Fashion’s Sustainability Landscape: Who’s Investing in What?
Business as usual has come and gone, as far as sustainability advocates are concerned.
More companies are investing in sustainability and making it a broader business priority.
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“In the past year, we have seen accelerated investment into the circular economy, which transitions us away from our current take, make, waste linear economy to one in which materials are shared, reused and continuously cycled,” said Kate Daly, managing director of the Center for the Circular Economy at Closed Loop Partners. “Brands and retailers are evaluating their business holistically through the lens of environmental, social and [corporate] governance factors, growing their investments in new materials, researching circular solutions and testing and piloting new business models like reusable packaging systems in store.”
Across the top value-creating companies analyzed by WWD, reuse was one area that saw significant investment across the board. Companies evaluated included Nike, Inditex, LVMH, TJX Companies, Kering, Hermès, Fast Retailing, Adidas, Ross, VF Corp., Pandora, Richemont, Anta Sports, Next, L Brands, HLA, H&M, Lululemon, Hanes and Burberry by economic value creation in McKinsey & Co.’s Global Fashion Index for 2018 (adjusted for 2021 due to financial fallout of the pandemic).
Reuse — Easiest to Implement
The majority, or 70 percent, of McKinsey & Co.’s top 20 companies by value outlined a reuse program (like Ross’ reuse-a-hanger or Nike’s Reuse-a-Shoe) in their annual sustainability reports, perhaps because of ease of entry and low spend.
Since launching in 1993, Nike’s Reuse-a-Shoe program has repurposed 30 million shoes, touting the title as one of the oldest reuse and take-back programs.
Recent efforts from VF-owned The North Face speak to the consumer-facing engagement of these programs. With a warranty program that is 50 years old, the average life of a North Face product is a little over seven years. When it comes to new metrics for reuse, “[The industry] is still trying to figure out how to measure e-commerce programs, end-of-life — we’re actually still trying to work on that,” said Carol Shu, global senior manager of sustainability at The North Face.
The Move on Materials
After reuse, more than half of the companies showed beginner moves to more innovative materials that help shift away from plastic over reliance and virgin materials. Efforts are evaluated by not solely a public commitment to increase the use of recycled material content but also the use of innovative plant-based dyes and material alternatives, innovation funding competitions and strategic alliances with biotechnology companies.
Last week, Adidas announced its Stan Smiths are the first footwear silhouette to take on Mylo mushroom-derived “leather” at scale. The shoe is slated for limited release later this year with the aim to scale up access to Stan Smith Mylos and integrate the material into other Adidas products and franchises (materials like Mylo are not biodegradable at present). A month prior, Stella McCartney (teaming with biotech company Bolt Threads) and Hermès (teaming with biotech company MycoWorks) similarly trialed new materials to positive public response.
Becoming akin to brand champions for new materials, the only kicker is the Stan Smith Mylo isn’t available yet, neither is the Hermès bag, and McCartney’s bustier and trousers are not for sale — as is the case with many innovative concept launches; Look, don’t touch.
That being said, progress is still being made in the move away from the virgin plastic-based norm, according to industry fiber benchmarks like Textile Exchange — it just isn’t happening at the pace or scale needed.
Polyester’s dominance alone captured 52 percent of the 111 million metric tons of fiber produced in 2019, far overshadowing the plant-based fibers of ancient origins (jute, linen and hemp) taking up 6 percent of the market share of natural protein fibers (silk, wool) each holding 1 percent of the market.
The latest material innovations wouldn’t even track on an industry benchmark at their current scale, so what is driving interest in the new materials?
“Quality is what drives adoption and ultimately impact,” said MycoWorks chief executive officer Matt Scullin. MycoWorks recently closed a $45 million Series B financing deal and worked with Hermès on its latest collaboration. “Brands and consumers are not going to sacrifice performance for sustainability. Leather is fundamentally a performance material. It’s highly durable. It has a sensuality. It evokes emotion that other materials do not. Our approach with Fine Mycelium materials has been to put performance first.”
The company is one of many seeking to edge out competition as veganism and concerns surrounding plastic-based materials continue to rise.
Recycling Gaps
Half of the companies — LVMH, TJX, Kering, Fast Retailing and H&M among them — are making investments in recycling infrastructure — akin to H&M’s Rube Goldberg-like garment-to-garment recycling machine and investments in chemical recycler Re:Newcell.
Amid some isolated efforts, investments in recovery infrastructure and incentives to enable recapture of material after use are lagging.
