The role of sustainability within the fashion industry and the application of sustainable practices within fashion businesses.
Introduction
Within the global fashion industry, concerns about the long-term viability of its current business model and practices have led to a growing focus on the role of sustainability and sustainable practices. This has been driven by a number of factors: the global warming scientific debate; the significant and often detrimental environmental impact of such a large global industry on natural resources; overuse and misuse of these limited natural resources; scandals about some fashion sectors’ exploitation of cheap labour; and changes in customer attitudes and behaviour. The industry has begun to take steps to address these concerns by adopting more sustainable practices (Saner, 2017).
This realisation that the current model is not sustainable has led some brands to take a hard look at their manufacturing processes, supply chains, carbon footprint, waste and recycling, social and economic impact, to find strategic, long-term solutions to these issues. These solutions commit the industry to strategic sustainability planning and sustainable practices.
Such strategic planning will require long-term investment, commitment and technological innovation. This report will examine and evaluate the growing role and importance of sustainability within the fashion industry and explore how some fashion businesses are already applying sustainable practices and innovative solutions to meet these 21st century challenges (Black, 2012, p. 9).
The Context: the global fashion industry ́s impact.
Although the fashion industry had experienced a very challenging year in 2016 in terms of growth, it was still worth an estimated $2.4 trillion in 2016 and accounted for 2 percent of the world ́s Gross Domestic Product (GDP). The industry is also the fifth largest sector in the global economy (Ahmed et al, 2016, p. 6). The economic and social impact of such a huge industrial ecosystem is obvious.
For developed countries where consumers have higher disposable incomes the economic benefits are clear and largely positive. Consumers enjoy access to ever-changing, easily available and cheap apparel which in turn encourages them to spend more. This has clear financial benefits for fashion companies, investors and economies.
In developing countries, however, the picture is mixed. The fashion industry has been accused of taking advantage of these weaker economies to exploit their natural resources, cheap labour markets and lax regulatory systems, to maximise profits. The social and economic benefits for third world countries and their populations from the activities of the fashion industry are debatable. Undoubtedly the fashion industry brings much needed employment, supply chain expertise and investment to these countries but there are also major problems in its exploitation of natural resources and labour markets.
The environmental impact of the fashion industry is also enormous and controversial. The industry is well aware that many of its current business practices have detrimental effects on the environment, deplete natural resources, abuse labour rights and conditions, contribute to poor waste management and add significantly to carbon emissions. The current business model, for example, of fast, cheap throw-away fashion has huge ramifications for cotton production, water usage, use of synthetic chemicals and pesticides, carbon emissions, biodiversity and labour markets in developing countries (Hermes, J, 2014).
Sustainable practices are seen as crucial for the fashion industry to mitigate this global impact. There are emerging strategies across the industry as to how these sustainable practices might be implemented and be effective: energy conservation; investment in technological innovation; internal and external improvements of the supply chain; recycling; educating and changing customer behaviour through more transparency; and resolving the competing interests of the fast fashion business model and sustainability (Black, 2012).
Of course, there will be different strategic directions and competing priorities within different sectors in the industry. But there is a growing consensus that sustainability has a major role to play within the industry and sustainable practices must be adopted.
The next section of this essay will examine the luxury and fast fashion sectors of the fashion business to evaluate their strategies and sustainable practices in responding to the social, economic and environmental effects of their global activities.
The effects of sustainable practices within the luxury and fast fashion businesses, particularly on the supply chain.
The luxury fashion industry ́s business model is based upon making beautifully crafted products from the finest quality materials. But this model has an inherent weakness. If the supply chain of rare, high quality materials, such as leather, silk or cashmere, is disrupted through the predicted effects of climate change, then luxury fashion is particularly vulnerable to changes such as drought and rising sea levels, as it often sources its materials from small-scale farmers in rural and coastal communities. Luxury supply chains are, therefore, most at risk from climate change because of the rarity and scarcity of their materials.
Recognising this systemic vulnerability has led to a conglomerate like LVMF to critically evaluate its supply chain, both internally and externally. This in turn has meant that its luxury brands have had to build sustainable practices into their strategic planning. The management structure and the resources of such a conglomerate allow it to make these deep and fundamental changes in strategic direction and these sustainable practices are binding for all its brands.
