Fashion brands, retailers and manufacturers must learn how to turn sustainability and ESG policy into profit in order to fulfil fashion consumption's projected 63% growth by 2030.

A new report suggests the fashion, textile and apparel industry’s biggest challenge over the next few years is accelerating progress on a closed loop and regenerative system – but it also dubs it the sector’s “biggest commercial opportunity”.

Commercialising fashion sustainability

The report titled ‘Policy to Profit: How New Rules Create Commercial Wins for Fashion‘ and published by B Corp boutique marketing firm Grounded points out the financial benefits of climate-related opportunities seen by the world’s largest companies have more than doubled since 2020. These firms now average over $3bn each, which equates to the world’s largest business seeing $5tn in potential gains.

It asserts “the ultimate business plan to save the world is attainable” as the United Nations Development Program says over $4tn is needed to close the world’s financing gap for achieving Sustainable Development Goals.

The report says there are three key things across three phases that will drive business and commercial strategy:

1. Design/manufacture phase: Minimise the use of finite and fossil fuel-based resources. Re-design, innovate and scale around renewable, recycled or bio derived inputs instead
2. Use phase: Keep feedstock, textiles, garments and apparel in use for longer – whether through more sustainable textile marketplaces, such as World Collective, or through repair and re-commerce, such as Thredup
3. Recovery phase: Close the loop through recovery, collection, recycling, re-manufacturing or refurbishment.

The report describes the recovery phase as the most challenging aspect to circularity. It says: “The last yard of closing the loop requires industry-wide transparency, reverse logistics, infrastructure, investment and easily accessible consumer collection points and behaviour change.”

Partnership and collaboration will also be critical as working with organisations across the fashion supply chain can help keep the ambition loop going. It also provides a game-plan for how to better integrate policies and regulation into a commercial, brand and innovation pipeline.

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Plus, there is a new wave of ESG policy and legislation that fashion brands, retailers and manufacturers will need to comply with to avoid falling behind.

Key ESG policies and certifications impacting the fashion industry

Grounded explains the new and incoming ESG policies that are coming through mainly from the EU and California aim to hold businesses accountable for their impact and contribution to environmental issues such as carbon emissions, water usage, chemical pollution and waste management.

The key ESG policies and certifications are:

• EU’s Corporate Sustainability Reporting Directive (CSRD)
• EU’s Corporate Sustainability Due Diligence Directive (CSDDD)
• California’s Climate Corporate Data Accountability Act (SB 253)
• EU’s Directive on Empowering Consumers for the Green Transition (EmpCo) and Proposed Green Claims Directive
• EU’s Ecodesign for Sustainable Products Regulation
• California’s Responsible Textile Recovery Act of 2024 – SB 707
• California PFAS Prohibitions
• EU Forced Labour Regulation
• US Uyghur Forced Labor Prevention Act

Key recommendations for turning fashion sustainability into profit

The report lists some “failsafe” considerations and drivers of governance, environmental stewardship and commercial innovation, but highlights its AI bot Gaia can also provide more specific recommendations to individual brands and retailers on request.

1. Mitigating risk

• Evaluate the policies to check what’s required with a legal counsel
• Educate across departments on ESG policy requirements
• Understand where the brand does business
• Evaluate corporate structures and supply chain connections
• PFAS – consider that you may need to prepare for elimination and secure testing services
• Know the high-risk materials and where they are in the supply chain
• Document all public-facing statements concerning ESG.

2. Taking the first steps

• Think ahead about how to support future ESG initiatives
• Support all ESG claims with third-party accreditations and certifications
• Stay alert to new policies that are being discussed
• Perform a landscape assessment to identify potential paradigm shifts

Creating a fashion flywheel of impact

Grounded suggests building out an insight-driven framework that enables any brand, business, social enterprise or non-profit to identify the biggest opportunity for triple bottom line impact at a corporate, culture, category, brand or community level.

The report concludes: “Your sustainability value proposition (SVP) that can drive both commercial and cultural innovation is at the centre of the flywheel – at the intersection between purpose, people (which is the biggest intention gaps for all key stakeholders) and then the planet (the biggest environmental, social or governance based risk and opportunity that you face.

“Hopefully, this is a good starting point to prompt discussion and illustrate how your business can start to take the necessary steps to create your own flywheel of impact to help accelerate better design, use and re-use across the industry.

“The flywheel of impact can be run as a cross-functional workshop in just one day.”

Apparel industry experts have unveiled an alternative way to create value within the fashion industry that is both sustainable and profitable for buyers and suppliers and takes advantage of new data science and business innovations to reduce overconsumption.

By Just Style