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CEO AGENDA

REDESIGNING FASHION’S BUSINESS MODEL

The current model has served as a powerful engine for global growth and development for the past 100 years, but we believe there is a compelling business case for those who invest in long-term social and environmental sustainability, beyond short-term financial incentives. While we acknowledge that changing established practices is not an easy feat, we also remain convinced that the fashion industry can act as inspirational forerunner. 

Already today, the fashion industry finds itself in a transformational state where company owners and shareholders seek to protect the long-term viability of their investments and acknowledge clear business opportunities by devoting themselves to sustainable development. A great opportunity for long-lasting and purpose-driven value creation is apparent, calling for creative leadership to champion change management and forward-looking approaches to progress by redefining measures of success and decoupling growth from resource constraints. 

We urge you as industry leaders to investigate new business models outside current market mechanisms to drive change, implement innovation and tap into collaborative business opportunities. This is not only essential to future-proof your business, but it is also crucial for humanity to operate within planetary boundaries and to meet the needs of future generations. 

The current model has served as a powerful engine for global growth and development for the past 100 years, but we believe there is a compelling business case for those who invest in long-term social and environmental sustainability, beyond short-term financial incentives. While we acknowledge that changing established practices is not an easy feat, we also remain convinced that the fashion industry can act as inspirational forerunner. 

Already today, the fashion industry finds itself in a transformational state where company owners and shareholders seek to protect the long-term viability of their investments and acknowledge clear business opportunities by devoting themselves to sustainable development. A great opportunity for long-lasting and purpose-driven value creation is apparent, calling for creative leadership to champion change management and forward-looking approaches to progress by redefining measures of success and decoupling growth from resource constraints. 

We urge you as industry leaders to investigate new business models outside current market mechanisms to drive change, implement innovation and tap into collaborative business opportunities. This is not only essential to future-proof your business, but it is also crucial for humanity to operate within planetary boundaries and to meet the needs of future generations. 

2020 SPOTLIGHT

BIODIVERSITY

Bee

The CEO Agenda 2020 shines a light on biodiversity among the existing priorities and provides further guidance for fashion brands to take action. Biodiversity is integrated within the core priorities Supply Chain Traceability, Reversing Climate Change, Efficient Use of Water, Energy and Chemicals, and within the transformational priority Sustainable Material Mix. To ease navigation, the bee icon indicates where you can find more information on biodiversity.

Biodiversity is the term given to the variety of life on Earth and the natural systems it forms and includes the variability among living organisms as well as the diversity within species, between species and of ecosystems. It represents the life support system of the Earth, with human livelihoods also directly dependent on genetic, species and ecosystem diversity and function.1

Not only does all economic activity depend on services provided by nature2 but the fashion industry's increasing demand and utilisation of energy, land, water and natural resources results in grave loss of ecosystems and species as well as microfibre pollution to name a few. Biodiversity, along with the conservation and restoration of nature should therefore urgently be taken into account for the industry moving forward.

EIGHT SUSTAINABILITY PRIORITIES
FOR THE FASHION INDUSTRY

Core priorities for immediate implementation
Supply Chain Traceability
Reversing Climate Change
Efficient use of Water, Energy and Chemicals
Respectful and secure work environments
Transformational priorities for fundamental change
Sustainable Material Mix
Circular Fashion System
Promotion of better wage systems
Fourth Industrial Revolution

About the ceo agenda

With the CEO Agenda we seek to frame the conversation about sustainability and to encourage you as fashion industry leaders to take action.

Therefore, it articulates the eight most crucial sustainability priorities for fashion, offering clear guidance on where to focus your efforts. It reflects a shared belief by Global Fashion Agenda and its Strategic Partners that the outlined eight priorities are the most important current challenges for the industry to tackle together.

Within these eight priorities, the CEO Agenda is broken down into two key sections: four core priorities for immediate implementation and four transformational priorities for fundamental change that require strong collaborative structures and investments. Clicking on the appropriate icons will direct you to the selected priority.

All priorities are further divided into three key paragraphs: ‘Why does it matter?’ offering an executive summary to the priority’s subject matter, ‘Where are we today?’ sharing a present-day status and ‘What needs to change?’ noting next steps for the industry.

To illustrate how the CEO Agenda contributes to sustainable development as aspired to by the UN, relevant Sustainable Development Goals are listed under each priority.

Core priority for immediate implementation
Supply chain traceability

Supply chain traceability

Trace tier one and two manufacturers3

Why does
it matter?
Where are
we today?
What needs to change?
Why does
it matter?

