New consumer behaviors predicated on values are quickly and steadily reshaping the future of commerce and retail. According to Shopify’s 2021 Future of Commerce report, 53% of consumers prefer green or sustainable products and 75% say they would pay more for environmentally friendly products.
This shift is even more meaningful for the fashion industry where, according to Angela Luna and Al Saad, authors of Open Source Fashion Cookbook and founders of Adiff—a label making clothing accessories from would-be waste materials and who employs resettled refugees—brands have largely approached sustainability and ethics as concepts to buy into rather than truly embrace. Luna and Saad also note the industry has made it much more difficult for most people to participate in sustainable fashion due to the high price tag generally attached to it.
Sustainable business is good business, but it does come at a cost. So, where do we go from here? For starters, sustainability and sustainable fashion need funding in order to drive transformative change. According to a recent report from Boston Consulting Group and Fashion for Good, that figure sits at $20 to $30 billion per year. As the demand for sustainable products continues to rise, global preference and greater investment in sustainable business have an opportunity to meet that demand.
At this year’s Vogue Business and Shopify Sustainability Forum, panelists dove into the opportunities and challenges around investing in fashion’s sustainable future. Here, we look at three key takeaways from that important conversation, plus more on what is sustainable fashion and how investing in those businesses—especially startups—promotes longevity and better practices for the industry overall.
What is sustainable fashion and where does the market stand today?
Sustainable fashion is about designing and manufacturing clothing while ensuring that the people, communities, and environments involved in those processes are cared for and protected. In other words: how can we design, produce, sell, and purchase apparel that is ethically made, minimizes its impact on the environment, and ensures better working conditions for the workers who make it all possible?
According to Entrepreneur, the sustainable fashion market is segmented in three ways. First, it is sectioned into organic, man-made, recycled, and natural. Then it’s based on designations such as fair trade, animal cruelty-free, eco-friendly, and charitable brands. And, finally, by the end-user. Currently, the women’s and man-made, cruelty-free segments lead the way in market share and the men’s and organic, eco-friendly sectors trail close behind.
Sustainable fashion is growing rapidly, particularly online as consumers are increasingly comfortable with shopping from home, even for products more traditionally tied to brick-and-mortar stores. According to ResearchAndMarkets (via Entrepreneur), the sustainable fashion market is expected to sustain growth from $6.3 billion in 2019 to $8.2 billion in 2023. Between 2025 and 2030, that growth is expected to reach $15.2 billion.
Emerging markets growth and foreign investments have been driving this, but the lasting effects of COVID-19, less free trade, and a lack of standardization are expected to impact it in the future.
Do consumers understand sustainable fashion or know where to find it?
According to clean manufacturing producer Genomatic (via Fashion United), 42% of shoppers are not sure what makes a garment sustainable. Eighty-six percent of consumers believe sustainability is a good goal but nearly half don’t know how or where to find sustainable clothes. While a majority of consumers (72%) have heard of sustainability issues in the fashion industry—particularly excess consumption, carbon emissions, and water pollution from dye processes—they’re also unsure on how to be part of the solution, and often give in to more convenient choices because of it.
Sustainable fashion and racial justice
Racial and environmental justice are inherently linked, making it inextricable from sustainable fashion. The disproportionate effect of COVID-19, police violence, and bad politics toward people of color, according to Vanity Fair, has accelerated the desire and need to center the sustainability conversation on the people it’s always affected the most. In other words, anti-racism needs to be a key part of any successful strategy to reimagine the fashion industry into a truly sustainable, environmentally friendly one.
In order to build transformational change, the industry needs to actively reckon with and stop overtaking communities, cultures, and places both at home and abroad that have largely Black and Brown populations. These are the folks that are often left to deal with all of the people and pollutants left behind when companies move on to cheaper manufacturing and labor, only to repeat the cycle somewhere else. That’s why labor rights (also heavily tied to racial justice) are another increasingly critical part of the sustainability conversation today.
What are the next steps for sustainability in fashion?
