The fashion industry is one of the world's worst polluters, but many people are still unaware of its impact. In recent years, the fast fashion phenomenon has changed the way we consume clothing, creating untold waste and emissions in the process.
Still, as awareness of climate change increases, there is a noticeable shift in consumer preferences. In a desire to be more kind to the planet, consumers are turning to eco-friendly and sustainable fabrics, reusing and recycling clothing, and becoming more conscious of where their clothes come from.
To improve the fashion industry's bad reputation, there are four areas of social and environmental degradation that require change.
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Mass extraction of raw materials.
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textile production.
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Dyeing, printing, washing and color finishing.
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Biodegradable and recyclable.
Why is sustainability in fashion important?
Sustainability in fashion is becoming increasingly important as climate awareness highlights the damage caused by the industry.
Environmental, social and corporate governance (ESG) is a key theme that is leading companies to more transparent ways of working. Investors are also becoming more selective about the companies in which they invest their money.
Socially responsible investing is on the rise, with investors using ESG scores to understand how sustainable a company is over the long term.
Negative press is the enemy of investors
British fast fashion e-commerce star Boohoo was ousted in 2020 after the Sunday Times revealed that workers at one of its Leicester factories were paid £3.50 an hour and worked in sub-acceptable conditions. .
As a result, the company's stock price plummeted by approximately 55%. Since then, Boohoo stock has experienced extreme volatility. Nevertheless, Boohoo is trying to fight back. In 2021, we appointed an ESG expert to our board of directors. This story highlights the importance of good corporate governance and upholding sustainable values.
Another example of a less-than-stellar performer is Chinese fast fashion brand Shein. In 2021, web design firm Rouge Media recently analyzed over 30 of the UK's largest fast fashion retailers and named Shine as the “most manipulative” company in the industry. The study found that Shein's website is full of marketing tactics to get people to spend more money and keep coming back. Nevertheless, its popularity has risen and it remains a firm favorite among young shoppers.
On the other hand, eco-friendly shoe brands allbirds (BIRD) quickly became famous after its release in 2015. Despite early successes, including a notable IPO in 2021 that sent the stock soaring, the company faced challenges with novelty and a declining stock price. In response, Allbirds updated its strategy, placing greater emphasis on wholesale partnerships and overhauling its product lineup, including the relaunch of its iconic Wool Runner sneaker. This transformation was aimed at helping the company regain momentum and increase profitability.
meanwhile, Nike (NYSE:NKE), adidas (OTCQX: ADDYY), Ethletic, Genesis, Rothy's, TOMS, On, Puma, Woden, Baabuk, Tommy Hilfiger, Zara and more offer a variety of sustainable products and direct-to-consumer marketing channels.
Zara has been fighting to build a more responsible future. The brand, which is considered the founder of Fast Fashion (back in 1990), has often faced its fair share of criticism. But it also paves the way for a better future.
Indeed, the parent company Inditex (BME: ITX) was named the most sustainable retailer by the Dow Jones Sustainability Index from 2016 to 2018. Since the pandemic began, the company has faced increasing challenges such as store closures and supply chain issues. Undaunted, Inditex is accelerating its sustainability goals with a new goal of reaching net-zero emissions by 2040, 10 years earlier than previously planned.
ESG scoring and reporting
According to the Governance & Accountability Institute, S&P500 Companies reporting ESG performance jumped from less than 20% in 2011 to 90% in 2019. And during this time he saw a significant increase in the content of ESG reports.
Now more than ever, this applies to the fashion industry.
There is a growing desire for companies to lose consumer trust if they do not strive to meet sustainability goals. In either case, profits are likely to take a hit because the path to sustainability won't be cheap.
Balancing cost, quality and environmental considerations
There is no doubt that the fashion industry faces significant sustainability challenges. 75% of consumers consider sustainability important when purchasing fashion, but fewer prioritize sustainability over cost or quality.
High quality and value for money continue to dominate consumer choices, and there is a reluctance to pay extra for sustainability. However, integrating sustainable practices without raising prices can give companies a competitive edge.
Swedish company Re:NewCell demonstrates this by reducing sustainable material costs through innovative solutions like Circulose, used by H&M and Levi's. Similarly, Adidas is leading the way in sustainability by focusing on circularity and reducing emissions, replacing virgin polyester with recycled materials and partnering with environmental organizations.
Despite these efforts, the industry struggles to standardize sustainability metrics and transparency. Many companies report only a small portion of their carbon footprint, primarily direct emissions from business operations and energy use. The challenge lies in fully disclosing the wider scope of emissions, including supply chain and product lifecycle impacts.
growing influence
Influential figures in the fashion world are proposing solutions to environmental problems, including accelerating the transition to sustainable products in fashion policy and phasing out fossil fuels.
Danish fashion company Best Sellers and Swedish retailer H&M Group have partnered with Global Fashion Agenda and Copenhagen Infrastructure Partners to invest in an offshore wind project in Bangladesh. The partnership reflects the fashion industry's commitment to sustainable energy and aims to significantly increase the availability of renewable energy in fashion manufacturing countries.