Traceability4 is a prerequisite for identifying and improving the environmental, social, ethical and financial impact of fashion production across all CEO Agenda priorities. It is a crucial catalyst for fashion brands and manufacturers to identify challenges along their supply chains and to understand and manage opportunities to implement more sustainable practices. It is also the first step to assess risks to biodiversity, climate and human well-being and can help create a tangible baseline for proactive planning and future target setting.5 In addition, supply chain traceability can ultimately make supply chains more efficient by providing clarity on where to streamline efforts. By making more informed business decisions, businesses can mitigate negative impacts on the planet and workers along the value chain and strive for the creation of positive impacts instead.

Traceability is also a prerequisite for transparency6 and puts fashion companies in a position to collaborate more productively with their peers and external stakeholders on sustainability. Finally, traceability can equip companies with the data they need to credibly communicate with customers, investors and manufacturers about sustainability and the impact of their products.7

How does this priority address the Sustainable Development Goals?
Where are
we today?

The fashion industry is one of the most complex global production networks. The complexity and fragmentation of the fashion supply chain can make it difficult for fashion brands to keep track of where and how their products are made.As a result many fashion brands across segments lack full traceability and visibility in their supply chains.

In the past year we have started to see a growing number of brands and manufacturers implement supply chain measurement tools as they have become more widely available and accessible. Measurement tools increasingly enable fashion producers to know where and how products are made, including the environmental and social impact involved in their production,9 which is beginning to lead to an increased availability of comparable data.

We also see frontrunners explore new technology that has the potential to make data collection easier and more credible. More companies have made traceability a part of their value proposition and their communication, moving away from storytelling to story-proofing. At the same time, consumer interest in transparency has increased, while consumer conversations and comments on media platforms have a growing impact on brand perception. Overall, companies are increasing visibility of the supply chain, although the focus still lies mainly on the processing and garment manufacturing stages and few companies have achieved visibility of their impact on biodiversity.

What needs to change?

To increase traceability, fashion brands must first trace and measure the impact of tier one and two manufacturers. They need to understand the production practices of these manufacturers including their environmental and social impact. To gain a deeper understanding, brands can use a standardised industry measurement tool to holistically understand their value chain impacts, increase transparency, enable collaboration and drive stakeholder engagement on sustainability.

Frontrunners looking to go beyond this core priority will identify and address material impacts across their value chains. Companies at the forefront will invest in new technology solutions that enable access to supply chain data and provide validity. Brands leading the way will also utilise traceability to enhance their understanding of the potential ramifications for climate, circularity and biodiversity, illuminating consequences such as deforestation and pollution.

Footnotes

3:

Tier one is defined as manufacturing and tier two as wet processing. For details, see Global Fashion Agenda and Boston Consulting Group’s Pulse of the Fashion Industry 2017.

4:

Traceability is defined as supply chain visibility that enables the tracking of the social and environmental impact of production.   

5:

IUCN (2016). Biodiversity Risks and Opportunities in the Apparel Sector.

6:

According to the Fashion Transparency Index (2019), transparency involves credible, comprehensible and comparable public disclosure of data and information about a fashion brand’s supply chain, business practices and the impacts of these practices on workers, communities and the environment.

7:

Aula, P. and Heinonen, J. (2016). The Reputable Firm – How Digitalization of Communication Is Revolutionizing Reputation Management.

8:

Global Fashion Agenda and Boston Consulting Group (2017). Pulse of the Fashion Industry 2017.

9:

For example, the Sustainable Apparel Coalition’s Higg Index and Kering’s Environmental Profit and Loss.

Core priority for immediate implementation
Reversing Climate Change

Reversing Climate Change

Implement measures that reduce greenhouse gas emissions, promote renewable energy and protect biodiversity

Why does
it matter?
Where are
we today?
What needs to change?
Why does
it matter?

Climate change represents a major threat to sustainable development globally, while its devastating effects especially burden the poorest citizens.10 It has led to wildfires, droughts, flooding, hurricanes, rising sea-levels, ocean acidification and the melting of permafrost. Drastic measures are required to halt the destabilisation of our planet and prevent further consequences.

The fashion industry is a large contributor to climate change. Greenhouse gas is being emitted throughout the fashion value chain, from agriculture and production to the use and disposal of textiles. If the industry stays on its current trajectory, emissions from textile production will rise by more than 60% by 2030, according to expert estimates.11 They need to reduce greenhouse gas emissions in their operations and along their value chains to build a net zero-emission economy.