The Vogue Business and Shopify Sustainability Forum, a half-day virtual event that occurred this spring, was born out of Vogue Business’ in-depth coverage on sustainability and fashion, and the need to continue these conversations well beyond designated calendar days dedicated to the Earth. Shopify participated in the event as an emerging voice in the sustainability conversation. Here, panelists offered advice, fresh perspectives, and alternative business models and strategies to help the fashion and beauty industry get inspired to face up to the sustainability challenges in meaningful ways. One panel, in particular, navigated the conversation of investing in sustainability and why there are still so many barriers businesses face in raising funding even though it is more crucial than ever to do so.
Four key factors for change
For Olivia Markham, managing director and portfolio manager at the global asset manager BlackRock, there are four factors that need to be addressed in the fashion industry in order to move toward sustainability.
- using more sustainable materials,
- minimizing the carbon footprint of the industry and improving resource efficiency,
- reducing waste,
- and, perhaps the least talked about, making the industry more transparent and easy to understand for the consumer
“We really need the consumer to drive some of this change, and the consumer needs to be empowered by information,” Markham said. It’s simply not enough to build sustainable businesses and brands, consumers need to know how to participate, where to find the products that align with their changing values, and how to keep the momentum going through their own actions and choices.
Investing in the circular economy and justifying the cost
Caroline Brown, former fashion executive and founder of New York-based investment firm Closed Loop Partners, noted that companies furthering the development of the circular economy are the focus of her investment decisions. These are companies that design out waste and pollution, keep products and materials in use longer, and regenerate natural systems.
The first variable she and her partners look at is if a company has the potential to solve a meaningful problem for a big, addressable market? Second, how aligned to consumer demand is the solution? “There are some big problems that consumers are not focused on today, and there are others that consumers are really adamant and yelling about, and those will be the ones that are adopted more quickly and scale more quickly,” Brown said.
Brown and her associates also look at how much capital it will realistically take a company to bring a viable product to market. And last, but perhaps most importantly, who is the team working on the product, what is their track record and knowledge base, and how do they work together?
If you look at the historical model in a linear economy, Brown explains, companies were making, using, and wasting products. In a circular economy, however, there is a financial benefit to recapturing raw materials for reuse in the supply chain. “We see companies being able to participate in the profits of the secondary sale in a way that they haven’t before with the explosion of the resale market,” Brown said. “We also see companies developing an ongoing and long-term relationship with their customers, which enables further customer loyalty and lower attrition rates, accompanying lower acquisition costs.”
Baking sustainability into your business
When it comes to sustainability, it’s no longer enough to reduce waste or consider incremental changes to your supply chain after the fact, although it is important to start regardless of where your business stands today. Instead, brands can—and should—bake sustainability into their business from the start as much as possible. And if it’s not a new business, the discussion around what can be done to further sustainability efforts should happen at the onset of planning processes, when strategies are being formed for the next month, quarter, or year.
To that end, in 2019, Shopify committed $5 million every year to put towards the most promising solutions and technologies emerging around the world to fight climate change and move toward a more sustainable future for commerce. “It may seem like [the sustainability fund] doesn’t quite fit with Shopify,” said Stacy Kauk, Sustainability Fund director at Shopify, “but really what we are trying to do is make sure that our merchants and the brands that are on our platforms thrive in the long-term. The negative effects of climate change are only going to get worse and they make things more challenging for people around the world. So, if we’re not addressing that threat, then our 1.7 million merchants will be trying to survive, rather than building their business and thriving.”
It’s important to balance that sustainability component with also driving sales and growing these businesses, Kauk adds. “One of the things we try to focus on is removing friction and pain points for our merchants so that they can focus on building and growing their business. We provide them with the support and tools that help them either become more sustainable, build a sustainable brand, or make changes to their existing business approach.”
The future is sustainable—it has to be—and businesses need to catch up. Consumers are ready for this investment, too—they’re concerned about the environment and want to feel good about their choices and the brands they support.
Yes, sustainability is incredibly complex. There are no easy answers or quick fixes. But by taking consistent action (no matter how seemingly small), baking sustainability into our business plans rather than including it as an afterthought, and investing upfront to reap the long-term benefits, we can move toward transformative change—even in an industry as notorious for waste as fashion.