Produced by JP Morgan Asset Management
The concept of sustainability is rapidly rising up the agenda within the fashion industry. Yet while consumers are increasingly interested in sustainable fashion, they are not willing to pay a premium for it. Still, sustainability can be a competitive advantage. There are companies delivering a sustainable message, but identifying the true leaders from the potential greenwashing takes research.
Consumers care about sustainability, but not at any price. As the global population grows, the negative environmental impacts of our demand for fashion are becoming more apparent. The industry is responsible for 10% of global carbon emissions and 20% of global wastewater, as well as producing significant amounts of waste. The equivalent of one garbage truck of textiles is dumped in landfill or burned every second (1).
75% of consumers view sustainability as ‘extremely’ or ‘very important’ in their fashion purchasing decision (2). And over 50% of consumers would switch for a brand that acts in a more environmentally and socially friendly way. But in practice, are consumers really willing to pay? Not yet, it seems. Only 7% of consumers say sustainability is the most important factor in their decision making.
Exhibit 1: Consumers care about sustainability, but not at any price – most important factors in decision making
Source: Boston Consulting Group, Pulse of the Fashion Industry, 2019 update.
Consumers continue to rate ‘high quality’ and ‘good value for money’ as the most important factors in their decisions. This is backed up by our engagements with fashion companies, who claim that consumers are not willing to pay a premium for sustainability, although at the same price point they would choose the more sustainable offering.
This signals that consumers have a preference for sustainability and it can be a competitive advantage for retailers. But companies need to see it as a way to maintain or grow their market share rather than a way to increase prices. Sustainable leaders should be investing in innovation and scale for sustainable solutions to bring prices down and maintain their brand position.
Distinguishing the real from the fake
The fashion industry is highly fragmented, and sustainability standards are still in their infancy. More and more companies are reporting on both their environmental and social impacts. But with different companies focusing on different disclosures, metrics and measurement methodologies, how can the best be identified? Fundamental research and ongoing dialogue with a company are key, allowing to assess whether fashion brands are paying lip service to sustainability or whether they are truly committed to it.
What does it take to be a sustainable fashion leader?
Has the company signed up to measurable targets to reduce its negative environmental footprint? Is the company abiding by external certifications to demonstrate the sustainability of its products? Is the company accurately measuring and reporting its entire carbon footprint?
The last of these requires particular research focus as only about 5% of a fashion retailer’s carbon footprint comes directly from its own operations or indirectly from generating the energy used by the company. The vast majority of carbon emissions occur in the company’s value chain. This includes production, processing and transportation of fibres and fabrics, transportation of the end product to its final destination, and emissions related to use, care and disposal. Unsurprisingly, this complexity means that emissions are currently underreported, with many companies only reporting on transportation of the end product. Fundamental research is therefore key to understand the supply chain picture and determine what companies are really doing to reduce their total emissions.
The section below was written by the Wealth8 Team
But can we be greener when it comes to fashion? What does it actually mean to be sustainable with shopping? Do these small changes really make a difference? While looking after the environment feels like a responsibility far greater than the individual, it’s never been more important that we all play a part. Here are a few brands black-owned sustainable brands that we love!
Founded in 2020 by Josephine Philips, Sojo is a fashion-tech startup for the circular economy. Its app and cycle-powered delivery service uses a Deliveroo-style model to connect customers to local seamster businesses, taking a commission from the seamster’s services and charging the customer a delivery fee to cover collection and drop off.
Sanchos is a black-owned sustainable fashion & ethical gift department shop. It was founded in 2015 by Kalkidan Legesse. Sanchos’ mission is to make sustainable fashion accessible on the high street.
Yala is the first UK jewellry company to become a B-corp It was founded by Audrey Migot-Adohalla and the jewellery is sustainably made in Kenya by artisans working in the informal sector. Yala works with over 150 artisans in Kenya ensuring they receive fair wages as well as a safe and healthy work space. The businesses goal is to challenge misconceptions about Africa and its people through design, entrepreneurship and creative talent.
Founded in 2017 by Tara Chandra and Susan Allen, Flo is a UK-based organic and natural femcare brand whose mission is to make people confident and empowered about their messiest bodily moments. Their products are BPA-free and 5% of the profit from each pack goes to charities supporting girls and women in need.
(1) UNEP, Putting the brakes on fast fashion, November 2018 (2) Boston Consulting Group, Pulse of the Fashion Industry, 2019 update