Eva Kruse isn’t happy.
Fifteen years after the founder of the Danish Fashion Institute and Copenhagen Fashion Week launched a sustainable fashion event to give the industry a spot at the UN’s annual COP climate summit, not nearly enough has changed.
“It wasn’t the idea that we would still be talking about the same things 15 years in,” Kruse, now chief global engagement officer at sustainability focused loungewear start-up Pangaia, told the audience at this year’s Global Fashion Summit. “I’ll be brutally honest, I’m quite disappointed in all of us that we haven’t been able to push things forward.”
It’s a frustration that pervaded the event, which has become the industry’s most high-profile sustainability gathering.
To be sure, executives no longer roll their eyes when the topic comes up, industry veteran and early sustainability champion Julie Gilhart noted. But if climate, diversity and labour issues have now made it firmly onto C-suite agendas, the sector’s efforts to actually tackle the issues remain largely stuck in pilot mode — or the province of marketing and PR efforts.
Meanwhile, the risks of inaction are becoming increasingly clear, as regulators step up oversight, missteps threaten brand reputations and climate extremes buffet supply chains. And yet its planet-warming emissions are still on the rise and on track to balloon by more than 40 percent by the end of the decade, when they need to halve.
“We’re running out of time,” said Thomas Tochtermann, chairman of Copenhagen-based industry advocacy group Global Fashion Agenda, which hosts the summit. “Now is the time to invest and create tipping points.”
Here’s why achieving that may be both harder than ever and finally ready to happen:
Things are Getting Political
The industry’s sustainability veterans aren’t the only ones getting fed up with fashion’s glacial pace of progress.
Regulators around the world are finally stepping in to do what neither business nor consumers (who, as it turns out, rarely shop according to their stated values) could: force change. A tidal wave of legislation is coming down the pipe, both directly targeting fashion, or sweeping the industry up in broader regulatory efforts.
Europe is leading the charge, with some new requirements already coming into force. But other countries are not far behind. In the US, action at the state level is expected to ratchet up next year after elections.
New regulations mean initiatives that have largely been confined to voluntary, industry-led efforts are about to become compulsory, making fashion accountable for its sustainability commitments in a way it never has been before. They can also add complexity and cost; expect industry lobbying to shape policy in its favour to step up alongside the increased regulatory focus on the sector.
Even so, legislative moves are already beginning to reshape the market. This week a handful of brands including Calvin Klein-owner PVH Corp. and H&M Group signed landmark binding agreements to support higher wages in Cambodia. The bi-lateral commitments with the global union IndustriALL are designed to ensure companies’ sourcing practices don’t undercut efforts to raise salaries. One reason brands were prepared to put skin in the game in a way they never have before: incoming due diligence requirements that are set to make them more accountable for what happens in their supply chains.
For companies wanting to make change, these regulations are an opportunity, not a burden, said climate campaigner and former Unilever CEO Paul Polman. “Don’t view them as a handcuff or restricting business; see them as a mechanism to drive the fashion industry to new heights, to move the floor up faster and to eliminate the free riders.”
Money Problems
Meeting fashion’s climate commitments is going to require cash, and a lot of it. Finding it is going to be tough, especially now.
The world is in a period of exceptional volatility driven by a post-Covid economic downturn and spiking geopolitical tensions that are hijacking corporate agendas — no matter that the climate crisis is a significant contributor to global instability.
On the other hand, the combination of incoming regulation and growing climate risk is moving sustainability up the agenda for CFOs and out of the realm of marketing and PR departments.
“A sustainable business needs to be profitable, but you can only be a long-term profitable business if you’re sustainable,” H&M CFO Adam Karlsson told the summit audience.
The topic is fraught, not only because no one’s investing enough money to meet commitments at the moment, but also because most of the biggest spending will need to go towards reducing the environmental footprint of polluting manufacturing processes. In a sector where most of the profits and pricing power lies with brands, but most of cost and work must be born by outsourced manufacturers who should pay for this and how is a hotly debated issue.
Industry mechanisms to enable more investment are nascent and business models geared to maximise flexibility and speed and minimise prices for brands leaves little room for the kind of long-term investing that will be needed to deliver on climate goals.
“It’s risky, because if as a manufacturer you invest in renewables, you’re investing for 15 years, and a brand may be there for one to two seasons,” said Tochterman. “Brands need to step up and collectively do something to attract other investors to follow suit.”
Go Big or Go Home
Where progress has been made, things need to level up. And fast. None of the efforts made in the last 15 years will make a difference if they can’t now start to scale.
While there have been setbacks (like the bankruptcy of first-mover textile-to-textile recycler Renewcell earlier this year), companies are also beginning to take bigger swings and new players are stepping into the market.
This week, Syre, the polyester recycling company launched by H&M Group and green industry investor Vargas in March, raised $100 million to complete construction of a pilot plant this year. The recycler has set aggressive targets to build 12 industrial plants this decade and brought on new strategic backers to help get there.
More industrial players are also entering the mix, a shift that could help new initiatives plug into the fashion system in a big way more quickly. Other announcements this week included an investment by Taiwanese conglomerate Far Eastern Group’s venture arm in US-based recycler Circ. Far Eastern is one of the world’s largest producers of both virgin and recycled polyester. Elsewhere Sanko, the owner of denim manufacturing giant Isko, has launched its own recycling venture.
Moving the industry is hard work, but what needs to be done is ultimately quite straightforward, said Polman.
“I do hope we’ll be able to say that at this pivotal moment, when everything was on the line, when the fate of humanity was at stake, that the fashion industry decided to be part of the solution, not part of the problem,” he said.
Editor’s Note: This article was updated on May 28, 2023, to correct the ownership of Calvin Klein to PVH Corp.
