Company school teaching case study: is the fashion industry become more sustainable?

By editor
October 17, 2024

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The Atacama Desert in northern Chile just added mountains of discarded clothing that are so large they are accessible from space. Also, in Ghana and another African countries, unnecessary items from second- side clothing markets are enormous landfills and choking waterways.

The nation’s clothing sector is damaging the world. The prevalence of futuristic images of textile waste, which are moved and empty straight from the factory floor to the world’s landfills, is astounding.

The clothing industry produces more than ever as a result of the increase of fast fashion, which is hard to find. However, according to the World Economic Forum, 150 billion goods were produced annually in 2016. The sector’s current world revenue is actually higher than that of some of the world’s leading economies.

However, misuse is just one of the many ways that trend harms the environment. The company’s size and chemical- and water- extensive manufacturing processes, together with its reliance on non- renewable energy sources, think its effect on the environment is tremendous. The fashion industry is estimated by the German Environment Agency, Europe’s economic guardian, to add up to 10 per share of the country’s total carbon pollution.

Test yourself

This second of a series of monthly case studies in the business class style that examine ethical business problems organizations face. Read the article and the FT articles that are suggested at the end ( and linked to within the piece ) before answering the questions that were asked.

About the artists: Fabrizio Ferraro is professor of corporate administration, IESE Business School and Anna Sáez de Tejada Cuenca is associate professor of activities, information and technology, IESE Business School

The collection is a part of a large collection of FT “instant teaching case studies” that investigate business issues.

Today, the industry is waking up to its commitment to the environment problems, and adjusting its design, production, distribution and finish- of- life cycles.

Some businesses in the comfort sector are profiting from their market place and users ‘ lower cost sensitivity to make investments in the move to more sustainable practices. LVMH’s Stella McCartney, much known for championing natural concerns, has pioneered the use of other materials such as grow- based phony furs. Chloé, France’s premier luxury fashion house, has become the first to be B Corp certified, meaning it has made unwavering commitments to the environment and social goals as a result of reevaluating its growth strategy during the pandemic.

Sustainable action is not limited to high- priced products, however. Ganni, a more affordable Danish brand, reported that it has reduced carbon emissions while increasing sales, which demonstrates that it is possible to achieve both.

Even fast- fashion giants such as Inditex, owner of Zara, and H&M are investing in research and development in recycling, and improving transparency. For instance, they have placed used clothing collection bins in numerous stores. H&M reported that it received 16, 855 tonnes of used products in 2023— up by more than 2, 000 tonnes year on year— which it sends for reuse or recycling, through partnerships with specialist handlers.

A modern and minimalistic Zara store setup showcasing a light gray coat and accessories on a wooden display stand. A prominent sign invites shoppers to recycle their old clothes through the #joinlife program
Second life: Zara bins for used clothing © Inditex

So far, though, such activities remain modest. One issue is that both businesses and consumers are at fault in a cycle of overproduction and overconsumption. Instead of the typical four, speed-fashion companies produce dozens of collections each year, and even high-end brands produce far more than they anticipate selling.

Meanwhile, consumers now wear garments only a few times before disposing of them. And only a small percentage of people are willing to pay more for environmentally friendly goods. Gen Z, who was born between the late 1990s and 2010, will largely support environmental protection, but the rapid expansion of low-cost retailers like Shein and Temu defies that commitment. Social media influencers with ever-changing outfits and the popularity of TikTok “hurries,” where users display a collection of purchases, encourage more consumption.

Recycling is difficult, and uses more resources. Textiles must first be divided and sorted by type. Most clothes are composed of multiple fibres, including polyester — the oil- based staple of clothing, which is almost impossible to recycle with existing technologies. Renewcell, a Swedish company that offers industrial-scale closed-loop services where discarded textiles are collected, recycled, and transformed into fibers to make new clothing, has recently failed, demonstrating how much more popular are the quality and cost of virgin fibers are with producers and consumers than those of recycled materials.

The most environmentally friendly option would be to leave existing clothing unworn, but the very disposability of fast fashion results in frequently failed attempts to hold up to new life: clothes are made to be stowed and reused. Additionally, it has proven difficult to persuade consumers to return clothes to retailers without receiving a reward, like H&M’s store vouchers, which promote fresh shopping.

Second- hand clothing start- ups, such as online marketplace Vinted and Vestiaire Collective, have flourished, but they represent a minuscule portion of the market. Even the most successful rental services struggle to make an impact. Our research, which is currently being conducted, suggests that they may unintentionally cause clients to change outfits more frequently than they would otherwise, and that packaging and transportation costs are high.

However, a brand-new consumer generation has the potential to alter behavior and establish novel consumption patterns. Companies can reevaluate their business models. And there remains enormous room for innovation in materials, design, industrial processes, methods of recycling, and ways to reuse textiles produced.

Fashion needs a rethink. A trust that will use its profits to combat the climate crisis was established two years ago by Yvon Chouinard to protect Patagonia, the US outdoor clothing brand he founded. He noted that” we are just getting started”, as Patagonia approached 50 years of its “experiment in responsible business”. He continued,” If we have any hope of a thriving planet — much less a thriving business — 50 years from now, it will take all of us doing what we can with the resources we have.”

Questions for discussion

Read:
Can fast fashion get rid of its bad habits?

Fund managers welcome the prospect of Shein London IPO with a cool reception.

Vinted, a second-hand fashion website, announces its first-ever profit.

Consider these questions:

  1. How can brands make more people willing to pay for sustainable clothing?

  2. How could the cycle between excessive production and excessive consumption be broken?

  3. Can fast-paced companies change their business models to be less dependent on volume growth ( and how)?

  4. How might the fashion industry use artificial intelligence to lessen its impact on the environment?

  5. How accountable are fashion companies for the footprint of their goods throughout the life cycle?

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