Eva Cruz is not happy.
Fifteen years after the Danish Fashion Council and the founders of Copenhagen Fashion Week launched a sustainable fashion event to help the industry get involved in the United Nations’ annual COP climate summit, little has changed.
“I never thought 15 years later we’d still be having the same conversation,” Cruz, who now serves as chief global engagement officer at sustainability-focused loungewear startup Pangaia, told the audience at this year’s Global Fashion Summit. “I’ll be honest with you, I’m just so disappointed that we all weren’t able to move things forward.”
It’s a frustration that permeates the event, which has become the industry’s highest-profile sustainability gathering.
It’s true that executives no longer frown when the topic comes up, points out Julie Gilhart, an industry veteran and early advocate for sustainability.But while climate, diversity and labor issues are now firmly on the C-suite agenda, industry efforts to actually address these issues remain largely in the pilot phase, in the realm of marketing and public relations.
Meanwhile, the risks of doing nothing are becoming increasingly clear as regulators increase scrutiny, missteps threaten brand reputations, and extreme weather upends supply chains. Yet global warming emissions are still rising and are expected to soar by more than 40 percent in the decade they are required to be halved.
“Time is running out,” said Thomas Tochtermann, chairman of Global Fashion Agenda, the Copenhagen-based industry advocacy group that organizes the summit. “Now is the time to invest and create a tipping point.”
Here’s why it’s harder than ever to achieve, yet finally possible.
Things are getting political
It’s not just those with longstanding connections to sustainability in the fashion industry who are tired of the industry’s slow progress.
Regulators around the world are finally stepping in to do what neither companies nor consumers (who, in truth, rarely shop according to the values they claim to own) have been able to do: force change. A wave of legislation is emerging that either targets fashion directly or enmeshes the industry in broader regulatory efforts.
Europe is leading the way, with some new requirements already in place, but other countries aren’t far behind, and in the U.S., efforts at the state level are expected to accelerate after next year’s election.
The new regulations mean that efforts that have so far been largely limited to industry-led voluntary initiatives are about to become mandatory, holding the fashion industry accountable for its sustainability efforts in a way that has never been done before. Regulations are also likely to increase complexity and costs. We can expect lobbying to shape policies favorable to the industry to intensify as regulations on the industry increase.
Still, legislation is already beginning to reshape the market. This week, several brands, including Calvin Klein parent company PVH and H&M Group, signed a landmark binding agreement to help raise wages in Cambodia. A bilateral agreement with international trade union IndustriALL ensures that companies’ sourcing practices don’t undermine wage-raising efforts. Brands are prepared to take on new risks because of the looming introduction of due diligence requirements designed to make them more accountable for what happens in their supply chains.
For companies willing to change, these regulations are an opportunity, not a burden, says Paul Polman, an environmental activist and former CEO of Unilever: “Instead of seeing regulation as a shackle or something that restricts your business, see it as a mechanism to take the fashion industry to new heights, raise the floor faster and eliminate free riders.”
Money issues
Tackling the fashion industry’s climate challenge will require a lot of money, which will be hard to come by, especially now.
The world is in a period of exceptional instability, driven by the post-COVID economic downturn and rising geopolitical tensions that are hijacking the corporate agenda, even as the climate crisis remains a major driver of global instability.
Meanwhile, new regulations and growing climate risks are pushing sustainability higher on the CFO’s agenda and out of the realm of marketing and PR departments.
“A sustainable business needs to be profitable, but if it’s not sustainable, it won’t be a profitable business in the long term,” H&M CFO Adam Karlsson told the summit audience.
This is a tricky topic, not only because no one is currently investing enough money to deliver on the promises, but also because most of the biggest expenditures would have to go towards reducing the environmental impact of polluting manufacturing processes. Who should pay for this and how is a hotly debated issue in an industry where most of the profits and pricing power reside with the brands, but most of the costs and work must be borne by outsourced manufacturers.
Industry mechanisms to enable further investment are still in their infancy, and business models designed to maximise flexibility and speed and minimise price tag for brands leave little room for the long-term investments needed to meet climate targets.
“When you invest in renewable energy as a manufacturer, it’s a 15-year investment, but the brand may only be there for a season or two, so there’s a risk,” Tochtelman says. “Brands need to be proactive and do something together to encourage other investors to follow suit.”
Be bold or go home
Where progress has been made, things need to level up — and quickly. The efforts made over the last 15 years will be for naught if they can’t be scaled up now.
There have been setbacks, such as the collapse of fibre-to-fibre recycling pioneer Renewcell earlier this year, but companies are starting to make bigger changes and new players are entering the market.
This week, Saia, a polyester recycling company founded in March by the H&M Group and environmental industry investor Vargas, raised $100 million to finish construction of a pilot plant by the end of the year. The recycling company has set an aggressive goal of building 12 industrial plants by the end of the decade, and it has gained a new strategic backer to help it achieve that goal.
More industry players are also entering the sector, a change that could help new initiatives penetrate the fashion industry more quickly. Other announcements this week include an investment by the venture arm of Taiwanese conglomerate Far Eastern Group in US-based recycler Cark. Far Eastern is one of the world’s largest manufacturers of both virgin and recycled polyester. Meanwhile Sunco, owner of denim giant Isco, has launched its own recycling venture.
Polman said that while getting the industry moving is a lot of work, what is needed is ultimately quite simple.
“I hope that in this pivotal moment, when everything was at stake, when the fate of humanity was at stake, we can say that the fashion industry has decided to be part of the solution, not part of the problem,” he said.
Editor’s note: This story was updated on May 28, 2023 to correct that Calvin Klein’s ownership has transferred to PVH Corp.
