Sustainability and value in the global fashion industry
A Deloitte presentation of how a sustainable business approach may contain significant opportunities for companies operating in different part of the extensive fashion supply chain. The presentation connects one value opportunity to each part of the fashion value chain though many of the value opportunities is relevant in different parts of the value chain as well.
For more information contact DK Deloitte Sustainability Manager, Bahare Hagshenas, bahahag@deloitte.dk
General description of the presentation:
In order to conceptualize/put into a clear framework the business potential of considering sustainability in the fashion industry one may consider different sustainability value opportunities as being connected to different parts of the product life-cycle (or in a globalized industry as the fashion industry; different parts of the value chain). The presentation will therefore separate the fashion value chain into 7 segments and connect one key value opportunity to each of the 7 segments:
Design
Sourcing
Manufacture
Distribution
Retail
Use
Discard
This framework is to be understood primarily as an instrument to make clear that the business case for sustainability in fashion is a complex matter dependent upon which part of the value chain one is trying to address. It should therefore be emphasized that one value opportunity, in this presentation, connected to one segment may very well connect to other segments as well.
Key value opportunity connected to the design segment:
Attract and retain future talent
The argument for this slide:
The millennial generation will be increasingly important to employers (including employers in the fashion industry)
The millennial generation prefers to work for employers that are innovative
The millennial generation expect that businesses (hence employers) do a lot in terms of sustainability
Therefore, employers should be innovative and do a lot in terms of sustainability in order to attract and retain future talent (i.e. members from the millennial generation)
Support for the argument:
Kering Group connects the importance of attracting talents to their business and assert that sustainability is key in this
Kering Group:
Revenue 2013: 9.7 billion euros, 35.000 employees, 22 brands: e.g. Gucci, Puma, Bottega Veneta
H&M connects sustainbility to the attraction and retention of employees
Nike has made a free app especially for designers to use. The app show the different impacts associated with the use of different materials. This indicates that Nike is doing employer branding by positioning themselves as focused on sustainability.
Note that the connection of the value opportunity (attraction and rentention of future talent) is based on the idea that “design” is understood as the process (i.e. making sustainability part of the criterias for the work process of designing products), not the result (i.e. sustainable product design (e.g. durable design)). Only so is the argument valid
Key value opportunity connected to sourcing segment:
Increase resilience against externality risks
The argument for this slide:
Different materials (i.e. textile fibres), have different impacts
Impacts may be understood as externalities
However, there is a risk that externalities may (due e.g. to changing regulation, resource scarcity and depletion) become internalized
By taking into account the impacts of different materials when one sources one reduces one’s exposure to these risks
Therefore, one should ‘source sustainability’ (i.e. source low impact materials) in order to reduce risks. However, one should note that since different materials have different non-straightforwardly-comparable impacts it is not an easy task
Note that the impacts enumerated are impact associated only with the fabric production stage of the life-cycle. This stage include:
(1) Resource production and processesing;
(2) pretreatment;
(3) sizing;
(4) Spinning;
(5) desizing;
(6) warping sizing;
(7) Fabric formation;
(8) Finishing;
(9) printing an dyeing
Note under polyester that the impact on resource availability is to be understood as the external cost resulting from the production of one kg of fiber. The resouce availability impact is US$100 pr kg of cotton (see p. 83 in http://susproc.jrc.ec.europa.eu/textiles/docs/120423%20IMPRO%20Textiles_Publication%20draft%20v1.pdf)
Case-based support for the argument
A very large coalition of stakeholders from the industry (including all the major players) have joint the Sustainabile Apparel Coalition. Their current focus is development, piloting and broad adoption of the Higg Index, a tool for measuring the environmental and social performance of apparel products.
Key value opportunity connected to the manufacture segment:
Mitigate supply chain risks
The argument for this slide:
The freqency of risks events in the supply chain has increased
The risk events in the supply chain is becoming more costly
CSR/sustainability risks are pertinent supply chain risks
Therefore, one should consider RSCM as a way to mitigate the number of costly risk events in one’s supply chain. This is also the case in the fashion industry (if not especially in the fashion industry where value chains are long, complex, and often placed in high risk areas)
Support for the argument.
