Overview

The climate crisis is a pressing issue that is heavily impacting the fashion industry and consumer behavior. As consumers across the globe become more aware, there is an increased demand for sustainability. Even amidst the pandemic, sustainability remains a top priority for stakeholders.

As the situation becomes increasingly alarming, businesses are under pressure to change. The fashion industry needs to reimagine their operations with a core focus on sustainability and transparency to ensure success in the future.

The Impact of the Textile Industry on the Environment

Compared to other industries, it can be challenging for individuals to realize the true impact of fashion on the environment. In reality, the fashion industry is highly unsustainable and serves as one of the biggest contributors to the climate crisis. The sector is responsible for producing 10% of humanity’s carbon emissions, surpassing both the aviation and shipping industries combined. This number is expected to rise to 26% in the next 30 years if no changes are implemented.

Each year, over 150 billion articles of clothing are manufactured and shipped across the globe. In recent years, there has been a significant increase in the production and consumption of clothing. Studies found that consumers purchased 60% more clothes in 2014 than they did in 2000. Consumers were also quicker to discard these items compared to previous years. It was found that 85% of all garments manufactured were dumped or burned each year. The industry must address this issue of overproduction and shift towards a more demand-driven model to reduce waste. The pandemic further emphasized the need to change as 982 million orders for garments were cancelled.

The industry is also one of the largest consumers of water and their process of textile dyeing causes 25% of all water pollution. Excess and often hazardous water from textile dyeing is dumped into fresh water sources leaving them contaminated.

Industry leaders can no longer ignore the issue and must work towards reducing their carbon footprint through the use of technology and innovation.

Consumer Sentiment on Sustainability

Today, consumers are placing more value on sustainability and social responsibility than they did before. A study by McKinsey found that two-thirds of shoppers surveyed were more inclined to reduce their impact on climate change post-pandemic than they were pre-pandemic. This notion is also reflected in consumer behavior as 57% adjusted their behavior to limit their impact on the environment.

Additionally, a large majority of consumers surveyed were more likely to purchase from brands that encourage sustainability in their practices. Younger consumers in particular opt for brands that prioritize sustainability and transparency over other alternatives. A survey conducted by ING discovered that 61% of consumers were less likely to purchase products that don’t take the environment into consideration. Brands that continue to work towards transparency and sustainability are likely to emerge stronger in the future.

Sustainability in the Fashion Industry

The fashion industry has been slow to embrace sustainability, however, in recent years there has been a fivefold increase in sustainable fashion with 48% of CEOs including sustainability in their agenda last year. Sustainability has been a topic of discussion amongst industry leaders for years and was cited as the industry’s biggest challenge and opportunity in 2020. A study by McKinsey found that 67% of respondents viewed innovative sustainable materials as critical to their business.

Since sustainability is becoming important to stakeholders such as consumers and investors, businesses need to make it an integral part of their business model. Investors want to see transparency in the supply-chain and consumers are responding positively to brands with sustainable and ethical practices. A study found that companies that engage in social and environmental responsibility will see an increase in profit margins by 1-2 percent in the next 10 years. Through digitization, businesses can increase visibility into the supply-chain for all stakeholders and improve sustainability reporting by eliminating manual processes. To be successful, brands must integrate sustainability into their entire business model instead of taking a segmented approach.

As a response to emerging trends and heightened demands, many brands have promised to do better. Fast-fashion company Zara has vowed to use 100% sustainable materials by 2025 and clothing brand H&M made similar commitments to their customers. Other brands, such as Everlane, have pledged to transparency in the supply-chain by showing customers the conditions in which their clothes are being made and the exact cost of the garment.

Digital technologies can play a vital role in ensuring that brands achieve their sustainability goals and help the fashion industry reduce its production of waste by tackling the issue of overconsumption. Through advanced AI, data, and analytics businesses can make more informed decisions and better predict demand. Digitization can enable companies to produce in smaller batches and decrease the harm caused to the environment by eliminating physical samples. Traditional processes require repeated sampling, however with digital sampling companies are able to save fabric, energy, and reduce water consumption. By using digital tools, brands such as Target and Under Armour were able to reduce waste by up to 96% last year as excess inventory was rerouted to charity or secondhand stores instead of a landfill.

Old processes that use immense energy and produce waste are no longer acceptable. Digital technologies enable businesses to shift towards a more sustainable future. With digital textile printing, companies use fewer resources and less than 5% of the energy used by conventional methods. It can also reduce pollution caused by textile dyeing and streamline processes to increase efficiency. Many organizations in the industry are partnering with startups on technology to limit their impact on the environment.

The supply-chain of the future will leverage technology and enable brands to develop close partnerships with all stakeholders, better anticipate consumer demand, and enhance efficiency. As a result, a demand and purpose driven model will have a positive impact on the environment by reducing waste and overconsumption.

Even though COVID-19 has caused severe disruptions and additional concerns, the industry cannot afford to stop their sustainability efforts and must continue to research and innovate to reduce their carbon footprint.

Future Outlook

The fashion industry is still at the beginning of their journey to be more sustainable. However, in order to meet consumer needs, reduce their carbon footprint, and stay relevant in this hyper-competitive environment the fashion industry must innovate, invest, and leverage new technologies.