Brands Set Big Sustainability Sourcing Goals for 2025, in New McKinsey Report
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A new sustainability report from consulting firm McKinsey & Co. shows that environmentally-friendly sourcing is a priority across the apparel space. Reflecting the growing concerns from consumers, many brands are investing in sustainable processes and setting ambitious goals for 2025, as they are currently falling short.
McKinsey surveyed 64 chief purchasing officers from the industry, cumulatively responsible for over $100 billion in sourcing value. Brands represented in the report include VF Corp. and H&M Group. Consistently, executives spoke about the importance of sustainability initiatives while also acknowledging the lack of progress that’s been made.
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Sustainable sourcing covers multiple individual processes but the three most commonly reported focus areas were sustainable materials, transparency and traceability, and supplier relationships. Packaging, circular economies and broader ecological footprint were ranked lower.
“The report makes it clear that most apparel companies will need to shift current practices dramatically if they are to deliver on these bold expectations,” said the McKinsey report. “The industry lacks a common language on sustainable sourcing, let alone a shared set of standards. But the findings leave no doubt that sustainable sourcing at scale will be a must for apparel companies over the next five years.”
McKinsey found that a powerful driver for introducing environmentally-friendly practices is public pressure. The report was supplemented with consumer surveys, industry expertise and research by services firm Edited. According to McKinsey, internet searches for “sustainable fashion” tripled between 2016 and 2019, while the hashtag “#sustainablefashion” received 300% as many hits in the same timeframe in both the U.S. and Europe.
Yet brands are not meeting the demand: in the first half of 2019, only 1% of new products launched by mass-market apparel companies were tagged as sustainable online. But this is a fivefold increase from 2017 and McKinsey emphasized the success of specialized sustainability brands Allbirds and Everlane.
In order to meet their ambitious sustainability goals by 2025, brands that haven’t incorporated sustainability from the outset must reckon with concerns over increased costs and sufficient material availability. While 89% of CPO respondents believe that sourcing costs will increase, 95% agreed that they foresaw problems in material acquisition.
Despite this, 55% of respondents announced a commitment to have half their products be made of sustainable materials by 2025. Other intentions include incorporating RFID tagging into the traceability process (58%), providing supplier information at point of sale (59%) and achieving full transparency from fiber to store by 2025 (65%).
“In the not-so-distant past, ‘sustainability’ was used primarily as a tool to mitigate reputational risk and ensure compliance,” said Cameron Bailey, EVP for global supply chain at VF Corp. “Our world changed quickly and companies have come to clearly understand that transparency and traceability are critical to the future.”
But Bailey warns that incorporating sustainability throughout a company’s supply chain is a challenge that brands must take seriously. VF Corp.’s own initiative to promote full transparency on its Vans checkerboard canvas sneaker found that 56 individual suppliers were involved in the making of one pair of shoes.
“Like most things within a global supply chain, it’s complicated,” said Bailey. “Reaching internal alignment on the need to be more transparent is much easier than obtaining the information required. While this work is tedious, it’s vital to fulfilling our purpose-led commitments. We expect to achieve similar transparency for another 150 products by the end of 2021.”
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