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Sustainable Fashion: Will COVID-19 accelerate a greener future?
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Conversations around sustainability in the fashion industry were escalating prior to the coronavirus outbreak. But the global pandemic may have provided a watershed moment, propelling deficiencies within the sector to the top of the sustainability agenda.

Pollution and emissions: the other face of fashion

As we reported in Global Fashion: Green is the new black, the fashion industry is one of the largest contributors to climate change, producing around 10% of global greenhouse gas (GHG) emissions annually. Exacerbated by inefficient supply chains and the explosion in disposable ‘fast fashion’, the sector could take up a quarter of the world’s carbon budget by 2050.

Pollution and emissions: the other face of fashion

Source: McKinsey, Greenpeace, Barclays Research.

COVID-19 will leave many fashion brands fighting for survival…

Historically, there has been little economic incentive for brands to invest in more responsible production models. But the COVID-19 pandemic has hit fashion hard.

Store closures and a drop in discretionary consumer spending have seen global sales plummet 60-70% from April to May 2020*. With 56% of companies not earning their cost of capital in 2018, the likelihood of many fashion brands going bankrupt over 2020-2021 appears high.

*Source: Boston Consulting Group.

…but could be the driver for change

While fashion companies fight for their existence, the pandemic has also intensified public debate around textile waste, overconsumption and irresponsible business practices. As consumers shift away from extreme consumerism, brands that genuinely embrace sustainability are presented with a compelling opportunity for differentiation – as well as the potential to future-proof their business.

COVID-19 will leave many fashion brands fighting for survival

Sources: BCG, December 2019; McKinsey, April 2020; Lyst, April 2020.

A catalyst to rethink supply chains…

For example, COVID-19 has highlighted fragility and poor practice across fashion’s opaque supply chains. Technology that enables greater supply chain visibility – tracking how and where goods are made – could see growth in demand as brands look to improve resilience and efficiency, and demonstrate greater transparency and accountability to stakeholders.

….and dismantle the ‘take-make-dispose’ model

The pandemic could also be the catalyst to drive the fashion industry to shift from its wasteful ‘take-make-dispose’ model of perpetual growth to a more reactive approach. Faced with vast amounts of unsold stock following the shutdown, brands could deploy a range of methods to manage inventory.

Four solutions to transform the ‘take-make-dispose’ model

Implementation timeline: 2030 and beyond

Assuming lockdowns are lifted over summer 2020, the fashion industry is likely to be focused on cost-cutting and offloading of excess inventory in the most cost-effective yet sustainable way. But looking towards 2030, our Research analysts anticipate that new thinking, backed by ambitious targets and certification, will start to transform the industry.

The sustainable fashion timeline

Short term (2020-2023)

- Sustainability commitments strained

- Focus on cost-cutting

- Heavy discounting to clear inventory

- Resale stores thrive

- Unsold inventory repurposed

Medium term (into 2030)

- Diversification of manufacturing locations

- Adoption of traceability technology

- Development of digital sampling and design

- Growth in recycling technology

- Shift to ‘drop season’ model

Long term (beyond 2030)

- Reshoring of production

- Shift to production on demand

- Mainstream adoption of new materials

- Remodelling of the fashion calendar

Source: Barclays Research

Read the full reports

Authorised clients of Barclays Investment Bank can log in to Barclays Live to read the full reports.

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About the analyst

Anushka Challawala is a member of the Sustainable & Thematic Investment 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.

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