Fashion is a multi-trillion dollar industry. But it is also one of the world’s most polluting sectors, on course to consume 25% of the world’s carbon budget by 2050. An urgent rethink of the industry’s ‘take-make-dispose’ model is needed, with the potential to unlock billions of dollars of value across the supply chain.
The Covid pandemic has severely impacted the entire fashion industry supply chain, from cancelled orders to global store closures. While the future impact on consumer sentiment is still unclear, sustainability is likely to play a greater role in fashion brands’ recovery plans in a post-Covid world, with a particular focus on supply chain traceability, workers’ rights and excess inventory following store closures.
The global apparel and footwear industry is estimated to grow 5% (2019-30 CAGR) over the next decade, becoming a $3.3trn market by 2030*. Rising population, an emerging middle class and the fast fashion culture are causing apparel consumption to soar (+63% into 2030). However, global fashion’s immensely water-consuming, energy-exhausting and wasteful supply chain practices are creating environmental concern.
The sector contributes 8% of global greenhouse gas emissions, and on its current trajectory, it could take up a quarter of the world’s total carbon budget by 2050.
An unprecedented strain on resources: fashion’s environmental footprint
Source: Barclays Research, BCG & Global Fashion Agenda 2017, Ellen MacArthur Foundation
fast fashion > noun: Catering to consumers’ appetite for variety and of-the-moment styles at an affordable price point, using highly accelerated production cycles to deliver new items almost weekly
Fast fashion speeding up environmental damage
Exacerbating fashion’s poor environmental footprint is the rise of fast fashion. Since the early 2000s, billions of dollars of marketing have normalised a culture of repeatedly buying then disposing of clothes to make room for the next trend. This has driven up the number of items purchased per individual while halving the average number of times an item is worn before being discarded.
Compared to 15 years ago…
Source: McKinsey, Greenpeace
Solutions for sustainability
The fashion industry needs to take action now – not only to reduce its climate impact in the face of looming regulation and increasing public scrutiny, but to safeguard its own profitability. We present four solutions with the potential to substantially reduce fashion’s environmental footprint.
Four key solutions
Sustainable materials
- Implement a common framework for fibre use
- Move away from conventional cotton & virgin polyester
- Invest in and scale up experimental materials
Increased Resource efficiency
- Move to renewable energy across the supply chain
- Eliminate hazardous chemicals: sustainable dyes, digital printing, regulation
- Initiate collaborative efficiency programmes
Improved transparency
- Increase adoption of 3D digital design tech
- Invest in emerging textile recycling technology to help transition to a circular economy
Waste Reduction
- Improve traceability across the supply chain
- Set standardised guidelines for Tier 1 & 2 suppliers
- Increase the use of ‘Green’ certifications for differentiation
More efficiency, more value
Per BCG/GFA estimates, there is a potential €110bn (c$120bn) of value to be gained if the industry can successfully embed sustainable practices by 2030.
Source: Barclays Research, BCG/Global Fashion Agenda
Endorsing ‘Sustainable Fashion’ in a bid to transition to a circular economy
We believe that further value can be generated by investing in new experimental materials, improving the recyclability of existing ones, and via the emergence of new business models (resale, rental, subscription clothing services). However, the extent to which this enables ‘sustainable fashion’ is dependent on the scaling of technology and will require extensive collaborative effort by all industry stakeholders.
Sustainability is likely to be the next major pressure point for fashion, as increased awareness has revealed that the industry has a lot of catching up to do. If fashion is to be a greener, cleaner industry, an overhaul of its entire supply chain is now essential.
*Source: BCG & Global Fashion Agenda
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About the analyst
Anushka Challawala is a member of the Sustainable & Thematic Investing team, Equity Research. Anushka joined the team in September 2018 following two years covering European Telecoms. Anushka graduated with a BSc in Management from the University of Warwick.