Even today climate change is affecting the fashion industry adversely. Extreme weather events such as hurricanes, flooding or typhoons directly disrupt supply chains and impact productivity. Issues such as water shortages, endangered ecosystems and decreased biodiversity are projected to become more severe with global warming. Major biodiversity loss and ecosystem collapse can lead to irreversible consequences for the environment, resulting in severely depleted resources for humankind and industries.12 Consequently, climate change is exacerbating biodiversity loss and harming vital ecosystems— such as oceans and forests— that are important for absorbing carbon emissions.13 This development will have disruptive and unpredictable effects on fashion industry supply chains and its workers.

How does this priority address the Sustainable Development Goals?
Where are
we today?

Currently the total greenhouse gas emissions from textile production amount to 1.2 billion tonnes annually. This is more than the emissions of all international flights and maritime shipping combined.14 According to other estimates the global apparel and footwear industry accounts for 10% of the world’s greenhouse gas emissions.15 While some regulation is happening, many companies are stepping up their game in anticipation of future thresholds and quotas. On an industry level there has been an increasing commitment to reduce emissions. Some companies have set science-based targets, implemented efficiency programmes and use renewable energy sources to a greater extent.

However, progress is too slow and global emissions are set to rise for the third consecutive year.16 Latest research suggests that the world is not on track to achieve the targets of the Paris Agreement.17 To keep the temperature increase below 1.5 degrees Celsius we will need to cut greenhouse gas emissions by 45% by 2030 and build a net zero-emission economy by 2050.18 In the past year we have seen new reports stressing the urgent need for action by companies and governments. The global climate movement demands governments and businesses to step up their game drastically. More and more, industry leaders have increased their commitments to reduce emissions by setting targets and signing industry charters. Simultaneously, the fashion industry lacks deep understanding of its impacts on biodiversity loss. Current solutions and business models will not be sufficient to meet climate targets or assess the industry’s impacts on biodiversity loss. Fashion brands and manufacturers must increase their resilience and work collaboratively to implement a common understanding of the impact of the industry and define a baseline for biodiversity measures. More accelerated efforts are needed – not only to reduce the impact of the industry on the planet, but to reverse climate change.

What needs to change?

The fashion industry needs to embrace more systemic and comprehensive change and scale up low-carbon and nature-based solutions.

As a first step, fashion companies should assess their impact on the climate along the value chain, starting with tier one and two manufacturers. A substantial focus for all industry players must be to re-evaluate the usage of natural resources. In addition, they should work with other players along their value chain to implement programmes that reduce greenhouse gas emissions and to protect and conserve the planet, e.g. by switching to renewable energy resources, promoting land restoration or investing in sustainable land management practices. Leaders have to set science-based targets with clear goals to ultimately meet the Paris Agreement. They should also support regenerative agriculture to allow increased space for habitats to flourish. Frontrunners will collaborate with industry peers, manufacturers, investors and policymakers to help reverse climate change and to turn their companies into climate-positive businesses.

Footnotes

10:

UNFCCC. Action on Climate and Sustainable Development Goals.

11:

Ellen MacArthur Foundation (2017). A New Textiles Economy: Redesigning Fashion’s Future.

12:

World Economic Forum (2019). The Global Risks Report 2019. 14th edition

13:

World Economic Forum (2019). The Global Risks Report 2019. 14th edition

14:

Ellen MacArthur Foundation (2017). A New Textiles Economy: Redesigning Fashion’s Future.

15:

UNFCC (2018). UN Helps Fashion Industry Shift to Low Carbon.

16:

National Geographic (2019). Climate Change Report Card: These Countries Are Reaching Targets.

17:

UNFCCC (2018). UN Climate Change Annual Report 2017.

18:

Compared to 2010 levels. UNFCCC (2019). UN Climate Change Annual Report 2018.

Core priority for immediate implementation
EFFICIENT USE OF WATER, ENERGY AND CHEMICALS

EFFICIENT USE OF WATER, ENERGY AND CHEMICALS

Efficient use of water, energy and chemicals programmes in the processing stages

Why does
it matter?
Where are
we today?
What needs to change?
Why does
it matter?

Today energy is cheap in comparison to the environmental impact of fossil fuels, but according to the European Commission, prices are already rising.19 In the future, an increase in demand and the introduction of carbon taxation could drive up the cost of energy derived from fossil fuels even further. The dyeing and finishing of textiles accounts for 17-20% of all industrial water pollution. Clean drinking water, sanitation and water for crops will become increasingly scarce,20 and already today two million people suffer from water shortages.21 At the same time, pollution represents a major threat to biodiversity. Fortunately, the untapped potential for a more efficient use of water and energy in textile processing is substantial. On average it has been shown that textile processing mills can cut water use by 11% and energy use by 7%, with a return on investment within nine months.22 Reducing the use and release of hazardous chemicals in textile and leather processing, including dying will help improve the health of workers and reduce the impact on the environment. Enhancing water and energy efficiency, as well as chemical usage, has the potential to increase a fashion company’s EBIT margin up to 2-3 percentage points by 2030.23 Since wasteful practices in processing are typically easy to identify, they can be remedied in holistic improvement programmes that tackle multiple types of resources.

