How the Fashion Sector is Dealing with the ESG Practices?

Fast fashion has become the go-to choice for fashionable and affordable clothing for many in recent years. In a time of rapidly changing trends and a large number of customers eager to obtain each season’s ‘must-have piece’ the production of such products in high volumes has become the solution. However, as consumers’ awareness increase questions about the working conditions within the production chain, the quality of garments used and the environmental impact of such fast and massive production arise.

Given this context, major fashion brands are making efforts to address these concerns. It is no surprise that the EU has announced its desire to end fast-fashion by 2030. Consequently fast fashion brands are working on funding initiatives to consumers’ awareness on ESG practices.

With the Covid-19 Pandemic there has been an accelerated and evident perspective shift in social, eco-friendly and ethical responsibility. This has led to a heightened interest in environmental, social and governance (‘ESG’) practices. With fast fashion gaining popularity to meet societal demands, ESG litigation is on the rise. As a result, major fashion brands are directing their fundings on ESG compliance. In this article, Barnes Law looks at the fashion sectors’ recent efforts in adhering to ESG practices.

Looking Beyond the Products

Greater visibility throughout the full lifecycle of products.

Consumerism, capitalism and globalisation have not only impacted the production phase in garment sector but also the cotton plantation. Fast fashion’s increasing demand for cotton has led to the planting of genetically modified cotton which requires more pesticides than organic cotton, causing harm to the environment and nearby communities. Certain popular fashion brands like Mango Zara and Reformation have taken steps to enhance visibility throughout their product’s entire lifecycle.

In late 2022, Mango launched its ‘Sustainable Vision 2030’ strategy with the goal of reducing the environmental and social impacts of its products and operations. Mango aims to include 100% sustainable cotton and 100% recycled polyester within 3 years by moving to a more sustainable collection by 2030 with every fibre of sustainable origin or recycled. Additionally, the brand will give way its criticised ‘Committed’ fashion line to QR codes that will offer valuable information on the composition, design and production location of the product by redirecting them to its website. With this strategy Mango also attempts to stay ahead of potential legislative requirements. The strategy further covers a wider goal that is to reach climate neutrality by 2050 reducing water and plastic consumption, protecting biodiversity with an updated anima welfare policy.

On the other hand, Reformation has introduced ‘RefScale’, a tool that tracks the carbon and water footprint of its products, empowering consumers to make informed choices. Similarly, the brand Baukjen which has the ethos ‘designed for good’ has created its own ‘Sustainability Index Metric’ to help consumers understand the impact of the clothes. And Zara, a Spanish based global brand that is part of Inditex Group,  announced its commitment to adopting a circular economy throughout its value chain on its website.

Next to these above mentioned fashion brands, in mid-June 2023 in total 17 global fashion brands including H&M, Kering Group, Adidas and Marks & Spencer joined a new deforestation-free leather commitment. This initiative is led by non-profits Textile Exchange and Leather Working Group (‘LWG’). The commitment lays out guidance to end deforestation associated with leather production.

All these initiatives are not solely driven by the anticipated legislative requirements. Consumers’ increasing consciousness of ESG values and holding brands accountable cannot be undermined. The number of consumers that are more willing to pay higher prices for clothes is growing day by day.

Working Conditions in Production Lines

Greater determination to tackle human rights abuses in supply chains VS unintended consequences of ceasing to work.

Human rights abuses in garment sector have been widespread, highlighted by the events like the Rana Plaza collapse in Bangladesh in 2013 killing thousands of garment workers, the 2021 military coup in Myanmar. While the former did not influence big brands production, the military coup in Myanmar and the concomitant political instability caused more than 200 000 workers in the garment sector to lose their jobs.

Irish fast-fashion retailer Primark swiftly paused operations in Myanmar after the coup. Although in May 2021 the brand resumed sourcing from the country, a report by the Ethical Trade Initiate (‘ETI’) urged Primark to exist responsibly from the region. A recent closure of Primark’s two suppliers in March 2023, further facilitated the brand’s exit. The brand promptly communicated with the affected 2,200 workers stating its commitment to working closely with the suppliers to ensure that the workers’ rights including compensation and rightful wages, are respected. This move demonstrates an awareness of the possibility of extending a fast-fashion brand’s responsibility throughout the supply and value chains.

Regulatory Scrutiny

Close regulatory scrutiny on ‘sustainability’ labels compels brands to either provide concrete evidence to support their sustainability claims or withdraw them altogether.

The UK’s Competition and Markets Authority (‘CMA’) has been taking active role in regulating fashion brands green claims. In early 2023, the CMA initiated an investigation into ASOS’s ‘Responsible Edit’, Boohoo’s ‘Ready for the Future’ and Asda’s ‘George for Good’ marketing strategies. The investigation covers two main aspects: the criteria used by retailers to assess eco-friendliness and the specific standards that products must meet to be labelled as sustainable. Notably, products containing only 20% recycled fabric raised concerns about their eco-friendliness. The CMA also disapproved the use of complex terminology that may confuse consumers.

Although not directly applicable in the UK due the Brexit, the EU proposed a Directive on Green Claims in March 2023. The proposal aims consumer protection by controlling environmental claims and green labels across the Union.

To Label but How to Label?

When a consumer is choosing between two equally viable options, a sustainable certificate can tip the scales in favour of a company who has it against the one who does not. Hence, there is a shift by fashion brands to manufacture garments using accredited materials.

Having an accreditation is a positive step that instils consumer confidence. However, as more brands adopts various accreditations, consumer confusion grows due to the differences between them. In the EU more than 230 sustainability labels have been identified. It becomes more crucial for brands not to exaggerate the importance of their accreditation or overstate the ESG credentials of an accredited product which in either case brings about greenwashing accusations. The brand is perceived as misleading consumers about its real environmental efforts.  To avoid greenwashing claims obtaining worthwhile accreditations is crucial. Brands can achieve this by providing concrete evidence of their adherence to the relevant standards. These standards can be imposed by brands through contractual tools to the participants of the production chain.

For the EU consumers seeking trustworthy labels, the European Commission provides a guidance. EU Ecolabel is one label to trust next to the EU’s official environmental management and audit schemed EMAS. Through EMAS organisations registered to it ensure that all environmental aspects, from energy usage to emissions, are handled in a legally compliant and transparent manner.