The global fashion industry is big business. It’s currently valued at more than $3 trillion dollars—that’s larger than most economies on the planet. And it’s only getting bigger, with McKinsey forecasting industry growth of 4.5% in 2019.
At the heart of this growth is the concept of “fast fashion”, or affordable fashion—getting the latest clothing trends into stores as quickly as possible for reasonable prices. Fast fashion has transformed the way the industry operates. It now produces double the clothing produced at the turn of the century. And it has also transformed consumers’ relationship with clothing—we’re buying more clothes than ever and wearing them for half as long.
But there’s a cost to always being on-trend. And at Davos, we wanted to find out the true price of the clothing we buy and how to have a sustainable ecosystem of affordable clothing. While the reasons are more complex than you think, there’s a path forward for businesses and consumers.
Fast fashion comes at a cost
Unfortunately, the fashion industry has unintended impacts on the environment. It produces 10 percent of all carbon emissions—that’s more than the aerospace and maritime industries combined. The industry is also responsible for 20 percent of all industrial water pollution as well as releasing millions of tons of micro plastics into the world’s oceans.
And that’s now. The demand for clothes is increasing as the world’s population grows. If trends continue, it’s predicted that the global fashion industry will consume a quarter of the world’s carbon budget by 2050.
But it’s not just the environment that pays a hidden price for fast fashion. There’s a human cost as well. The fashion industry employs one in every six workers globally, with many working upwards of 90 hours a week for less than $3 a day. Working conditions are often dangerous and many in the industry, especially women, are at risk of exploitation.
Affordability may be the culprit
This is an unacceptable price to pay for the clothing we wear. So why is it happening? Is it the industry’s pushing us to buy? Or consumers demanding rock bottom prices?
It’s a chicken and egg scenario for Dominic McVey, serial entrepreneur and Non-Executive Director at responsible clothing brand, Hella Clothing. He believes the industry can’t shy away from the blame. “What I’ve seen since joining the industry is shocking,” he says. “And what is more shocking is that brands know what is happening, it’s an open secret.”
But consumers must shoulder some of the blame as well, says McVey. He doesn’t believe they’re willing to pay the price for more sustainable clothing. “Consumers are extremely price sensitive and that’s driving a race to the bottom on price for many brands” he says. “This prevents the industry from taking any meaningful steps forward.
Morten Lehmann, Chief Sustainability Officer at the Global Fashion Agenda, agrees.. only 7 percent of people will pay more for sustainable fashion. “That’s a low number,” he says. “But in reality I believe it’s even less than that.” And he believes this is a big reason the industry isn’t changing its ways. “The business incentive just isn’t there,” he says. “That’s why we see around 40 percent of fashion brands showing no signs of change.”
Businesses can’t change what they can’t see
There’s also a matter of complexity. The supply chains of fashion brands are global and unimaginably complex, says Christine Leong, Managing Director and Global Lead for Decentralized Identity and Biometrics at Accenture. “The simplest items of clothing are made from components sourced from around the world. And few businesses have any real visibility into all these components. So even if they think they’re doing the right thing how can they be sure?”
For Sarika Garg, Investor and Advisory Board Member at Tradeshift, this is a crucial point. “Only 6% of the world’s supply chain is traceable,” she says. “Companies just don’t know what’s happening in their supply chains, especially beyond the first tier of suppliers. This isn’t an excuse for the awful practices in the fashion industry, but it’s hard for any business to change when they don’t know what needs changing. It’s also hard for consumers to ask the right questions and get the answers they need.”
Technology can lead the way towards transparency
So how do fashion brands overcome this challenge and get the visibility needed to drive meaningful change? Unfortunately, given the complexity of the industry, there are no shortcuts. But technology is helping fashion brands shine a light on their supply chain.
Tradeshift’s Garg explains how the company is actively working with its clients to help them solve this issue. “We’re working with some major fashion brands and apply our technology to illuminate what’s happening in their supply chain,” she says. “And this goes beyond the usual focus on tier one suppliers, they want to know what is happening in tier two, three, four and beyond. It’s a journey, but it’s encouraging to see the brands we work with take this seriously.”
Accenture is working on similar projects. Leong details how providing all individuals and items in the supply chain with a unique digital identity can promote transparency and accountability. “When you have these digital identities, you’re able to build solutions that highlight when violations occur in the supply chain much easier,” she says. “You’re also able to give consumers rich detail about all the steps taken to create the item of clothing they’re considering. All of this is possible with the technology that exists today, but it’ll take time to build the infrastructure to support it.”
Businesses and consumers need to align on the future
While technology promises to illuminate what’s happening in the darkest corners of the fashion industry’s supply chain, it is only part of the solution. To really clean up its act and move towards a more sustainable future, brands and consumers must want to change their behaviour.
And right now the incentive isn’t there, according to Lehmann. “I’m not seeing the pressure from consumers so brands aren’t changing,” he says. “Take the dreadful incident at Rana Plaza, for example. This received global news coverage, consumers knew what happened. But what impact did it have on the brands implicated? Very little. One of the brands said they only received two emails from customers about what happened.”
Dominic McVey has driven change in the industry first hand. For example, he details how 2 percent of Hela Clothing’s workforce in Ethiopia is disabled. “We want to increase that number,” he says. “20 percent of people in the country are born with a disability and I believe our workforce should reflect society.” Outside of this Hela Clothing has also planted 10,000 trees, switched to solar power, provided childcare facilities to workers as well as other services like sexual health planning and mental health support.
While proud of his work, McVey realizes that it’ll take more than that to transform the industry. For him, It’s a societal issue. “If we don’t overcome poverty in the developed world we won’t overcome poverty in the developing world,” he says. “That’s because someone will always be looking to pay the lowest price for the clothing they wear. And when those conditions exist you can nearly guarantee that the person making those clothes won’t be getting a fair wage. And you can also guarantee the factories won’t care about the environment.”
Making shift happen
Fashion isn’t the only industry with a sustainability issue. And like with fashion, many of these issues live in the supply chain. But so do the solutions. So it’s imperative that all businesses make sustainability in all its forms a priority and put the right foot forward to drive meaningful and permanent change.
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