The fashion industry scores poorly on its environmental record
Do good by doing good is the ESG mantra of companies that take into account the requirements of investors, employees and other stakeholders. The fashion industry isn’t doing so well on the E part of this acronym, according to a report.
Why is this important: Fashion companies criticized for their lack of respect for the environment run the risk of losing customers and shareholders.
- They also expose themselves to militant attack, whether it’s a small group of individuals or a larger hedge fund waving the ESG (environmental, social and governance) banner.
Reality check: The fashion industry is considered the second largest commercial polluter in the world, just behind the energy industry, according to a United Nations statistic.
- With greater focus on climate change and the circular economy, companies must collect their ESG acts or go out of style.
What is happening: According to a report by global consultancy Kearney, only 7% of fashion industry companies surveyed use recycled materials to any significant extent.
Between the lines: “Executives don’t really understand how circularity actually works and it really cascades through the organization,” Brian Ehrig, a Kearney partner, told Axios.
By the numbers: According to the report, only around 5% of companies – mostly luxury brands – offer extended repair services, 5% offer second-hand sales and around 2% offer rental or leasing services.
And after: Very few brands spend on R&D, so their next best bet is partnerships with companies like ThredUp, posh mark and The real realEhrig said.
- But that needs to be accompanied by building relationships, and perhaps investing, with recyclers, second-hand markets and other ecosystem players for it to work, he says.