As governments propose regulations to address the environmental and social impacts of the fashion industry and companies consider voluntary reporting of environmental, social, and governance (“ESG”) factors, the fashion industry continues to wrestle with a complex reality. The fashion industry cannot avoid the fact that it is operating on a 20th century business model built on production, consumption, and profit while attempting to solve for 21st century-and-beyond sustainability problems that require a foundational paradigm shift. 

A striking conversation about fashion’s overproduction and overconsumption problem came about at the end of March when the Financial Times published an interview with Marta Ortega Perez, the chairwoman on Zara-owner Inditex, who – in an apparent attempt to distinguish Zara from Shein and other fast fashion competitors – noted that the group does not view itself as falling in the realm of fast fashion. Among the pushback to Ortega Perez’s comments, fashion sustainability strategist Rachel Arthur begged to differ, noting that when a distribution model includes new collections dozens of times a year, you are a fast fashion company. Arthur later asserted that Zara produces approximately 450 million garments a year, and in fact, the term “fast fashion” was coined back in 1989 thanks to Zara.  

The Consistent Quest for Scale

The 450-million-garments-per-year number gets to the heart of fashion’s production/consumption problem: the consistent quest for scale. In furtherance of mass-market fashion’s enduring aim of getting to market quickly – at rock bottom prices, and grow their businesses’ bottom lines, early fast fashion players like Zara and H&M have been dwarfed by newer market entrants like Shein, Boohoo, and very recently, Temu. The BBC noted in 2021 that Singapore-headquartered Shein was adding some 6,000 new styles to its e-commerce site on a daily basis with as many as 600,000 items for sale on its site at any one point in time. 

The low priced products being offered up by ultra-fast-fashion players are aimed directly at Gen Z and for all the talk of this demographic of consumers being especially environmentally conscious, they have helped to drive fast fashion companies like Shein to global behemoth status even overtaking companies like Amazon in terms of their fast rise and dominance. (As of earlier this month, Shein was valued at $66 billion following a $2 billion funding round.)

The sheer number of products being peddled by fast fashion companies is compounded by the cheap materials used to make these products. Polyester, viscose, and other synthetics are the order of the day because they are the lowest cost; they are also some of the most harmful to the environment since they do not biodegrade. Search “Atacama Desert Landfill” on Google, and you will find story after story about the thousands of secondhand clothes, mostly from fast fashion brands, that are dumped daily in what has become a massive toxic site in Chile. The same goes for “Kantamanto Market” in Ghana, which is full of the “dead white man’s clothes” because locals cannot imagine that people would buy and cast-off such quantities of clothes in the way the U.S. and European consumers do. Still yet, discarded apparel is washing up on shores around the globe. 

Foundational Changes Are Needed

In order to grapple with the volume problem, foundational changes to business models and the fashion system are necessary. Companies continue to rely on the 20th century business model of producing more for less at high volumes to drive profit and growth. On its face, this model is not sustainable and no amount of carbon offsets, water reductions, Greenhouse Gas reductions, or corporate social responsibility statements will address the fashion industry’s ESG impacts in a game-changing way.

Brands need to reckon with their pricing and marketing structures: instead of relying on volume, a shift towards quality materials, quality labor practices, and sustainable methods of production – thereby, resulting in lower volumes at higher prices – is key. In addition to producing clothing that will last for years (instead of 2-10 wears), and pricing first-sale items at a premium, brands also need to adopt a tiered product and pricing structure, which has organically been developing with the rise of the secondhand segment. For example, the first sale of a garment is first-tier, secondhand merchandise represents the second-tier, and repair/refurbishment of existing merchandise falls within the third tier. Because the ability to recycle textiles remains severely limited, upcycling could also be incorporated into certain brands’ business models. Upcycled items are often one-of-a-kind and can be priced at premium levels, as well. 

(While the secondhand market has risen and is projected to experience some of the most significant growth in the apparel industry, the carbon and water offsets that buying secondhand bring are being dwarfed by the environmental and human costs of ongoing production of new apparel. Fashion brands are touting their sustainability measures, buying carbon credits, reducing water usage in production, and launching secondhand clothing initiatives to capitalize on this new market, but they are not addressing the core of the sustainability issues.)