Speaking to the plastic crisis specifically, Daly suggests collections made with recycled polyester may be a red herring over larger-scale infrastructural investments. “At our current rate, 8 million metric tons of plastic end up in our oceans each year, in addition to the 150 million metric tons currently circulating in marine environments. We need greater investment in recovery infrastructure to help close the supply-and-demand gap for plastics and protect the environment. To effectively do so, alongside upstream innovations to stop waste from the outset, a suite of solutions downstream is necessary — from mechanical recycling to advanced recycling technologies that can break down our most difficult-to-recycle plastics and transform them into high-quality raw materials that can be funneled back into the system,” she said.
Plastics aside, industry-led initiatives like Accelerating Circularity are one of many aiming to tackle fashion’s infrastructure and supply streams to curb waste.
Few Have Jumped All-In on Resale
Despite reporting the strongest growth amid the pandemic, resale trailed all of the circular investments, at just 30 percent designating funds and efforts to it.
None of the players entering the resale space — VF Corp., H&M (majority stake in resale platform Sellpy), Kering (led a $216 million funding round in French luxury resale site Vestiaire Collective in March), Richemont (Watchfinder, Yoox Net-a-porter Group), Burberry (a recent partner to The RealReal) or as of this week, Lululemon (a re-commerce program with Trove) — have demonstrated a decoupling from volume-based growth.
“Circularity is at such a nascent stage…investment is relatively small in a vacuum. One shoe does not circular make a company,” said Michelle Gabriel, an educator at Glasgow Caledonian University in New York. “We’re not seeing the changes we want to see with circularity because one, it can’t solve our problems and two because it’s [a negligible amount] of the operation of these companies.”
Gabriel finds investments to be a drop in the bucket, infrastructure lacking and labor infringements or lived experiences to be more telling of sustainability progress with reports from labor groups being a key reference.
Pandemic Fallout With Suppliers, A ‘North Star’
Humanity has equal footing in the sustainability conversation.
Investments in human rights due diligence can take the form of published supplier lists (past tier-1), supply chain technologies that aid transparency, third-party auditing and membership in responsible business initiatives or sensibly — living wages.
With the harsh blow dealt to the apparel industry by the pandemic, incidents of wage theft and unmet supplier commitments upstream can be a more human pulse of industry sustainability.
“When we keep the social components as the North Star, we will inherently embed the other things…I am excited about the conversations that are taking place around inclusion and diversity and what a safe industry looks like,” said Gabriel emphasizing the impact to the 75 million people — mostly young women of color — making our clothes today. Gabriel is engaging in an ongoing research project to collect the lived experiences of individuals who identify as Black, Indigenous, and people of color or LGBTQIA+ within fashion.
Using data available from labor organizations like the Worker Rights Consortium and Remake, some companies (30 percent) that publicly resolved payments to suppliers on canceled or delayed orders at the start of the pandemic were later buyers implicated in severance theft in an April report titled “Fired, Then Robbed” from the WRC. Although the companies paid out in the #PayUp campaign, Nike, Inditex, Next, Fast Retailing, Adidas and H&M were among those buyers implicated in severance cases, as by WRC reports.
Kering, VF and Lululemon remain in the clear for resolved COVID-19-related payments to suppliers. Other companies remain unaccounted for in the pandemic supplier fallout, with public visibility into supply chains lacking.
Going forward, labor rights advocates and watchdogs believe full public transparency will be the ultimate testament to industry-wide progress.
Climate, Chemicals, Biodiversity Reporting — Getting There
Across the board, reporting on sustainability efforts has come a long way — and fast at that within the past year — especially with the rising interest in Environmental, Social and Corporate Governance metrics.
Where applicable, 45 percent of the analyzed companies have set or “committed” to setting science-based targets according to the Science Based Targets Initiative; 65 percent have achieved certification with chemical management programs (including Bluesign or Zero Discharge of Hazardous Chemicals; and 40 percent have invested in some sort of regenerative agriculture project or “restoration” as per sustainability reports.
Some companies are going a step further to disclose material risks to investors.
Standards like the Sustainability Accounting Standards Board Standards identify the subset of environmental, social and governance issues most relevant to financial performance in each of 77 industries. The standards are developed based on feedback from companies, investors and other market participants “as part of a transparent, publicly documented process,” according to the website.
A handful of companies Nike, VF Corp., Pandora and Hanesbrands report by SASB Standards to communicate financially material sustainability information to investors to make bleeding externalities not typically accounted for in apparel, more visible.
When probed on whether companies, across the industry, are indeed holistically re-evaluating their sustainability strategies, Gabriel said: “Maybe not — but I think they’re realizing they can’t afford not to.”
For More, See:
Just a Mere $20B to $30B a Year to Transform the Industry, According to Report
What 2020 Taught Fashion About Sustainability and Where to Go From Here
What Comes After Single-Use Retail Bags?
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