The $2.5 trillion fashion and apparel industry is an economic heavyweight. One of the largest consumer industries, it employs over 60 million people along its global value chain. For many emerging markets it is a stepping stone out of poverty with women making up over 70% of the supply chain.
Consumers in the developed world have become used to fast fashion and cheap clothes as a throw-away commodity that mostly ends up in landfills. And the trend towards ever shorter life cycles of apparel does not yet seem to have plateaued. The average consumer today purchases 60% more clothing than 20 years ago. Each garment is kept half as long, and about 40% of clothes in the wardrobes of developed countries are never worn, as estimated by the United Nations Economic Commission for Europe.
The often-dismal workplace conditions that supply our growing consumption came to light five years ago when the Rana Plaza building in Bangladesh collapsed, causing the death of over 1,000 textile workers, mostly young women. Leading brands have since then committed to safer factories, and a number of action groups and ethical clothing initiatives are now tracking performance and are shining a light on the value chain. But studies by Oxfam Australia show that little has changed regarding social conditions, in particular minimum wages, to enable decent living conditions.
As concerns about water scarcity and climate change are on the rise, the industry’s enormous environmental footprint has been moving center stage as well. By some estimates, the fashion industry is responsible for up to 10% of global CO2 emissions, 20% of the world’s industrial wastewater, 24% of insecticides and 11% of pesticides use.
Executives know very well that their current business model is not future-fit. In the absence of global rules or major changes on the consumer side, the fashion industry is now carefully exploring options on how to improve its social and environmental impact while successfully operating in a highly price-competitive environment.
Reinventing an industry built on growing consumption, cheap labor, free public goods such as access to water and environmental pollution is not an easy undertaking. Good old as well as new ideas are floating: regenerative agriculture, organic cotton, living wages in the supply chain, and reusing fibers to create circular material flow.
One of the more promising market-based approaches is being pursued by the New York-based Glasgow Caledonian University (GCNYC) Fair Fashion Center, which acts as a research and action center for 35 CEOs representing 242 brands in the fashion industry. After several rounds of CEO meetings and exchanges of research and ideas, an innovative project is now under development that has the potential to change the industry from within.
With a grant from the Rockefeller Foundation and in collaboration with GRIPS Energy AG, the No Carbon Dioxide (NoCO2) initiative seeks to tackle both social conditions and the environmental footprint. The basic concept of NoCO2 is simple: provide the impetus to replace costly and dirty diesel power used by the independently owned factories that supply fashion brands with clean energy and direct the savings associated with it to the factory workers.
Feasibility studies have long shown that such an energy switch is viable through flexible power purchase agreements, provided that initial funding and ongoing incentivizing is available. NoCO2 aims to accomplish this through a blended finance model that also involves consumers who will be able to “round up” their e-commerce purchases in support of the initiative.
Similar models are already in use, such as eBay’s Giving Works or Walmart’s Miracle Balloon which have raised tens of millions of dollars, suggesting that consumers are quite willing to support a greater cause. Linking consumers with impact investors, factory owners, and global brands seems a daunting cross-sector challenge. But in the words of Cara Smyth, a global fashion veteran and founder of Fair Fashion, it is quite simple: “You just have to do it.”
NoCO2 will be launching later this year. As a pre-competitive initiative, it has the potential to bring systemic change on a very large scale to the fashion industry. For executives it will offer the opportunity to boost their brands and improve the level playing field while at the same time improving social and environmental conditions. It is hoped that executives are willing to step up and collaborate, in the industry’s own interest and for the benefit of all.