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The fast fashion fiasco

Fashion retailers are now able to provide styles priced so cheaply that consumers can afford to wear an item once and then throw it away – but fast fashion has a hidden price.

  • In part one of a new two-part series we examine some of the problems with the fast fashion business model, and the impact it has on the environment.
  • In part two we will look at some of the ways that investors can engage with companies to encourage them to rethink their approach.

A bikini sold for £1 by a Manchester-based online retailer triggered a storm of public outrage in the UK earlier this year as critics pointed out that this could not reflect its social and environmental cost. The episode highlighted growing consumer awareness of the externalities of the fast fashion model. In an earlier EOS Insights web post, my colleague Hannah Shoesmith shared her experiences of the social impacts of the clothing sector, but in this article I will focus on the environmental impact of the fast fashion business model.

Currently, the fast fashion model is linear – a dress is produced as cheaply as possible, perhaps worn just once to a party and then discarded. While the number of garments produced is always increasing, clothing utilisation is declining. Research by McKinsey shows that the number of clothing items purchased by the average consumer rose by 60% between 2000 and 2015, while the average number of times a garment is worn before it is discarded fell by 36%.

Growth of clothing sales and decline in clothing utilisation since 2000

Work by the Ellen MacArthur Foundation demonstrates the wastefulness and environmental pollution stemming from textile production and processing today. A whopping 73% of garments produced in 2015 ended up in landfill or incinerated, while less than 1% was recycled into similar applications (see diagram). This represents a loss of over US$100bn per year in terms of the value of these materials.

Global material flows for clothing in 2015

There is also a significant cost borne by our environment in terms of climate change, resource depletion and pollution. In its 2017 report the Ellen MacArthur Foundation estimated that textile production accounted for 1.2 billion tonnes of CO2 equivalent every year, more than international flights and maritime shipping put together. This led the Foundation to conclude that the textile industry would take up 26% of the global carbon budget associated with a 2°C global warming pathway by 2050.

Moreover, the fast fashion model is resource intensive. Cotton production’s high water footprint exacerbates climate impacts in regions experiencing water stress, resulting in biodiversity loss and threatening the livelihoods of local communities. To produce one kilogram of cotton – the amount needed for one shirt - between 10,000 and 20,000 litres of water are required. At the same time, industrial processes such as the dying of fabrics and leather cause rivers and streams to become polluted with hazardous chemicals. It is estimated that, after agriculture, textile dying is the largest polluter of clean water, while microfibres from polyester fabrics contribute to plastics pollution in oceans.

The UK parliament’s Environmental Audit Committee investigated the social and environmental costs of the fast fashion industry in February 2019 and issued policy measure recommendations to “reinvent fashion”. This included suggestions to shift the balance of incentives in favour of reuse, repair and recycling to support responsible companies through taxation.

An example of this was a proposed Extended Producer Responsibility (EPR) scheme to reduce waste with a one penny charge per garment on producers. It also proposed banning incineration or sending unsold stock to landfill where this could be reused or recycled, as well as making it mandatory for fashion retailers with a turnover over £36m to set environmental targets.

Disappointingly, the UK government rejected these recommendations in June 2019. It is yet to be seen if the voluntary Sustainable Clothing Action Plan (SCAP), co-ordinated by charity WRAP, will be enough to shift industry practice towards setting and implementing meaningful targets to reduce carbon emissions, water and waste.

Even without clear government action, we might have reached peak fast fashion – a sizeable consumer group is emerging that considers sustainability in its purchasing decisions. A recent survey showed that in the US, 50% of young people classed as Generation Z would be willing to pay more for a sustainable product. Companies must future-proof their business models for changes in consumer demand and potential future regulation.

In part two of this series we will look at some of the key steps that investors can encourage companies to take to help address this issue.

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EOS Client Service and Business Development

Amy D’Eugenio,
Head of Client Service and Business Development, Hermes EOS