The Ultimate ROI: You, the Fashion Cycle, and Our Planet

ECONYL® brand
8 min readJan 27, 2023

In a volatile and complex world, are your sustainability-driven initiatives paying off?

Sustainable fashion: fact vs. fantasy

At COP 21 the world set itself the ambition to reduce global emissions by 1.5 Celsius, which is now at risk due to inaction (or insufficient action) by key players. The Intergovernmental Panel on Climate Change (IPCC) recently emphasized how “without immediate and deep emission reductions across all sectors, it will be impossible [to reach this target].”[1]

Fashion, which comes at a high environmental cost, has an important role to play in the transition to a greener global economy. The industry alone is responsible for 4% to 10% of global GHG emissions (depending on who you ask)[2] with 92 million tonnes of waste generated every year.[3]

On one side, the crucial root problems are addressable. Advancements in circular business models and innovative technologies could enable the industry to achieve viable improvements. On the other side, much of fashion’s impact is linked to overproduction, waste mismanagement, and a failure in recycling, which would require scaling these advancements ASAP.

Whether one looks at conservative or optimistic estimates, the implementation of such initiatives brings substantial sustainability benefits. For example, the adoption of circular strategies and better recycling alone has an accelerated abatement potential of 161 million tonnes of CO2 equivalents by 2030. The economic perspective is also enormous. In recent years resale, rental, repair, and remaking have boomed, positioned to grow from 3.5% of the global fashion market today to hit 23% by 2030, representing a USD 700 billion market opportunity.[4]

A Risky Slow Start

Unfortunately, market actors lack a sense of urgency. Partially due to a conservative approach to risk-taking (one wrong turn when implementing circularity can be expensive),[5] the fashion industry is not pulling its own weight. A recent Business of Fashion report — which used 388 binary metrics and over 5,000 data points — found that 15 of the largest fashion houses scored 36 out of 100 on sustainability targets, an unsettling reality check.[6]

Further studies by the Ellen Macarthur Foundation (EMF) and Vogue help shed light on the causes of fashion’s poor performance.[7] The Foundation spotlights the shockingly low recycling rate, and the inefficiency it spurs. Across the industry, only 13% of total material input is in some way recycled. For clothing, it is less than 1%, representing a loss of more than USD 100 billion in terms of materials.

A big chunk of the blame goes to overproduction in trend cycles, poor inventory management, and bad sales planning. This includes faulty forecasting, overestimation by producers, and production errors due to tight deadlines and style cancellations. “Generally speaking, targets [in fashion] that are 20 years out are just aspirational in nature,” cautions Michael Sadowski, a consultant for the World Resources Institute.[8]

Your Bottom Line, but Greener

The narrative, however, does not end somberly. There are tangible steps to alleviate your carbon footprint while bolstering your ROI. The first part of this section will uncover three strategies for direct-to-consumer eco-facing fashion brands; the second part will quantify the impact; and the third part will present a case study of such measures in action.

The III Strategies

The initiatives below stem from qualitative and quantitative research. Most importantly, they are not exclusionary; in fact, many businesses employ combinations of the below, if not all, in some form.[9]

I. Rethink performance indicators, incentives & experiences

It is important to reflect holistically on what sustainability means to your community and stakeholders. For example, a switch from products made with virgin materials to one made with recycled fibers requires thoughtfully designed incentives and customer journeys to position the brand in today’s complex, “greenwishing”[10] marketplace.

II. Design products made to outlast

Build physically and emotionally durable goods with the end in mind. For example, the push to develop ethical materials is in full force thanks to fast-maturing technology and partnerships between brands and innovators. (When it comes to fiber advancements, learn why ECONYL® regenerated nylon is a smarter choice).

III. Calibrate your investments with digital disruptions

Creating the right garments in the right quantity and making sure they are shipped to the right location at the right time all play key parts to a more sustainable outlook. For example, Artificial Intelligence (AI) solutions can help analyze trends and use patterns to accurately predict consumer styles, minimizing clothing waste.[11]

Your Impact, In Numbers

In 2020, an IBM survey predicted that — according to one-third of its respondents — AI and technology would define the viability of green initiatives. Today, fashion brands are building on that advice.[12]

Take retail, for instance. An AI approach to hyper-personalization is revolutionizing consumer journeys. Data collection and processing, at scale, allows brands to truly know what their customers are searching for. Such information is then used to build better size and style recommendation models, reducing clothing returns and avoiding logistics-linked environmental impact.[13]

It brings economic benefits, too. Lily AI is an AI-powered platform that accurately connects shoppers to the products they are looking to buy. One retailer working with the algorithm reported 30 times better business results, which translated to a USD 20 million revenue uplift for their bottom line.[14]

As we know, fashion supply chains are intrinsically fragmented and complex, making sustainability initiatives tough to implement. More than 150 billion garments are produced each year, and most end up far across the world from where they came from, with very little visibility on the product history, location and distribution data.[15]

Technology can act as a traceability enabler towards a more accountable future in fashion, allowing stakeholders to make decisions based on trustworthy sustainability information. For example, TextileGenesis uses blockchain technology to assign trackable digital tokens to recycled and organic fibers. The platform authenticates whether the fibers originate from sustainable sources, helping retailers like Kering, Zalando and H&M Group better understand their entire products’ lifecycles.[16]

Diving Deeper: A Brand in Action

Eileen Fisher, a women’s apparel company, has long been an ESG champion. When she forged the business bearing her name, she instilled it with a higher purpose.[17] Not only does the certified B-Corp company keep track of its carbon footprint, but it is also owned 60% by its founder, and 40% by its people through its employee stock ownership plan. The company started in 1984 with $350 and is now valued at USD 400 million.[18]

As early as 2009 the brand pioneered circular economics into its business model. The launch of take-back programs and the Renew line helps reduce the amount of clothing destined for landfills, whilst simultaneously giving back items and materials for resale value.[19]

Through a more targeted approach, the company was able to save USD 1.6 million on transportation costs by switching to sea and trucking transport models, rather than flying its products. In 2020, when air transport costs surged 186%, its sustainable strategy provided for a solid buffer.