How does this priority address the Sustainable Development Goals?
Where are
we today?

Looking at the fashion value chain, the activities with the largest impact on climate, water and chemical pollution can be found in the processing stage. Thus, this stage represents a high priority for immediate action in most segments, from chemical tanning of leather for luxury brands to denim processing for high-street retailers. Besides, the increased demand for energy, land and water is resulting in grave biodiversity loss. Although leading fashion brands have already made progress in this area, a large gap still persists between top and bottom performers.24

In recent years we have seen industry players come together to invest in the scaling of efficiency programmes in the processing stages of the supply chain. However, there is still significant improvement potential for many companies, and this priority remains a low-hanging fruit for environmental and financial efficiency gains.25

What needs to change?

We encourage industry leaders to work closely with supply chain partners and to start by identifying and tracking water, energy and chemicals consumption and pollution in the processing stage to create a baseline. Companies should then implement and scale efficiency programmes and renewable energy sources in collaboration with manufacturers, industry initiatives and their peers, that reduce the consumption of all three resources and minimise pollution in the processing stage of the supply chain. While reducing the consumption of chemicals, companies should also work through supply chain relationships to drive the substitution of hazardous chemicals with less harmful alternatives. Investing and implementing sustainable water management is a crucial step to mitigate water scarcity, protect biodiversity and provide safe drinking water and sanitation.

Frontrunners should review their progress to date and implement measures to increase the efficient use of resources throughout the whole value chain, from the sourcing of raw materials to retail and consumer use, to reduce their environmental footprint further.

Footnotes

19:

European Commission (2019). Energy Prices and Costs in Europe.

20:

Sachs, J.D. (2014). The Age of Sustainable Development. Climate Change 2014: Impacts, Adaption, and Vulnerability.

21:

United Nations (2018). Water and Climate Change.

22:

Global Fashion Agenda and Boston Consulting Group (2018). Pulse of the Fashion Industry 2018.

23:

Global Fashion Agenda and Boston Consulting Group (2018). Pulse of the Fashion Industry 2018.

24:

The top quartile achieved a Pulse Score of 65/100, and the bottom a score of 16/100. Global Fashion Agenda and Boston Consulting Group (2019). Pulse of the Fashion Industry 2019.

25:

Global Fashion Agenda and Boston Consulting Group (2017). Pulse of the Fashion Industry 2017.

Core priority for immediate implementation
Respectful and secure work environments

Respectful and secure work environments

Uphold standards for the respect of universal human rights for all people employed along the value chain

Why does
it matter?
Where are
we today?
What needs to change?
Why does
it matter?

Respect for universal human rights is not only an ethical imperative, it is also a growing expectation from consumers and remains a business imperative. Secure and respectful work environments can bring numerous economic benefits: Higher productivity, fewer sick days, less errors and shorter turnaround times. Respectful and secure work environments are also a key factor in end-to-end employee attraction and retention. But many workers, especially in the early stages of the value chain, are still exposed to hazards such as factory fires and the use of hazardous chemicals. On average, one in twenty fashion industry workers suffers an injury every year. Two thirds of the global garment workforce are female, and many of these women are subject to discrimination. Improving work conditions, investing in skill building and promoting topics such as health, safety, financial inclusion, diversity and gender equality can increase the EBIT margin by up to 1-2 percentage points by 2030, as compared to the 2015 baseline.26

How does this priority address the Sustainable Development Goals?
Where are
we today?

The 60 million people employed along the fashion value chain27 have historically been exposed to occupational hazards ranging from exposure to dangerous work conditions to discrimination.28 While the industry has come a long way in recent years, non-secure and non-dignified work environments still exist across the value chain. Human rights violations occur at various value chain stages and are tackled differently, depending on brand impact and local context.

Over the years, we have seen an increasing number of governments and companies take a firmer stance on equality in the workplace, with new regulations and policies taking effect. Consumer expectations, ongoing online discussions and mainstream media coverage continue to increase public awareness of the topic. An increasing number of companies are implementing local measures to ensure safe and secure work environments in the supply chain, e.g. by investing in training programmes and support services. However, as production continues to shift between countries, more measures need to be put into place to secure the protection of human rights, raise social standards and eliminate forced labour in the value chain.

What needs to change?

