tangshan Sanyou and Xinxiang Chemical Fiber (Bailu) tied for third.

An exciting trend we’re seeing this year is that some of the already well-established green shirt producers are striving to deepen their greens and are working to achieve the coveted dark green shirt. Two additional producers broke into dark green this year — Yibin Grace and Acegreen — and several more are now on the cusp.

The 2023 Hot Button Report also saw new entrants engaging and taking action. As noted above, Shandong Hongtaiding adopted a policy, quickly embarked on an audit, and rose from a white shirt to a light green shirt. Zhejiang Huafeng also adopted a policy, conducted audit training, and been awarded a rainbow shirt.

Canopy was also very pleased that two companies are re-engaged with the initiative after not being active in recent years. Shangdong Yamei and Weifang Xinlong have begun a dialogue with Canopy, and Yamei is learning about the audit process. We look forward to seeing more engagement in the coming months.

Canopy conducted additional supply chain research this year in order to update our knowledge about sourcing risks that companies that have not been in regular dialogue with Canopy may be facing. This research led to a review of what known level of risk may exist in the supply chains at these companies, and this is reflected accordingly in the scores of those with red in their shirts.

Next Generation Solutions — Becoming the New Normal

One critical pathway to alleviate pressure on the world’s Ancient and Endangered Forests is to encourage the Man-Made Cellulosic Fibres (MMCF) sector to be leaders in Next Generation Solutions — low-carbon, forest-friendly alternatives to virgin wood fibres. In 2023, an increasing number of MMCF producers deepened their commitment to Next Generation Solutions through R&D, setting ambitious targets and launching new low-impact products.

In the European Union, producers are looking to pivot operations in order to realize the EU Strategy for Sustainable and Circular Textiles — incorporating increasing quantities of recycled textiles into their value chains. Chinese MMCF producers are making important strides through developing initiatives to collect and process domestic supplies of textile waste and exploring the use of juncao grass and other alternative feedstocks. We are excited to see the results of these new projects.

Canopy continues to play a facilitative role in the market development for these products: encouraging both brands and producers to raise their Next Gen aspirations, and make public commitments that send a strong signal that if Next Gen is produced, the market will buy it.  A large part of our work in the coming year will be to encourage the pull-through of demand for products already on the market and to secure commitments from brands to purchase at volumes needed to address the climate and biodiversity crises.

Some of the notable Next Gen highlights from 2023 include:

Nearly all participating producers reported Next Gen R&D activities: testing and trialling Next Gen inputs. They also expressed interest in integrating more Next Gen pulp when it’s available for purchase, or in manufacturing their own once testing indicates it’s ready for commercial production.
Volumes of pulp in the Next Gen trials are significantly higher this year compared to last year, and some producers are making improvements to their facilities to enable the processing of larger volumes of MMCF fibre containing Next Gen pulp.
Many producers are involved in industry-wide and government programs to troubleshoot the issues related to the integration of Next Gen fibres, especially scaling-up collection of textile waste and good quality separation of blended fibres. Increased collaboration to process Next Gen pulps through spinning, weaving, and dying, is paving the way to circularity.
Yibin Grace has announced its intention to increase the Next Gen content in its ReGracell line from 30% to 50% in 2023 — setting a new benchmark for the sector. Sanyou has announced its intention to increase its Next Gen capacity to 200,000 tonnes per year, pending brand demand. Lenzing has maintained its public commitment to 100,000 tonnes of 100% Next Gen content by 2026, and Birla has maintained its public commitment to 100,000 tonnes of 50% Next Gen content by 2024.
There are now nine established commercial lines of Next Gen made with recycled textiles, one more than last year and five more than in 2021: Lenzing’s Refibra, Birla’s Liva Reviva, Sanyou’s Revisco, Yibin Grace’s ReGracell, Sateri’s Finex, Xinxiang Chemical Fibre’s Eco-Bailu, Daiwabo’s Recovis, a line from Jilin Chemical Fiber Co., and select offerings from E.Miroglio* contain recycled cotton fibre. These products are all available for purchase — offsetting thousands of tonnes of forest fibre.
In addition, some producers are using agricultural residues — Eastman has commercially launched Naia Renew ES, which contains cellulose from US-grown cotton linters, which is considered a transitional Next Gen fibre when a company is actively exploring other feedstocks. And several Chinese MMCF producers are exploring the use of juncao grass, and other agricultural products, as fibre inputs.

* Daiwabo and E.Miroglio’s products contain very small percentages of Next Gen fibre at this time and they continue to collaborate with pulp producers to get to the specs for which they are looking.

Audits and Sourcing 

Since the last Hot Button Report, eight producers have either published or have begun their CanopyStyle Audits. Two MMCF producers have embarked on supplier verification audits to ensure their suppliers’ sourcing is consistent with their policies. Almost all MMCF producers have increased their use of FSC Mix fibre; notable examples are ENKA and E. Miroglio, who only use FSC inputs, and Yibin Grace and Formosa, who use over 90% FSC inputs. Canopy recognizes the importance of using FSC Mix for MMCF, although we continue to push for an increase in the use of FSC 100%, which is fibre that meets all of FSC’s principles and criteria.

Conservation Actions 

This year, we asked producers to follow up on the letter sent last year to all Parties of the Convention on Biological Diversity (an agreement between 150 governments, established in 1992, to protect life on Earth). Companies representing 78% of global MMCF production signed onto a letter to all member states, asking that they fully implement last year’s agreed Framework to protect at least 30% of the world’s land area by 2030 (as well as marine and freshwater systems). The letter highlighted the need to implement protection measures in key areas of Ancient and Endangered Forests in Canada and Indonesia, as well as other globally significant forests.

In 2022 we introduced a new strategy to provide producers that have less integrated pulp production with opportunities to earn points towards dark green shirts. Producers were encouraged to learn more about the Ancient and Endangered Forests in the countries from which they source by filling out a survey to assess their understanding of subjects like original forest cover, how much of this remains, and what efforts are underway locally to protect remaining Ancient and Endangered Forests. This year, we asked producers to update their surveys with any new information acquired. Producers were also encouraged to contribute to conservation efforts, either through in-kind support or through donations to a related conservation organization. Many producers provided evidence of in-kind support, and some are making direct contributions to forest conservation, either through actions in regions where they have influence or through financial support.

In 2024, Canopy will look to engage with remaining red shirt producers on their sourcing and on opportunities to use alternative fibres. We will continue to encourage improvement among those already showing leadership, primarily by supporting their efforts on Next Generation Solutions. With the momentum of ten years of CanopyStyle propelling us forward, and 550 brands and retailers supporting the work to protect Ancient and Endangered Forests, we are confident that we can continue to achieve lasting and meaningful change for the planet!

Canopy remains committed to continuously improving its tools and we strive to incorporate new data as it becomes available, as well as review our criteria and methodology on a regular basis.

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