the ecological transition is moving forward, but at a slow pace

Fashion and the ecological transition: where do we stand and what are the prospects at a time when the geopolitical context is deteriorating? In recent years, sustainable development has become central to the fashion and luxury sector, in terms of production, supply chain, investment, communication and regulation. But progress in this area remains complex, as illustrated by the Venice Sustainable Fashion Forum, which highlighted a number of good practices and suggestions, while also pointing to delays in implementing the transition, inconsistencies between North and South, between environmental and social impact, and between consumer awareness and behaviour, with the resultant compromises and political and industrial obstacles.

Launched last year in Venice, Italy, Europe’s leading producer of luxury goods, the summit, which took place on October 26 and 27, is positioning itself as the new benchmark for sustainable development, a niche until now occupied by Copenhagen. Organised by Sistema Moda Italia (SMI), the employers’ confederation bringing together all the textile and clothing companies in Italy, the consultancy firm The European House – Ambrosetti and the local employers’ association Confindustria Veneto Est, this second edition was entitled “Boosting Transition“. As Flavio Sciuccati, senior partner and director of Ambrosetti’s global fashion division, said at the start of the conference, the aim was to “underline the urgency for our sector, which is lagging far behind other, more virtuous sectors that began twenty years ago.”

To mark the occasion, the firm has published a very comprehensive study, involving some 2,800 manufacturers in the supply chain and 100 of Europe’s leading fashion companies, assessed on the basis of their ESG performance. From the outset, the report points out that in 2020, the 27 members of the EU manufactured 6.9 million tonnes of finished textile products, producing 121 million tonnes of CO2 equivalent, occupying 180,000 km2 of land, while using 175 million tonnes of virgin raw materials and 24,000 million m3 of water. In other words, the environmental impact of the European fashion industry remains significant. Admittedly, it will continue to decrease thanks to technological innovation, according to the study, but consumer demand for textiles and accessories is expected to rise sharply. It is expected to double between now and 2025.

In Europe, only 4 out of every 35 items of clothing thrown away per year are recycled.

At the same time, textile waste is increasing. According to the report, consumers in the European Union produce between 5.2 and 7.5 million tonnes of textile waste a year, or almost 26 billion items of clothing, with growth of 20% predicted by 2030. “When we buy, one out of every three discarded products goes to landfill in non-OECD regions,” says Carlo Cici, one of the authors of the research, partner and head of sustainable practices at Ambrosetti. European citizens throw away an average of 35 items of clothing a year, of which only three are recycled and one reused on the domestic market. A reality that seems far removed from the rhetoric orchestrated by brands and retailers about their commitment to the circular economy.

Not to mention the fact that 70% of the fibres used to make these textile products are synthetic, making reuse virtually impossible. “Everyone talks about traceability, but without always being consistent,” says the researcher. “Nearly 58% of consumers say they consider sustainability to be an important value when buying a garment, but even today, when they buy online, they still return the product one time out of three, most of which is destined to end up in an open-air landfill in Africa.”

The social impact of the fashion industry doesn’t seem to have improved much over the last ten years either, as witnessed by the current protests by textile workers in Bangladesh. Since the Rana Plaza disaster in 2013, which exposed the exploitation and terrible working conditions of these workers in Dhaka, Bangladesh, the social situation has regressed, even if controls have increased, according to the Ambrosetti study. Less than 2% of workers in the sector worldwide, i.e. 1.5 million people out of a total of almost 75 million, benefit from adequate pay and a proper employment contract.

This contrast between the declared desire of Western companies to act more responsibly and ethically and the reality on the ground, particularly in the countries in the South, came up several times during the debates at the Venice Sustainable Fashion Forum. The anecdote told by Matteo Ward, an expert in sustainable development and co-founder of the eco-friendly streetwear brand Wråd, was revealing.

While visiting the outskirts of Dhaka with a guide who proudly explained that the surrounding textile factories were all certified and equipped with filters, he noticed the blackish, foul-smelling colour of the water, which was used to irrigate the countryside. His guide retorts: “If a T-shirt costs 5 dollars where you come from, we can’t afford to use these filters all the time. We only turn them on when there are checks.” “As long as Western companies think only of their profits by exploiting resources and human capital in countries where the urgent need is economic survival, we will inevitably end up with this kind of ecological compromise”, stresses the entrepreneur.

“Since the financial crisis of 2008, the textile industry has been under pressure, and has been further weakened by geopolitical tensions. Today, the fashion sector represents the focal point for the countless problems and difficulties of an industrial production model with worrying aspects. Yet it is very difficult to dismantle the system. While some have brought their production back to Europe, many continue to create major negative externalities in several countries,” says Stefano Miceli, professor of economics and business management at Ca’ Foscari University in Venice. “We have always thought in terms of the consumer. The sector must also integrate the notion of post-production, what happens at the end of a product’s life. We need to use this concept to create a new ecosystem.”

Spreading the costs across the industry

“The current situation is the result of choices made twenty years ago. At the time, we called it democratic fashion to meet growing consumer demand. But every decision has an impact,” says Ercole Botto Poala, president of Confindustria Moda and managing director of the Reda family woolen mill. Sustainable development requires major investment. If we don’t spread the cost along the entire clothing chain, it’s going to become unsustainable for the entire upstream sector, which is at the forefront of the ecological transition,” he continues.