Retraining the Consumers

For decades, the U.S. has trained consumers to buy higher volumes at the lowest prices. Sam’s Club and Costco are a couple of examples of this approach. Against this background, marketers will need to shift their focus from greenwashing to educational tactics to drive the consumer towards the tier that best fits their budget and their aspirations. Consumers need to understand why businesses must make this shift and why urgent and sweeping change is needed. The idea that consumers can style new looks with existing apparel at an affordable price can move businesses toward their sustainability goals more than buying cheap first-sale pieces that are discarded within a week. 

Brands will also need to ensure that they are providing varied price points so that consumers continue to have access to apparel, accessories, footwear, etc.; this could come in the form of reasonably priced secondhand apparel.

Finally, these changes also require business models that allow for ESG metrics of success in addition to financial metrics. Reliance on profit-driven and profit-only models is not realistic in today’s environment. The regulations that have recently passed, and others that are currently pending, will be key to holding brands accountable for their actions, as well as to providing them with an avenue for the development of new ways to measure success and growth in terms of environmental and social impacts. Since greenwashing has long been (and continues to be) an issue in the fashion industry, without clear ESG regulations and standards that require transparent and accountable change, brands have repeatedly shown that their tendency is to rely on marketing spin. 

Changing the current fashion paradigm presents significant complexities. For some businesses, including those in the ultra-fast-fashion arena, this means upending their entire model to avoid greenwashing and a litany of problematic statements claiming movement toward sustainability and accountability while continuing to produce millions of garments every year for less than the cost of sandwich. Those two things are, of course, irreconcilable.

For fashion brands to truly move the sustainability needle, they will need to find new paradigms and new metrics centered on growth and success in ESG and financial areas. ESG regulations and enforcement will be critical to provide consistency and uniformity in measuring and reporting in these areas. Creating this new system with reliable, credible, and consistent information for both brands and consumers will be critical to its success. 

Melissa Gamble is an Assistant Professor in the Fashion Studies Department at Columbia College Chicago, where she teaches Trendspotting, Law for Creatives: Fashion, and Professional Practice. 

Over the past five years, a number of signals indicate that significant changes may be coming to the fashion industry in terms of regulations in Western Europe and the United States. In the U.S., fashion brands have existed in a stable relatively low regulatory environment for decades. Many laws and regulations intended to champion the safety of the consumer have been enforced with an undercurrent of caveat emptor – or in other words, that buyers are responsible for checking the quality and suitability of goods before a purchase is made. Examples of this can be found in various labelling laws and marketing regulations, which require fashion brands to disclose fiber content and country of origin, and prohibit false advertising. 

The U.S. government has carefully balanced the need for regulation with competition and a desire for free-market capitalism. As a result, laws address specific issues not the system as a whole, which means that most laws do not address the macro-level generational imbalances that have developed in the apparel industry over the last 50 years, including environmental and social justice-related issues. For instance, while the federal government has passed domestic labor laws, the Clean Water Act, and the Clean Air Act, all of which have implications for fashion manufacturing, many fashion brands’ manufacturing and production takes place overseas in countries where no equivalent environmental or labor protections exist, and where manufacturing goods at the lowest prices possible is the most significant factor to consider. 

Beyond this, the workings of modern brands have become so sophisticated that it is not uncommon for companies to send textiles or unfinished goods to different countries for an additional step in the manufacturing process with the sole aim of avoiding unfavorable quotas and tariffs.  As the Wall Street Journal reported in February 2020, when the Trump administration increased tariffs on goods from China with the idea that it would promote manufacturing in the U.S., manufacturers simply opted to send products elsewhere for a last small step to change the country of origin before shipping to the U.S.

Even within the borders of the U.S., federal wage and hour laws are often rendered ineffective when manufacturers subcontract the little remaining cut and sew work to companies that take advantage of undocumented immigrant labor pools. Numerous examples have been documented in California involving popular budget and fast fashion brands where retailers avoid liability by arguing that they cannot be responsible for what they – as the retailer and not the manufacturer – cannot control. 

And not an isolated practice, the many loopholes that exist in the U.S. have been utilized by fashion brands in other western first-world countries, as well. 

What are the signals? 

