How ESG investors are making sustainable fashion a trend
International Luxury Group (ILG of Switzerland AG)
The fashion industry has long been criticised for its impact on the environment. On top of this, outsiders are also looking with a critical eye at the sector’s fast pace of production, labour practices, pollution, and biodiversity impact.
However, many brands have been working hard in recent years to adopt sustainable practices and be part of the solution. This is both a bid to restore the industry’s reputation, but also appeal to investors who prioritise environmental, social and governance (ESG) factors.
These types of investors are quite literally making sustainable fashion ‘a trend’.
In a nutshell,?sustainable fashion?is an approach towards sourcing, manufacturing, and designing clothes which maximises the benefits to the fashion industry and society at large, while at the same time minimising its impact on the environment.
The best way to think about sustainable fashion is to consider every stage in the supply chain and how well it is dealt with – design, material procurement, processing and production, transportation, distribution, end of life, and understanding companies’ initiatives. It's certainly complex.
Crucially, it’s not just meeting the demands of ESG investors that is driving change in fashion. Modern consumers increasingly want to do business with brands concerned about their environmental impact and who incorporate ethical practices into their values and business models.
With growing demands for sustainability, brands that don’t meet the expected standards must be willing to sacrifice extreme profitability as their financial performance is going to increasingly depend on their ability to contend with environmental, social, governance and overall ethical matters – and be seen as doing so.