A webinar hosted by TMA Europe and gunnercooke
Rashmi Dube – gunnercooke Partner in Corporate Governance & Litigation
Clare Press – Presenter, the Wardrobe Crisis podcast, Producer & Co-Presenter of the UN’s Ethical Fashion podcast
Marina Bradford – Sustainability consultant & founder of Bemari, a B-Corp certified impact & circularity consultancy
Andrew Griffiths – Director, Community & Partnerships, PlanetMark
Carsten Staecker – Partner, Equity Advisory, PwC Frankfurt
Based on a recent report, people in the US and the UK defined sustainability differently. What does sustainability mean? Do we need to be clearer about the definition? Is it just a ‘nice to have’ in business?
Clare – The fashion industry has been getting away with addressing eco sustainability but not social sustainability. It’s also dangerous to talk about sustainability as a trend. It’s not a trend, it’s the only way forward. Brands need to future-proof their businesses. The current fast fashion system is the definition of unsustainability. The production of clothes has gone up, yet the wearability has gone down. We are getting more clothes worn for less time. It’s wasting materials but also human resource. Sustainability should be deeply embedded into business practices.
Andrew – It’s not a trend. The weather forecast isn’t a trend. Healthcare isn’t a fad. There are trends within sustainability, but it is a reality and something businesses have to adapt to, as they would a healthcare crisis or climate change crisis. Businesses with a good sustainability plan are more durable than those who aren’t. It’s actually now more profitable to be sustainable, especially when you take into account the long-term rewards.
Marina – It’s a blind spot. Sustainability is an area of risk that we haven’t been paying attention to as much as other risks that are more visible to us. Sustainability addresses a wide range of areas making up our eco-system, and the effects are also becoming more real and visible for us. If not managed, it’s a risk to the business, existence of communities and life as we know it. We are starting to address it now, not because it sounds good or someone said you should, but because if you don’t, in five years or even sooner it will have a huge impact on your business.
Carsten – Sustainability is about the future viability of the business model. The issues in fashion include the environmental aspects, e.g. greenhouse gases being emitted by the industry, which is more than the airline and shipping industries combined, the water usage, and the waste of resources. There is 92m tonnes of textile waste per year. Only 1% of apparel items are being recycled. And there is also an ethical side, notably issues around low wages, child labour and health and safety risks in factories. These issues are increasingly raising public awareness and customer sensitivity is growing fast. Investors are looking at how businesses are responding and adapting their business models.
There was a report from the fashion revolution consumer survey 2020 which found that European countries were agreeing it’s important for fashion brands to have sustainability certificates. This suggests consumers want policy and regulations to have a bigger role. Are we able to place greater regulation on the fashion industry or can the industry leapfrog this as it’s governance e.g. good practice?
Andrew – It’s an issue of ‘can we enforce this?’ A shift in thinking is for businesses to not only think about the impact on shareholders, but the impact on all stakeholders. Sustainability is not going away; we are just talking about it in a new way. There’s also financial sustainability to consider. Businesses can’t leapfrog it, but they should be aware that if they don’t act now then it will come back to bite them, and you won’t be able to act fast enough later when you need to.
Marina – Good governance already expects that you create value for your stakeholders, but it doesn’t necessarily enforce or define what this looks like for stakeholders other than shareholders. We need to define what we mean by governance, responsibility and sustainability to make it more actionable. We need to start thinking about the impact of our actions outside of our immediate visibility. We absolutely have to have regulation in this space. When the implications are this significant, we can’t leave it to chance. Not all organisations have the resources and the level of understanding needed to reduce their environmental impacts. The sheer scale of the challenge and organisations that would need to make changes in order to address the issues and our climate timeline means we need to bring in regulations to create an incentive and guidelines for those businesses to accelerate the shift.
Carsten – Brands need to be a leader in this sphere. Marketing around sustainability also increases the awareness of consumers, so it puts companies that don’t act further back. So there is an element of acceleration in this. We need to see the overall end game. We need to decarbonise before our deadline and be more resourceful. Companies that voluntarily take steps forward will lead the way for an industry that has to change dramatically. There is starting to be more regulatory intervention around the world, with the reduction of GHG emissions and the improvement of labour conditions being the main drivers of these rules.
Clare – There has been attempts to reform regulations and penalise those who aren’t leading the way. The government rejected these. There are different tempos for different countries bringing in regulations but overall, it’s too slow. There is more consumer pressure; people want to see regulation. And brands want to see regulation if they are forward thinking. It takes a long time to transition so we can’t leave it too late to act. We need consumers to move and culture to move, but we also really do need regulations to say polluters should pay.
