A stark but little known statistic is that UK consumers buy more clothes per person than those in any other country in Europe.
Other potentially startling realities are that it can take more than 20,000 litres of water to produce 1kg of cotton, equivalent to a single t-shirt and pair of jeans, and up to 8,000 different chemicals are used to turn raw materials into clothes.
Recent evidence from industry analysts suggests that resource-intensive garments are worn only a handful of times before being discarded and ending up in landfill.
With the sustainability of the fashion industry coming under increasing scrutiny, such facts cast a guilty light on the acquisitive habits of shoppers in the UK and the developed world as whole.
The ‘fast fashion’ business model, a contemporary term to describe the rapid movement of designs from catwalk to affordable retail outlets to capture current trends, has been widely blamed for encouraging over-consumption of clothes, without taking any responsibility for the excessive waste or environmental and human costs this generates.
Under the fast fashion model, garments are sold for relatively cheap prices and aimed at younger, fashion-conscious consumers, who are enticed to change their wardrobe on a regular, trend-driven basis.
Streamlined supply chains and short production times have made this approach both possible and profitable for brands.
Many fashion companies, both high street and luxury, have already taken steps to implement more sustainable manufacturing processes and supply chains.
Most have also introduced policies that ensure fair treatment of workers (and animals) involved in their operations.
There is still a lot of work to be done, however – especially if brands want to avoid legal challenges, stakeholder disaffection, and perhaps most importantly, reputational damage.
Below, we offer advice on how retailers can adopt and improve environmentally-friendly, ethically and legally-compliant approaches to the business of fashion.
Sustainability in vogue
With the topic of climate change increasingly taking centre stage in influential political and social forums, consumers are gradually becoming more sensitive to sustainability issues.
The ecological and ethical footprints of clothes are beginning to influence the purchasing decisions of average consumers, a shift which has made brands sit up and take notice.
In particular, retailers are being asked to provide greater transparency into their manufacturing and supply chain processes, especially following some high-profile tragic accidents at garment factories in developing countries.
Where once shoppers would rarely question how a product was made or what it was made of, brands are now expected to clearly state where garments come from (although this is largely a result of EU Rules of Origin legislation) and how their environmental and social governance (ESG) policies inform their choice of processes, materials and deployment of human resources.
Some of the higher-end labels have seized control of their manufacturing and distribution processes to ensure sustainable methods and ethical standards are maintained throughout their supply chains.
More than organic cotton
The message that sustainability in fashion extends beyond simply using organic cotton to produce clothes is yet to be fully understood by the whole fashion community.
While many people equate sustainability with the quality and source of material used, the legal and ethical responsibility of retailers goes further than this.
In January 2019, the House of Commons Environment Audit Committee published its "Interim Report on the Sustainability of the Fashion Industry", based on evidence gathered from 16 leading UK fashion retailers.
As well as detailing familiar issues surrounding the use of "sweatshops" in developing economies, the report found that even in some UK-based factories supplying British fast fashion and e-retailers, labour practices were 'side-stepping' employment law to maximise profits.
In response to the findings of the report, and against the backdrop of consternation from consumers regarding manufacturing practices, some well-known fashion retailers were swift to act.
Corrective approaches included banning cash payments to employees, terminating relationships with factories found to be violating employment law and even funding whistleblowing helplines for reporting illegal and unethical practices.
The government report also found that some retail groups and companies have taken action to combat exploitation and misuse of materials in the fashion industry, including commitments to increase the use of recycled materials.
Challenges and opportunities
Pivoting to more sustainable models comes with additional upfront costs, although proponents of good ESG argue that, in the long-term, ethical practices pay off by reducing risks of fines and reputational damage for non-compliance with best practice guidelines.
Based on current trends, it seems that demand for more sustainable and ethical manufacturing will continue to grow in tandem with enhanced consumer awareness and spending power.
Research published in February 2019 by industry news service Retail Week found that 72% of consumers aged 18-24 would be willing to pay more for an environmentally friendly product, as would 64% of those aged 25-34 (this declines to 47% among consumers over the age of 35).
But given the fierceness of competition among fashion retailers, passing on increased costs of using sustainable materials and manufacturing methods to shoppers may not seem like a palatable business move.
