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Fashion's Sustainability Goals Threatened By the Crisis

In the midst of the pandemic, brands are continuing to make big, long-term commitments to environmental and social goals, but with money tight, progress is likely to be fraught.
Mona Tougaard walks the Dior runway in September, 2019 | Source: Peter White/Getty Images
  • Sarah Kent

LONDON, United Kingdom — The world's biggest fashion brands want you to know they are just as committed to sustainability as they were before the pandemic. You just might need to wait a little longer to see some results.

Covid-19 has sent the global fashion industry into a tailspin, with suppliers and retailers only just beginning to reopen stores and factories. Many are devoting all of their time and resources to ensuring their businesses survive. Sustainable sourcing, reducing waste and cutting carbon emissions — inescapable in fashion marketing and internal planning even two months ago — are at least temporarily on the back-burner.

"Covid-19 has put the apparel, footwear and textile industry's sustainability transformations on pause," the Sustainable Apparel Coalition, an industry group, said in an April report with supply chain technology firm Higg Co. and the consultancy Boston Consulting Group. "For many brands, non-essential spending is currently frozen or being reevaluated, which in many cases includes their sustainability programs and teams."

To be sure, the fashion industry already faced plenty of criticism for moving too slowly and timidly to address its environmental impact, even before Covid-19. But there are fresh risks of backsliding. Companies are cancelling factory orders, jeopardising the livelihoods of millions of garment workers. Billions of dollars of unsold clothes are stashed away in warehouses and stores. Much of that inventory could end up in landfills or burned.

Covid-19 has put the apparel, footwear and textile industry's sustainability transformations on pause.

Still, brands remain publicly committed to industry-wide initiatives, like the UN's Fashion Industry Charter for Climate Action and the Fashion Pact, which launched at the G7 last year.

However, simply on a practical level, it is hard for the industry to deliver on its commitments right now. The Apparel Impact Institute, an industry body that funds projects to improve the sector’s environmental impact, has had to pause its work with textile mills because inspections and in-person meetings are impossible.

Site visits are slowly beginning to resume in some regions, but “we are looking at adjusted timelines,” said Lewis Perkins, the group’s president. However, the organisation hasn’t lost any brand partners and is looking to adapt its training for digital delivery.

Whether the industry can regain lost momentum will depend on how quickly fashion's economic prospects rebound. According to BoF and McKinsey & Company's coronavirus update to the State of Fashion 2020, revenue for the global fashion sector will contract around 30 percent this year. Some brands, including J.Crew, have filed for bankruptcy.

On the other hand, there are fresh opportunities to drive momentum if brands incorporate sustainability into their recovery plans.

"Focus on sustainability will grow even stronger since the need for business resilience has become very clear," H&M group Chief Executive Helena Helmersson told analysts in early April.

A False Positive

The pandemic will reduce fashion’s environmental impact, at least on a temporary basis, as plunging sales force brands to cut back on making new clothes.

Coach-owner Tapestry and Gap Inc. are among the major fashion companies that have said they will reduce volumes for upcoming seasons. Many luxury brands are skipping the resort season and tightening up their pre-fall collections.

We all kind of dance around the elephant in the room, which is that all of this takes money.

Lower volumes by default mean lower emissions, less use of raw materials and reduced water consumption. To save money, companies are cutting back on carbon-intensive air freight. The industry is likely to hold fewer international events for years to come, reducing travel.

But fashion’s environmental toll could quickly return to pre-pandemic levels — if not worse — as soon as sales begin to pick up again. Ambitious long-term environmental targets require significant investment in things like more efficient machinery, cleaner energy and better materials throughout the supply chain.

“We all kind of dance around the elephant in the room, which is that all of this takes money,” said Michael Sadowski, a freelance advisor and consultant to the World Resources Institute.

Meanwhile, the knock-on social impact on workers in fashion's supply chain is likely to be dire. According to a survey of more than 500 manufacturing facilities by the Sustainable Apparel Coalition and Higg Co, 40 percent are struggling to pay employees. Garment workers face a stark choice between poverty and the health risks associated with continuing to work.

Cautious Momentum

Despite the challenges, the pandemic could indeed prove a powerful driver for positive change. It has thrown into sharp relief the problems caused by fashion's sprawling and convoluted supply chain, creating a fresh strategic imperative for brands to address operating models that have long proved a hurdle to more responsible business practises. Better inventory management is also likely to become a key focus and could help reduce fashion's use of resources and waste generation.

Recessions can also create opportunities for innovative business models. While small brands built around responsible business practises are by no means immune to the financial crisis, those with the firepower to survive believe they are well-positioned for the retail landscape to come.

The system is broken and we have an opportunity to rebuild it in a way that is more sustainable.

“Brands that don’t move into having something greater than just a product are going to really suffer in the coming years,” said James Bartle, founder and chief executive at Outland Denim, which provides employment and training to women who have experienced exploitation. “Customers and consumers are more ready for this than they ever have been in history.”

While the company’s wholesale business has suffered as a result of the pandemic, e-commerce is growing. A crowdfunding campaign launched in March has attracted more than AU$1 million ($649,000).

Slow-fashion start-up Public Habit has just launched a seed round to raise $750,000. The company is focused on avoiding overproduction and waste. It partners closely with manufacturers to produce essentials on demand and within a shortened development timeline.

“I’m more convinced than ever this model needs to be one of the primary models in fashion going forward,” said co-founder Sydney Badger. “This is just blowing up in our face what 12 to 18 months pre-planning does to the average retailer.”

Investment firm Closed Loop Partners is continuing to look for investment opportunities and believes the crisis will accelerate change. It is in the process of seeding a new growth equity fund focused on scaling businesses that could drive more sustainable operations.

"One of the critical elements that's happened in this pandemic is that so much of the supply chain has been challenged and disrupted," said Caroline Brown, a managing director at the firm. "We think there will be a need to build on those innovations faster than in the past."

For big established companies, shifting the business model is exponentially harder. But those that use the current crisis as an opportunity to embed more responsible business practises into their strategies may well emerge more resilient to future shocks and better positioned to resonate with consumers.

“It's clear that the system is broken and we have an opportunity to rebuild it in a way that is more sustainable for our planet and more equitable for those who inhabit it,” said Amina Razvi, executive director at the SAC. “As the industry rebuilds, we have a real shot at doing things differently… and better.”

We’re tracking the latest on the coronavirus outbreak and its impact on the global fashion business. Visit our live blog for everything you need to know.

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