Footwear and Apparel Brands: Time to Take the First Sustainable Step Forward
The apparel and footwear industry is all about style. When it comes to the fashionable world of environmental, social and governance trends, leading brands aren't yet matching that style with substance.
According to the recently published Business of Fashion Sustainability Index, “the global economy has 10 years to avoid catastrophic change," and though the fashion industry is talking about environmental and social responsibility more than ever before, their actions are not yet matching their “talk.” Fashion needs to play a prominent role in solving for the climate change due to both the physical impact it has on the environment and the cultural imprint it has on societal norms. As noted, the apparel industry is responsible for 10 percent of global carbon emissions — that’s more than all international flights and maritime shipping combined.
The Ellen MacArthur foundation estimates that every year some USD $500 billion in value is lost due to clothing that is barely worn, not donated or recycled, or ends up in a landfill. Less than 1 percent of used clothing is recycled into new garments. Social media, climate change protestors, and the activist movement have driven consumers’ awareness of fashion brands’ environmental impact. The Business of Fashion just introduced their Sustainability Index, tracking the fashion industry’s progress towards environmental and social transformation. Many customers demand brands take more responsibility and step up their reporting on environmental and social issues.
Now more than ever, brands need to move beyond style and pursue substance to improve sustainability. Simultaneously, increased regulatory scrutiny will force fashion companies to double down on commitments to achieve sustainability targets so as to avoid fines or risk losing access to markets. For many companies, this comes down to both the social — and actual — license to operate. For many brands with much of their value tied to goodwill and image, the risks and opportunities are substantial.
Here are some considerations around why now is the time to develop an approach for addressing some of the fashion industry’s environmental impacts and how to do so:
Customers Care. Period.
Customers are increasingly sustainability savvy, and want their choices to make a positive impact. This concern influences their intended purchasing behavior and brand selections. In a recent survey, 88 percent of consumers would like brands to help them be more environmentally friendly and ethical in their daily life. Additionally, 62 percent of Gen Z customers prefer to buy from sustainable brands. The data points to customers increasingly making buying decisions based on whether or not a brand is a positive force for the environment, and that they intend to spend more on sustainable brands.
More Stringent Regulatory Requirements
Around the world regulators will continue to raise standards and impose new rules and consequences.
- Europe is leading the world in legislating sustainability reporting requirements.
- France’s ban on the destruction of unsold fashion goods will go into effect by 2023, with manufacturers and retailers obligated to donate, reuse or recycle.
- The EU Circular Economy action plan aims to ensure products can be repaired or recycled, with textile as a key priority.
- In the U.S., the new administration has re-stated goals of achieving zero carbon emissions no later than 2050.
- In 2020, U.S. President Joe Biden pledged to make publicly traded companies disclose their climate risks and emissions levels.
For fashion brands, this could mean stricter mandatory requirements and bigger fines for non-compliance. The time is now for fashion executives to take a hard look at their companies’ sustainability strategies to ensure regulatory compliance.
Fashion Brands and Retailers Can Start TODAY
With simple things to start reducing their environmental impact along, with enhancing their customer value proposition, fashion brands can start being more sustainable today. So, where is the low-hanging fruit?
1. Explore ways to “take out the trash.”
It’s time to reduce waste and remove items like hangtags, plastic hangers and button packs. What is the first thing consumers do after buying apparel or accessories? They pull off and throw away all the stuff attached to the purchase. Brands should challenge whether a customer today sees value here. If research shows the consumer does indeed value that information, perhaps brands can deliver that message with a QR code on the one hangtag that will still remain (the price tag) and enrich the story online. At a minimum, start by changing the spec of the hang tag, reducing the number of hang tags on a garment, reusing hangers, or using alternative materials for hangers.
- Cycling brand Pearl Izumi estimates that 19,000 pounds of paper (or ~165 trees), 68,000-plus gallons of water and over 4,500 gallons of oil can be saved each year using their new hangtags printed with soy ink on 30-75 percent post-consumer recycle paper.
- Braiform sets a goal to help retailers re-use over a billion hangers per year, which can lead to savings of more than 35,000 tons of plastic materials entering a landfill – the CO2 savings will be equivalent to avoiding 10.6 billion plastic straws or over 4 billion plastic bags, or flying around the world 19 times.
