The retail sector has made valiant efforts to enhance its environmental and social responsibility. And yet permanently moving the needle on environmental, social and governance (ESG) aspects of business remains a complex challenge. It calls for extraordinary levels of collaboration, commitment, and consumer engagement — not to mention technology and business innovation.
But the opportunity is there. Take fashion, for example. At nearly $3 trillion in value, the industry is a huge part of the global economy. In fact, almost one in six people are thought to have a job directly or indirectly related to fashion. So, if the industry can make headway in areas like working conditions, anti-discrimination, and other social responsibility initiatives, it can have a significant global impact.
Similarly, by instigating cleaner, more efficient, less wasteful practices, fashion can make a material reduction in retail’s overall environmental footprint. Consider that the industry alone is estimated to account for around 8% of all global greenhouse gas emissions. And there are also key issues around water efficiency, chemical release, land conversion, and biodiversity loss.
The good news is that the fashion industry is hardwired for change. And through collective action it’s starting to tackle ESG in a more cohesive way, whether that’s via the collaborative UNFCCC Fashion Industry Charter for Climate Action or with non-profits like Responsible Business Coalition’s Fashion Conveners.
However, if it wants to make sustainability a permanent and authentic feature, fashion needs to focus its efforts. Because ESG cuts across so many aspects of the business and the supply chain, it’s easy for initiatives to end up fragmented or spread too thinly to have any real impact.
Here are some of the ways fashion companies can achieve that focus.
Tackle the transparency question. There’s a whole range of targeted interventions fashion can make across the supply chain, including pivoting to innovative raw materials, reducing supplier carbon emissions, eliminating hazardous chemicals, and improving wastewater management.
For example, Patagonia has been piloting regenerative organic certified cotton to improve soil quality, enhance animal welfare, and support farmers. While H&M and others have started publishing wastewater data on their wet processing facilities and are testing their suppliers.
But it’s very hard to make real progress without the right transparency, the right data, and the right analytical tools. And in most organizations, a lot of preparatory work is needed to ensure the integrity and accuracy of these insights. The priorities should therefore be to drive forward with digital transformation across the supply chain, improving the accessibility and reliability of data, and moving towards automated reporting.
Bring consumers on board. It goes without saying consumers need to be intimately involved in the retail sustainability journey. And here, again, transparency is key. Retailers should be aiming to provide clear, comprehensible, and consistent ESG insights via product labelling, including developing industry-wide standards where appropriate.
For example, Accenture worked with the Responsible Business Coalition and Vogue to create the Impact Index to help fashion shoppers better understand their clothing’s sustainability credentials. For each garment, it allows consumers to drill down into key ESG indicators, like raw materials usage, chemicals usage, animal welfare, education, and empowerment, with more categories planned.
Retailers should also be thinking creatively here. We know, for example, that personalized fashion is extremely popular with consumers. And there’s a clear opportunity to combine that kind of customization with sustainability, allowing customers to pick and choose fabrics and manufacturing processes that align with their values.
Think S as well as E in ESG. Sustainability is about being socially as well as environmentally responsible. Brands should therefore be prepared to intervene to uphold worker rights across the supply chain and implement fair labor and compensation policies. Targeted empowerment and education programs for communities based around the supply chain can also be highly effective.
PUMA, for example, worked with a factory partner in Vietnam to identify root causes of wage violations related to hours of work and compensation. The company helped the factory transition to a more transparent and equitable pay and incentive system, raising worker wages and reducing excessive overtime.
ESG makes good business sense. Retailers and fashion brands are increasingly pursuing more sustainable business models, not just because it is the right thing to do, but because they realize that by making ESG a priority at all levels of the organization, they can bolster financial and competitive performance. In other words, embedding ESG into a company’s DNA is central to the ability of companies to operate both profitably and mindfully. By investing in organizational practices that stick, businesses will be better placed to achieve their financial goals while contributing to social welfare and the common good.
Innovate with circularity.
In the end, a sustainable future for fashion means transitioning to a circular economy with a greater use of regenerative practices and closed-loop recycled materials. Clearly, full circularity will take time. But circular strategies and plans should be in place by now. And brands should be looking for investments — including digital platforms and dynamic planning tools — that can initiate the loop in advance of closing it.
A good recent example is Allbirds, which launched ReRun, a new resale platform, in partnership with Trove’s technology platform and logistics. This commitment to circularity will initially offer Allbirds customers the option of trading in their worn shoes for store credit.
The big picture? If retail wants to make tangible progress on sustainability, ESG needs to be embedded as a management approach, not parceled off as a separate or siloed endeavor. That, ultimately, is the first key step in permanently taking sustainability to the next level.
Consumers want it. Investors want it. Brands themselves want it. Now we need to work collectively to make it happen.