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‘Prepare for Reinvestment:’ BCG Calls on Fashion to Stay the Sustainable Course

R.I.P Elizabeth Suzann.

The ethically minded clothing brand announced this week on Instagram that it’ll be closing up shop and laying off all employees after the financial pressures of the coronavirus pandemic proved “too severe” to recover from in a “healthy and responsible way.”

Elizabeth Pape, the company’s founder and CEO, says it will no longer take new orders, though it will continue producing its made-to-order garments through July. She intimated, however, that she may reopen in the fall as a smaller, more limited operation based out of her at-home workshop.

Elizabeth Suzann’s loss, which comes after seven years of business, augurs ill for sustainable fashion as a whole as the COVID-19 crisis continues to roil supply chains, wreck jobs and ravage the global economy.

On Thursday, Boston Consulting Group (BCG), the Sustainable Apparel Coalition (SAC) and its Higg Co. spinoff, issued a joint warning about the precarious state of sustainability efforts in an industry where more than 30 percent of business is poised to evaporate in 2020 alone.

Driven by shifting consumer expectations, concerns “once dominant” within the industry, from sustainable materials sourcing to carbon reduction to workers’ rights, have been downgraded in importance as businesses lurch to stem the immediate fiscal distress from shuttered storefronts, manufacturing disruptions and plunging consumer spending, they wrote in a new report.

In March, retail sales in the United States fell 8.7 percent, the worst monthly decline on record from the Census Bureau, which started tracking them in 1992.

Not helping? A recent survey of SAC members, which include C&A, H&M, Levi Strauss, Patagonia, Target and Walmart, found that one-third of decision makers within those companies felt “very unprepared” for the coronavirus onslaught with significant unplanned effort now required to preserve cash and liquidity.

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Manufacturers have taken even more of a bruising. In a poll of more than 500 facilities across all main production regions, 86 percent said they’ve been impacted by cancelled or suspended orders. As a direct result, 40 percent now struggle with paying employees, leading to layoffs and factory closures.

A BCG and SAC report cautions that fashion risks “irrecoverable self-inflicted wounds” if it abandons sustainability because of coronavirus.
Elizabeth Suzann’s Parabola silk crepe dress. Elizabeth Pape, founder of the Nashville ethical brand, took to Instagram to share that the label had reached its capacity to create its made-to-order garments but would potentially return later this year with a different model. Elizabeth Suzann

Still, the report cautions that the industry risks “irrecoverable self-inflicted wounds” if it abandons sustainability and value chain partnerships in the face of COVID-19.

Indeed, companies that embrace ethical measures will be among the leaders of a “resurgent fashion industry” on the other side of the pandemic, noted the report’s authors, who offer a “positive outlook” of what’s possible if companies fully integrate sustainability into their operations instead of abandoning it.

There are four key phases of recovery, according to the report. Fashion companies must first and foremost “protect critical assets” by safeguarding workers, employees, capital, value chain partnerships, channels and the trust and support of their customers.

“This moment is an opportunity to remove unnecessary complexity and costs, in order to prepare for reinvestment,” the reports author’s wrote.

A second step involves resolving immediate inventory challenges with suppliers.

“Leaders will recognize the importance of open dialogue and constructive partnership across the value chain in order to find shared solutions for protecting worker livelihood and sustaining trust,” they wrote. “Cancellation of completed orders will be a measure of last resort, while cancellation without consultation or collaboration will be an unacceptable practice.”

BCG, SAC and Higg Co. reiterate the fact that “leader” brands will make sustainability central to post-pandemic decision making, while “laggards” will see sustainability as a bandwagon to hop back on only when convenient.

Finally, the report advises companies to “accelerate transparency while increasing sustainability ambitions.”

“Companies must take advantage of digitalization, innovative business models and end-to-end solutions—with transparency playing a central role—in order to assess and demonstrate positive environmental and social impact to stakeholders,” the authors wrote. A new transparent model, they added, will “have an edge” over traditional business models.

The “post-COVID consumer” will make purchases, in part, based on trust and purpose, and companies will be judged on how they did (or did not do) during the crisis, as well as how they prioritize sustainability and transparency once the dust settles.

“As we watch the apparel industry struggle due to COVID-19, the SAC’s vision of an industry that increases social justice, reduces environmental impact and has a positive impact on communities is more important now than ever,” Amina Razvi, executive director of the SAC, said in a statement.

While the coronavirus pandemic shows that “anything is possible” when individuals, communities, business and governments rally together to solve a global threat, climate change must be the “next great challenge” the industry needs to address together.

“This pandemic is forcing us to acknowledge that economic, environmental and human health are all deeply interconnected, and meaningful solutions will only be possible if integration, collaboration and transparency are at the forefront of a new industry paradigm,” Razvi said.