- Hanger manufacturer Arch & Hook is launching new innovations such as hangers made from recycled marine plastics.
- Brands including Ralph Lauren, J.Crew, Banana Republic and Brooks Brothers are among the growing clientele of Corozo Buttons, a supplier using natural materials derived from tropical palm trees to make buttons, zipper pulls and tags. (Natural, high-quality materials like corozo are not only better for the environment, but also within reach of most budgets.)
Examine each SKU and really ask if every hang tag, button is critical to telling the product’s story and inherent to the customer value proposition.
2. Consider cutting back on wasted air shipments.
It's estimated that air freight produces on average 45-50 times more CO2 than sea freight per freight distance carried. That’s up to 50 times the amount of CO2! Brands and retailers often justify the use of air freight with benefits such as faster time to market, higher probability of selling products at full price and reducing the risk of potential sales loss due to stockout. However, most of these potential benefits can still be retained without opt in for air freights and its huge environmental cost through proper planning and optimization of value chain processes.
Fashion designers and merchants can reduce last minute design changes that often trigger expedited shipment. A more responsive supply chain, through closer collaboration with value chain partners, can still get in-season garments delivered on-time to help sell close to full price without relying on expensive air shipments. By providing different shipment options to consumers and educating them the environmental impacts, consumers may opt in for longer delivery time for less time-sensitive purchases. The bottom line is that air freight should not be abused to compensate for poor business planning decisions and for simply missing timelines.
In the future, new reporting requirements will make the impact of these decisions far more visible to consumers. Building disciplines now to restrict the use of air freight will not only help brands and retailers reduce their environmental footprint but will also task them to fix underlining business process inefficiencies.
3. Establish a baseline, start to measure your progress, and create a BHAG (Big Hairy Audacious Goal).
What role will your company play in solving the environmental impact problem in 10 years? The Business of Fashion identified six categories that are critical for companies to make progress moving forward: transparent supply chains, emissions, water and chemicals, materials, workers’ rights, and waste.
How does your company score today in each of these dimensions? Leading brands that have a science-based impact measurement system in place have already seen some early promising results. For example, French luxury group Kering has developed an approach called EP&L, or Environmental Profit and Loss, which measures the environmental footprint associated with its operations across the entire supply chain. Further, the measured impact will then be translated into monetary value, i.e. cost of the impact, to inform where best to implement initiatives and steer business strategy responsibly. With the help of EP&L, Kering is on track to reduce its carbon footprint by 50 percent by 2025. Once you establish your baseline, you can identify key areas of improvement and focus on the areas that will make the most impact. But you won’t make progress unless you start. The many available free tools, frameworks and planning documents can help you begin.
Ultimately, brands and retailers can crawl before they walk or run. But it’s important to get started. The call to action to address the industry’s environmental and social impact is clear - and the customers’ demand for change will only get louder and louder. Brands and retailers that implement business practices to address the customer’s concern for more sustainable products, and the likely environmental impact measuring and reporting regulation waiting in the wings, will increase their relevance and goodwill. The steps outlined here give brands easy to understand and pragmatic actions to keep pace with market expectations, stay ahead of regulations and become more relevant to their customers while helping the climate.
Rich Goode is the managing director, ESG, for Alvarez & Marsal, a leading global professional services firm that provides advisory, business performance improvement and turnaround management services.
Kristin Burrows is the senior director, CRG, for Alvarez & Marsal, a leading global professional services firm that provides advisory, business performance improvement and turnaround management services.
TZ Shen is the senior director, CRG, for Alvarez & Marsal, a leading global professional services firm that provides advisory, business performance improvement and turnaround management services.
Rich Goode is the managing director, ESG, for Alvarez & Marshal, a leading global professional services firm that provides advisory, business performance improvement and turnaround management services.
Kristin Burrows is the senior director, CRG, for Alvarez & Marshal, a leading global professional services firm that provides advisory, business performance improvement and turnaround management services.
TZ Shen is the senior director, CRG, for Alvarez & Marshal, a leading global professional services firm that provides advisory, business performance improvement and turnaround management services.