sustainability within the fashion industry · 2019-02-25 · 4 5 1 as a leading fashion educator,...

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SUSTAINABILITY WITHIN THE FASHION INDUSTRYv2.0 Thu 23 August 2018

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CONTENTS

1Executive summary

2About the Fashion Business Council

3Business temperature check 3.1 Fashion industry as a whole - 3.1.1 Key findings - 3.1.2 Attitudes about the future of the fashion industry - 3.1.3 Challenges in the fashion industry 3.2 Continuous discounting - 3.2.1 Key findings 3.3 Brexit - 3.3.1 Key findings

4Sustainability and ethical trade 4.1 Key findings 4.2 Understanding of sustainability 4.3 Scope of sustainability - 4.3.1 Sustainability issues - 4.3.2 Sustainability opportunities - 4.3.3 Sustainability risks 4.4 Business performance on sustainable behaviour 4.5 Ownership/responsibility for sustainability 4.6 The consumer

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Appendix 1 - Methodology

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10 12

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THE FASHION BUSINESS COUNCIL

UNIVERSITY OF THE ARTS, LONDON COLLEGE OF FASHION London College of Fashion, UAL is a world leader in fashion design, media and business education. We have been nurturing creative talent for over a century, offering courses in all things fashion. With over 70 undergraduate and postgraduate degrees, and 165 short courses across every subject, we encourage our students to examine the past and challenge the present. To have inventive, assertive ideas that challenge social and political agendas. We give them the skills, opportunities – and above all, the freedom – to put those ideas into practice. POPULUS Since we set up in 2003, our goal has been to equip Businesses and individuals with a sophisticated understanding of their markets, audiences and brands. We believe this Critical Knowledge has the power to shape a healthy political, social and economic environment. In a market saturated with research agencies that simply deliver data, Populus stands out as a consultancy capable of delivering Critical Knowledge through expertise across political, reputation, corporate and consumer research and a leading edge suite of products and services. SILVERSEA Silver Sea Insight are a boutique consultancy for the arts, charity and visitor attraction sectors, helping organisations of all sizes put their customers at the heart of their business. We specialise in CRM, data and market research projects, working with our clients to get more out of their data, better understand their audiences, and increase visitor engagement.

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1As a leading fashion educator, the London College of Fashion created the Fashion Business Council to research with, and on behalf of, industry to understand emerging business priorities. With sustainability issues a strong business theme there is an overarching need to understand its potential development within our industry and look to support its application.

In order to research the aspects of this theme the Council created a mixed method research approach. First, quantitative surveys asked industry professionals to relate their thoughts on the context of overall industry sentiment and its immediate prospects. These were then supplemented with questions that looked specifically at the sustainability topic. Second, the results were discussed by a smaller number of Council members to explore the qualitative meaning behind the survey answers.

The research presented in this report identifies that:

- Optimism with the long-term prospects of the industry remain generally high

- The disposable nature of fashion is seen as the fastest rising risk to business

- There are silo mentalities and narrow business awareness within the industry

- These are limiting the focus of sustainability throughout the business organisation

- Industry practitioners tend to see the topic as intangible and difficult to define

- Behaving sustainably in one area of business can create non-sustainable behaviour in another area which limits its value as a holistic business strategy

Whilst the challenges facing the industry are very real and have salience now and into the future, there appears a deviation in the awareness of sustainability and its relevance across the value system. Whilst there appears to be a positive sentiment running through the

industry, disparity in experience, awareness and application runs throughout the findings, despite a generally positive view of the industry.

The report findings suggest that industry practitioners hold differing perceptions of how they can add value to the development of sustainability practice. Evidence within the report shows that there are different speeds of awareness and action across functions and that the time is ripe for a broader set of initiatives to bring all roles fully into the sustainability spectrum.

Executive summary This second report by the Fashion Business Council considers sustainability within the fashion industry at a time of a changing environment where conscious capitalism and the future of our world are presenting a new paradigm in business operations.

Initiatives that have focused on ensuring that the fashion supply chain operates within legal and moral convention have had the effect of improving the use of scarce resources and worker rights. They have also acted as a catalyst to question phenomena such as fast fashion and the over consumption of fashion product. These in turn have engaged the consumer to ask questions of the brands with which they engage. The growing use of terms such as pre-loved and circular design suggest that a global business imperative to think and act responsibly is creating new strategic opportunities for the fashion value system to fully embrace sustainability. As consumer interest in sustainability begins to move beyond innovators and early adopters has instigated further pressure in the fashion industry to act decisively.

As a leading fashion educator, the London College of Fashion created the Fashion Business Council to research with, and on behalf of, industry to understand emerging business priorities. With sustainability issues a strong business theme there is an overarching need to understand its potential development within our industry and look to support its application.

In order to research the aspects of this theme the Council created a mixed method research approach. First, quantitative surveys asked industry professionals to relate their thoughts on the context of overall industry sentiment and its immediate prospects. These were then supplemented with questions that looked specifically at the sustainability topic. Second, the results were discussed by a smaller number of Council members to explore the qualitative meaning behind the survey answers.

