The fashion industry is no longer just under-appreciated, it is in an undeclared war. What is it about fashion brands that make them the target of more greenwashing claims than just about any other industry?
Do fashion labels make themselves easy targets by setting unrealistic goals and making outlandish claims? Is it because the environmental, social and economic impacts of their massive and far-flung supply chains are harder to measure and easier to cover up? Or are words like ‘sustainable’ just so ambiguous, or worse (like the word ‘natural’ when applied to foods), meaningless?
It seems to be a bit of all three.
In recent times, the villains singled out for greenwashing are almost a who’s who of the world’s most popular fashion brands, including Zara and H&M. Amazon has also been taken to task for one of its fashion lines, along with Boohoo, Zalando, Shein and ASOS. The accusations cover the waterfront of possible misdeeds, from the nitpicky to the more serious; from not paying a ‘living wage’ to workers in developing countries, to overstating emissions reductions, to sneaking non-recyclable components into their products. H&M even got a shellacking from activists for promoting its in-store recycling machines in a Nintendo game. H&M, how dare you.
Most recently, Lululemon has been the target of lawsuits in the US and France over its ‘Be Planet’ campaign, which activists claimed was a sham. This was particularly painful, given Lululemon’s roots in yoga and its marketing theme of a healthy and ethical lifestyle. The timing of the French lawsuit, right before the Paris Olympics, was designed to inflict maximum embarrassment since Lululemon was the official kit provider for the Canadian Olympic squad.
An activist organisation called Stand.earth was instrumental in initiating the legal process (beginning in Canada where Lululemon is domiciled) and harshly critical of Lulu’s environmental claims. Lately, it has struck a more conciliatory tone, praising Lululemon’s new Global Impact Report released in September, for saying that it would transition 25 per cent of its main suppliers to renewable electricity sources by next year. Once again, though, Lululemon has set itself up for criticism if it fails to reach the goal, or if it claims to have achieved the goal without satisfactory proof. Indeed, Stand.earth has already expressed concerns that there is no clear roadmap to getting to the 25 per cent.
Do consumers really care?
Despite the fact that surveys are regularly wheeled out purporting to show that sustainability is important to consumers in the purchasing decision, the purchasing behaviour itself seems to contradict that. This is probably because consumers are more interested in continuing to get technically superior and trendy clothes (and cheap ones in the case of fast fashion), than they are in environmental or social impacts. Lululemon is pumping out strong revenue growth, particularly internationally. And the hit job in Paris hasn’t bothered sports organisations: Yesterday, the company launched a new line of fan apparel for the National Hockey League.
Neither has it bothered the share market. Lululemon’s shares were in a bad way during the first half of the year because of stiffer competition in the North American athleisure sector and the departure of its influential chief product officer, Sun Choe. The slump was not associated with greenwashing claims. Since the Olympics, however, the shares have appreciated more than 25 per cent. The majority of analysts now rate the shares a ‘Buy’ or ‘Strong Buy’. That doesn’t sound like a company whose ESG practices are bothering anyone.
ESG has taken on a life of its own
With tighter regulations around environmental reporting, ESG/DEI has turned into a beauty contest with vested interests now so deeply entangled in it that all large businesses are investing mind-boggling resources to meet the requirements. Unfortunately for retailers, they happen to be in one of the largest and most clearly visible industries.
It matters little now whether or not ESG/DEI is producing benefits, or even if it is doing harm: There are too many consultants, accountants, lawyers, bankers and regulatory agencies with a financial stake in the mandating, capture, transformation, aggregation and publication of the data. And then there is the massive investment in technology platforms for all of this activity, since an Excel spreadsheet won’t work with such a complex system.
Needless to say, compliance costs are mountainous. CSR Hub, a US-based ESG ‘solutions provider’ issues the following estimates for a middling enterprise with annual revenues of $50-$100 million: software tools $100,000-plus to buy and “many thousands more to operate”, one-to-three full-time staff devoted to ESG issues, each paid more than $50,000, and $50,000-$100,000 for auditors. This amounts to as much as $350,000 and doesn’t seem to include consulting fees, publication and printing, and sundry other costs.
Mind-boggling reports
The page counts on most annual ESG reports are crazy, but not surprising in view of the resources required to capture and process the information, and the perceived need to posture satisfactorily enough to avoid criticism and be effective as a marketing tool. For example, Lululemon’s global impact report is 50 pages long. H&M’s latest sustainability report is a staggering 90 pages. Not to be outdone, Inditex weighs in with 60 pages on the environment and another 72 on DEI. Amazon churns out 97 pages. Walmart is so over the top with it that just the highlights are 43 pages.
It isn’t only retailers under the cosh for environmental practices though. The University College of Estate Management in the UK states that a survey of more than 1500 senior executives found that almost 60 per cent admitted to greenwashing and two-thirds even doubted the sincerity of their own efforts.
It’s the fashion brands that seem to cop a disproportionate amount of outright anger and accusations of trickery, though. One obvious answer is for the companies to set less ambitious and clearly achievable and verifiable goals, and to lower the marketing intensity of ESG/DEI. If the end product and the price are the things that dominate shoppers’ minds when it comes to the actual purchasing decision, then participating in the beauty contest is a waste of resources, no matter how much activists egg on the companies.
The post Why fashion brands are the target of so many greenwashing claims appeared first on Inside Retail Australia.