These practices can be summarized under three initiatives: firstly, its Life program which applies sustainable practices across all its activities to reduce its environmental impact, conserve energy and water resources, and protect ecosystems; secondly, its carbon reduction program with investment in renewable energy and an ambitious target of energy reduction by 20% by 2020; thirdly, sustainability at its retail stores by introducing innovative energy saving measures to radically reduce their green house emissions. LVMH is applying both external and internal sustainable initiatives across the conglomerate to ensure these have the maximum impact on its supply chain (LVMH, 2015).
These are very positive initiatives motivated by a strategic acceptance that climate change is a reality and that sustainable practices have a key role to play in protecting LVMH ́s major fashion brands` future and profitability. The company is seeking to future proof its supply chain by building resiliency policies into its sourcing of scarce materials, by reducing its impact on the environment through the adoption of renewable energy systems, by actively protecting water resources rather than polluting or depleting them and by long term investment and innovation in green infrastructure. These internal and external actions are supported by all its luxury brands, its executive and its investors. LVMH has not yet launched a marketing strategy for its customers, emphasising its green credentials. This perhaps points to the still tentative relationship between luxury and eco-fashion and its wealthy customers ́ suspicions about the quality of eco-designs and products.
LVMH has yet to fully embrace eco-friendly luxury products made from sustainable materials and designed by environmentally committed designers, or be fully transparent about its supply chain, but the sustainable practices it has initiated are major steps in the right direction.
Not marketing its good work may be a missed opportunity, as we should not underestimate the influence such a prestigious conglomerate as LVMH has in shaping public opinion and customer attitudes. The ‘Energy P&L’ initiative, for example, implemented by its competitor, Kering Group, does raise public awareness of climate change and encourages other luxury retailers to adopt similar policies. This seems to make marketing sense. Where luxury fashion brands go, others are sure to follow.
The Kering Group has also responded positively to the challenges of maintaining sustainable supply chains. Kering made its first commitment to transparency and sustainability in 2012 when it voluntarily set targets to reduce its carbon footprint, use of hazardous chemicals and police rigorously its sourcing of gold, leather and precious skins.
What led to this change? Kering also saw clearly that its current operational model was unsustainable, given the accelerating effects of global warming and its reliance on high quality raw materials.
In 2016 Kering published its first comprehensive report on its successes and challenges in meeting its ambitious 2012 targets. The picture is mixed on the targets set for sourcing raw materials, emissions and the social impact of its use of natural resources (Abnett, 2016). One headline achievement was its 99 percent success in the reduction of PVC use in its products. Another was 81 percent success in sourcing its paper from certified sustainably managed forests. A 100 percent target of sourcing its gold from verified sources, however, only resulted in a 15 percent success rate.
The challenge of ethically sourcing raw materials is exacerbated when the sources of these materials are in countries with poor or virtually non- existent regulatory or compliance systems. Kering is reliant on co- operation from these countries, their suppliers, their proper management of resources and workers. In these circumstances, enforcing regulations and imposing penalties for non-compliance are often not realistic. Increasing vertical integration, where Kering can locate its operations in Europe is a possible, if more costly, solution.
Targets on carbon emissions, waste and water use were also missed. But again with, for example, carbon emissions, Kering has no control over factories producing raw materials in poorly regulated countries. Its answer is to contribute financially to environmental projects in developing countries to offset this. Kering has, however, predicted huge cost saving over the longer term from improved waste reductions by applying pressure on its suppliers and offering incentives for them to adopt more sustainable practices.
Its target for the removal of hazardous chemicals was set for 2020, perhaps recognising that the solution to this challenge would only be found in properly funded research into ‘green’ chemicals. The key to solving this problem is innovation, research and investment.
Substantial investment in research and development is needed by the fashion industry as a whole to promote the use of ‘green’ chemicals. The price of these environmentally friendly chemicals must be brought down if they have any chance of being used. Damaging chemicals and pesticides will continue to be used in developing countries where raw materials are outsourced and regulatory controls are lax. Luxury brands can, however, invest more in innovation and research to make better and more efficient technology available to developing countries and thus avoid some of the worst environmental damage. These are internal and external controls which profitable companies can put in place through strategic investment.
The Kering Group, like LVMH, is committed to sustainability because, in its view, it is not an option but a necessity. It has looked at the science and concluded that if its luxury brands are to have a sustainable future, then its business model must be based on sustainable practices (Abnett, 2016, p. 5). The strategic decisions of these large conglomerates will undoubtedly benefit the environment, encourage innovation and contribute to the long-term sustainability of their suppliers and their communities.