As with many fundamental changes throughout U.S. history, consumers have provided early warning signals – and in many cases, the impetus for change – to brands. In the past five years, alone, brands have witnessed the rise of Gen-Z, a powerful, young consumer group that already makes up approximately 20 percent of the U.S. population, and 32 percent of the world’s population. When combined with Millennials, these two groups make up well over half of the world’s population, and while they generations differ from one another in many ways, both Millennial and Gen-Z cohorts are diverse, well-educated, and active in connection with an array of issues, particularly those in the environmental and social justice spheres. They use digital platforms to gather, advocate, and activate around these issues, and have called for transparency, environmental responsibility and social accountability from brands and governments in the U.S. and around the world. 

Signals are also coming in the form of new government initiatives that are underway in Europe, and to a lesser degree in the U.S., which indicate that fashion industry regulations and the larger regulatory environment is, indeed, shifting. 

The pandemic has not only ruptured the apparel industry’s supply chain, it also laid bare the global environmental and social issues that the industry has long ignored. Specific events, such as the collapse of Bangladeshi garment factory building Rana Plaza in 2013, have sparked backlash – and demand for change – from the public. Yet, there have been few – if any – major movements toward accountability on a systemic level. The voluntary Bangladesh Accord, for instance, brought about a certain level of response from western fashion brands producing in Bangladesh, but it expired on May 31, 2021, and while it was subject to a 3-month extension, it has not been renewed since. All the while, problems with working conditions and quality inspections, and the enforcement of safety and fair pay measures have endured (even when the Accord was in effect) due to a lack of support from local government and an unwillingness of fashion brands to use their leverage to change the existing systems. 

Progress does appear to be afoot elsewhere, which could ultimately have an effect on the industry as a whole, as the EU is poised to make some significant changes as it prepares to implement new reporting and corporate governance directives in furtherance of the Sustainable Corporate Governance initiative. The proposed changes require directors and executives of brands operating within the EU to shift from the more limited short-term financial outcomes and measures to long-term outcomes and measure that include the environment, human rights, and social impacts along their supply chains. The resolution – which was adopted by the European Parliament in March 2021 – also contemplates expanding the definition of stakeholders to include employers, environmental organizations, and organizations along the company’s supply chain. Significantly, the new model includes liability for organizations and directors for noncompliance. 

As part of a more extensive climate bill, France passed a law requiring a “carbon label” to be included on garments and textiles to help inform consumers about the impact of their purchases. This law follows closely on the heels of an “anti-waste” law passed in 2020 by the French government that prohibits the destruction of excess inventory and samples, among other things. 

Meanwhile, in Germany, the “green button” label law passed in June, thereby, requiring companies to meet a minimum of 26 social and environmental standards – including supply chain reporting and responsibility points – in order to use the label. While there are some areas, such as farming and processing of textiles, that are not covered by the German law, a number of textile and apparel companies are proceeding through the testing process under the law. 

And finally, in the U.S., the California Garment Worker’s Act, commonly known as SB62, was signed into law in September, with support from fashion brands like Reformation, Saitex, Eileen Fisher, and Mara Hoffman, among others. Aimed at improving working conditions in America’s largest garment center, the Act eliminates the piece-rate wage system that has been long-employed by the global apparel manufacturing industry and that has been heavily criticized by garment workers and advocacy groups as providing easy avenues for wage theft. 

Looking ahead

With the publication of the United Nations latest climate report indicating that climate change is accelerating at a rapid pace and that human actors are the cause, fashion brands need to move sustainability considerations to the forefront. Increased regulation in the fashion industry and beyond is likely, as climate change becomes a more immediate and existential consideration. Sustainability considerations should include human and environmental impacts. These factors require a long-term horizon and a new set of metrics beyond speed-to-market and the financial bottom line, and new measures of success are possible with the rise of Benefit or B corporations, for example, which have been adopted by 37 states in the U.S. with legislation pending in 4 more states. 

The fashion industry thrives on change and newness, and while quick and expansive change is required, the creativity and innovation that is born of necessity has been met by brands and designers time and time again in the past. And the growing majority of young consumers and our planet will tolerate no less.  

Melissa Gamble is an Assistant Professor in the Fashion Studies Department at Columbia College Chicago, where she teaches Trendspotting, Law for Creatives: Fashion, and Professional Practice.