Can fashion finally move the needle on sustainability?

The retail sector has made valiant efforts to strengthen its environmental and social responsibility. And yet, constantly moving the needle on the environmental, social and governance (ESG) aspects of companies remains a complex challenge. It requires extraordinary levels of collaboration, engagement and consumer engagement, not to mention technology and business innovation.

But the opportunity is there. Take fashion, for example. With a value of nearly $3 trillion, the industry is a significant part of the global economy. In fact, almost one in six people have a job directly or indirectly related to fashion. So if the industry can make progress in areas such as working conditions, anti-discrimination and other social responsibility initiatives, it can have a significant global impact.

Likewise, by incentivizing cleaner, more efficient and less wasteful practices, fashion can significantly reduce the overall environmental footprint of retail. Consider that industry alone is estimated to account for around 8% of all global greenhouse gas emissions. And there are also key issues around water efficiency, chemical releases, land conversion and biodiversity loss.

The good news is that the fashion industry is hardwired for change. And through collective action, it’s beginning to address ESG more cohesively, whether through the UNFCCC’s Fashion Industry Collaborative Charter for Climate Action or with nonprofits like the Fashion Conveners of the Responsible Business Coalition.

However, if it wants to make sustainability a permanent and authentic feature, fashion must focus its efforts. Because ESG cuts across so many aspects of business and the supply chain, it is easy for initiatives to become fragmented or too dispersed to have real impact.

Here are some of the ways fashion companies can achieve this goal.

Address the issue of transparency. There are a range of targeted interventions fashion can make along the supply chain, including turning to innovative raw materials, reducing carbon emissions from suppliers, eliminating hazardous chemicals and by improving wastewater management.

For example, Patagonia has piloted regenerative certified organic cotton to improve soil quality, improve animal welfare and support farmers. While H&M and others have started publishing wastewater data from their wet processing facilities and are testing their suppliers.

But it is very difficult to make real progress without the right transparency, the right data and the right analytical tools. And in most organizations, a lot of groundwork goes into ensuring the integrity and accuracy of that information. The priorities should therefore be to pursue digital transformation throughout the supply chain, to improve the accessibility and reliability of data and to move towards automated reporting.

Onboard consumers. It goes without saying that consumers need to be intimately involved in the retail sustainability journey. And here again, transparency is essential. Retailers should aim to provide clear, understandable and consistent ESG information through product labeling, including developing industry-wide standards where appropriate.

For example, Accenture worked with the Responsible Business Coalition and Vogue to create the Impact Index to help fashion buyers better understand their garments’ sustainability credentials. For each garment, it allows consumers to explore key ESG indicators, such as raw material use, chemical use, animal welfare, education and empowerment, with more categories planned.

Retailers should also get creative here. We know, for example, that personalized fashion is extremely popular with consumers. And there’s a clear opportunity to combine this kind of customization with sustainability, allowing customers to choose fabrics and manufacturing processes that align with their values.

Think S as well as E in ESG. Sustainability is about being socially and environmentally responsible. Brands must therefore be ready to step in to uphold workers’ rights throughout the supply chain and implement fair labor and compensation policies. Targeted empowerment and education programs for communities based around the supply chain can also be very effective.

PUMA, for example, worked with a factory partner in Vietnam to identify the root causes of wage violations related to working hours and compensation. The company helped the factory move to a more transparent and fair compensation and incentive system, increasing workers’ wages and reducing excessive overtime.

ESG is a good business decision. Retailers and fashion brands are increasingly looking for more sustainable business models, not just because it’s the right thing to do, but because they realize that by making ESG a priority at all levels of the organization, they can strengthen financial and competitive performance. In other words, embedding ESG in a company’s DNA is essential to companies’ ability to operate both profitably and consciously. By investing in organizational practices that hold, businesses will be better positioned to achieve their financial goals while contributing to social well-being and the common good.

Innovate with circularity.

Ultimately, a sustainable future for fashion means transitioning to a circular economy with greater use of regenerative practices and closed-loop recycled materials. Obviously, full circularity will take time. But circular strategies and plans should already be in place. And brands should look for investments — including digital platforms and dynamic planning tools — that can start the circle before it comes full circle.

A good recent example is Allbirds, which launched ReRun, a new resale platform, in partnership with Trove’s technology and logistics platform. This commitment to circularity will initially offer Allbirds customers the opportunity to trade in their worn-out shoes for store credit.

The big picture? If retail is to make tangible progress on sustainability, ESG must be integrated as a management approach, not a separate or siled business. This is, ultimately, the first key step to sustainably taking sustainability to the next level.

Consumers want it. Investors want it. The brands themselves want it. Now we have to work collectively to make it happen.

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