Can Fashion Ever Really Be Transparent About Its Sustainable Practices?
The time has come for fashion and retail to open up.
With core societal issues — from inequality to racial equity to climate change — reframing almost everything, people are increasingly looking to business leaders to be a force for change and good.
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And to do that, they have to be upfront with just where their companies are in their journey.
“The moment has never been more profound,” said Alison Omens, chief strategy officer, of the nonprofit Just Capital, in a presentation titled, “Honesty Through Transparency: Rewriting the Consumer Narrative” at the Fairchild Media Sustainability Forum.
“There’s such an urgency in this moment from all the stakeholders, from consumers to workers to the climate, if we think about the climate and our environment as a stakeholder,” Omens said.
Just Capital tracks the environmental, social and governance, or ESG, progress at companies in the Russell 1000 index of the largest publicly traded firms.
While ESG is a burning topic — for investors, companies and consumers — it’s an area that has seen only halting improvement, which makes tracking progress and corporate transparency all the more important.
“This is the moment for market leadership,” Omens said. “We hear [that] repeatedly from people — we do annual surveys and monthly surveys on what people mean when they think about business leadership.”
Chasing the almighty dollar is simply not enough anymore, if it ever really was.
“We have moved beyond the concept of business leadership that’s just about profit and loss, that’s just about even leadership in local communities,” Omens said. “People are looking for big, bold commitments and big actions on the big topics of today.
“The last two years have represented profound crisis and urgency, this feeling of more action is needed and thinking about leadership as a bigger and broader concept,” she said. “There is a higher expectation than there was five years ago and certainly than there was in the past decades when we had this different definition of what it meant to be running a successful company.”
And part of that new success comes from being open about where companies are in their evolution.
The notion of pulling back the curtain is an incredibly popular one with Americans, with Omens noting that desire for more corporate transparency cuts across ideology, race, gender, ethnicity and where people live.
“There is a high expectation that companies need to be a lot more transparent about everything from wages to political spending to engagement in lobbying to climate emissions,” Omens said. “There is also an expectation, or a belief, perhaps, that we need a standardized reporting system.”
Regulators are moving in that direction, with the Securities and Exchange Commission, which sets rules for companies, last month proposing changes that would require firms to make certain climate-related disclosures.
Omens advised that companies participate in the process and send their feedback to the SEC.
“There is this conversation of, is it the role of business?” she said, referring to who is responsible for taking on these big issues “Is it the role of government? Is it the role of the connection point between the two? Our polling says everyone thinks it’s the connection point between the two.”
For now, Omens encouraged companies to reveal their ESG progress to help Just and other outside observers understand how the market is moving.
“We need companies to disclose where they are on their journey,” she said. “Where they are now and where they’re trying to go and, each year, how they’re doing, so that we as an organization can benchmark.
“Celebrating transparency in itself is an important indicator of a company’s commitment to these topics,” Omens said. “There is a lot of opportunity for using transparency as a step on the journey toward combating climate change, reducing waste and, more broadly, talking about where you are orientating in a stakeholder direction.
“No company is getting this right on every topic or even close on every topic, which is an important thing to remember as you’re starting to think about where you want to be in terms of transparency,” she said.
And so, just getting started is important, for society, the environment and, it turns out, business.
“This transition from profit alone to a focus on ESG or stakeholder capitalism is not easy,” Omens said. “These are not easy challenges and so we do need to be investigating and understanding both how to do it, but also the reasons to do it, that it leads to outperformance, better competition, better recruitment, better retention.
“Our goal is to change behavior to make it easier for people who are sitting in the C-suite, are sitting in small businesses, to make a set of decisions that do lead to better outcomes for stakeholders as well as business itself,” she said.
But getting there requires not just a superficial tweak or change in one area, but a new approach that tracks progress in the different areas of ESG independently, and feeds into a broader rethinking of the business.
“This needs to be part of a holistic strategy of assessing operations across the board and thinking about the impact that it has on workers, the environment [and] suppliers… how climate change relates to income inequality, relates to racial equity,” Omens said. “And those things do, whether it’s access to products or the communities that people are living in. There’s a lot of gradation when thinking about impact.”
And clearly there’s also plenty more work to do.
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