The European Commission alludes to the word “green”. When its creators set out a plan to make textiles more durable and recyclable by 2030 in the spring of 2022, they looked not only at reducing waste and recycling, but also at how the fashion industry communicates with its customers. The strategic plan aims to tackle ‘greenwashing’ and states that terms such as ‘environmentally friendly’ and ‘good for the environment’ will be ‘allowed only if they are backed by recognized excellence in environmental protection’.
While the EU’s plan is not enforceable legislation, its policymakers – like those in other parts of the world – highlight the burning questions looming over the fashion industry in 2023: what is sustainable fashion and which brands – if any – can claim that do they sell it? While brands have struggled with their own answers for years, governments and regulators are signaling that existing definitions can be inadequate and, in many cases, misleading.
Consumer watchdogs in Norway and the Netherlands have ruled that a number of high-profile marketing campaigns by major brands were misleading. In the UK, the Competition and Markets Authority launched a review of sustainability claims in the fashion retail industry in 2022, targeting fashion as one of the sectors most resented for greenwashing. The review investigated fast fashion brands that it believed may be using misleading language or cherry-picking information they share with consumers in an attempt to appear more sustainable than they might actually be. As a result, some companies are rethinking the way they present their sustainability statements. Meanwhile, in France, legislation expected in 2023 will require brands to add “carbon labels” to clothing and textiles that will display an environmental “score” from A to E to help consumers make more informed purchasing decisions.
This increased scrutiny and regulation comes as a growing number of consumers place importance on the environmental or social impact of the fashion they buy. A quarter of respondents to a 2021 McKinsey UK survey said their purchasing decisions were driven by sustainability, while 80 percent of consumers in a US survey said sustainability was an important factor in choosing a fashion brand to shop with. In another 2021 survey in India, 94 percent of consumers said they were willing to pay high prices for “ethical” products. Younger consumers are particularly motivated by concerns about sustainability: half of Gen-Z shoppers in China said they wanted to buy less fast fashion in a recent survey on sustainable consumption.
Fashion companies are responding to this growing interest in sustainability. Many have stepped up disclosure of sustainability initiatives in recent years, although evidence of progress on these initiatives is limited, according to the 2022 BoF Sustainability Index.
At the same time, brands should be aware that even sustainability-focused consumers struggle to understand the information they encounter when shopping. In a 2019 University of Melbourne survey of Australian consumers, most respondents were “overwhelmed” when trying to understand how clothes are made and “deeply skeptical” of brands’ claims. Similarly, U.S. respondents to a 2021 survey by biotech firm Genomatica echoed these sentiments: 42 percent of teenagers and adults surveyed said they weren’t sure what makes clothing sustainable, while 88 percent said they didn’t trust brands’ claims.
What is in the definition?
The complexity of sustainable business practices requires a holistic approach to address a range of environmental and social factors, from carbon emissions to garment workers’ rights. As part of this, the industry does not always adapt to a shared vision for change, which can lead to consumer confusion. For example, while the leather supply chain is often associated with animal cruelty and “unsustainable” agriculture, many “sustainable” vegan alternatives are criticized for containing harmful amounts of plastic.
Any brand that wants to operate more responsibly faces tensions when trying to deliver on its sustainability promise, leading some to avoid even using the term “sustainable.” US outdoor clothing retailer Patagonia – despite its efforts to promote responsible business practices – does not label its business or products as “sustainable” as part of its corporate policy, explaining that “we recognize that we are part of the problem”. Similarly, Ganni took to Instagram in 2021 to explain “why we’re not a sustainable brand,” instead emphasizing his focus on transparency and honesty. The Danish fashion brand, which worked with the United Nations Development Program to create a zero-impact collection, clarified that criticism of its progress “would most likely be justified.”
“Without standardized language or regulated frameworks, deciphering what companies are really doing is extremely difficult,” said Kenneth P. Pucker, former chief operating officer of US outdoor footwear brand Timberland and now a 2022 advisory partner at Berkshire Partners.
While third-party certification schemes and impact assessment tools have emerged to guide brands and consumers, these have also stirred debate. In 2022, one of the most widely used fashion rating systems, the Higg Index, faced a number of criticisms, from the quality and accuracy of the data it provides to the potential for big brands to influence it. After deciding that the index’s consumer-facing efforts may be misleading, the Norwegian Consumer Authority banned the reference to the Higg Index in marketing materials in June 2022. The Sustainable Apparel Coalition, the group behind the index, suspended the program and commissioned an independent review of its data and methodology.