Rana Plaza factory complex collapse:
1.129 peple lost their lives
Industry response:
Accord on Factory and Building Safety in Bangladesh
Hver opmærksom på at billedet vedr. Rana Plaza er copyrightet (hvilket jeg også har anført) men, hvis jeg var dig vil jeg tage chancen for ligesom at fastholde publikum lidt
Key value opportunity connected to the distribution segment:
Lower your costs
The argument of this slide:
By considering sustainability in connection with packaging and transport of one’s products one can reduce one’s costs
One should reduce one’s costs’
Therefore one should consider sustainability in connection with packaging and transport
Support for the argument:
Packaging:
Through PUMAs Clever Little Bag Campaign they reduce in the, in the presentation, enumerated ways.
Transport:
The table indicates that the GHG emissions varies heavily dependent on which kind of transport you choose (note that, as it is GHG emissions may not be considered a cost (because it is de facto not), however, it may very well become one.
The ‘Globe with the lines’ indicates that another important factor is the route by which one transport one’s products and the supplier one uses.
In 2008, Levi Strauss reviewed and altered its international shipping routes. It used less air and truck transport, and increased rail and ship usage. Many routes decreased greenhouse-gas emissions by 50 percent to 60 percent.
Key value opportunity connected to the retail segment:
Benefit from emerging market opportunities
The argument of this slide:
The majority of consumers say they are willing to pay more for sustainable products
Consumers say that they find it increasingly important that business are transparent about their conduct (transparency, I here consider as interchangeable with sustainability)
The consumer segment that are most influential – the millennials (they consume 25-40 percent more than the average consumer) – believe that they should improve the state of the world (e.g. through their shopping)
Therefore, fashion companies should try to benefit from these trends (note here the ‘attitude-behaviour gap’ – and argue for bridging it )
Support for the argument
C&A Europe’s total revenue grew by € 212 million in 2012 to € 6,8bn, a gain of 3.2 %
Immense growth in sales of organic textiles
In 2010 13% of C&As entire cotton collection was made of organic textile
Note that Nudie jeans is a frontrunner in sustainable fashion:
Nudies offers recycling schemes where they re-purpose used denim for new jeans styles and rugs. Consumers can bring their worn out Nudie jeans to any of their stores to be recycled
Nudies encourages consumers to wear their jeans for for extended periods of time (up to 6 months) without washing. Helps consumers extend the life of their jeans through repair shops and repair kits. 20% discount off new items for those who bring in used pairs. Those jeans are then repaired and sold again to customers who prefer a more worn-in look
Key value opportunity connected to the retail segment:
Increase customer engagement, loyalty and brand identification
The argument of this slide:
Customer engagement is import to businesses strategy
Increased customer engagement has a strong positive impact on business success
Sustainability is a way to increase customer engagement
Therefore, fashion companies should use sustainability to increase customer engagement
Support for the argument:
Patagonia – ‘Don’t Buy this Jacket campaign’:
On Black Friday (shopping frency day in USA) Patagonia, the outdoor apparel clothing company, advertised a full-page ad on the New York Times, showing one of their bestseller jackets with the message “Don’t buy this jacket. On the ad itself Patagonia asked people to think about the environmental impacts on their consumption and “to buy less and to reflect before you spend a dime on this jacket or anything else.”
Patagonia is a front runner in terms of sustainable outdoor fashion
Patagonia has had a partnership with E-bay since 2005 where people sell and buy unwanted patagonia clothing and gear
Levi’s – ‘Water>less campaign’:
In 2009 Levi’s released updated caretags to encourage people to wash their jeans in cold water, line dry them, and donate them at the end of their natural lives. More recently, they launched the water>less campaign pairing a product line which boasts drastically reduced water usage with a consumer education campaign.
Key value opportunity connected to the discard segment:
Internalize product value
The argument of this slide:
Clothes has a very high environmental impact (a little supplement to the argument – not really a premise)
A lot of clothes are recycled
This recyled clothes has a high value
This value is currentlyg out of reach to the fashion companies
Therefore, fashion companies should internalize this value by offering consumers to take back their unwanted clothes.
Support for the argument:
H&M has initiates a take-back system in all of their 53 markets
In 2013 4.2 million kilos of clothes was collected
In february 2014 H&M has sent out a ‘Capsule Collection’ of five denim pieces using 20% fibers from the garment collection program.
Summary of the presentation
Logo er altid venstrestillet og der er altid legaltekst på bagsiden.
