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Sustainability Can’t Scale Without a Common Language, McKinsey Study Finds

The fashion industry may be unified in its ambitions for sustainability, but it’s far from united in how to get there, how to measure it or even how to discuss it. And that’s what has hindered supply chain sustainability at scale.

In its Apparel CPO Survey 2019, which launched at Sourcing Summit New York Thursday, McKinsey & Company found that sustainable fashion lacks the crucial common language necessary to drive progress forward. And while some initiatives have made headway—the research group cites the Sustainable Apparel Coalition’s Higg Index as one example—the industry nonetheless struggles to communicate about sustainability with a shared vocabulary.

What’s more, the idea of what even constitutes “sustainability” is up for grabs. “Claims of sustainability can relate to anything from individual lighthouse projects or capsule collections to fully-fledged, integrated sustainability strategies,” the report notes.

Not only does this hamper advancement efforts, but it confuses consumers. According to street interviews McKinsey conducted with Gen Z consumers (16- to 25-year-olds, in this case), these spenders in four European cities indicated confusion with sustainability’s definition and how to identify which brands or retailers are more sustainable than others.

Despite this perplexity, scaling sustainable manufacturing is imperative as consumer demand for the practices increase and it evolves into a real driver of purchasing decisions—especially for the Gen Z cohort. What’s more, “political action has changed the framework within which apparel companies operate, and regulations have become stricter,” McKinsey said.

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To say more progress is needed would be an understatement: The survey shows that just 1 percent of new products launched by mass-market apparel brands and retailers at 235 online shops were tagged “sustainable.” (Some good news: That’s up by five-fold since just two years ago.)

So what’s holding things back? For one thing, according to McKinsey, it’s a lack of industry-wide standardization of sustainability in apparel sourcing. “Standardization and objective criteria for measuring sustainability are needed—for example, in the mix of sustainable materials,” the report noted.

“A big step-up has been achieved, especially since Rana Plaza in 2013, in scaling up social sustainability and transparency,” Karl-Hendrik Magnus, partner at McKinsey and Company, told Sourcing Journal. “Scaling up sustainable sourcing isn’t trivial at all. It requires a very broad change agenda, real conviction and significant investments. Some challenges, as for example the common language to consumers, cannot be solved by one brand alone but require real collaboration in the industry.”

The good news is that the CPOs surveyed by McKinsey indicated that they’re ready for the movement and anticipate a major scale-up in the share of products containing sustainable materials, with 55 percent reporting that their companies wanted at least half of their products to be made with sustainable materials by 2025.

They also recognize that this is needed in order to “align the industry and inform the consumer,” the firm noted.

When asked about the key sustainable apparel sourcing topics at the top of their agenda for the next five years, CPOs cited sustainable materials, transparency and traceability, supplier relationships, purchasing practices and ecological footprint as their top five. Social sustainable efforts, such as fair living wages, came in lower on the totem pole.

“It seems that two factors are influencing the increased focus on environmental issues,” McKinsey noted. “First, sustainability is often used by the broader public as synonymous with environmental sustainability only. Second, as one sourcing executive told us, environmental sustainability initiatives are easier to implement.”

When it comes to making more specific predictions about the state of sustainable apparel manufacturing in 2025, McKinsey said 68 percent of its CPOs believe it’s highly or somewhat likely that there will be a sustainable share of recycled fibers in every new garment produced, while 56 percent believe it’s highly or somewhat likely that new, sustainable man-made textiles will replace at least one-fifth of current textiles.

Sixty-nine percent think hazardous chemicals will no longer be used by that point, and 61 percent are optimistic that waterless processing will become the norm.

When it comes to supplier relationships, two-thirds of respondents believe sustainability will be the dominant selection criteria for onboarding new suppliers. What’s more, 61 percent say fashion brands co-investing with suppliers in sustainability improvements will become status quo.

“Some aspirations will be difficult to realize. Scaling sustainable sourcing is a big challenge and requires real collaboration in the industry,” noted Magnus. “Most bottlenecks cannot be solved by individual companies alone. The industry needs a common language to communicate sustainability to the consumers in simple ways. This understanding will generate a virtuous cycle where consumers increase their demand of sustainable products and companies will have to find innovative ways to address that demand at scale.”