The production and distribution of fashion causes major environmental and social problems and current efforts are not sufficient to make the sector truly sustainable. If fashion companies and retailers do not act quickly, their profitability will be compromised, according to a Barclays analyst report. Primark, Inditex, H&M and Zalando, among others, may feel addressed.
Business opportunity
The world can no longer afford to ignore the pernicious practices of the global fashion industry, the report states. The rise of fast fashion has exacerbated the problems: analysts estimate that the industry wastes 500 billion dollar (450 billion euro) a year and will consume as much as 25% of the global carbon budget by 2050. Overproduction, under-utilisation of raw materials and lack of recycling are some of the major culprits. A confronting example: the production of one cotton T-shirt requires 2,700 litres of water, or more than the amount a human being drinks in 2.5 years. And more than half of all fast fashion items are thrown away within a year. Add to this the fact that by 2030, fashion consumption will grow by 63% as a result of strong population growth and a growing middle class…
It is in the interest of the players concerned to intervene: their profitability could fall by 3% due to raw material scarcity and rising labour costs. There is a threat of strict regulation, and the general public is following this theme with suspicion: between December 2018 and 2019, Google reported a 250% increase in searches for ‘sustainable fashion’ and a 200% increase in searches for ‘best sustainable fashion brands’. All these factors combined should provide a clear incentive for the industry to radically transform its supply chain. “We see sustainable fashion as a clear business opportunity because the scaling up of experimental materials, emerging technologies and new business models (such as second-hand sales and rentals) are enabling circularity,” it says.
Renewable Energy
The report is critical about the many existing ecological initiatives in the sector. The problem is that the production cycle in the fashion industry is highly fragmented. However, the analysts do see benefit in economies of scale in terms of sustainable materials, more efficient use of resources, reduction of waste and transparency.
As far as materials are concerned, polyester and cotton are dominant today – together accounting for more than 85% of the fibres used. But polyester production requires large amounts of non-renewable resources such as fossil fuels and toxic dyes, and cotton production requires huge amounts of water. However, the benefits of sustainable or organic cotton are the subject of much debate. The report sees more potential in new, experimental fibres based on vegetable raw materials such as wood pulp, pineapple or citrus. Big names such as Inditex, H&M, Ted Baker and Asos are taking the lead.
How can textile producers make more efficient use of energy and chemicals? Certainly a reduction in energy consumption would immediately lead to decreasing costs, which is an important argument. Deploying renewable energy can guarantee a secure power supply – while the current electricity grid in countries like Pakistan or India is highly uncertain. Fashion brands are reluctant to invest because it would tie them to specific producers or countries in the longer term. Yet there are inspiring examples: Zara is committed to using 80% renewable energy by 2025. Nike opened a distribution centre in Ham, Belgium, that runs entirely on renewable energy.
Overproduction
Legislation will be needed to get rid of harmful chemical treatments in fashion production, according to the report. Although there are already quite a few startups developing sustainable alternatives. One possible solution is digital printing, a method that would consume 90% less water and 30% less electricity than traditional textile printing methods.
What about waste? Fast fashion causes overproduction. People today buy 60% more clothes than 15 years ago and keep the pieces only half as long. 80% end up in landfills or are incinerated… Everything starts with design: it would help if clothes were designed to be easily recyclable. 15% of textiles are already lost when they are cut in the factory. RFID can streamline the supply chain. Digital 3D design avoids the need to make physical prototypes: Hugo Boss is working on it. 3D printing also reduces waste. And new business models, such as second-hand sales and rental or leasing of clothing, significantly reduce the footprint. The consumer is ready for it. Rent the Runway, the French Vestiaire Collective and traditional retailers such as Urban Outfitters and H&M believe in it.
Need for transparency
Currently, less than 1% of the material used to make clothing, is recycled into new clothing. A huge opportunity: brands and retailers could make greater efforts to collect discarded clothing. They could also offer repair services to extend the life of garments – H&M is already doing so. The recycling of polyester would have a major impact. Nike and The North Face are leading the way here.
Finally, in order to stimulate the effective implementation of these kinds of measures, there is a need for more transparency, says the report. Today, it is difficult or impossible for most brands to properly assess their suppliers on environmental and social practices: the sector is fragmented, distances are long, suppliers work with subcontractors… The many existing initiatives to improve the sector’s environmental footprint work side by side and lack scale. There is a need for common, binding standards in the field of sustainable materials, harmful chemicals and waste management.
Greenwashing
In this context, it is impossible for consumers to gain insight into what fashion brands really achieve in terms of sustainability. Many initiatives can be classified as ‘greenwashing’, says the report. The Norwegian consumer authority, for example, claims that H&M misleads consumers with its ‘Conscious’ collection, and the British newspaper The Times was devastating for Boohoo‘s ‘For the Future’ collection because it turned out not to be recyclable.
Which fashion companies are best placed to meet the challenges of sustainability? The report sees British players Asos and Boohoo as vulnerable in this area, sees fewer problems for Zalando’s platform model, and quotes Primark as a forerunner thanks to its focus on sustainable cotton and the absence of e-commerce. Inditex and H&M also set ambitious goals. In the luxury sector, Kering and LVMH raise the bar; in the US, Nike, Gap, Lululemon, Amazon and eBay are best placed.
