Businesses worldwide are making sustainability a focal point of their corporate positioning and strategy, and the fashion industry, in alignment with the global trend, is responding by taking new steps towards developing more sustainable operations.
Sustainability is becoming serious business in fashion
Ralph Lauren recently appointed its first Chief Sustainability Officer. Wrangler announced a new process of eliminating the use of water in denim dyeing. Inditex created a sustainability commission in their management board to track the group’s policies and monitor the supply chain and Net-a-Porter, a leading online luxury retailer, launched Net Sustain to focus efforts on promoting and selling brands that champion sustainability.
These high-level announcements, by big fashion players, suggest that sustainability is no longer the domain of marketing departments and is quickly becoming an operational best practice. The trending acceptance of sustainability as a key business initiative is reinforced by a 2014 study from the CDP, a leading environmental reporting and risk management organization, which found that S&P 500 companies that build sustainability into their core strategies outperform those that fail to show leadership. In addition, a recent report in the Financial Times asserts, “Companies that genuinely adopted ESG [environmental, social and governance] policies beat their peers who did not by 4.8 per cent a year over 18 years.”
Fashion companies seeking to create value in a market transformed by sustainability must gain oversight of the social and environmental impact of their global supply chain. Direct insight into how the supply chain operates enables organizations to make smarter decisions that benefit not only their business but also the environment. McKinsey research has claimed, “Real-time, end-to-end transparency throughout the supply chain is the next generation of performance management systems.” This ability, to know what is happening in real time, allows organizations to align their business operations and services, generate new revenue models and join the sustainability trend of focusing on value.
On-demand production and sustainability go hand in hand
The on-demand model improves sustainability and transparency initiatives by closing the gap between businesses and their suppliers and customers. This contraction of the global supply chain enables companies to choose the highest quality suppliers and coordinate their efforts to achieve “zero waste” throughout their value chain. Businesses can leverage product data to optimize material efficiency, which in turn reduces energy demand and water consumption. Moreover, by matching production with demand, businesses can take advantage of nearshoring opportunities to lower transportation-associated carbon emissions.
By shortening the distance between themselves and their suppliers and customers—the key value of the on-demand model—fashion businesses can generate environmental and social value, mitigate risks and increase revenues. Companies that are first to take action in choosing sustainable materials, suppliers and processes will win the full potential that this new business model has to offer.