In the midst of the pandemic, fashion companies are focused on survival, which has, in some cases, left corporate social responsibility measures hanging in the balance. But instead of putting sustainability on the back burner, eco-friendly innovation could actually build more resilient businesses over the long term.
COVID-19 has further amplified the need for a more socially and environmentally responsible fashion industry, as workers at shuttered factories faced unemployment, consumer demand for goods slowed and inventory piled up. With the manifold pressures to manage, questions have risen about how investments in sustainability will be affected as companies navigate the pandemic with limited cash flows.
“On some level, [the pandemic] accelerates the path we were already going towards, but on another it shows that the [sustainable] business model is not resilient to shocks, and it’s not good to see that,” said Morten Lehmann, chief sustainability officer for the Global Fashion Agenda (GFA). “The only positive thing is if this will enable the industry to be more resilient to future shocks, if not from the pandemic, then climate change.”
A new report from Sourcing Journal on the state of sustainability points to the business case for embracing new business models and making organization-wide changes with people and the environment in mind.
In the report, Chainge Capital’s chairman John Thorbeck posits that investment in environmental, social and governmental standards can actually boost companies’ returns. Sustainability strategies will also be a determining factor in who secures capital—and who doesn’t. “How will [retailers] attract capital if their transformation to profitability and sustainability isn’t convincing?” he wrote.
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With limited capital to spare, fashion businesses also need to rein in excessive production and inventory. Due to the pandemic prompted store closures, merchandise is piling up across the supply chain, resulting in lost sales and markdowns. Even outside of the pandemic, better matching supply to demand can allow companies to improve margins and sell-through rates, freeing up funds for more profitable products.
Beyond the financial imperative for reducing overstocks, there is also a significant environmental cost of goods ending up in landfills. Projections from GFA and Boston Consulting Group estimate that there will be an additional 57 million tons of production and post-consumer fashion waste generated each year, increasing the industry’s share of total global waste by 62 percent between 2015 and 2030.
Contributing to the issue is companies’ lack of visibility into their own supply chains. A study by Retail Systems Research found that the majority of executives don’t have a clear picture of where their inventory actually is.
Demand planning platforms are helping companies right-size their inventory by using data to drive purchase order decisions. Clients working with Fuse Inventory, for example, have been able to compare their buys with what sold to collectively reduce their overstocks by as much as 70 percent.
On-demand production and made to measure also hold the potential to curb fashion’s overstocks and waste. If consumers are willing to simmer their need-now demands, these models could cut down on surplus inventory by only making apparel once a shopper orders it. Further, in cut and sew manufacturing, roughly 5 percent to 20 percent of fabrics end up as discarded scraps. Alternatives like 3D knitting machines that require no cutting, can virtually eliminate this excess material.
Collaborative technologies like 3D design have also caught on in a bigger way, fueled by new necessities stemming from the coronavirus crisis, and these innovations can further reduce the impact of product development by requiring fewer sample iterations.
In this together?
In the post-COVID-19 recovery, the key factory that will facilitate further innovation and impact, is collaboration. From partnerships on eco-minded products to participation in widespread initiatives and pacts, joining together has never been more important for moving the needle in fashion.
When it comes to sustainable innovation, working with competitors to expedite new, cleaner production methods or circular programs could have vital upsides for the industry. Organizations like the Apparel Impact Institute offer members the chance to pool resources, which could be even more of a benefit emerging from the pandemic.
“Now, more than ever, it’s clear that no company can fight a global crisis alone,” Amina Ravzi, executive director at the Sustainable Apparel Coalition, said in the report. “Partnership is leadership, and it will take everyone working together to prioritize the health and safety of people and planet.”
Learn more about how the industry is addressing climate change, tackling waste, embracing circularity and accelerating traceability. Download Sourcing Journal’s Sustainability 2020 report here.