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2 In 2016, London College of Fashion in conjunction with Silver Sea Insight and Populus developed an international business panel of senior managers across the different sectors of the fashion industry, with a view to conducting research on an annual basis examining current issues facing the industry.

2018 marks the third year of the project. Our research saw the completion of 138 online surveys by a panel of fashion industry professionals with an emphasis on questions on sustainability within the fashion industry. Second, the responses to these were then followed up and interrogated more fully in five in-depth Delphi interviews with senior industry professionals. This report summarises the key findings from our research.

The Fashion Business Council would like to thank the fashion industry professionals who have contributed to this report.

About the Fashion Business Council

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3 Business temperature check Prior to being asked specific questions about the core topic of sustainability, respondents were asked a series of temperature check questions to understand business sentiment. These temperature checks are useful to set the context around which questions are answered.

3.1 Fashion industry as a whole The fashion industry is in a period of profound change and innovation brought about by technological change, the rise of the entrepreneurial/gig economy, low barriers to entry into the market and a changing consumer attitude to fashion. Evidence suggests that businesses within the industry are coping with these changes with varying degrees of success; businesses that are able to act nimbly and adapt are able to take advantage of and explore these emerging market opportunities as opposed to slower overhead heavy businesses. 3.1.1 Key Findings There were commonalities with the 2017 research around lack of clarity and lateral thinking within industry professionals A silo mentality still appears to exist across the industry Optimism about the future of the fashion industry has been consistent over the three years Those who work in retail operations were the most optimistic about the future of the industry and respondents who had roles in communications were the least optimistic More experienced members of the industry tended to be more optimistic about fashion’s future than early career members of the Council The increased ‘disposable’ nature of clothing was identified as the fastest rising risk in the 2018 study

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3.1.2 Attitudes about the future of the fashion industry Levels of optimism and pessimism have remained fairly consistent. Industry optimism remaining steady at around 70 out of 100 for each year of study to date. As in 2017, those established in the fashion industry were more optimistic than those who were newer to the industry. Last year, those that worked in design were more prone to pessimism than professionals in other roles; in 2018, design professionals’ optimism levels have remained static and it is now communications professionals who are more prone to pessimism. Those working in a retail operations role remain the most optimistic group in the Council.

68 72 692016 2017 2018

On a scale of 0-100 where 100 means very optimistic and 0 means very pessimistic, how optimistic or pessimistic do you feel about the future of the fashion industry? [MEAN SCORES]

TOTAL

RETAIL AND STORE

IT/FINANCE/HR

DESIGN

COMMS

OTHER

UP TO 4 YEARS

5-10 YEARS

11+ YEARS

PANEL

LCF CONTACTS

69

73

69

67

63

69

63

72

70

72

60

ROLE

YEARS IN THE INDUSTRY

SAMPLE TYPE

Levels of optimism and pessimism were slightly more mixed when explored further in the Delphi, with challenges being discussed more readily than opportunities.

“I think I’m probably 50-50; half of me is very optimistic because there’s so much great talent coming through and it’s becoming an industry where innovation is more and more the norm. However, I’m pessimistic at the same time because, historically, the industry isn’t particularly focused on people and the value of them within their organisations. We have lots of great things happening, but we also need to take our workforce with us. That’s where we’ve got a really big challenge. Until we get leaders to really acknowledge that, we’re never going to fully move forward and be an innovative industry.” HR / Finance / Operations

“So for the next generation it might seem quite pessimistic with so much change and the climate we’re in, but if you look at the younger brands coming through, they’re coming through and thriving and doing really well.” Design

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3.1.3 Challenges in the fashion industry The Council were asked what their perception of the greatest threat to the future of the United Kingdom’s fashion industry. The table immediately below provides a breakdown of the threats and their importance in comparison to last year:

Worryingly, all of the identified issues were seen as being a greater threat than in the 2017 survey, with ‘disposable’ clothing, big data and local sourcing being considered the fastest rising threats. Once again, unethical manufacturing processes was considered the greatest threat to the industry, a position held in both 2016 and 2017.

During the course of the Delphi interviews, a number of common subjects came up that had not been included as part of the survey or set interview questions to explore. These are highlighted on the next spread.

Unethical manufacturing process Increased ‘disposable’ nature of clothing Continuous discounting Leaving the EU on WTO terms Britain leaving the European Union Fashion fatigue causing customer disillusionment China as a fashion/creative hub Big data Promotion of a healthy body image Increased appetite for local sourcing and providence

1 2 3 4 5 6 7 8 9 10

72 70 69 66 64 63 57 49 48 48

60 47 58 52 49 44 56 27 32 27

+12 +28 +11 +14 +15 +19 +1

+22 +16 +21

THREAT % 2018 % 2017 +/-

To what extent, if at all, do you view each of the following as threatening to the future UK fashion and retail industry? [A GREAT / CONSIDERABLE THREAT]

14 15

Council members noted that consumers had started to move away from mass market, mainstream products and were moving towards more unique, bespoke items. This could prove problematic for larger established Businesses who appear unable to adapt quickly to these audience wants and cater fully to their needs.