Fashion brands need to demonstrate, document and communicate their respect for the universal human rights of direct and indirect employees.29 This includes working to enable equal partnerships among players along the value chain. Specifically, companies should implement policies and processes to safeguard human rights, including safe working conditions, no discrimination and no forced labour for all people employed directly or indirectly in the production and marketing of their products.

Frontrunners will want to engage with brands, manufacturers, employee representatives, local governments and associations to collaboratively raise standards and track progress for human and labour rights. Further engagement is needed to ensure that the voices of workers are heard, to influence local policy and legislation and to raise industry compliance standards. 

Footnotes

26:

Global Fashion Agenda and Boston Consulting Group (2018). Pulse of the Fashion Industry 2018.

27:

Fashion United (2016). Global Fashion Industry Statistics: International Apparel, quoted in Global Fashion Agenda and Boston Consulting Group (2017). Pulse of the Fashion Industry 2017.

28:

Global Fashion Agenda and Boston Consulting Group (2017). Pulse of the Fashion Industry 2017.

29:

United Nations (1948). The Universal Declaration of Human Rights.

Think pieces

Come back and visit the site as more think pieces will be released throughout the year.

Come back and visit the site as more think pieces will be released throughout the year.

Transformational priority for fundamental change
Sustainable Material Mix

Sustainable Material Mix

Reduce the negative effects of existing fibres and develop new innovative, more sustainable fibres

Why does
it matter?
Where are
we today?
How can we get closer to a solution?
Why does
it matter?

The material mix is one of the biggest drivers of a fashion brand’s environmental footprint and comes with great implications for climate change, waste and biodiversity. Across segments it can determine up to two thirds of a brand’s impact in terms of water, energy and land use, as well as its air emissions and waste.30 Changing the mix of materials can reduce the environmental footprint of a fashion producer significantly. For example, research suggests that cotton production alone is responsible for a quarter of all insecticides and herbicides used globally.31 It is estimated that replacing conventional cotton with its organic alternative can save 62% of the primary energy demand.32 For polyester, estimates suggest that substituting one metric ton of virgin polyester with its recyclable counterpart can reduce toxic substances by up to 90%, energy consumption by 60% and emissions by up to 40%.33

At first sight, natural fibres generally appear superior from a sustainability perspective. Natural plant fibres, such as cotton, are renewable and biodegradable. However, conventional cotton production is one of the biggest drivers of water consumption in the supply chain. Natural animal fibres, such as wool, leather, down and silk offer unique qualities. But their production can entail forced feeding, live plucking and unethical slaughtering practices, and the rising number of vegetarian consumers strengthens the business case to protect animal welfare.34 Also, animal farming has a high environmental impact because of its land use and climate effects.35 When it comes to leather, the heavy use of chemicals for tanning is particularly problematic. In addition, the production of natural fibres such as cotton, viscose and leather can have a high negative impact on biodiversity when done unsustainably. Potential effects include soil depletion, deforestation and diminished wildlife populations.

So, what about synthetic alternatives? Some man-made fibres look promising. They typically require less water than natural fibres, are often highly durable and can be more easily recycled. However, most existing synthetic fibres are not biodegradable and rely on fossil fuels and chemicals during production. When laundered many synthetic fibres shed micro fibres that account for up to 35% of microplastic pollution in the oceans.36 However, much more research is needed on this topic across fibre groups, and the true impact is still unknown.

 

Cellulosic fibres present an opportunity if their impact on deforestation and land degradation can be decreased. While the industry is still far from a truly sustainable material mix, it is worth investing in innovation in this area. The environmental and economic payoff could be substantial, especially considering the increasing scarcity of natural resources, paired with a growing global population.

How does this priority address the Sustainable Development Goals?
Where are
we today?

The fashion industry is challenged to focus on the development of new, more sustainable raw materials, possibly because deciphering the environmental, social and ethical impact of raw materials is a complex undertaking. The picture is muddled further by the variety of calculation methods used. There are still debates on how to weigh the different trade-offs with existing fibres, and there is a general lack of data on the environmental impact across all fibre types. It will take a major innovation push to improve existing materials and to develop new materials that are less resource intensive and that can be recycled more easily.

In recent years we have seen encouraging developments around a more sustainable material mix in collections,37 a heightened focus on recycled materials and emphasis on creative innovation for the development of more sustainable materials. A rising number of companies and local governments have taken a stronger stance on fur, and they have implemented more stringent standards on animal welfare. Nevertheless, much more must be done to raise the industry standard to ensure that no animals suffer in the production of fashion.