Aligning for a common cause
The need for common frameworks is clear. In 2021, at the request of G20 leaders, the international financial reporting standards body launched the International Financial Reporting Standards Board to provide essential information to help capital market participants monitor climate impacts. “Rarely do governments, policy makers and the private sector come together for a common cause,” said Emmanuel Faber, Chair of the ISSB. “However, all agree on the importance of high-quality, globally comparable sustainability information for capital markets.”
The ISSB released its first draft baseline in early 2022. The reporting system, if widely adopted, could allow investors and consumers alike to compare brands across industries. However, it may not be specific enough to highlight the specific challenges of the fashion industry.
At the same time, ahead of the coming regulation, initiatives continue to emerge across players to provide brands with a framework to assess and communicate their impact. In February 2022, 50 cosmetics companies, including The Estée Lauder Companies and professional associations, formed a consortium in collaboration with independent bodies to create an “Eco Beauty Score” for cosmetics companies to assess their environmental impact. However, industry-backed initiatives generally face a lot of criticism. As such, brands should ensure that they work with independent third parties and follow ongoing regulatory efforts to reduce concerns about their effectiveness.
Before brands can accurately talk about their credentials, they should delve deep into their own operations and supply chains to gather data they can effectively compare. For example, Swedish fashion brand Asket has invested in tracking its entire supply chain and collecting data to communicate to consumers the origin, impact and price of each garment. As regulators increase requirements to back up any sustainability claims, investment in supply chain data collection and management tools is likely to expand.
Stronger bridges should be built between technical sustainability teams and companies’ marketing teams to review how information can be communicated responsibly and effectively, and to ensure that marketing messages are not created in isolation. With regulation coming, vague sustainability marketing isn’t just a reputational risk – it can lead to fines or even legal action.
Terms that could mislead consumers – such as broad terms such as “green” or “environmentally friendly” – should be avoided as they could give the impression that products have positive environmental attributes. Instead, important notices or context should be made available to consumers, such as specific data that supply chain brands can collect to demonstrate a reduction in impact from a defined baseline. For example, French-based luxury company Kering created internal sustainability communication guidelines for its employees to help avoid greenwashing legal issues and consumer backlash; the guidelines advise brands that own them to avoid broad blanket terms like “environmentally friendly” and instead focus on clear and unambiguous statements about metrics such as reduced emissions.
To be sure, brands will continue to be able to identify and talk about the sustainability issues most important to their consumer base under increased scrutiny, but they must ensure that their claims are backed up with solid work. When ultra-fast fashion giant Shein launched a resale platform for US consumers in October 2022 as part of a series of efforts to combat criticism, it was called out for greenwashing; research has found that existing resale platforms typically do not help reduce production levels, especially for fast fashion brands. Fashion leaders should stay abreast of upcoming regulation and seek customer feedback, such as by tracking Net Promoter Scores, to understand their business’s perceived sustainability progress, areas for improvement, and communication mode and timing preferences. Technology and digital tools will play a key role in ensuring better traceability along the value chain, from data platforms to facilitate the collection of information at all stages of production to strict data standards for tracking sustainability metrics.
In 2023, new communication strategies about sustainability will be required. To move the needle, brands will also need to be more open about their progress and shortcomings, whether through public reporting or product labels. If brands don’t find a responsible and effective way to talk about their sustainability journey, they can risk damaging consumer trust or face compliance implications, requiring brand legal teams to work closely with communications colleagues.
Fashion leaders have an opportunity in 2023 to create new rules of engagement when it comes to sustainability, from aligning company-wide marketing as well as regulatory and other information to working with policymakers, industry bodies and other brands to solve problems. Communication should reflect the brand’s long-term commitment to sustainability, articulate realistic, time-bound goals and progress towards them. But ultimately, the brands best equipped to make meaningful and credible changes will be those that ensure every part of their operations double down on sustainability, not just talk about it.
This article first appeared in State of Fashion 2023an in-depth report on the global fashion industry jointly published by BoF and McKinsey & Company.