Changing consumer habits

“People want a bit of uniqueness and, unfortunately, at the minute, everything is very much the same. So, it’s about how do you give them something that is that little bit different, but it’s also about things like service propositions, and how do you make [your customer] feel valued as and try and maintain that loyalty within your business and within your brand? They’re real challenges, but they’re also real opportunities for us right now.” HR / Finance / OperationsMarketing

Technology

Another key theme to emerge from the Delphi interviews was the growth in technological usage, both in terms of the best way to integrate technology into the fashion industry and what it means for the workplace and industry careers. There was concern that with processes becoming technology-led rather than intuition-led technology was having the effect of de-skilling the workforce over the longer term.

“I think technology, maybe. The robots, how do they make clothes, will it be possible? The robot can make the clothes and they don’t need to use the labour, something in that. And also, digital ecommerce, yes.” HR / Finance / Operations

One of the key challenges to emerge from the Delphi interviews was the issue of employability post-graduation. Whilst students were leaving university with excellent core discipline skills, it was felt that they were unable to transfer these into the current fashion industry environment; fewer internships and a lack of understanding of new and emerging roles in a changing workplace has led to students finding it increasingly difficult to find a suitable role within the industry.

This echoes a challenge that was raised in the 2017 research where the Council suggested that teaching and learning was an area that needed to be reviewed. Fears that essential skills were being lost, as raised in 2017, do not appear to be an issue in 2018 but the need for educational institutions to better prepare their graduates for life after their degree and offer direction and business education is still very much a key issue.

Council members were unable to propose what could be done in this area to improve the situation in the future and perhaps this is difficult to do in a time of dynamism of innovation in the industry.

Employability

“I feel that there’s not a lot of confidence being provided for students in terms of the employability post-graduation… There is a lot of anxiety, and a lot of that comes down to ‘we’re learning great things’; ‘we’re learning to think and deconstruct really complicated issues about the history, present and future of fashion’. But, how does this turn into careers?” Marketing

“I just don’t feel that the universities are doing enough to reflect what is actually happening in the workplace, and what roles students can actually go into. Because it feels they’re stuck a little bit in a very old view of what a career in fashion looks like, and what skills you need as well.” Marketing

“It’s the actual structure of the fashion education system that needs to be explored a little bit more in depth. It’s a long-term investment, obviously investing in the future of the fashion industry, and deciding what skills are going to be important the next 20, 30 years. But they need to start thinking about that a little bit more.” Marketing

“They’re starting to educate within the business school a bit more around people management, but I think it’s something that could go further. The opportunity to strengthen the industry is not just about the practical skills of doing your job, and the area you’re working in, whether it’s design or merchandising, or whatever. It’s about understanding how you do business really well. I see a lot of graduates coming out who think the world is all about luxury, but actually, there’s a whole other world that sits behind it. There is this mainstream area that I think could do with more focus. We need people to really embrace the high street again.” HR / Finance / Operations

“A lot of businesses within the fashion industry are trying to keep up with the pace of change, and I talk about pace of change as very related to skills, data and understanding audiences, and then putting that all back into the production. They’re hiring from outside the fashion industry to find these roles.” Marketing

“Technology needs to be really key integral subject that London College of Fashion should be looking at because that seems to be where it’s going. AI seems to be getting bigger. The tech thing is going to be growing bigger, so fashion and tech, and especially how tech can be integrated into the fashion industry. The fact that a lot of jobs are going to be lost through automation, through robots and machines doing our jobs, but if those jobs are lost what other jobs will be created in other avenues.” Design

“The focus has gone so much onto the customer now. You need to think about who your customer is, who your aspirational customer is as well, who is it that you want to grow into in the future. You need to make sure the product you’re developing, your marketing strategies, and what you stand for as a brand all aligns with your customer. That’s an issue for many organisations, if you look at M&S, they seem to have taken their eye off the ball a little bit with their customer. They’ve got broad appeal, but I do feel they do have quite a specific customer and they’ve lost her to other retailers, so that’s an important thing. Also, being authentic, having specific values which people can just relate to you in terms of what you stand for.” Design

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3.2 Continuous discounting 3.2.1 Key findings Remains a key threat for the industry Appetite for low prices supersedes sustainability issues


1 2 3 4 5 6 7 8 9 10

72 70 69 66 64 63 57 49 48 48

60 47 58 52 49 44 56 27 32 27

+12 +28 +11 +14 +15 +19 +1

+22 +16 +21

THREAT % 2018 % 2017 +/-


Continuous discounting remains a high-level issue, rising as a threat from the 2017 survey. It has however dropped from second to third in the list of threats as the increased ‘disposable’ nature of clothing becomes more of a high-level issue.

“Because it might impact our brands and we don’t want [continuous discounting] at all for luxury. But, I guess, maybe, like Fast Fashion or the other industry, it might suffer a bit, because everyone is doing discounts.” HR / Finance / Operations

One stakeholder felt that Businesses should have faith in their brand and not rely on discounting for their sales.

