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‘Sustainability’ has sparked a gold rush among fashion industry players who recognise that the sector’s business model, with all its excesses, is ripe for disruption. It’s gone fully mainstream: sustainability dominated Davos, with the likes of Greta Thunberg and Prince Charles repeating their calls for urgent action to tackle the climate crisis.
Those calls are being heard pretty loudly in the fashion industry, a sector that is more self-conscious than others about it’s dire eco credentials. But there’s a problem: most of the focus, and money, is on just one part of the chain.
Fashion innovators have birthed countless brands, apps and sites that help us, the consumers, to buy more sustainably, track where our clothes are made, who they were made by, and what we can do with our garments once we’ve KonMari’d our way to a new wardrobe. And investors are responding positively to these startups—pouring in $2 billion worth venture capital into the fashion sector 2018.
Jennifer Hyman (right) CEO & Co-Founder, Rent The Runway
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But while tried and tested consumer-facing solutions to the industry’s excesses— think Allbirds, Vinted, Rent The Runway—get the attention, companies innovating on the manufacturing and production side face huge gaps in financing, and at crucial stages. Companies developing raw materials out of hemp, fruit or nettle, for example, are not being funded as eagerly as consumer-facing startups, a report by Fashion for Good and Boston Consulting Group has found. In fact, innovations behind the scenes—at the manufacturing and processing end—are missing between $20 billion and $30 billion in financing every year, hampering their ability to make a lasting impact.
This matters because for all the recycling, reusing and renting of outfits we’re capable of, the bigger footprint lies in the production process where waste, pollution and, at times, unethical labour conditions, are maximised.
These areas are largely overlooked by investors as the technologies require more time and research to develop. There’s a long way to go before the $2 trillion fashion industry might fully comply with the UN’s sustainable development goals by 2030.
Damning statistics make a decent enough case for why the fashion sector is ripe for disruption at the production stage. Globally, it contributes between 5% and 10% of carbon emissions, almost 20% of water pollution, and 4% of the world’s waste. If the industry cleaned up its act, it would contribute to ticking off other sustainable development goals, too. Targets such as clean water and sanitation might be reached faster.
The Way Forward
You may have walked into an H&M store recently, a bastion of fast fashion, and been surprised to spot a garment collection box. Skeptical, you may have questioned whether the clothes end up among the pile of 100 billion other neglected items that end up in landfill each year.
Yet H&M Group, whose attempts at sustainable fashion have previously been slammed by regulators over misleading claims about its environmental benefits, a practice known as “greenwashing”, seems to be moving in a hopeful direction. H&M claims on its website that the donated items are now either recycled, reworn or repurposed. The clothing giant has also been linked with Ambercycle, which converts masses of waste clothing into yarn for next year’s fast fashion.
There’s also some promising developments, in terms of financing, on the horizon. Sustainability linked loans is the latest trend to watch, where financing depends on how sustainably a business conducts itself.
Prada, last November, became the first luxury brand to sign an SSL, a five year-term loan of €50 million from Crédit Agricole. The market for these new loans rose from $5 billion in 2017 to $40 billion in 2018, according to BCG.
New funds have also emerged in recent years to meet that financing gap. The likes of Alante Capital and the Textile Innovation Fund invest in alternative raw materials, 3D printing and sustainable dyeing.
It’s been a slow start but the future looks promising as long as fashion brands champion these new solutions. Supply chain players need to step up and make themselves—and the case for their existence—even more visible.
With trends changing season by season, fashion is constantly fickle. Sustainability was the talk of the town at Davos this year—with the fashion industry now taking note, it’s one trend that’s here to stay.