Some leading fashion designers have urged retailers to rethink their choices to balance out increased costs in some areas by reducing spending on others, without compromising quality or appeal to consumers.
International supply chains
The difficulties facing retailers wishing to be compliant with environmental and ethical regulations and guidelines are compounded by the complex and often international nature of the industry’s supply chains.
Depending on where a company operates and what inputs go into its manufacturing process, applicable regulatory laws may include:
The Bribery Act (UK) (impacts on procurement, manufacturing and business payments);
Modern Slavery Act (UK) (impacts on personnel, procurement and manufacturing);
The Animal Welfare Act (UK) (impacts on the use of animal products);
Grenelle II regulation (France) (impacts on energy consumption);
REACH (EU) (impacts on chemicals usage);
Restriction of Hazardous Substances (RoHS) (EU) (impacts on chemicals usage);
Conflict Minerals Regulation (EU) (impacts on jewels, minerals and metals usage);
The Dodd-Frank Act (US) (impacts on minerals and metals usage);
Waste from Electrical and Electronic Equipment (WEEE) (EU) (impacts on manufacturing and waste disposal);
Transparency in Supply Chains Act (California, US) (impacts on procurement, manufacturing and logistics); and
Proposition 65 (California, US) (impacts on chemicals usage).
With the UK set to leave the EU in the near future, depending on the outcome of Brexit negotiations, retailers may have to comply with additional layers of regulation in order to continue to do business with EU member states as 'third country' trading partners.
Competition and margin pressure among retailers mean that brands have to seek new ways to engage profitably with their customer base.
This is likely to be achieved in part via new technological advances, like 'smart' supply chains, which reduce unnecessary build-up of unwanted merchandise.
Re-focusing distribution approaches via emerging consumer participation models, such as rental, where people hire clothes from shops or even their peers for short periods, will enable retailers to harness the benefits of changing consumer behaviour.
This fits neatly with the subscription-based model already popular in industries like entertainment and transport and which is increasingly being tested by cosmetics and clothing brands.
Making a virtue of sustainability
Brands are generally aware that consumers are shrewd and able to spot cynical marketing ploys.
It is therefore important that companies embed sustainable practices into their business models, rather than bolting them on to existing structures, making the resulting structure unwieldy and vulnerable to compliance and reputational risks.
Achieving this usually requires a thorough audit of a company's organisation and processes and ascertaining what approach will work best for that particular business.
Simply adopting policies for the sake of it risks corrupting a company's existing ESG process and ethos, if the external guidelines it has chosen to follow do not reflect the circumstances of that individual brand or retailer.
The pace of change in fashion sustainability has so far been slow, especially compared with other trends such as the shift to online retailing and the collapse of many well-known high-street bricks and mortar brands.
Sustainability looks set to be the next big wave of change for the industry and there are opportunities for early adopters of more ethical practices and better ESG more generally.
In responding to this trend, retailers should consider taking the following steps:
Map sustainability in the context of the business to ascertain which of its functions impact the environment the most, and what opportunities exist to reduce this impact.
Understand supply chains from end-to-end, to see where processes can be improved and where the costs of any improvements can be balanced by cutting unnecessary spend.
Develop a strategy that aligns with applicable legal and ethical guidelines in all jurisdictions involved in a company's supply chain.
Meet key stakeholders within the supply chain to understand their concerns and use their feedback to get their buy-in to help execute the strategy.
Prepare a governance structure that follows best practice guidelines and allows key decision makers among the top management to take control of ESG and sustainability initiatives.
Establish a process for monitoring the implementation of strategies and policies and any updates to regulations and guidelines on governance and sustainability.
Set up proper reporting and data collection procedures to ensure that achievements (and failures) against sustainability targets are recorded and fed back to key stakeholders (often, companies are doing the right thing, but are not reporting it in a way regulators or consumers expect or understand).
Consider engaging external advisers to assist with the above.
James Corlett is a partner specialising in brand development at European law firm, Fieldfisher. To find our more about our retail, brand development and ESG expertise, please email James or visit the relevant pages on the Fieldfisher website.
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