“[Continuous discounting] is really dangerous, and I’ve always believed this. It’s become something that the consumer almost expects, and it’s trying to change that mindset of the consumer. I’ve worked for a couple of brands where they don’t discount at all. They work purely on the basis that the brand is strong enough to survive without discounting…If you’ve got a strong enough brand and you’re offering what that consumer wants, you should have confidence that they’re going to buy it at the right price at the right time.”HR / Finance / Operations

When probed further in the Delphi however, Council members didn’t hold strong views or pick out specifics around the culture of continuous discounting. As in 2017, it was felt that continuous discounting was shaping shopping habits, with consumers delaying purchasing and buying predominately in sale season. The resultant effect on achieved margin was again mentioned, as well as the implication that the product was of a lower quality if buying it in a sale. Continuous discounting has an effect on purchasing throughout the year, with purchasing becoming more inconsistent and increasing the difficulty for Businesses to forecast sales and stock mixes effectively.

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3.3 Brexit 3.3.1 Key findings Brexit has risen as a threat but Council members were generally more optimistic about their Business’s level of preparedness than in 2017

Availability of visas is a key concern as well as lack of interest in retailing as a career within the United Kingdom

Interestingly Brexit has remained at number five in the importance of issues despite its looming implementation. It has however along with all other issues seen a relatively high rise in threat perception over 2017.


1 2 3 4 5 6 7 8 9 10

72 70 69 66 64 63 57 49 48 48

60 47 58 52 49 44 56 27 32 27

+12 +28 +11 +14 +15 +19 +1

+22 +16 +21

THREAT % 2018 % 2017 +/-


That threat perception has increased in the Council is interesting when compared to their answers about their attitude towards Brexit. When asked specifically how optimistic or pessimistic they were about the likely impact of Brexit on their organisation, optimism had increased across all industry roles. Those who had more experience in the industry (11+ years) were more prone to pessimism than in 2017 (when they had been the most optimistic group).

TOTAL RETAIL FIN/IT/HR DESIGN <4 YEARS 5-10 YEARS 11+ YEARS

59 60 65 63 61 66 52 55 54 60 59 62 62 57OPT

IMIS

M0

100 ATTITUDE TOWARDS BREXIT

2017-2018

In the Delphi, Council members voiced their major concerns regarding Brexit and its threat to the fashion industry. For these Council members, their main worry was about employee recruitment and retention and the impact that Brexit would have on those working in retail operations particularly. All Council members were concerned about the availability of visas for foreign nationals, and what additional restrictions on travelling and working across the EU would mean in terms of the retail operations workforce.

“I know the majority of the people in the retail store are not from the UK, so BREXIT will have a big impact. I think that will be my Business’s main issue. We have 70 stores in the UK and Ireland. We have external consultants, like PWC or KPMG, big accounting firms helping us. But, I think they will think about the people already here might be able to stay, so they’re not that worried. Yes, but if they can’t, I don’t know exactly what will happen to those people. It’s all very uncertain.” HR / Finance / Operations

“…the other thing we have to be really aware of is the availability of people within our organisation. So, a really simple example was most of the teams that I’ve worked with within Central London, we’ve got every nationality you can think of. The minute that Brexit comes through, potentially, we’re going to have a decrease in workforce. How do we manage that? Unfortunately, retail is not a career path that really has any strength in the UK, people don’t particularly want to go into retail as a career, and that’s part of our challenge. Brexit is only going to highlight that more…We’ve got a potential issue in that half our workforce could end up not being able to be here. What do we do?” HR / Finance / Operations

When the Council were asked the extent to which they thought their Business was prepared for the impact that Brexit will have on its business, in general preparedness had gone up since 2017; the exception was from the more experienced members, where there was a rise in perception of unpreparedness.

“We all know Brexit is coming, we’ve all been given enough time and space to prepare for it. I feel if you do prepare for it, it might be a good thing where people are buying British, people are looking more to British brands like Debenhams. People are looking to brands like us to be more patriotic and that might be really good in the future.” Design

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4 Sustainability and ethical trade

As the quantitative research yielded some interesting findings regarding sustainability, it was decided to enrich that data with additional qualitative insight and opinion on this issue from respected industry leaders through a series of in depth telephone interviews.

To what extent do you think that your organisation is prepared for the impact that Brexit will have on its business [SUM Prepared/Unprepared, 2017-2018]?

-12 -14 -7 -12 -20 -11 -6 -19 -15 -12 -5 -13 -24 -14

55 67 53 68 52 69 58 64 47 74 59 74 64 68

TOTAL UP TO 4 YEARS

5-10 YEARS

11+ YEARS

RETAIL FINANCE/IT/HR

DESIGN

22 23

4.1 Key Findings There appears to be a silo mentality within the industry; the issue is either “not their problem” or the sustainability lobby are talking to themselves and not widening the pool of engagement Sustainability is sometimes just not tangible for some practitioners Sustainability is very difficult to measure in a meaningful way as too ethereal; the theory needs to be tied to reality; it is hard for individuals to see their contribution Behaving sustainably in one area of business can create non-sustainable behaviour in another area

As evidenced by the rise of ‘disposable’ nature of clothing and local sourcing as a threat in the quantitative research, sustainability is clearly an important issue for the Council, which was also reflected in the Delphi.


