Fashion Is Finally in the Midst of an ESG Frenzy
A few years after sustainability became a buzzword, the term — and many of its practices — are still trending. In fact, these days, companies and brands are getting in on the action, some creating internal ESG — or environmental, social and governance boards — in order to measure their own sustainable practices, which includes everything from the environment to being a better corporate citizen, and how they hold up to industry standards.
“The ESG frenzy is quite interesting; I would call that a collision of stakeholder priorities,” Cara Smyth, managing director of global ESG and retail at Accenture, and fellow and founder of Fordham University’s Responsible Business Coalition, told WWD editorial director James Fallon during Fairchild Media Group’s 2022 Sustainability Forum. “I think over the last year, investors have recognized, ‘Oh, [ESG] drives valuation; it drives efficiency. It de-risks a company that I invest in.’ So the investors are interested in it. We’ve started to see the value of ESG. Maybe that wasn’t clear [in the past]. And then also what you see are regulations coming on stream.
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“And then you have consumers [who] are saying, ‘Wow, I actually care where my products are coming from,” continued Smyth, a self-described “sustainability nerd,” who also serves as the chair of the Rockefeller Philanthropy Advisors: Fashion Makes Change. “This alignment of the market forces [and government forces] has created what is the ESG frenzy. That whole landscape of change is what is forcing this new dialogue now.”
But as with any market or cultural evolution, there are no shortages of challenges. In order to incorporate environmentally friendly practices into a business, Smyth advised firms to first identify and then focus on a few key, near-term priorities. That includes asking targeted questions in regards to ESG practices, such as queries on raw materials, fair labor, recruitment, education and empowerment, disposal of chemicals, data and circularity, and how the company will engage consumers in ESG, among other topics.
“The challenges are there, but the data is also there to [help] all of the different stakeholder groups — from the nonprofits to the activists to the investors to the regulator bodies to the consumers,” Smyth said during the virtual forum. “The idea that you have — whatever you have, a billion dollars worth of product floating around — on re-commerce platforms, on resale platforms, [and investors thinking], ‘Why aren’t I doing that business?’ As they’re trying to think about reducing consumption and reducing all of the new product that they make. And think about all of the virgin materials that are necessary [for business]. If a company can capture that business, it allows them to maintain their fiduciary responsibility, or their growth, but in a way that is more respectful of the finite resources that we have.
“The future of ESG is about taking another very serious step, which is actually operationalizing ESG,” she continued. “It’s got to be embedded into the companies, almost like a management approach.”
Businesses can also benefit from effectively communicating with customers about things that are important to them, whether it be by way of labeling products with appropriate certifications, or through advertisements.
“We know through various customer poll surveys that consumers care about materials, chemical, animal welfare, labor rights and education and empowerment and the supply chain,” Smyth said. “In marketing campaigns, talk openly about what your efforts are and how you are driving the conversation and the dialogue forward. And everyone wants to know what your purpose is.
“I don’t think [sustainability] is the first reason why consumers buy. But they will leave you quickly if you get the E, the S or the G wrong,” Smyth continued. “Companies need to be very authentic about their brands and what their priorities are and speak to consumers in a way that they can understand. So as the industry changes, taking these messages out into the street, via marketing, talking about your purpose, talking about why your brand is engaged in this way, is also critical, because we need to move collectively and collaboratively.”
On the other side of the coin is consumer behavior (something that is difficult to change) and the conflicting notions of trying to sell more product while simultaneously telling shoppers to be mindful of their impact on the environment.
“As a fashion person, I love the feeling of putting on a new dress or a new lipstick. But I don’t want to be depressed when I’m buying,” Smyth said. “People are still shopping; they’re buying a lot. [But] they’re also throwing it away. So as consumers, we all have to be smart about what we’re buying. [Ask questions like], ‘Are you going to keep it?’ And ‘do you really like it?’ Think about the waste. What are you doing with it when you’re done with it? There are a lot of options now: re-commerce, repair, recycle and reuse.
“Everybody is interested in this,” she added, “and I think that is creating a tornado of change.”
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