British designer Stella McCartney is a pioneer in sustainable fashion. In fact, she launched the first luxury brand to eschew animal-based materials such as leather, feathers, fur, and hides. Since 2006, informed by insights from her Livestock's Long Shadow Report linking livestock farming and climate impact, she has adopted comprehensive sustainability practices. McCartney's COP28 Sustainable Markets Concept featured sustainable start-ups and circular solutions, showcasing her 15 pioneering efforts including regenerative agriculture and plant-based alternatives.
Fashion Revolution, an influential participant in the fashion world, called for greater transparency and accountability on environmental and human rights issues within the industry. This includes addressing the lack of action in defunding new fossil fuel projects and ensuring new commitments are effectively communicated and achieved.
Luxury conglomerate LVMH announced its commitment to environmental goals through various initiatives. These include a partnership with the Foundation For Amazon Sustainability to combat deforestation and soil conservation efforts.
Italian fashion leaders, including CNMI President Carlo Capasa, discussed the country's sustainability roadmap. This includes collaborations with the Ellen MacArthur Foundation and the United Nations Ethical Fashion Initiative, with a focus on defining his ESG details for the fashion industry.
These developments show that the fashion industry is increasing its commitment to sustainable practices, renewable energy initiatives, and environmental stewardship, marking a major shift towards a more responsible and environmentally conscious approach. Masu.
Companies to watch in sustainable fashion
Companies operating in the textile-to-textile recycling field include:
Everne is a company that claims to be on the path to commercializing recycling technology.
Mugen Textile Company Converts cellulose waste into cotton-like fibers. Customers include Patagonia, H&M Group, Bestseller, and more.
Natural fiber welding (NFW) We recycle cotton, wool, and other fibers as alternatives to man-made fibers. We are collaborating with Ralph Lauren to commercialize the product.
circulation system We process textile waste, which is industrial waste, into recycled cotton.
circle Converts pre-consumer and post-consumer textile waste into new polyester. Partners include H&M, Girlfriend Collective and Madewell.
meanwhile, Better Cotton Initiative (BCI) encourages companies to choose sustainable materials. For example, fashion brand Rip Curl (owned by Kathmandu Holdings) is following BCI's lead and aims to use 65% sustainable cotton by 2025.
The Mills Fabrica is a venture capital firm that invests in tech-style startups around the world. In addition to Algalife and Evrnu, Mango Materials is another investment, creating biodegradable polyester alternatives.
Other innovations in the fashion industry are also gaining attention.
Using sustainable bast fibers such as flax, hemp, jute and ramie requires little irrigation or treatment to produce and has less impact on the soil.
Enzyme detergents are biodegradable and break down difficult-to-remove stain molecules such as blood and fat. The design improvements lower wash temperatures and reduce the energy needed to wash clothes.
Investing in fast fashion alternatives
Some of the companies mentioned here are new and not yet publicly traded, but some of them are in the process of going through funding rounds. This means investors need to keep an eye on potential IPO investment opportunities.
Meanwhile, another way to combat fast fashion is to recycle and rent clothing. The following publicly traded companies have made headlines in recent years:
rent a runway (NASDAQ: RENT) began trading on October 27, 2021. Although the IPO opened at a high, the stock closed down 8%. Founded in 2008, Rent the Runway is a fashion rental platform that offers subscription services to its members.
poshmark We sell used clothes. Since its IPO in January 2021, the stock price has plunged more than 75%.
The RealReal Co., Ltd.(NASDAQ: REAL) sells authentic consignment luxury goods for sale. We operate an online marketplace and physical stores. REAL stock has fallen 55% since its IPO in June 2019.
thread up (NASDAQ:TDUP), both of which sell used clothing and other accessories. TDUP stock has risen 7% since its IPO in March 2021.
fight back is still a privately held company, but is gradually expanding its footprint. Its disruptive Resale-as-a-Service (RaaS) technology connects brands to the second-hand market. Reflaunt's latest funding round was raised on August 25, 2022 in Series A for $11 million.
Is reselling fashion profitable?
While these thrift stores promote a circular economy, they are struggling to attract consumers and investors.
This can be seen from the decline in stock prices. They too are struggling to make a profit. Rent the Runway lost 95% of its stock value from its IPO to January 2024.
However, this may not be an accurate portrayal of their future, given the impact that COVID-19 and global supply chain disruptions have had on retail.
According to Statista, the global used and resale apparel market is valued at $177 billion in 2022. This market is expected to grow significantly and nearly double to $351 billion by 2027.
Some major league players even throw their hats into the ring. Etsy (NASDAQ: ETSY) has acquired peer-to-peer social e-commerce store Depop for $1.6 billion. Levi's has launched a second-hand goods website, and Gucci has launched a luxury second-hand goods online store. plus, asos (LON: ASC) invests in luxury resale and allows used clothing to be sold on the ASOS Marketplace. Additionally, Vinted, an online marketplace based in Lithuania, allows users to buy, sell, and exchange new or used items. The company has gained huge popularity and holds the reputation of being Lithuania's first “unicorn” (a term used to describe startups valued at more than $1 billion).
There is certainly a lot going on in the world of fashion, and ESG has come at a furious pace in recent years to transform the industry.
