“A code red for humanity.” This is how U.N. Secretary-General António Guterres describes the latest report from the Intergovernmental Panel on Climate Change (IPCC).
The report confirms that human activity is rapidly accelerating global warming and that unless drastic action is taken to reduce emissions, the world is on track to exceed the 1.5℃ maximum acceptable temperature increase within this century.
While environmental efforts within fashion have accelerated in recent years, the industry is still haunted by its responsibility for 10% of global carbon emissions and must broaden its approach to deliver impact in time.
A Closer Look at ‘Greenwashing’ in Business
Sustainability is gaining momentum in fashion, yet ‘greenwashing’ is frequently used to criticize the environmental efforts to date. Climate activist Greta Thurnberg recently dubbed the emergence of eco-friendly clothing capsules and circularity initiatives as, “spending fantasy amounts on campaigns to portray themselves as ‘sustainable,’ ‘ethical,’ ‘green,’ ‘climate neutral’ and ‘fair.’”
The Federal Trade Commission (FTC) provides general guidelines around sustainability marketing, and no legally binding standards, allowing brands to set varying standards for a “sustainable” product – even when only composed of 20 percent sustainably sourced materials. Confirming this fuzziness, a recent ICPEN report found that “40 percent of green claims made online could be misleading consumers.” In this way, many brands are able to create the appearance of eco-consciousness without delivering meaningful results.
The looming consequences of global warming trends suggest the fashion industry can no longer afford to just ‘portray’ itself as green. Brands need to reflect on how their own processes cause overproduction at a rate of nearly 40 percent each year, sending unsold clothing to landfills and fueling the rise in emissions.
The Conversation Between and Sustainability and Profitability
Faced with the responsibility to deliver impactful results, it won’t be enough for brands to tack on a few more sustainable capsules. Even if they could, the financial implications of scaling costly eco-friendly materials across their entire product portfolio is a frightening prospect for executives geared toward quarterly earnings. Meeting the urgent call expressed by the IPCC without pushing fashion to the financial brink requires more than doubling down on existing approaches. Fashion is now turning its focus to internal processes like product creation and go-to-market, where actions and decisions can be tied directly to the inflated inventories and lost profits that cripple retail brands.
Historically, the fashion industry has been resistant to internal change. However, 24-month lead times, gut-based decision making, and uncertainty of consumer demand are now driving an unsustainable creation of inventory that fails to sell. Impatient with the status quo, several brands are taking action to make their product to market processes more efficient.
New Balance CEO Joe Preston recently commented “We plan to use predictive analytics and other technologies to optimize SKU assortments. We believe that there are certainly ways that we can continue to make progress to make sure we have the right product at the right time.”
Reducing overproduction is a step in the right direction. Looking forward, retail needs to re-evaluate further internal processes like the overdependence on excessive sampling and frequent global travel. Digitizing these traditional product-to-market means of working will position brands to take significant steps to reduce their carbon footprint in a profitable manner. It’s time for fashion to move beyond appearing ‘green’ and into a sustainable means of existing.
About Matt Field, co-founder of MakerSights
Drawing from his extensive background in both retail and technology, Matt is helping to transform the way brands develop and bring to market new products by combining voice of the customer software and predictive analytics. Through the MakerSights platform, leading apparel, accessories, footwear and home brands are able to de-risk their most important product decisions, making more of the products their customers want, and driving greater speed and profitability across their businesses.
Outside of MakerSights, Matt serves as an advisor to American Express and its Digital Advisory Board, assisting senior leadership to develop and execute innovative products, campaigns, and services to drive customer acquisition and retention. Matt also serves as a board member to Swipecast – a discovery engine and marketplace for critical services supporting the fashion industry. In his free time, Matt is an avid soccer fan, a recent convert to trail running and considers himself a pizza aficionado.
Sources:
- UN Secretary-General on latest IPCC report: https://www.un.org/press/en/2021/sgsm20847.doc.htm
- ICPEN report: https://icpen.org/news/1147
- Evaluation of FTC Green Guides: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3240164
- Impact of Fashion’s Sustainable Capsule Collections: https://www.voguebusiness.com/sustainability/impact-fashion-sustainable-capsule-collections
- New Balance CEO talks about Digital Transformation: https://sgbonline.com/new-balances-ceo-talks-about-digital-transformation/
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