The issue of micro fibre pollution has risen on the industry’s agenda, drawing increased attention from brands, regulators, media and academics. That said, much more research and investment is needed in this area. Interest in innovation to mitigate the release of micro fibres through sustainable materials has increased. While some collaborative efforts are underway, industry implementation of advances are needed to accelerate large-scale change.

How can we get closer to a solution?

We encourage fashion industry leaders to trace and evaluate the environmental and social impact of the materials they use and to shift their mix towards low-impact materials, e.g. by using organic instead of conventional cotton. Companies must be aware of trade-offs since purely switching their materials mix will not solve all environmental issues. They must ensure that appropriate fibres are being selected for the intended end-of-use of their products.

Frontrunners should work collaboratively with raw material suppliers, manufacturers, researchers and industry associations to reduce the negative effects of the production of existing fibres and further develop industry standards for animal welfare. Leaders will embark on a journey of discovery to develop new, more sustainable materials that reduce resource consumption, utilise existing material streams and attempt to mitigate negative externalities, such as micro fibre shedding and a decrease in biodiversity.

Footnotes

30:

Global Fashion Agenda and Boston Consulting Group (2018). Pulse of the Fashion Industry 2018.

31:

IUCN (2016). Biodiversity Risks and Opportunities in the Apparel Sector.

 

32:

Textile Exchange (2017). Quick Guide to Organic Cotton.

33:

Global Fashion Agenda and Boston Consulting Group (2018). Pulse of the Fashion Industry 2018.

34:

Plantprotein.co (2019). Vegan and Plant-Based Diet Statistics.

35:

Global Fashion Agenda and Boston Consulting Group (2017). Pulse of the Fashion Industry 2017.

36:

Ellen MacArthur Foundation (2017). A New Textiles Economy: Redesigning Fashion’s Future.

37:

Global Fashion Agenda and Boston Consulting Group (2018). Pulse of the Fashion Industry 2018.

Transformational priority for fundamental change
Circular Fashion System

Circular Fashion System

Design, produce, sell and collect products that enable the reuse and recycling of post-consumer textiles at scale

Why does
it matter?
Where are
we today?
How can we get closer to a solution?
Why does
it matter?

Fashion is primarily produced in a linear system of “take, make, dispose”, with 73% of the world’s clothing eventually ending in landfills. If textile collection rates were tripled by 2030, it could be worth more than EUR 4 billion for the world economy.38 This figure merely represents the value of those products that would not end up in landfills. If the industry were to find a way to collect and recycle all fibres, the value could be up to EUR 80 billion.39

While some brands have initiated the process of redesigning their product lifecycles, complexities around changing the linear model have slowed down the movement towards circularity.40 Unless the whole industry acts now, the linear model will soon reach its physical limits. According to current forecasts, the world population will exceed 8.5 billion people by 2030, and global garment production will increase by 81%,41 continuing to depend on finite planetary resources. This is why current practices are putting both the industry and the planet in jeopardy, and why the pace of transformation to a circular fashion system must accelerate rapidly.

How does this priority address the Sustainable Development Goals?
Where are
we today?

Today, less than 15% of clothes are collected for recycling and less than 1% of the material used to produce clothing is recycled into new clothing. Every second, a garbage truck full of textiles is thrown out.42 While the number of times clothes are actually worn has dropped by a third compared to the early 2000s, total clothing sales are expected to reach 160 million tonnes in  2050.43 Upcoming European policy will, for the first time, ensure textile collection by 2025. Yet many of today’s products are designed with neither durability nor recyclability in mind. They often consist of mixed fibres and compositions that are hard to disassemble. In effect, the fashion industry is far away from a circular system in which materials are designed and recycled to avoid waste and generate additional value.44 Although companies are increasingly exploring circular models, progress is slow due to regulatory, logistical, technical and economic complexities regarding circular business models, textile collection and recycling.

In the past year we have seen an increasing interest in circularity among brands, regulators, investors, consumers and industry initiatives. There is also some evidence of a more collaborative approach across the industry through policy. The second-hand market for fashion has grown 21 times faster than the retail apparel market over the past three years45 and more companies are navigating alternative resale and aftercare channels. Post-consumer textile recycling has started to receive investment; however, it is not yet operating at scale. Although some tools exist, many designers still lack access to knowledge on how to design for a circular fashion system. While some of these results are encouraging, the majority of textiles still ends in landfill, and further industry collaboration is required to turn the tide.

How can we get closer to a solution?

We encourage leaders of the fashion industry to train their design and product development teams to understand the full impact of choices made in product creation. This includes, but is not limited to, designing for durability, disassembly and recycling and increasing the share of recycled fibres in their products. Retailers should increase their efforts to collect used garments and encourage consumers to engage in circular initiatives. 

