The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
The last 12 months have radically reshaped the fashion industry, but sustainability remains one of the sector’s favourite buzzwords and most intractable challenges.
While the pandemic is an ongoing and immediate crisis, brands are doubling down on commitments to reduce emissions, keep clothing in a virtuous loop of recycling and tackle human rights abuses in the supply chain in a bid to mitigate the risk that the next disaster to hit the industry is environmental.
“The industry is not resilient to crisis and that is worrying,” said Morten Lehmann, chief sustainability officer of the Global Fashion Agenda, an industry advocacy group. But there’s a growing understanding that the industry needs to change if brands are to align with global climate goals and growing consumer interest in more socially responsible models.
“We see a polarisation [of brands, where] some see sustainability as a way to become more resilient,” Lehmann added.
There’s certainly no shortage of problems to pick from, but a number of key issues are coming into focus this year as brands react to the social, economic and technological shifts of the last 12 months.
Companies have been talking about ways to minimise waste, keep clothes in circulation for longer and scale up recycling technologies for years, but 2021 looks set to be a pivotal moment for the circular fashion movement.
The pandemic served to highlight fashion’s huge over-production problem and ratcheted up pressure within brands to find economic ways to manage excess inventory. That’s boosted the profile of the already fast-growing resale market, even piquing the interest of luxury labels long wary of how second-hand marketplaces could affect their brand value. Last year, Gucci partnered with The RealReal and LVMH flagged in December that it is looking at ways to integrate resale into its business.
Elsewhere, brands including Cos and Levi’s have launched their own resale offerings, and second-hand platforms Poshmark and ThredUp are gearing up to go public in a test of investor appetite. Though the second-hand apparel market is still relatively small, it’s growing fast, with sales expected to more than double from $28 billion in 2019 to $64 billion in 2024, according to GlobalData estimates cited in a 2020 report by ThredUp.
Those numbers make it particularly appealing for executives looking for ways to boost their sustainability credentials and their bottom line.
The potential to shift to more circular models is set to get an additional boost in 2021 as recycling technologies that have been years in development finally begin to scale.
[Circularity is] a much bigger idea than just one technology, or one change in the business model
“The [next] key thing is going to be scaling technologies now, because a lot of them have just reached pilot scale,” said Laura Balmond, programme manager for the Ellen MacArthur Foundation’s Make Fashion Circular initiative.
For instance, over the next 12 months, one of H&M Group’s suppliers is test-driving a machine that can recycle blended cotton and polyester in a factory setting for the first time, with the fast-fashion giant committed to supporting the technology’s wider rollout if all goes well. Meanwhile, textile recycling company Renewcell listed on the Swedish stock market in November, with plans to ramp up production capacity almost fivefold by 2026.
To be sure, volumes still remain fractional within the context of the global textile advancements and building on the progress made in the coming year will require long-term commitment and widespread industry collaboration.
“[Circularity is] a much bigger idea than just one technology, or one change in the business model,” said Balmond. “It really is looking at the whole system within which clothes are offered and how they’re made.”
The Next Big Thing: Biodiversity
Fashion brands aiming to level up sustainability ambitions are increasingly looking beyond initiatives that simply reduce harm to opportunities to have a positive impact. That’s increasing focus on one of the industry’s most poorly understood and complex environmental pain points: its effect on biodiversity.
It’s a relatively emergent topic within the fashion sector, reflecting a broader and growing awareness of the devastating impact climate change and industrial agricultural practices have had on the natural world. For instance, a recent report by the World Wildlife Fund found animal population sizes have declined a staggering 68 percent since 1970 as a result of ecological disturbance that has affected around three-quarters of the planet’s ice-free land. Agricultural practices linked to many of fashion’s key raw materials are one big contributor.
The issue is set to gain more attention in the coming year as a central component of The Fashion Pact, a high-level coalition put together by Kering chief executive Francois-Henri Pinault at the request of French President Emmanuel Macron in 2019. The group numbers 60 fashion companies (representing roughly a third of the global industry), including H&M Group and Inditex on one side of the spectrum and Chanel and Prada on the other.
We can’t expect nature to bounce back on its own.
As part of a broader suite of targets intended to tackle fashion’s biggest environmental risks and pressure points, signatories committed to developing biodiversity blueprints by the end of last year. In the coming months, companies are expected to set clearer targets to develop solutions based on their findings. One area likely to gain greater attention is regenerative agriculture, a farming and livestock rotation practice that makes soil healthier so that it can sequester more carbon and help regulate local water cycles.
“We’re so out of balance with nature at this point. And so we can’t expect nature to bounce back on its own,” said Claire Bergkamp, chief operating officer of Textile Exchange, a nonprofit aimed at improving the environmental standard of raw materials production. On the other hand, understanding and addressing biodiversity could prove pivotal in addressing the climate crisis.
“How we manage our agricultural processes is going to dictate whether or not we can actually achieve the 45 percent reduction [of greenhouse gas emissions by 2030] target,” Bergkamp said, referring to global goals to reduce emissions to a level that would avoid catastrophic climate change.
Climate has dominated fashion’s discourse on sustainability in recent years, but the cultural unravelling and economic devastation caused by the pandemic has shifted focus back onto long-standing social challenges.
From Leicester to Dhaka to Xinjiang, reports of labour rights violations in the garment and textile industry have piqued the attention of consumers, investors and policymakers. The reports haven’t simply served as fodder for PR scandals, they’ve also increased regulatory scrutiny, hit share prices and sent investors running.
The crisis has raised the profile of calls from human rights campaigners and labour advocates to address long-standing problems in the fashion supply chain. A high-profile campaign last year led by ethical clothes campaign group Remake successfully pressured many of the industry’s biggest brands to commit to pay for orders placed with suppliers throughout the pandemic. As the dust settles, campaigners are pushing for more systemic change to ensure workers are paid living wages and guaranteed decent working conditions.
But the pressure to change isn’t just coming from labour rights groups. Allegations of widespread human rights abuses in China’s Xinjiang Uyghur Autonomous Region, where one-fifth of the world’s cotton is produced, have left the industry exposed to intense regulatory scrutiny on both sides of the Atlantic. The United States has said it will bar entry of all cotton products and tomatoes imported from the region.
It’s a thorny challenge for the fashion industry, which has little visibility over where the raw materials in its supply chain come from, but it’s ratcheting up pressure for brands to do more.
“For a huge percentage of the industry, that lack of traceability and the lack of long-term, equal partnerships with manufacturers, and the vulnerability of many manufacturing countries with their weak institutional setups, has really come front and centre [for] 2021,” said Lehmann of GFA.
The coming year presents new challenges that threaten the fundamental business of fashion, but it also presents an unprecedented opportunity to improve practices that have failed to meaningfully advance for years.
“We can’t go back to business as usual,” said Amina Razvi, executive director of the Sustainable Apparel Coalition. “That would be the worst outcome.”