1 2 3 4 5 6 7 8 9 10

72 70 69 66 64 63 57 49 48 48

60 47 58 52 49 44 56 27 32 27

+12 +28 +11 +14 +15 +19 +1

+22 +16 +21

THREAT % 2018 % 2017 +/-


“You have to have a social responsibility for the society. And all your supply chains have to be sustainable for the materials, which have to be recycled. And also, for the labour, they will have to pay reasonable wages.” HR / Finance / Operations

70% 59% 63% 80%

49% 47% 53% 52%

48% 50% 63% 36%

Increased ‘disposable’ nature of clothing

Big data

Increased appetite for local sourcing and providence

Total Retail/Store Finance / IT / HR

Design


24 25

4.2 Understanding of sustainability Sustainability is an all-encompassing and abstract term that can be difficult to articulate. It can have a different meaning and different set of issues depending on a person’s role within the sector.

This bore out in the Delphi interviews, with Council members having a limited and vague knowledge of sustainability. Ultimately, Council members believed at its core, sustainability was defined as actions that contributed positively to society and the planet, rather than harming or exploiting them. 4.3 Scope of sustainability

Sustainability covers a breadth of areas within the fashion industry and some of the solutions to the problems of behaving sustainably can themselves contribute to non-sustainable practices. Becoming a sustainable business may cause conflict between the business itself, as well as to and for its consumers. 4.3.1 Sustainability issues

When the Council were asked to choose how urgently the fashion industry needed to address a series of issues, those pertaining to workers’/human rights were considered the most urgent, with environmental concerns and transparency over business relationships being seen as slightly lower priorities.

“It’s very much not clear what it means. There’s no agreed definition. There is no scientific definition. And in some ways, it’s a little bit unhelpful. I think, actually, we would be better off being really specific. Talk about climate change, talk about workers’ rights, talk about IT. If we’re talking about distribution of value, talk about that, because it’s very easy for misunderstandings to happen and for the focus to be put on one particular area and not another.” CSR

Worker’s rights

Modern Slavery

Responsible Sourcing

Collaboration and sharing responsibility within supply chain

Climate change

Transparent business relationships

Carbon emissions

38%

42%

38%

30%

33%

28%

28%

38%

33%

38%

30%

33%

28%

28%

19%

20%

22%

24%

24%

26%

27%

5%

6%

4%

3%

4%

7%

7%

Very urgent Somewhat urgent

Not very urgent

Not at all urgent

How urgent are each of the following issues for the fashion industry to address?

26 27

When probed in the Delphi, workers’ rights were viewed as important but not one of the more prominent issues. Council members associated this issue with rights for workers on the manufacturing and retail side.

“I feel the idea of workers’ rights, because a lot of people are talking about the Rana Plaza disaster and nothing seems to have changed, but, again, looking at it in a 360-degree view, you have to think about the fact that we want the things faster, quicker, cheaper. You can’t have a top that’s £2 at Primark and then pay someone £4, economically that’s not going to work. So, when it comes to workers’ rights, it has to be a collective thing, where it has to be something where all these brands get together and we are going to look at workers’ rights in India or China, and make sure whenever we manufacture in these places, we’re going to make sure that there’s at least these five things that are as standard, that every worker should always get. Without there being a collective push, then it doesn’t seem much will change, which is unfortunate.” Design

Responsible sourcing was considered the third most urgent issue for the fashion industry to address, tying in with the fast rise in threat perception of local sourcing. Council members mentioned ensuring clothing was manufactured in a responsible way, through correct working practice, and the sustainability of the delivery and shipping procedures in relation to this issue. Reducing waste and reusing clothes was also considered a priority for the industry.

“They’re all really interlinked, because if you address the one aspect of sustainability, inevitably, it has consequences for other aspects. Say, for example, you address animal welfare in terms of leather, switch to a different material, you end you with, potentially, something which is oil-base, and using lots of toxic chemicals. But, for me, the focus should be on use. We produce anywhere between 40 and 100 billion items of clothing, globally, each year, which is more than enough. It’s more than enough in existence. And, for me, it’s about how do we change the way that we use clothes, distribute them, value them.” CSR

“[In terms of sustainability] we do think about the manufacturing processes a lot more, we do think about things like distribution and all that side of it, and I think we are starting to get better with looking at the other areas of our business, like people. Thinking about how our stores are run and how we can be much more effective in using energy and the materials that we use to do things.” HR / Finance / Operations

There is no stand out issue that needs to be tackled urgently which demonstrates how challenging the scope of sustainability is. How does the industry tackle such a broad range of issues and how does it prioritise which issue to address first? There are also conflicts within sustainability which means that addressing and improving one issue could lead to an non-sustainable impact on other areas of the industry (e.g. the industry could reduce carbon emissions by local sourcing but this would cause job losses in Cambodia). 4.3.2 Sustainability opportunities

For the Council, the biggest opportunities for fashion business to behave responsibly were reducing waste and improving working conditions.

