Make do and mend: why fashion needs to look to the past to thrive in the future
Investors should be doing more to raise industry standards and the way we all consume fashion needs to change.
Sewing and fund management don’t have a lot in common. While they’re both about picking the right components and piecing them together to make a coherent whole, that’s about as far as I can stretch the parallel.
My mum taught me the basics of sewing when I was little, but I didn’t really see the appeal until I went off to university. My Oxford college had fancy dress ‘bops’ every two weeks, so investing in a tiny sewing machine seemed more sensible than shelling out for costumes.
Over the years I’ve honed my skills with formal classes plus a lot of YouTube! Lockdown gave me a golden opportunity to go through my fabric box and take on some more ambitious projects. And, like everyone else, I ‘Marie Kondo-ed’ my wardrobe in the first month and found depressingly few things that filled me with joy. With charity shops closed, things in the ‘discard’ pile either got altered and restyled or harvested for mask-making!
Not only do I find it satisfying and therapeutic to create something from scratch, I also know the DIY approach is far more socially- and environmentally-friendly than buying off the rack (or website). The work of our sustainability teams and sustainable investors has given me a better idea of the scale of the problem.
Some frightening fast fashion facts
Did you know that the fashion industry emits more carbon than international flights and maritime shipping combined? Or that one garbage truck full of clothes is burned or dumped in a landfill every second?
This BusinessInsider article explains the impact that the fashion industry has on the natural world. Such as the fact that the fashion industry is the second-largest consumer of water worldwide. A single pair of jeans uses about 2,000 gallons of water; it would take 10 years for one person drinking eight cups of water a day to drink the equivalent.
And that’s just the environmental side of things.
From a social perspective, labour standards in the garment manufacturing industry are frequently woeful. Many brands or subcontractors still exploit cheap labour, paying garment workers well below minimum “living wage”. A living wage is considered a human right and represents the minimum a worker needs to earn to cover the costs of their most basic needs.
For example, in 2020 a scandal broke at online retailer Boohoo when it was revealed that workers at ‘dark factories’ in Leicester were being paid just £3-4 per hour versus the UK’s £8.20 minimum wage for 21-24 year olds and £8.72 national living wage (as at April 2020).
Besides wages, there are broader issues with working standards, health and safety etc. One particularly sad aspect is that child labour is rife in the industry. Over 100 million children are affected in the garment and footwear supply chain globally, as workers, or children of working parents and community members near farms and factories, according to a 2020 UNICEF report.
The reality is that when clothes are sold at knockdown prices, someone in the supply chain is paying the price.
How investors can help
While this paints a dismal picture (and may put you off your next shopping spree), it’s important that investors are active in this industry and use our financial clout to drive positive change. We can do this by allocating capital to companies with genuinely sustainable business models, those that are focused on contributing to social and/or environmental solutions. This will enable them to expand and take market share. We also need to identify and actively engage with laggards to push for positive change.
While ultimately we want to engage with companies to improve their business practices, the first step is often asking for better disclosure and greater transparency to enable us to better identify leaders versus laggards.
As investors, we need to be asking the tough questions – in particular when it comes to complex and opaque supply chains.
Even the biggest of fashion houses don’t have 100% visibility on how responsibly all the members of its supply chain are acting – or even who they are beneath layers of contracting and subcontracting. More and more companies produce impressive-looking reports on their Tier 1 suppliers, but this barely scratches the surface.
Fast fashion framework
In response to these challenges, my colleagues have put together a framework to assess the sustainability of various fashion companies, which we are using to identify potential candidates for our sustainable fund and areas where we should be engaging.
- Read more: "How sustainable are fast fashion businesses"
It looks at a variety of environmental and supplier-focused factors but, importantly, also incorporates a measure of the “disposability” of an item. This is a new angle not generally considered by third-party scoring systems. The thought process is that if a company has an impact of 100 per item produced, there is a big difference between that item being worn once (100 per usage) vs 20 times (5 per usage).
Make do and mend
As investors, we can and should be doing more to raise industry standards and push for long-term, sustainable change.
The fashion industry has the potential to contribute to all of the UN’s 17 Sustainable Development Goals. From empowering women to helping reduce pollution, changes in the fashion industry can bring about far-reaching positive social and environmental change.
But ultimately, the buck stops at us – the customers. We need to vote with our feet to penalise ‘bad actors’ and support companies with more sustainable practices. The challenge is that if it’s hard for investors to tell, then customers have an even harder job. There’s a lot of talk about ‘sustainable fashion’ but we are septical that many brands are changing their practices as much as their marketing.
What I believe we really need is a fundamental change in how we consume. We’re all conscious of what we eat now, with the rise of plant-based meats and non-dairy milks. But most of us don’t give as much thought to what we wear. It’s hard to make informed choices, but the one thing we can all do is to get out of the ‘fast fashion’ mentality – buy less, and wear each garment more. That probably means being prepared to pay more for clothes that will last, and mending or altering things rather than throwing them away.
If you’re not handy, most dry cleaners will do it… or if you ask very nicely I might start taking orders.
The views and opinions contained herein are those of Schroders’ investment teams and/or Economics Group, and do not necessarily represent Schroder Investment Management North America Inc.’s house views. These views are subject to change. This information is intended to be for information purposes only and it is not intended as promotional material in any respect.