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A new feature has recently appeared on the arid landscape of northern Chile’s Atacama Desert: mountains of discarded clothing so large they can be seen from space. Similarly, in Ghana and other African countries, junk from second-hand clothing markets is overflowing landfills and clogging waterways.
The global fashion industry is damaging the planet, and dystopian images of unsold textile waste being sent from factories straight to dumps around the world have become shockingly commonplace.
Thanks to the rise of fast fashion, the clothing industry is producing more goods than ever before: reliable figures are hard to come by, but in 2016 the World Economic Forum estimated annual production at 150 billion items. The industry’s global revenue is now larger than some of the world’s major economies.
But waste is only one of the many harms that fashion causes to the environment. The industry’s size, its chemical- and water-intensive production processes, and its reliance on non-renewable energy sources mean that the environmental impact is enormous. Europe’s environmental watchdog, the European Environment Agency, estimates that the fashion industry is responsible for up to 10 percent of the world’s total carbon emissions.
Test yourself
This is the fifth in a monthly business school-style educational case study series focusing on responsible business dilemmas facing organisations. Before considering the questions posed, please read this article and the FT article suggested at the end (and linked within the article).
About the authors: Fabrizio Ferraro is Professor of Strategic Management at IESE Business School and Anna Sáez de Tejada Cuenca is Assistant Professor of Operations, Information and Technology at IESE Business School.
The series is part of FT’s wider collection of “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 sector, some companies are using their market position and customers’ lack of price sensitivity to invest in the transition to more sustainable practices. LVMH’s Stella McCartney, long known for championing environmental issues, has pioneered the use of alternative materials such as plant-based fake fur. France’s Chloe rethought its growth strategy during the pandemic, becoming the first luxury fashion house to achieve B Corporation certification, meaning it has a proven commitment to environmental and social goals.
But sustainability isn’t just limited to pricey products: More affordable Danish brand Ganni has begun phasing out virgin leather from its shoes and handbags, reporting increased sales while reducing its carbon footprint, proving that both are achievable.
Even fast-fashion giants like Zara’s parent company Inditex and H&M are investing in recycling research and development and becoming more transparent. For example, many of their stores have installed collection bins where customers can drop off used clothing. H&M reports that it received 16,855 tonnes of used products in 2023 (up more than 2,000 tonnes from the previous year) and partnered with specialist processors to reuse or recycle them.
Second Life: Zara’s bin for second-hand clothes © Inditex
But so far, these efforts have remained muted. Part of the problem is that both companies and consumers are contributing to a cycle of overproduction and overconsumption. Fast fashion companies are producing dozens of collections a year instead of the traditional four, and even luxury brands are producing far more than they expect to sell.
Meanwhile, consumers now discard clothing after only wearing it a few times. And only a few are willing to pay a premium for eco-friendly products. Gen Z (born between the late 1990s and 2010) champions environmental protection in principle, but the explosive growth of low-cost retailers such as Shein and Temu belies that commitment. The popularity of social media influencers with their constantly changing outfits and TikTok “Howl,” where people show off their lavish purchases, encourages more consumption.
Recycling is difficult and resource-intensive. First, textiles need to be separated and sorted by type. Most clothing is made of multiple fibers, including polyester, the main component of petroleum-based clothing that is nearly impossible to recycle with existing technology. The recent bankruptcy of Renewcel, a Swedish company that offered an industrial-scale closed-loop service to collect discarded textiles, recycle them, turn them into textiles, and make new clothing, shows that the quality and price of virgin textiles remain more popular with manufacturers and customers than recycled materials.
The most environmentally friendly solution would be to keep existing clothes, but the very disposable nature of fast fashion means that clothes are not made to withstand a new life — they’re made to be worn and then discarded — and convincing consumers to return clothes to retailers has proven difficult unless they’re offered something in return, such as in-store vouchers for H&M to encourage them to buy new clothes.
Second-hand clothing start-ups such as online marketplaces Vinted and Vestiaire Collective are thriving but capture only a small slice of the market. Clothing rental services are also struggling to make an impact. Our ongoing research shows that such services can unintentionally encourage customers to change their clothes more frequently than usual, and they also have high environmental costs in packaging and shipping.
However, a new generation of consumers offers an opportunity to change behaviour and create new consumption patterns. Companies can rethink their business models. There is also a lot of room for innovation in materials, design, industrial processes, and ways of recycling and reusing produced textiles.
Fashion needs a rethink. Two years ago, Yvon Chouinard put Patagonia, the American outdoor gear company he founded, into a trust that will use profits to fight the climate crisis. As Patagonia marks 50 years as an “experiment in responsible business”, he points out that “we’re just getting started”. He adds: “If we have any hope that the planet will be thriving, let alone our businesses, in 50 years’ time, we all need to do what we can with the resources we have today.”
Discussion Questions
read:
Can fast fashion break its dirty habits?
Fund managers cool to Shane London IPO prospects
Second-hand fashion site Vinted reports first annual profit
Consider the following questions:
How can brands increase consumers’ willingness to pay for sustainable fashion?
How can we break the vicious cycle of overproduction and overconsumption?
Can fast fashion companies evolve their business models to become less reliant on increasing sales volume (and how)?
How can artificial intelligence be used to reduce the fashion industry’s environmental impact?
To what extent are fashion manufacturers responsible for the environmental footprint of their products throughout their life cycle?