Reducing wastage and overuse of scarce resources Improving working conditions within the fashion supply chain Educating their customers about responsible behaviour Projecting a positive image to the consumer

Developing a resilient long-term business

Charging more for fashion products

1

2

3

4

5

6

OPPORTUNITY % 2018

When it comes to behaving sustainably, the biggest opportunities for companies lie in which of these areas?

50

37

27

23

21

17

28 29

The table immediately below demonstrates again the challenging scope of sustainability as the perceived biggest opportunities differed depending on the specialism that respondents worked within the industry. For those working in retail operations and design, reducing wastage and overuse of scarce resources was by far the biggest business opportunity.

Reducing wastage and overuse of scarce resources

Improving working conditions within the fashion supply chain

Educating their customers about responsible behaviour

Projecting a positive image to the consumer

Developing a resilient long-term business

Charging more for fashion products

Total Retail/store Finance / HR / IT

Design

50% 59% 39% 56% 37% 32% 32% 48% 27% 18% 16% 24% 23% 26% 39% 8% 21% 26% 21% 8% 17% 24% 18% 28%

When it comes to behaving sustainably, the biggest opportunities for companies lie in which of these areas?

Those who worked in communications functions saw an opportunity in projecting a positive image to the consumer, something that was reflected in the Delphi interviews:

“I think there’s definitely huge commercial value...I think people are going to become more and more interested about where things come from, and I think that adds value, and that adds an opportunity for a brand to trademark a premium as well. The industry needs to find a way of just adding to the story of their product a little bit more, in terms of adding value.” Marketing

“From a press and PR perspective as well, you’re able to promote the fact that you are sustainable and you are doing good. So, your image in the industry would also be raised, and that will be raised for the foreseeable future, so that’s a really big benefit of looking into sustainability.” Design

There was a note of caution from Council members though. They highlighted the need to ensure that any promotion of sustainability was aligned with the Business’s business strategy, not in conflict with it and that they were not promoting their sustainability credentials for PR and profit purposes.

“When you’re talking sustainability, you need to understand, the consumer’s view on things. That can be a really big challenge for you. You can go from one extreme to the other. Do too little and your consumer is probably going to start to comment; but do too much, and you might start to do is lose the focus and lose the heritage and the soul of your business.” HR / Finance / Operations

“There is a few key issues around the motivation of a brand for promoting its sustainability activities in the eyes of the consumer. If it’s seen as profit driven, then you tend to have a more negative response from consumers. If it’s seen as being promoted because it’s in line with the Business’s values, then you tend to have a more positive response. If there’s not a fit between the Business’s sustainability efforts and the business strategy, if that’s not aligned, it can cause confusion and negativity. And, actually, it can also be the case that some Businesses are better off not promoting, communicating about sustainability activities, particularly if it’s at high risk of being exposed for those particular issues.” CSR

30 31

4.3.2 Sustainability risks

In both the quantitative and qualitative research activities, the key risk that emerged as a result of sustainable practice was financial management. It was perceived that an increase in the cost of fashion product manufacture, delivery and retail emerging slightly ahead of the upfront investment required to develop best practice sustainable behaviours.

There was no consistency across roles within the industry about what was deemed the biggest risk for business when behaving sustainably. Inevitably, those that worked in Finance/IT/HR roles thought that the increase in cost to fashion products was the biggest risk whereas for retail and design professionals, being able to meet the needs of the fast fashion mentality of many consumers was more of a risk to behaviour.

Sustainable behaviour increases the cost of fashion produces

The investment required to develop new best practice sustainable behaviours

Sustainable behaviour is a small factor in most consumers’ buying decisions

Being able to meet the needs of the fast fashion mentality of many customers

Ability to control dispersed global supply chains

Lack of expertise internally

Cynicism about sustainable behaviour claims made by companies

Lack of interest from leadership

1

2

3

4

5

6

7

8

RISK % 2018

26

25

25

25

22

21

18

17

“I think there’s a cost issue. If brands want to act more sustainably, there is obviously going to be an impact on the bottom line. If they’re getting the people on board that they need, getting the skill set, changing logistics of supply chain, there’s going to be a cost there. But all industries are all adapting to the goal of sustainability, they’re all going to have to adapt.” Marketing









26% 24% 34% 28% 25% 24% 18% 28% 25% 26% 21% 16% 25% 32% 18% 32% 22% 24% 21% 24% 21% 21% 16% 28% 18% 21% 18% 12% 17% 18% 18% 16%

Total Retail / Store

Finance/IT/HR

Design

When it comes to behaving sustainably, the biggest risks for companies lie in which of these areas?