A buffer which the brand reinforced with cutting-edge technologies, enabling them to deliver consistent, high-quality experiences to end-customers through a state-of-the-art IBM-powered order management system.[20] In July 2022, Eileen Fisher backed the digital platform Hey Fashion! to help expand global discussions on how to scale recycling infrastructure and promote underutilized technologies to prevent clothes from entering landfills.

“As the leader of an apparel company, I feel an urgency to address the challenges the industry faces regarding textile waste, over-consumption and circular design,” the founder recently commented, continuing to pave the way toward economically viable sustainability-driven initiatives.

Although change within the fashion industry will take time, there are strategies deployable today, which not only pivot on the newest tech, but also provide for solid buffers from market shocks, all while doing good for the planet. This, in big picture terms, is the ultimate ROI.

References

[1] “The Evidence is Clear: The Time for Action Is Now. We Can Halve Emissions by 2030.” The International Panel on Climate Change. Available at: https://www.ipcc.ch/2022/04/04/ipcc-ar6-wgiii-pressrelease/

[2] Achim Berg et al. “Fashion on Climate.” McKinsey Consulting. Available at: https://www.mckinsey.com/~/media/mckinsey/industries/retail/our%20insights/fashion%20on%20climate/fashion-on-climate-full-report.pdf

[3] “Measuring Fashion: Insights from the Environmental Impact of the Global Apparel and Footwear Industries.” Quantis. Available at: https://quantis.com/report/measuring-fashion-report/

[4] “Circular Business Models: Redefining Growth for a Thriving Fashion Industry.” Ellen Macarthur Foundation. Available at: https://emf.thirdlight.com/link/circular-business-models-report/@/preview/1?o

[5] “The Circular Business Model.” Harvard Business Review. Available at: https://hbr.org/2021/07/the-circular-business-model

[6] “The Sustainability Gap: How Fashion Measures Up.” The Business of Fashion. Available at: https://cdn.businessoffashion.com/reports/The_Sustainability_Index_2021.pdf

[7] “A New Textiles Economy: Redesigning Fashion’s Future.” Ellen Macarthur Foundation. Available at: https://emf.thirdlight.com/link/2axvc7eob8zx-za4ule/@/preview/1?o; and Rachel Cernansky. “Can Selling Deadstock Solve Fashion’s Waste Problem? It’s Complicated.” Vogue Business. Available at: https://www.voguebusiness.com/sustainability/can-selling-deadstock-solve-fashions-waste-problem-its-complicated

[8] Rachel Cernansky. “Can Fashion Be Climate Positive? Burberry Commits to Finding Out.” Vogue Business. Available at: https://www.voguebusiness.com/sustainability/can-fashion-be-climate-positive-burberry-commits-to-finding-out

[9] EMF, HBR, IBM, et al.

[10] Greenwish is the earnest hope that voluntary sustainability efforts are closer to achieving the necessary change than they really are — a concept developed by environmental advocate Duncan Austin.

[11] “Sustainability In Fast Fashion: How Tech Can Minimize Waste.” Forbes. Available at: https://www.forbes.com/sites/forbestechcouncil/2022/01/31/sustainability-in-fast-fashion-how-tech-can-minimize-waste/?sh=10522e2331e6

[12] Luq Niazi. “Is Sustainable Fashion Possible? AI Thinks So.” AI for Business. Available at: https://aibusiness.com/author.asp?section_id=796&doc_id=770009

[13] Candeloro, D. “Towards Sustainable Fashion: The Role of Artificial Intelligence — A Multiple Case Study.” ZoneModa Journal, 10(2), 91–105. Available at: https://doi.org/10.6092/issn.2611-0563/11837

[14] How Fashion Retailers Use AI to Optimise E-Commerce and Consumer Experience.” Business of Fashion. Available at: https://www.businessoffashion.com/articles/technology/how-fashion-retailers-use-ai-to-optimise-e-commerce-and-consumer-experience/

[15] “Threads that Bind.” Accenture. Available at: https://www.accenture.com/_acnmedia/PDF-115/Accenture-Threads-That-Bind.pdf

[16] “The Traceability Tech Aiming to Unlock a More Sustainable Industry.” Business of Fashion. Available at: https://www.businessoffashion.com/articles/technology/state-of-fashion-technology-report-sustainability-supply-chain-traceability/

[17] “2020 Benefit Corporation Report.” Eileen Fisher. Available at: https://www.eileenfisher.com/ns/images/behind_the_label/benefit-corp-report-2020-FINAL-rc.pdf

[18] Haley Draznin. “Eileen Fisher Built a Fashion Empire. Her Employees Now Own Nearly Half of It.” CNN Business. Available at: https://edition.cnn.com/2020/01/06/success/eileen-fisher-profit-sharing-fashion-boss-files/index.html

[19] Sophie Rifkin et al. “The Business Case for Sustainable Apparel at Eileen Fisher.” NYU Stern. Available at: https://www.stern.nyu.edu/sites/default/files/assets/documents/EILEEN%20FISHER%20Case.pdf

[20] “Case Study: Eileen Fisher.” IBM. Available at: https://www.ibm.com/watson/supply-chain/resources/eileen-fisher-order-management-case-study/

Authors: Naomy Gmyrek & Pietro Moro

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