Some companies have a sustainable message, but a thorough analysis is needed to distinguish the real leaders from potential greenwashing.
Thinking about garments’ end-of-life from the beginning, analyzing the production and distribution process, and comparing their environmental impact can help the fashion industry make a necessary shift. Partnerships and certifications are necessary for the shift to greener processes.
Consumers care about sustainability, but at what price?
As the world's population grows, the negative environmental impacts of our demand for fashion are becoming increasingly apparent. The sector is responsible for 10% of global carbon emissions and 20% of global wastewater, as well as generating a significant amount of waste. Every second the equivalent of a one-tonne rubbish truck is burnt or dumped in landfill.
75% of consumers consider sustainability to be “extremely or very important” in their fashion purchasing decisions. In addition, more than 50% of consumers would switch to a brand with better social and environmental performance.
But are consumers really willing to pay? It seems not yet. Only 7% of consumers say that sustainability is the most important factor in their purchasing decisions.
Consumers still consider “high quality” and “good value for money” to be the most important factors in their choices. Our interaction with fashion companies corroborates this, with fashion companies stating that consumers are not willing to pay a sustainability premium, although they would choose the most sustainable offer at the same price.
For us, this is an indication that consumers prefer sustainability, which can be a competitive advantage for retailers. However, companies need to see this as a way to maintain or increase market share, not to increase prices. Sustainable leaders must invest in innovation and leverage sustainable solutions to reduce prices and maintain their brand positioning.
Distinguishing the Authentic from the Fake
The fashion industry is highly fragmented and sustainability standards have barely got off the ground. More and more companies are reporting on both their social and environmental impacts. But as each company focuses on different information, metrics, and measurement methods, how do we identify the best?
Fundamental analysis and interaction with the company are essential for us, allowing us to assess whether fashion brands are truly committed to sustainability or only pretend to be. Here are some key questions that need to be answered”
- How do we spot a sustainable fashion leader?
- Has the company adhered to measurable targets to reduce its negative environmental footprint?
- Does the company adhere to external certifications that demonstrate the sustainability of products?
- Does the company accurately quantify and report its total carbon footprint?
The last of these points requires a very specific analysis, as only around 5% of the carbon footprint of fashion retailers comes directly from their own activity, or indirectly from the generation of the energy consumed by the company.
The vast majority of a company's carbon emissions occur in its value chain. This includes the production, processing, and transport of fibers and fabric, the transport of the final product to its ultimate destination, and the emissions related to the use, care, and disposal of its products.
Unsurprisingly, this complexity means that emissions are currently under-reported, with many companies reporting only those related to the transport of the final product. Fundamental analysis is therefore key to understanding the supply chain and determining what companies are actually doing to reduce their total emissions.
Final Thoughts
While price sensitivity remains essential for consumers in the fashion industry, the data suggests that sustainability is becoming more relevant to purchasing decisions and, ultimately, to a brand's long-term value.
This holds significant opportunities for sustainable leaders to stand out, to the detriment of non-sustainable fashion brands. Yet the industry is highly prone to greenwashing, making it difficult to distinguish between leaders and laggards in the transition to sustainable fashion. The key is company analysis and interaction with companies.