It was thought that smaller businesses might have an advantage over larger ones when it came to acting sustainably as they could be more adaptable and change their practices quickly. It was noted though that the large cash investment required to change practices may make this more difficult for those smaller and newer businesses:

“The risk side would be that there’s a cost factor associated with sustainability. For example, some of the newer brands that have come out are more sustainable, some of their product is a bit more expensive. But if you had more people involved in being sustainable, then the cost can come down, but to start off with, any Business making changes from a sustainability perspective, especially an established Business which needs to change its end-to-end process, there will be a cost implication.” Design

“It depends on the size of the Business. For the start-up player, just change it immediately. For example, they want to be a sustainable brand, so they setup their own supply chain in a sustainable way. And also, they use a lot of technology to help them do business. But, for huge Businesses, they will need to spend more time to change sustainably. Which is also quite difficult, in my opinion.” [For large Businesses], they are a bit behind [on sustainability], compared to start-up Businesses, because they are worried that it will change their brand. So, they do it in a more conservative way. And the sales are increasing, so they might not feel like it’s a threat for them. Maybe in the long-term it’s a threat, but in the short-term, we don’t really think that.” HR / Finance / Operations

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4.4 Business performance on sustainable behaviour When the Council were asked how they rated their Business’s performance on sustainable behaviour, over half stated that their Business behaves sustainably, although those who worked in design specialisms were less likely to be enthusiastic about Business performance.

15%

12%

36%

5%

38%

50%

20%

50%

26%

26%

12%

24%

12%

12%

12%

16%

9%

20%

5%

Total

Retail/store

Design

IT/Finance/HR

Very urgent Somewhat good

Neither poor nor good

Somewhat poor

Very poor

Overall how would you rate your company’s performance on behaving sustainably?

Branding and marketing opportunities

Supply clain and logistics

Product development/product buying and merchandising

Financial planning and management

Human resources management

Retail operations and day to day trading

Procurement of plant machinery, facilities and technologies

36%

35%

39%

28%

28%

31%

28%

30%

27%

23%

30%

30%

27%

21%

13%

10%

12%

12%

12%

16%

19%

7%

9%

9%

10%

10%

9%

7%

4%

5%

4%

3%

3%

3%

5%

Very well Somewhat well

Neither poorly nor well

Somewhat poorly

Very poorly

To what extent does your company engage in sustainable practices in the following functions?

Sustainable behaviour existed across a range of business functions, according to the majority of people involved in the quantitative research, covering environmental issues as well as workers’ rights.

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When probed further in the Delphi, responses were a little more mixed with some Council members unable to identify where this behaviour was taking place or what their Business’s policy was, despite being confident that there were sustainability policies and processes in place.

“I think they are trying to do something with the supply chain, but I don’t know whether they are doing it or not. They do supply chain; they want more recycled raw material. They did responsible sourcing. But, I don’t know exactly.” HR / Finance / Operations

“I don’t know. I work for a finance department, so we don’t really talk about sustainability. The Business always says, we want to be a sustainable business, etc. but it’s a question mark. Is it marketing strategy, including for the employee or for the customer as well? Is that a marketing strategy, or are they actually doing it? I think it’s always difficult to work out. I know that our Business is supporting sustainability, but I don’t feel very connected to that.” HR / Finance / Operations

“I do know that there is something they are working on. We do have a sustainability tab on our website at the moment. We did go to parliament recently to talk about our sustainability initiative. What’s really good is the fact that we are working on it as a business and we have said that we are going to work on that, but it is being revised at the moment.”Design

“What I can say is that for the last few roles that I’ve had, sustainability is very much within the strategic planning of every brand. The last couple of brands that I worked with were big, global brands, and you look at their corporate strategy and it’s right there. The global guys are doing it really well. The challenges come when you’re looking at the smaller brands, your FMAs, where the structures are much smaller, the knowledge is sometimes less, and it’s about how do you balance everything you need to do when you’re trying to grow a business. I haven’t been in a retailer, in the past five years, that hasn’t been talking about sustainability.” HR / Finance / Operations

Others were more knowledgeable about their business’s policies and practice across the industry:

4.5 Ownership/responsibility for sustainability

When probed in the Delphi interviews, Council members stated that they viewed sustainability the responsibility of everyone in the Business, from manufacturing to retail right through to the senior board, however for it to become a priority for an organisation, the senior management team should lead the way. Only through making everyone aware of sustainability practices and aims within a business did Council members feel that sustainability could be embedded into a brand’s culture.

“I wouldn’t say there’s any particular roles that have a particular emphasis, you could look at all of them. You could say designers, you could say buyers, you can CEOs, you can say technicians, technologists, merchandisers. They all have a role to play.” CSR

“I think it needs to be an issue throughout the entire organisation, it comes down to culture. I think it’s something that senior management definitely needs to enforce, and I think sustainability, it’s more obvious for some roles. But I think it just needs to flow straight through the organisation from top to bottom.” Marketing

One Council member remarked that they didn’t feel that the industry was doing enough and that sustainability needed to be fully integrated into everything that the business does:

“I think how dirty the fashion industry is in terms of environmental impact, it’s a bit of a ticking time bomb. Because I think everyone knows how the industry operates isn’t sustainable, and the impact is quite dear. I just don’t think that the industry is doing enough. It’s more of a checkbox initiative, it needs to be threaded straight through the entire business. I feel, at the minute, sustainability gets separated out from the rest of the industry as being standards on things. It needs to be fully integrated into absolutely everything that that business does.” Marketing

However, despite the consensus that sustainability was the responsibility of everyone, Council members were unable to identify who in their Business was responsible for implementing sustainability polices, other than mentioning the ‘corporate responsibility team’.

