Sustainable Movement Closes In On Clueless Fashion Industry

The day of reckoning for the fashion industry over its history of waste and its outsized carbon footprint just got a lot closer, while a recent survey of brand executives suggests most have yet to get that memo.  

State legislators in New York, home state of the industry (and its investors), recently floated a new law which would impose an astonishing level of corporate transparency, a principal element of the sustainable investment agenda known as ESG (environmental, social, and governance).

Adherence to ESG is becoming a widely accepted criterion used by investors to choose stocks suitable for “green” portfolios. Under the so-called Fashion Act, major apparel retailers ($100 million or more in revenue) would be legally bound to report “adverse environmental and social impacts” of at least half of their businesses. It would require disclosure of materials used in products along with details about energy, water, and chemical use in manufacturing and finishing. Stiff fines—up to two percent of annual revenue—could be imposed for failure to comply.

Whether the proposed law will survive the legislative process remains to be seen. Either way, it is likely to serve as a rallying point for the movement. The toothpaste is out of the tube. 

Furthermore, it’s what matters most to consumers, according to a recent survey by First Insight in partnership with the  University of Pennsylvania’s Wharton Baker Retailing Center. Two-thirds of consumer respondents said they would pay more for sustainably produced goods. Three out of four said they place a higher value on sustainability than on brand name.

That consumers are willing to pony up $320 for that hot new (sustainably produced) Cashmere beret will come as a shock in the c-suites of the fashion world.

The survey found that nearly all (94%) of brand executives believe the opposite—that brand name is more important than sustainability.

When asked what type of sustainable shopping formats consumers would utilize the most, retail executives ranked resale/recommerce programs last. But 41% of consumers reported they have already had the experience, shopping programs such as those offered by Lululemon and Levi’s. 

“Half of retail executives believe that price is the primary reason consumers shop across e-commerce formats,” said Professor Thomas Robertson, academic director of the Baker Center. “In fact, only 27% of consumers agree that price is their motivation.”

These startling disconnects make you wonder. Is anyone listening to consumers? Who’s minding the store?

Sustainability is such a broad issue that the apparel industry will eventually have to confront some aspects of the business that seem to have nothing to do with it. The practice of destroying unsold seasonal merchandise has already been exposed. Woe to the retailer who gets caught doing it today. 

If nothing else, over-buying leads to markdowns which compress margins and profitability.

So, you have to ask why, in the first place, fashion buyers are over-ordering stuff that doesn’t sell. It’s a pernicious problem that has a solution: ask the consumer. 

In an age when just about anything can be virtually consumer-tested—colors, designs, marketing campaigns—it’s absurd that so many apparel retailers over-buy. The goods may have been sustainably produced, but it’s the opposite of sustainable when perfectly good unsold clothing that can’t be returned to the manufacturer has to be shipped off to a recycling facility or destroyed.