Green is the Color of the Season

The fashion industry tackles its environmental impact

Fashion has transformed into one of the world’s largest and most globalized consumer industries. The industry employs hundreds of millions across the globe and sells to billions more—churning out garments at an ever-increasing pace. Clothing is increasingly seen as disposable, bolstered by rising demand from a growing middle class across the world and shifting consumer preferences for cheaper and trendier clothing. However, our modern relationship with fashion is taking a toll on our planet’s resources. This article outlines the industry’s environmental impact, highlights the sustainable development challenges facing the fashion industry, looks at existing green initiatives across the fashion industry, and explores emerging green finance and technology solutions that could help address these challenges. This is the second in a three-part blog series.

Apparel production today is more geographically widespread and disintegrated than ever before. As downward price pressure on garments grows, brands have increasingly outsourced manufacturing to countries with low labor costs and often poor environmental standards. This outsourcing between companies across the entire supply chain, from raw material producers and manufacturers to retailers, creates serious concerns about the industry’s environmental impact.

Fast fashion and its overproduction exemplifies this disconnect. H&M, Urban Outfitters, Walmart, Victoria’s Secret, and J.C. Penny are but a few of many brands accused of destroying excess inventory. Even luxury players, who historically owned their supply chains to retain close control of merchandise quality and exclusivity, have begun outsourcing production, leading to overproduction. Moreover, since these luxury brands see discounts and donations as devaluing their brand, excess inventory is arguably an even more significant problem. For example, in 2017, Burberry faced public outrage for burning $37 million worth of excess inventory, an amount equivalent to about 18,500 of the company’s iconic khaki trench coats. [i] 

Is there a silver lining here? One upside worth noting is the growing awareness of fashion’s environmental impacts among industry players, who have taken action to drive overall industry consensus toward a green agenda. With key industry players jointly announcing policies to tackle this issue, installing measures to address their supply chain footprints, promoting circular economy practices, and encouraging the growth of sustainable brands, there is today a proliferation of greening initiatives. Green is on its way to becoming the color of the season.

The 2020 Fashion Transparency Index survey reported that 78% of surveyed brands instituted formal company policies on carbon emissions and waste and recycling. [ii]  This figure indicates how far the industry has progressed since a 2017 Boston Consulting Group study concluded that environmental and social factors were not part of the corporate strategy conversation for most of the fashion industry. [iii] 

The 2020 Fashion Transparency Index survey reported that 78% of surveyed brands instituted formal company policies on carbon emissions and waste and recycling.

Multilateral efforts are also playing a role in transforming the industry. One example is  Fashion for Good , an innovative platform—with participation from major brands, including Adidas, Chanel, and Target—that scale promising technologies to make production processes more efficient. Another example is the  Fashion Pact , a coalition of 32 of the world’s largest fashion groups and brands, committed to transitioning to 100% renewable energy sources across its operations by 2030.

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Sustainability efforts are also happening at the local level with major fashion houses, like Alexander McQueen revamping their supply chains by moving their production back to small, artisanal textile mills throughout the UK. Other luxury brands such as Gucci, Bottega Veneta, and Saint Laurent started adhering to comprehensive guidelines for their selection of raw material suppliers—covering cotton, silk, paper, wood, metals, and gemstones. Furthermore, in response to environmental concerns associated with fashion week, Gucci committed to off-setting its guests’ carbon footprints from its spring/summer 2020 show and planned to reuse the set of the show in its shops.

Brands are also taking concrete action in support of their commitments by revamping their supply chains.

The concept of a circular economy, or the idea of keeping products and materials already in the marketplace in continued use, is gaining momentum within the sphere of sustainable fashion. For example, the brand Marks & Spencer instituted a clothing take-back scheme that collects three million items per year, and Patagonia offers a complimentary repair service that makes 40,000 repairs per year for customers.

In another example of circular economy practices, the VF Corporation launched its “Clothes the Loop” project, in which yarn is recycled from used fashion products for remanufacturing. And in an inventive approach to promoting a circular economy, Prada launched a ReNylon collection that uses an innovative fabric called ECONYL. The material is regenerated nylon fiber made from pre and post-consumer waste like fishing nets and can be recycled indefinitely with no loss in quality.

The fashion landscape is seeing an expanding list of niche players who are making sustainability the core of their brand image and business model. Young companies such as Everlane and Reformation are building vertically integrated and transparent supply chains from the ground up. Reformation, Pashko, Tonlé, and other brands use other companies’ excess inventory as a fabric source for their products. This practice is beneficial to both the environment and the companies’ bottom lines, as recycling fabrics from other companies’ inventories cost 20% less than purchasing new fabrics. [iv]  These sustainability-focused companies are pushing a broader mindset shift towards longer-lasting products with minimalist designs and timeless pieces. 

The fashion landscape is seeing an expanding list of niche players who are making sustainability the core of their brand image and business model.

While brands are eager to publish environmental goals, lack of transparency, and inconsistent reporting persists. Large companies with complex supply chains find it challenging to trace all their products, especially if their suppliers lack efficient data systems. Poor market data quality and style-forecasting technology are significant roadblocks for brands attempting to accurately forecast demand, leading to continued inefficiencies. And while technology can produce less environmentally damaging, more sustainable materials, producers of these new fabrics are struggling to attract sufficient funding to scale up because of material costs. The fashion industry is showing significant progress within the current scope of green initiatives, but much work remains. 

In the next installment of this series, we will explore how green finance and technology can help mediate some of these challenges.

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