“We do have a corporate responsibility team who are responsible for sustainability, so it is one of the things that is worked on within our Business in terms of policy and strategy.”Design

“I think that a lot of businesses still believe it sits within the product area. Where it actually sits is with the COO or CSO area, where it’s actually about looking at the business as a whole. I think it is still quite unclear where it is...That’s one thing we need to nail down is, where does it fit? Because it needs to go across the whole business, so it has to be within a function that has that spread and has that knowledge.” HR / Finance / Operations

It was felt that the current lack of government regulation would inevitably change, and that some form of regulation would be imposed on the industry. Some felt that this was necessary in order to provide a level playing field for all, as businesses would be required to make changes at the same time and pace, and potentially share the costs.

“It’s a good idea for the government to do something to help businesses to work better. And also, educate the people about sustainability.” HR / Finance / Operations

“Sustainability will eventually become legislation. So, it’s better that you look into it now and work on it for yourself, rather than you being forced to do it and being fined in the future because you haven’t followed what’s now gone into law. The government will get involved sooner rather than later when it comes to pushing sustainability.” Design

Not all were keen on government regulation though:

“In a perfect world, yes, it would be great; but we’re big enough and ugly enough as an industry to do this. Why do we need to have interventions to make it happen? I think that

there are things that are far more important to the country that need to be done than ensuring that we’re doing things that we should be doing because we’re responsible business owners. It’s not a good use of government policy and time.” HR / Finance / Operations

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1

2

3

4

5

6

7

8

RISK % 2018

26

25

25

25

22

21

18

17

4.6 The Consumer The consumer is a vital element in the fashion industry and it has yet to be ascertained whether or not sustainability is a consumer interest; whether or not they want it, need it or value it, a concern shared in the Delphi interviews. There is a conflict if the fashion industry is starting to pay attention to sustainability but its customers are still being driven by low prices as a result of continuous discounting.

“We’re much more focused on that sustainability piece, but the consumers got a very different perspective. They don’t necessarily fully understand the whole, complete jigsaw of your business. So, I think that things like sustainability, they probably look at in a far simpler way, whereas actually we can take sustainability right through our businesses.” HR / Finance / Operations

“The industry cares but the individual doesn’t. Actually, the Business only really cares, only if the customer decides not to buy the clothes, for example, if they only buy sustainable clothes. If the customer wants a cheaper price, they will try to make clothes as cheaply as possible.” HR / Finance / Operations

Council members thought that the consumer should bear some of the responsibility for sustainability, both in terms of pressurising businesses to behave more sustainably but also by using their purchasing power to tailor shopping patterns to those businesses who were acting more sustainably and subsuming some of the cost of sustainability, even if that led to them eventually buying less:

“We’re all responsible. As a customer, you should be expecting and demanding it from the people who you shop with and the customer can use the power of their purse. If someone isn’t acting sustainably, then move on to somebody else who is. As a retailer, if you’ve got a lot of power, someone like a Zara, you could be a strong voice within the industry. You could say that we’re going to take a stand, and we’re the ones who are going to say whenever we manufacture in whatever country, we’re going to make sure that workers have rights. We’re going to look at the sustainable practice.” Design

“The cost of sustainability should be fully integrated. And I don’t think it’s a case of one part of the chain taking on the cost. At the moment, what happens is, the people involved in making clothes, and all of the beings in the natural world that are affected by fashion, are the ones paying the cost. For me, it’s about reframing how are those costs are integrated throughout the chain so that fashion costs what it really should cost. It probably will mean consumers paying more, but also buying less.” CSR

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In conclusion, it is evident from this report that there is much that needs addressing to fully embed sustainability throughout the fashion industry. The report is clear in highlighting disparity in attention to the sustainability agenda whether this be by role of business type.

Effort is needed to fully assess the commercial value of sustainable behaviour as well as identifying connections between functional and behavioural ability throughout the supply chain. It cannot be right that Council members can be unsure of the impact of sustainability on their organisation and their role. There is clear opportunity to connect the strands of the debate and provide clarity to move forward.

This effort is made more compelling by the beating drum of consumer attitude and voice. The alarm at plastic in our oceans, women’s rights and the depletion of the resources that the Earth provides must act as a reminder that the industry and its future relies upon its relationship with the consumer. As they become more aware so business must change. It ignores this challenge at its peril.

5 Action

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APPENDIX 1 METHODOLOGY

The quantitative research was conducted online using two main sources of data:

1. Fashion industry professionals, from Populus’ consumer panel of individuals; this group self-identified as working in the fashion industry.

2. LCF contacts, who were emailed a link to the survey and asked to forward on the invitation to relevant colleagues

Sample sizes were as follows:

- 136 interviews from the consumer panel

- 36 completes from LCF contacts

In general, the respondents from Populus’ panel were more likely to work in IT/Finance/HR roles (35%), with the LCF contacts more likely to work in behind-the-scenes roles such as design (39%).

For the Delphi phase, Populus interviewed 5 fashion industry Council members by telephone between 23 and 29 May 2018. Interviews followed a topic guide developed by Populus in collaboration with London College of Fashion and Silver Sea Insight. Where necessary, respondents were re-contacted to discuss issues raised by subsequent respondents.

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