Frontrunners should explore circular business models that keep items in use for longer and enable recycling of post-consumer textiles at scale. Brands are also encouraged to explore new ways of creating value in existing material streams. It is vital for leaders to collaborate with their peers, industry organisations, governments and consumers to develop a fuller picture of the challenges and solutions involved in a circular system with the widespread collection of used clothes. Engaging with policymakers to enhance and incentivise mechanisms to scale circular fashion systems will be crucial at global scale. Continued investment in the development of innovative technologies will allow the industry to turn textile waste into high-quality fibres.

 

Footnotes

38:

Global Fashion Agenda and Boston Consulting Group (2017). Pulse of the Fashion Industry 2017.

39:

Ellen MacArthur Foundation (2017). A New Textiles Economy: Redesigning Fashion’s Future.

40:

Global Fashion Agenda and Boston Consulting Group (2019). Pulse of the Fashion Industry 2019.

41:

Global Fashion Agenda and Boston Consulting Group (2017). Pulse of the Fashion Industry 2017.

42:

Ellen MacArthur Foundation (2017). A New Textiles Economy: Redesigning Fashion’s Future.

43:

Ellen MacArthur Foundation (2017). A New Textiles Economy: Redesigning Fashion’s Future.

44:

In 2017 the Pulse Score for the end-of-use phase was 17/100, the lowest among all stages in the value chain. Global Fashion Agenda and Boston Consulting Group (2018). Pulse of the Fashion Industry 2018.

45:

Thred Up (2019). Thred Up 2019 Resale Report.

Transformational priority for fundamental change
Promotion of better wage systems

Promotion of better wage systems

Collaborate with industry stakeholders to explore opportunities to develop and implement better wage systems

Why does
it matter?
Where are
we today?
How can we get closer to a solution?
Why does
it matter?

The global fashion industry contributes to economic prosperity and creates jobs – employing around 60 million people along its value chain.46 Promoting industry-wide implementation of wages that meet the basic needs of workers is an opportunity for fashion brands to enhance the prosperity of people interacting with the value chain, including formal, subcontracted and informal workers who contribute to goods manufacturing. There is EUR 5 billion at stake for the world economy in terms of increased prosperity for garment workers.47

Although most fashion brands do not set the wages of production workers, they have a role to play in promoting systemic change, which is needed due to institutional failings. Fashion brands can support a dialogue between manufacturers, local governments and employee representatives to improve wage practices. As part of this dialogue brands can encourage governments to create the necessary legal frameworks and systems for periodic adjustments and fair negotiations of wage levels. Fashion brands can further contribute to the introduction of better wage systems by exploring opportunities in areas such as training and digitisation of payment systems. 

Implementing improvements in wages systems for garment workers could not only better the lives of workers and their families through health, safety and education, but also help increase productivity and reduce employee attrition, increase the quality of output, improve the reliability of deliveries and foster employee-driven innovation.48 Such systemic change will not happen overnight. It will require unprecedented, pre-competitive collaboration between rival companies and other stakeholders, as well as government efforts to make sure progress can be made.

How does this priority address the Sustainable Development Goals?
Where are
we today?

The current lack of a commonly agreed upon definition49 of a living wage is confounded further by the gap between legal minimum and living wages in most garment-producing countries. For the broader fashion industry, research suggests that many factories fail to comply with applicable minimum wage laws, and that the wages paid in some garment-producing countries, even when they comply with minimum wages, are too low to meet the basic needs of workers.50 Inadequate wages are often linked to bigger issues, such as a lack of governance and institutional support mechanisms.51

In the past year we have seen more collaboration between private and public stakeholders to drive wage improvements,52 but there is still a need to develop a holistic understanding of how wages should be measured and how systemic change towards better wage systems can be brought about. The lack of clear roadmaps or benchmarks, alongside a lack of transparency on wage data, are significant obstacles.53 In addition, compared to the amount of company commitments to living wages that exist, few results have been reported.

How can we get closer to a solution?

Fashion brands need to work with manufacturers and worker representatives to make sure they comply with the minimum requirements of applicable local laws, i.e. that they pay at least minimum wage without undue delay and unlawful deductions, and that they do not impose other unfair or unreasonable impediments. We encourage brands to explore how improvements in areas such as purchasing, productivity, training and data implementation can contribute to the establishment of better wage systems and to investigate alternative systems of wage setting, such as collective bargaining agreements. Brands can also support manufacturers in improving compensation, benefit systems and human resource management, which in turn can lead to an overall better working environment.

We encourage frontrunners to support a dialogue between brands, manufacturers, employee representatives, local governments and associations to leverage systemic change towards clear, functioning, robust and reliable wage-setting mechanisms.

