• Thu. Jul 25th, 2024

can the fashion industry be more sustainable?

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The Atacama Desert in northern Chile has recently added a new feature to its arid landscape: mountains of discarded garments so immense that they are visible from space. Similarly, in Ghana and other African countries, unwanted items from second-hand clothing markets are overwhelming landfills and choking waterways.

The world’s fashion industry is damaging the planet. Dystopian images of textile waste — which is moved, unsold, directly from the factory floor to global dumping grounds — have become shockingly commonplace.

Due in part to the rise of fast fashion, the clothing industry is producing more than ever: reliable figures are hard to come by but, in 2016, the World Economic Forum put the number of items at 150bn per year. The global revenue for the sector is now even larger than some leading world economies.

But waste is only one of many ways in which fashion harms the environment. The industry’s size and chemical- and water-intensive manufacturing processes, together with its reliance on non-renewable energy sources, mean its effect on the environment is immense. The fashion industry is estimated by the European Environment Agency, Europe’s environmental watchdog, to contribute up to 10 per cent of the world’s total carbon emissions.

Test yourself

This is the fifth in a series of monthly business school-style teaching case studies devoted to responsible-business dilemmas faced by organisations. Read the piece and FT articles suggested at the end (and linked to within the piece) before considering the questions raised. 

About the authors: Fabrizio Ferraro is professor of strategic management, IESE Business School and Anna Sáez de Tejada Cuenca is assistant professor of operations, information and technology, IESE Business School

The series forms part of a wide-ranging collection of FT ‘instant teaching case studies’ that explore business challenges.

Now, the industry is waking up to its contribution to the climate crisis, and adjusting its design, production, distribution and end-of-life cycles.

In the luxury segment, some companies are taking advantage of their market position and customers’ lower price sensitivity to invest in the transition to more sustainable practices. LVMH’s Stella McCartney, long known for championing ecological concerns, has pioneered the use of alternative materials such as plant-based faux furs. France’s Chloé, in rethinking its growth strategy during the pandemic, became the first luxury fashion house that is B Corp certified, meaning it has made verified commitments to environmental and social aims.

Sustainable action is not limited to high-priced products, however. The more affordable Danish brand Ganni has begun phasing out virgin leather in its shoes and handbags and reported that it has reduced carbon emissions while sales have grown, showing that it is possible to do both.

Even fast-fashion giants such as Inditex, owner of Zara, and H&M are investing in research and development in recycling, and improving transparency. For example, they have placed collection bins in many stores where customers can deposit used clothing. H&M reported that it received 16,855 tonnes of used products in 2023 — up by more than 2,000 tonnes year on year — which it sends for reuse or recycling, through partnerships with specialist handlers.

A modern and minimalistic Zara store setup showcasing a light gray coat and accessories on a wooden display stand. A prominent sign invites shoppers to recycle their old clothes through the #joinlife program
Second life: Zara bins for used clothing © Inditex

So far, though, such activities remain modest. One problem is that both companies and consumers are complicit in a cycle of overproduction and overconsumption. Fast-fashion companies crank out dozens of collections a year, rather than the traditional four, and even high-end brands produce far more than they expect to sell.

Meanwhile, consumers now wear garments only a few times before disposing of them. And only a small proportion is willing to pay more for greener items. While Gen Z, born between the late 1990s and 2010, will champion protection for the environment in principle, the explosive growth of low-cost retailers such as Shein and Temu belies that commitment. Social media influencers in ever-changing outfits and the popularity of TikTok ‘hauls’ — in which people show off a pile of purchases — encourage more consumption.

Recycling is difficult, and uses more resources. To start with, textiles must be separated and sorted by type. Most clothes are composed of multiple fibres, including polyester — the oil-based staple of clothing, which is almost impossible to recycle with existing technologies. The recent failure of Renewcell, a Swedish company offering industrial-scale closed-loop services — in which discarded textiles are collected, recycled and turned into fibres to make new garments — shows that the quality and price of virgin fibres are still more popular with makers and customers than those of recycled materials.

The most environmentally sound solution would be to leave existing clothes intact, but the very disposability of fast fashion means the clothes often fail to hold up to a new life: they are made to be worn and discarded. It has also proved hard to convince consumers to return clothes to retailers without offering something in return — such as H&M’s store vouchers, which promote fresh buying.

Second-hand clothing start-ups, such as online marketplace Vinted and Vestiaire Collective, have flourished, but they represent a minuscule portion of the market. Clothing rental services are struggling to make an impact, too. Our research — currently under way — indicates that they may inadvertently encourage clients to change outfits more frequently than they otherwise would, and come with a high environmental cost for packaging and transport.

However, a new generation of consumers has the opportunity to change behaviour and forge new patterns of consumption. Companies can rethink their business models. And there remains enormous room for innovation in materials, design, industrial processes, methods of recycling, and ways to reuse textiles produced.

Fashion needs a rethink. Two years ago, Yvon Chouinard handed Patagonia, the US outdoor clothing company that he founded, to a trust that will use its profits to battle the climate crisis. He noted that “we are just getting started”, as Patagonia approached 50 years of its “experiment in responsible business”. He continued: “If we have any hope of a thriving planet — much less a thriving business — 50 years from now, it is going to take all of us doing what we can with the resources we have.”

Questions for discussion

Read:
Can fast fashion kick its dirty habits?

Fund managers give cool reception to prospect of Shein London IPO

Second-hand fashion site Vinted posts first annual profit

Consider these questions:

  1. How can brands increase consumers’ willingness to pay for sustainable fashion?

  2. How could the cycle of overproduction and overconsumption be broken?

  3. Can fast-fashion players evolve their business models to be less reliant on volume growth (and how)?

  4. How could artificial intelligence be deployed in the fashion industry to reduce its environmental footprint?

  5. How responsible are fashion manufacturers for their products’ footprint during their life cycle?

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