Andrew – Think about digital disruption e.g. Blockbuster, Kodak. These are organisations that didn’t shift to address change. Blockbuster turned Netflix down five times and then Netflix took over the market because Blockbuster didn’t keep up.
Rashmi – Kodak understood that disruption was occurring, but they didn’t understand the nature of what was occurring. They thought people still wanted cameras as well as phones and thought people wanted to print photos.
Marina – Yes, you need to understand the nature of the changes and shifts in innovation and the market, and the social expectations element of these changes. When you have regulation, you have more clarity on the expectations you should be meeting. Otherwise, it’s open to interpretation.
The survey showed that the concern over child labour in the fashion industry was high. Only 22% were concerned with working conditions but 70% said brands should share info about wages and working conditions. Consumers want brands to care and be transparent. Are brands responding to consumers or the other way round? Is there a synergy between them?
Clare – Fashion is about desire for an item. Where the item is made is a secondary thought for most consumers. There are two streams. There are those who are hyper aware of the issues, then there’s those who want to treat themselves to a low value item because they are fed up of lockdown for example. And sometimes people move between these two streams. If you read lots of reports, you can see a general move to awareness of sustainability, particularly with Gen Z. And this trend if shifting the industry forward. However according to Forbes, Boohoo’s total sales topped billions of dollars. They were all over the news about their modern slavery conditions at factories in Leicester. But this has not damaged their sales.
Carsten – When the story came out about Boohoo the share price halved. But is has moved up again, although significantly underperforming its peers, eg. Zalando or ASOS. A lot of those stories consumers don’t see. Or maybe some of them don’t care. But a lot of it is about education and raising awareness. Being and acting sustainability in the fashion industry is something young people will activate eventually.
Clare – It used to be cool to smoke. Fast fashion won’t be cool soon.
Marina – Vaping replaced smoking, Coke Zero was launched as an alternative to a sugary version. Did the consumers demand a sugary drink in the first place or did they demand that clothes are made by underpaid workers? Or did the brands identify an opportunity and then created a demand for it in order to sell a new product?
Andrew – Big brands are very good at behavioural change and creating demand. Politicians say it’s young people who will solve our issues and young people who care. People have the attitude that young people will sort it out in five or ten years’ time. We need the people who have the power NOW to start sorting issues. Young people are a canary in a coalmine, they are just the first warning sign. A large Guardian survey showed two thirds of consumers in all age groups care about this. It’s a myth that it’s just young people. Don’t find yourself in the position of Blockbuster because you haven’t adapted fast enough. The rug will be pulled out from underneath you.
What is your opinion on fast fashion and the role of the influencer?
Carsten – Influencing is raising awareness of products. It’s the responsibility of the corporates on how they use this channel and what sort of influencers they work with.
Clare – Our lives would be a lot easier if influencers pushed the sustainability agenda. Model activists is a flashy term. Branding used to be a still photograph. But now models are speaking out and using voices as well as faces. The next generation of models have podcasts, use Instagram lives and go to protests.
Andrew – Influencers aren’t a new thing, it’s just a new word to describe people in a position where they can amplify messages. The social media platforms themselves are cracking down on influencers being transparent and responsible. Influencers also have their own personal brands, which are just as big as corporate brands, and the values need to align.
Any last points you’d like to add?
Clare – While it’s easy to put shame on the industry and focus on the negatives, I’m seeing a lot of brands doing great work and there is a shift on the way. Change will take time, so we should applaud people who are trying to take things forward.
Carsten – Successful fashion companies need to look at (i) promoting a circular business model, not linear; (ii) increase transparency in their supply chain for themselves and their stakeholders; (iii) prioritise sustainable raw materials; (iv) maintain ethical working conditions; and (v) implement reporting systems on sustainability. Make it clear to stakeholders what you are doing and how you are measuring. Make the sustainability agenda a core part of the corporate strategy.
Andrew – Fundamentally businesses make money by solving problems. The more complex the problem, the more you can charge and the more money you’ll make. There is no problem more serious than the threat of human extinction. The companies that put themselves at the forefront of this problem will do very well as they will solve the most complex problem we’ve ever faced, and they will reap the rewards for decades to come. Which brands will survive another 100 years?
Marina – (1) Consumers are also humans who care, to different degrees, but they all care, and wear different hats: they can be employees, managers, voters etc. Employees will think twice about joining a company that does not align with their values or staying in an organisation that is not doing enough. (2) Sustainability is the immediate priority – do not harm (we can’t say we will get down to zero on everything) but where we should aim for is regenerative business –start adding value to the ecosystem for the long term. and making system changes environmentally, socially and economically.
*All opinions are those of the panellists and not representative of their associated companies.