The question of the costs generated by this transformation is at the centre of all the debates. According to the Ambrosetti study, which takes the example of cotton T-shirts, producing a sustainable garment costs twice as much as traditional manufacturing, but it yields four times as much in terms of margin, because it can be sold for four times as much and more. However, with falling purchasing power and the critical issues that have arisen in recent years (rising energy and raw material prices, geopolitical instability, logistical problems, pandemics, the war in Ukraine, the crisis in the Middle East), the ecological transition is slowing down. Fashion companies can now choose between two strategic options: transferring costs to the market by raising their prices, or internalising them by partially reducing their margins.

Another obstacle to the transition is the slow pace of legislation and the often divergent choices made by political leaders. The United States adopted the Inflation Reduction Act (IRA) in 2022, while Europe presented its new Green Deal industrial plan in January. On 30 March 2022, the European Commission unveiled its Strategy for Sustainable and Circular Textiles, a set of proposals aimed at making sustainable products the norm in the European Union. But no agreement has yet been reached on nearly 28% of these measures, notes the Ambrosetti report.

Many discussions have focused in particular on the new regulation on Ecodesign for Sustainable Products Relugation (ESPR), which is due to be debated in Parliament and adopted in 2024, with a potential entry into force in 2025. Among other things, this text introduces a digital passport for a wide range of products, including clothing. Above all, it stipulates a ban on destroying unsold new clothes, as well as a ban on recycling unsold items. This measure is aimed in particular at fast fashion, to encourage it to produce less.

“The current EU Presidency has been very committed to the theme of sustainable development, but the tide is changing, beyond the pre-election phase we are entering. Just last week, a number of MEPs tabled a motion to reduce companies’ obligations in terms of extra-financial reporting, i.e. in terms of ESG parameters. The motion was not narrowly passed”, says Carlo Cici. “The climate emergency is no longer an abstract concept. For companies, this translates into obligations and an economic cost. In the EU, there are countries that are resisting, putting the debate on an ideological and emotional level, whereas there is a real urgency”, he criticises.

Yet undeniable progress has been made, as illustrated by research. In the space of a year, the number of companies certified by the CDP (Carbon Disclosure Project), a global not-for-profit environmental organisation set up to make the ecological footprint of companies public and transparent, has doubled. Of the 30 major fashion chains, twelve are structurally very active on the sustainability front. Ambrosetti also scrutinised the ESG (environmental, social and governance) criteria of the 100 largest European fashion companies.

The result: only 29% of these companies do not use extra-financial reporting. By 2022, 71 out of 100 companies had adopted ESG criteria, and those that publish a balance sheet have seen an average increase of 17% in their supervision in this area. In the Italian supply chain, the increase was 16%. Another interesting statistic is that in 2023, 78% of companies with a turnover of between €50 and €80 million received pressure from banks regarding their sustainability performance, compared with 22% in 2022.

Measuring your performance is the best way to make progress, because it makes you aware of your weaknesses and shortcomings and enables you to remedy them. But the parameters taken into account are too numerous and disparate, preventing comparisons, deplored many of the speakers at the conference. “Measuring the impact of policies through a minimum set of data for all” is one of the eight proposals put forward by Ambrosetti to speed up the transition. “So far, we’ve gone off in all directions. But we need a minimum set of identical indicators, otherwise we run the risk of making major investments without being really sure that we’re moving in the right direction”, Carlo Cici sums up.

One of the other proposals is a call to “catalyse change through alliances” between companies in the fashion industry, from upstream to downstream, but also with the financial sector and other players in the value chain. Prada‘s “Re-Nylon” project was an interesting illustration of this, enabling it to make its nylon products from regenerated yarn obtained by recycling plastic waste, from carpet scraps to fishing nets collected from the oceans. Its collection of ready-to-wear, bags and shoes made from 100% recycled nylon accounts for a significant proportion of the luxury group’s sales.

The project was launched in 2012 with nylon yarn manufacturer Aquafil, which developed Econyl, a regenerated nylon yarn, and then with weaver Limonta, which developed nylon fabrics based on Econyl. “It’s been a lot of work on the yarn and the research process. In 2019, we presented the first capsule of six accessories made from recycled nylon. Since 2021, we have switched all production of our nylon parts to this recycled material. This has given us a concrete understanding of how we can contribute to the ecological transition. We’re now going to tackle the other materials, where it’s not just a technological challenge, but also a social one, because not all textile chains are the same”, observes Chiara Morelli, who joined the Prada group at the start of the year to take up the post of Sustainable Operations and Product Compliance Director. 

This association of a fashion house with two suppliers and their involvement has proved virtuous and winning on all fronts. “When the industry is compact and united, we manage to overcome the difficulties. This project has enabled us to export this new know-how to other sectors, such as the automotive industry, and to strengthen our leadership and visibility. Our sales have increased, completely offsetting the investments we had made”, says Antonio Brusadelli, Limonta’s Managing Director. The same applies to Aquafil.

Communicating the importance of the value of a sustainable product

To get the message across and win the battle, particularly with consumers, we need to create a new narrative by focusing on the importance of the value of a sustainable product, in much the same way as the Slow Food movement has managed to do, suggests Professor Stefano Micelli. “A superficial coat of paint is not enough. You have to be able to integrate the brand’s sustainable approach with its deep roots from a narrative point of view”, agrees Bernstein financial analyst Luca Solca, using Brunello Cucinelli as an example.

“The companies that work best are those that integrate these values into their DNA. Giving greater meaning and depth to the marketing story through this means is one of the most important value axes”, he concludes.