If luxury brands ́ vulnerability lies in the perceived fragility of its supply chain to ensure the constant supply of rare materials, the fast fashion sector ́s problems arise paradoxically from its success in ensuring the abundant supply of cotton, which is the basis of the apparel business. This headlong rush for growth, regardless it seems at times of the social, economic and environmental impact such a strategy has, has presented this sector with a sustainability dilemma.
Cotton accounts for 90 percent of all natural fibres used in textiles, and in 40 percent of apparel produced worldwide. The process of growing cotton is water intensive. An estimated 8,000 synthetic chemicals are used globally to turn raw materials into textiles. Seventeen to twenty percent of industrial water pollution comes from the dyeing and treatment of these textiles with many of the chemicals released into freshwater sources (Ditty, 2015, p.12).
The Carbon Trust reports that clothing accounts for around 3% of global CO2 emissions. Roughly half of these emissions happen simply wearing, washing, tumble drying and ironing this clothing. Even after treatment of the wastewater, residual chemicals from the process can still be found in water supplies which are proven to be detrimental to human health and reproductive systems. (Ditty, 2015, p.12).
The textile industry ́s damaging impact on the environment is well understood within the industry and its overuse of water and chemicals is well documented. (Hermes, 2016)
The challenges now are: how does the fast fashion industry reconcile meeting the demands of the mass market for cheap clothing with its responsibilities to the environment and conserving precious natural resources such as water, sustainable agriculture and communities? The way forward is clearly to introduce sustainable practices and long-term strategic change.
A paradigm for such strategic change is the clothing and retail giant, H&M. Given its success in the fast fashion industry, selling more than 550 million garments per year, banking quarterly profits of $412m, this radical shift in strategic direction is remarkable. Its aim is to become completely climate positive by 2040. Its Garment Collection Initiative has collected 39,000 tonnes of clothing since its inception in 2013 and in January 2017 H&M launched its Bring It garment recovery campaign, with the aim of recycling 25,000 tonnes of clothing a year (Mellery-Pratt, 2017).
H&M is not indulging in greenwashing or clever marketing around organic cotton and sustainable materials. It is instituting change across its entire value chain, setting itself strict goals to achieve a 100% circular business model and introducing a Sustainable Impact Partnership Programme to assess the performance of its suppliers. Transparency is also a strategic goal. H&M shares a list containing 98.5% of its first tier suppliers ́ names and addresses (H&M, 2017).
This is systemic change, engaging all layers of management and stakeholders in their mission to be one of the high street ́s most ethical brands. The effects of such a change of mission will have clear benefits for the environment through recycling, better management of its suppliers and more transparency for its key stakeholders, its customers.
Changes in consumers` attitudes towards sustainability, sustainable and ethical practices
We live in an age of instant gratification and fashion immediacy. One of the consequences of discounted, cheap “fast fashion” in wealthier, mature markets is the priority consumers now put on value, on being able to buy more for less. Worldwide, consumers are demanding more ‘fast fashion’ and a greater variety of goods at affordable prices. The fashion industry is responding with ever increasing levels of production to meet this global demand.
Fashion shopping has also become an enjoyable leisure activity, where consumers seek to express themselves through style, colour, design, and to look and feel good. The serious political, social and environmental issues which arise from mass fashion production and consumption are not in the forefront of most consumers ́ minds when they are engaging with their favourite high street brands.
There is evidence, however, that consumer behaviour is changing. The McKinsey Report highlighted this. Brand loyalty is on the wane and consumers are characterised as more unpredictable, demanding and discerning. There is some evidence that consumers are also becoming more aware of sustainable issues, especially among younger consumers. But surveys have also shown that millennial consumers still prioritise “value, quality and image” (Ahmed et al, p. 73).
That’s not to say however, that there are no ethically conscious consumers. In fact Generation Y are leading the way for ethical shopping, and proving that they are becoming more strategic in their purchasing decisions than previous generations. A study published by Choosi in January 2017, found that more than 90% of respondents are considering their environmental and social footprint when making everyday purchasing decisions (Choosi, 2017).
