Apparel Industry Is Unprepared For New Sustainability Laws

One of the hot topics among fashion execs these days is what’s shaping up to be the industry’s next crisis — government regulation of sustainability. In the US, Europe, and elsewhere, new laws are in the pipeline or on the books that, for the first time, require leading brands to come clean about pollution and waste.

It’s a crisis because the apparel industry, as we’ve come to expect it, is stubbornly unsustainable. There have been numerous examples in recent years of the cost of speed and convenience, including the decision by marquee fashion labels to burn or otherwise destroy overstock merchandise and the annual tsunami of returns that end up in African landfills.

The cost of trying to make the business less harmful to the environment and less wasteful has been, in the short run, a lose-lose proposition — awkward, expensive, and often dismissed by critics as greenwashing. At the executive level, sustainability has been a blip on the radar screen. As a senior exec at one company told me recently, “Right now, I just need to figure out our pricing strategy given inflation.”

As the ideal of sustainability becomes hard law, kicking the can down the road isn’t work anymore, especially with tough new transparency and reporting requirements like those recently enacted in France. “It’s the first time a regulation has required so much disclosure in the entire industry,” says Baptiste Carriere-Pradal of the Amsterdam-based Sustainable Apparel Coalition. In a recent interview with BusinessofFashion.com, he warned, “The industry is not prepared at all.”

In the US, New York and California now ban certain chemicals used in waterproofed outerwear. But the New York State Legislature is putting the final touches on a major new piece of legislation — the New York Fashion Act — that is even tougher than France’s. If enacted, it would be a back-office headache for any company in any industry, let alone one that lives on such thin margins.

As currently written, the proposed New York law requires fashion retailers with more than $100 million in global revenue to produce maps of their supply chains, “… identifying, preventing, mitigating, accounting for, and taking remedial action to address actual and potential adverse impacts to human rights and the environment in their own operations and in their supply chain.” That’s a tall order, and the final legislation may be less burdensome. Either way, the trend toward regulation is gathering steam.

Addressing apparel sustainability is challenging because most retail executives have missed the boat regarding what consumers care most about. A First Insight survey from last year found that two-thirds of retailers believe consumers are not willing to spend more for sustainable brands, but two-thirds of consumers said they would…the key is that it has to be the right stuff.

The survey found that nearly all retailers — 94 % — believe that brand name is more important to consumers than sustainability, but three-quarters of consumers said the opposite. Retail executives ranked brand-operated resale/recommerce programs lowest when asked what type of sustainable shopping formats consumers would most utilize. But 41 % of consumers reported they already shop at brand resale/recommerce programs, such as those offered by Patagonia, Lululemon, or Levi’s.

It’s easy to understand how — after dealing with the pandemic, supply chain, and inventory glut crises — apparel companies have been busy just trying to keep the lights on. But it’s hard to figure out how they could be so poorly informed about what their customers want.