 

Footnotes

46:

Fashion United (2016). Global Fashion Industry Statistics: International Apparel, quoted in Global Fashion Agenda and Boston Consulting Group (2017). Pulse of the Fashion Industry 2017.

47:

Global Fashion Agenda and Boston Consulting Group (2017). Pulse of the Fashion Industry 2017.

48:

International Labour Organization. The benefits of international labour standards.

49:

ASN Bank (2018). Living Wage in the Garment Sector: Results of the 2018 Reviews.

50:

Global Fashion Agenda and Boston Consulting Group (2017). Pulse of the Fashion Industry 2017.

51:

ASN Bank (2018). Living Wage in the Garment Sector: Results of the 2018 Reviews.

52:

For example: Action, Collaboration, Transformation (ACT).

53:

Edwards, R., Hunt, T. and LeBaron, G. (2019). Corporate Commitments to Living Wages in the Garment Industry. SPERI and University of Sheffield.

Transformational priority for fundamental change
Fourth Industrial Revolution

Fourth Industrial Revolution

Embrace the opportunities in the digitisation of the value chain and engage with other brands, manufacturers and governments to prepare for the transition of workforces

Why does
it matter?
Where are
we today?
How can we get closer to a solution?
Why does
it matter?

Digitisation of the supply chain can bring social, environmental and economic benefits. Technology can rid workers of repetitive and dangerous tasks, such as dyeing and cutting fabric, and allow them to focus on more creative and rewarding activities.54 Additionally, technological advances that improve accuracy, productivity and transparency could help reduce energy use and waste. From a value creation perspective, digitisation can bring more flexibility to accommodate fluctuations in demand, speed up production, reduce variability and errors, and enable customisation at scale. Once the privilege of a chosen few, made-to-measure clothes and shoes could soon become ubiquitous thanks to technologies55 and retail innovation.

Nevertheless, there is no denying the fact that such technological advances have a downside. Artificial intelligence, automation and robotics will create new jobs, but those who lose their jobs in this transition may be the least equipped to seize the new opportunities56 such innovation creates. In places like Bangladesh, where the garment industry employs 3.6 million people,57 supply chain digitisation will have a significant impact on the workforce that will need to be managed to avoid adverse, disruptive effects on the lives of workers, their families, the fashion industry and the economy as a whole. 

How does this priority address the Sustainable Development Goals?
Where are
we today?

Ever since the introduction of the power loom in 1784, technology has been a major driver of change in the fashion industry and, today, the industry’s digital revolution is ongoing. Maturing technologies are transforming the way garments are made and distributed. Automation and new technology-driven production methods will inevitably transform the fashion value chain further, especially its manufacturing, processing and retail stages. However, the extent of that transformation is currently unknown and hard to predict as the impacts will vary from country to country, depending on current educational levels, economies and incomes.

In the past year we have seen growing investment in new technologies by both the private and public sectors. We have also seen some encouraging examples of what technology, such as artificial intelligence and 3D printing, can do for the fashion industry. However, positive impact at scale is still to be seen, and more effort on the development of digital infrastructure and programmes to transition workforces is needed. In light of these factors, the role of governments and international institutions in improving working conditions should not be underestimated as they are substantial in supporting technological innovation and employment on a local and global level.

How can we get closer to a solution?

Individual brands need to start preparing for the effects of technological innovation by analysing its potential impact on their value chains. But it will take a collective effort by the whole industry and public policymakers to prepare for the effects on entire workforces. Fashion brands must work with industry stakeholders to develop a model of responsible implementation that considers the impact on workforces and workers across the supply chain. Fashion has an influential role to play in educating its current workforce in preparation for a digitally enabled, global value chain.

Major technological innovation, alongside demographic shifts and climate change, will make for a disruptive and transformative future. We encourage frontrunners to help drive investment in training, re-skilling and up-skilling and to engage in contingency planning. Considering the prospective magnitude of the change, executives will want to reach out to their manufacturers and local governments to gauge the possible ramifications of technology-driven production methods and to prepare to support the transition of workforces at scale. 

Footnotes

54:

Global Fashion Agenda and Boston Consulting Group (2017). Pulse of the Fashion Industry 2017.

55:

Yeung, H.T., Choi, T.M., and Chiu, C.H. (2010). Innovative Mass Customization in the Fashion Industry. In: Cheng T. and Choi T.M. (eds.) Innovative Quick Response Programs in Logistics and Supply Chain Management.

56:

International Labour Organization (2019). Global Commission on the Future of Work: Work for a Brighter Future.

57:

The Asia Foundation (n.d.). Bangladesh’s Garment Workers.