Empowered by technology, Gen Y are making sustainable shopping a way of life, utilising apps such as Good On You, Shop Ethical, DoneGood, and aVoid to ensure they make informed choices. These apps provide real opportunities for savvy marketers promoting their brands` sustainable and ethical practices. The most common reason cited for choosing ethical brands is the human factor, recognising that fashion does not exist in a vacuum: it impacts workers and communities as the Rana Plaza disaster brought tragically home.
These new shifts in consumer behaviour contrast with previous generations where ethical concerns were not important. New data does indicate a trend towards a more ethical consumer, even suggesting that the younger generation are willing to shun brands that are deemed to be unethical.
For brands, predicting these trends in consumer behaviour is vital for their long-term strategy, production methods and supply chain. Brands must align with their customer base, to not only better engage with the more ethical consumer, but also to educate those who are not so aware of the issues. Both brands and retailers need to engage more fully with their consumers by being more transparent and being truly committed to bringing about change (Heinze, 2016). This means deliberately positioning their brands as sustainable and ethical and marketing them as such. Consumers are becoming more aware as well of their power to make a difference and they can punish brands which do not align with their ethical values.
The question then is what motivates consumers to make ethical choices? Consumer attitudes in the past towards sustainable fashion products may have been lukewarm, believing them to be of inferior quality and design. While price and availability do impact the extent to which consumers engage with ethical brands, quality is of utmost importance. (Confino & Muminova, 2011) Ethical clothing which is well designed, using high quality materials, is becoming ‘desirable’ giving rise to several newer, more niche brands like Edun, Suno, Honest By and Bodkin. These brands aim to combine the aesthetic and the sustainable in an affordable range.
A more established brand like Stella McCartney which sources recyclable materials, uses natural raw materials and even uses wind power to generate energy in its UK based studios and offices, has power to influence consumer choice and behavior in a more ethical and sustainable direction. The influence of luxury brands and celebrity endorsement cannot be underestimated. Ralph Lauren has, for example, hired sustainability directors to make changes to its business model and to overhaul its supply chain. Such strategic decisions have an impact on the industry as a whole and on consumer perceptions.
Conclusion: the sustainable model
Fast fashion still, however, poses real challenges for the environment, workers ́ rights and conditions and despite the growing trend in more ethically responsible consumers, many brands will need to undertake radical strategic action. Apparel supply chains must allow for a level of transparency that today’s shopper seeks. Movements such as #whomademyclothes and #showyourlabel demonstrate that consumers are calling for tighter regulation and monitoring, while expecting brands to adopt transparency within their basic marketing model. Smart branding that places sustainability at the core of its identity will allow informed consumers to express their values through their fashion choices, to support brands which are investing in sustainability and to contribute, as fashion stakeholders, to a greener and more sustainable planet.
Fashion brands that have adopted a leaner, more sustainable model have clearly defined social, economic and environmental objectives and a marketing strategy to explain these objectives. Brands embracing this model embed a sustainability and ethical strategy throughout their design and supply chains and work towards vertical integration. This ensures that all their internal and external activities are measured against these three overarching strategic aims.
Sustainable brands know the true costs involved in fashion production. This requires all activities and resources to be accounted for. Such brands systematically measure land usage, water wastage and labour costs, the environmental impact of the use of chemicals in water systems and land, health and safety and working conditions. All of these operations are monitored and properly costed to identify the true cost of these practices in the supply chain. The introduction of a tool like the Higg Index, a standardized supply chain measurement, by the Sustainable Apparel Coalition, will enable consumers to tell at a glance from a garment ́s tags its environmental effects. This will give sustainable products a distinct advantage with the ethical consumer.
For this sustainable model to work all stakeholders must also be involved: management, investors, shareholders, suppliers, workers and customers. The model not only requires personal commitment from all stakeholders but also investment in innovation, big data and a long-term strategy.
At this year ́s Copenhagen Fashion Summit it was agreed that a circular economic model must be adopted, by increasing the volume of textiles collected, reused and recycled by 2020. (Mellery-Pratt, 2017) Such a model, rooted in reuse, will eradicate waste and use the leftovers to create new garments, continuing the life-cycle indefinitely. This initiative should be thoroughly embraced by brands at the forefront of sustainability, in a movement towards slow fashion and quality. A number of Slow Fashion designers are already working to ensure the longevity of their clothing by sourcing high quality fabrics, offering traditional cuts and creating sophisticated, timeless pieces. These sustainable practices signpost the way forward.
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