The fashion industry is in turmoil. The ongoing pandemic left a deep mark, with the majority of brands facing significant drops in revenue. 

2020 marks the worst year to date, with a reported 90% decline in economic profit across the industry. The pandemic has also further accelerated digitization in fashion, leading to an unparalleled shift in consumer behavior. Consumers are “embracing digital innovations like live streaming, customer service video chat,and social shopping”, putting pressure on fashion companies and brands to quickly find their sweet spot in a digitalworld.

If navigating digitization was not challenging enough, the role of consumers has evolved as well. A staggering 87% ofGen Z are concerned about humanity’s impact on the world and feel business should make doing good a central part of their activities. Being a niche market and topic for decades, sustainability in fashion has recently evolved into a mainstream movement with rising consumer awareness for its implementation. Consumers are no longer consumers; they are advocates of change.

As environmental and human rights violations are a constant alarming issue, and consumer demand for more sustainable products, a regulatory framework is needed for actual systemic change. Today carbon neutrality and compliance with the Paris Agreement is the baseline for companies. However, to stand out and make a lasting impact for their customer and competitive landscape, brands’ ambitions in sustainability need to go beyond their usual scope of action. Disruptive change, such as: becoming a force for good businesses (aka. BCorp), ensuring a carbon positive value chain, and enabling circular systems, are transformative processes on all levels. Whereas incremental changes will not lead to the change needed. Many Fashion brand collectives, agencies, and initiatives have set new standards for regulating the fashion industry, but these multitudes of sustainability initiatives remain small-scale efforts. While every brand is responsible for its own operation, systemic change is only feasible if carried by a global movement. Even if the collective awareness for sustainability is growing, the lack of industry standards and certifications arebarriers to customer’s responsible and informed purchase decisions.

While technology is often presented as the panacea for many fashion industry’s challenges, it can not save the fashion industry on its own. Tech can help boost traceability and, thus, increase transparency in supply chains. AI can support, i.a. predicting demand and, in consequence, reducing overproduction. Furthermore the benefits of working with data are continuously proven – enterprises with strong corporate data literacy have up to 5% higher enterprise value.

However, implementing deep tech applications – be it blockchain-based tracking or AI-enhanced platforms – is an investment and not usually one any brands take lightly, especially in times of financial uncertainty. Boston Consulting Group assessed that the fashion industry would need up to $30 billion of financing annually to develop and establish technological solutions to meet sustainability needs.

Given the challenges ahead, it is no surprise the fashion industry started calling for a captain to help them reach thesafe shore – In the US, a fashion “czar” would steer digitization and sustainability. However, maybe it is not a fashion czar but targeted governmental activities that can support the industry needs. While governmental involvement and oversight always seem to be linked to dystopian fantasies, best practice examples worldwide show that governmentaloversight can enable companies and consumers to sustainable change.

In Hong Kong, the government has funded The Hong Kong Research Institute of Textiles and Apparel Limited(HKRITA) to develop sustainable solutions for the industry, including fabric recycling machines. This is a revolutionand a significant step forward as recycled blended materials while retaining fiber integrity. In France: The zero-wastelaw bans brands from destroying unsold products and making microplastic filters mandatory in industrial washingmachines.

Governments worldwide are willing to (co-) invest to scale up innovative and digital infrastructures, facilitatesustainability in the supply chain and develop consistent global standards.

Government oversight can also help solve another intertwined challenge: data in fashion. Analogous to most industries, data quality in fashion is deficient, resulting in skewed analyses and reports. The lack of reliable data can be addressed with targeted governmental regulations, forcing long-overdue transparency from corporations. Government agencies have the incentives to quantify impacts – collecting data from paying for recovering efforts from natural disasters caused by climate change to cleaning toxic chemicals in waterways from toxic textile dyes andcapturing carbon taxes emissions, among others. Measuring and monetizing negative externalities allow taxing companies that do not comply with regulations and use these taxes to fund innovations which can help fund material innovation and build infrastructures for recycling facilities.

Further, enabling transparency & traceability with trusted Government certifications and communication brands canstop greenwashing while informing and engaging shoppers. Government involvement can ensure industry standardsand certification to support environmentally sound socio-economic development plans actively. Alongside product labeling, campaigns and online platforms for discussion and engagement can inform people how brands take action.Transparency helps clarity of messaging and guidance for full closed-loop, empowering customers to play their part as well. People want to be involved in issues that concern them. Engaging customers with rewarding sustainable behavior and making actions for them easy and enjoyable will increase behavior change.

Once more the need for expanding the understanding of sustainability in fashion becomes evident but also highlights the necessity for governmental oversight to support sustainability efforts on a large scale beyond the mainstream environmental issues, and must include the often neglected social externalities like race  and gender inequality as  well as stakeholders’ health (including mental health). 55% of consumers expect fashion brands to care for the health of employees in times of crisis . The last year has shown society’s need for positive change and inclusion. Our understanding of sustainability needs toreflect these movements beyond quantitative measures.

We need to create a global framework for actual systemic change and enable customer trust. The industry needs tobe held responsible for its environmental and human rights violations. Governmental oversight, supported by technology throughout the fashion value chain, is bound to make the difference with a fashion czar or without one. In the UN Decade of Action, we need to stop talking but incentivize companies and consumers alike to act for change.

The lack of regulation and traceability in supply chains, while not wholly solved, has been replaced by greenwashing targets that do not instigate systemic change. The lack of specific, quantifiable targets and the aspirational objectives and voluntary based will not allow for faster and impactful change that is needed. To reach net-zero emissions by 2050 and cut 45 % of emissions by 2030, the industry needs to set bold targets in compliance with regulations. Solutions exist and have existed for a decade. Ask why Fashion is still the most polluting industry then?

Embracing digitization can make the fashion industry more sustainable and lucrative.

What could help the Fashion industry and its sustainability challenges? Digitalization is a tool to interconnect theSupply Chain. It presents many benefits such as engaging customers via product communication, enhancing traceability, and thus, increasing transparency; procurement with AI helps predict demand and ultimately reduce overproduction, and smart manufacturing helps manage resource consumption. Producing sustainably is one step,producing less is more crucial. Smaller production volumes sound counter-intuitive when targeting economic growth. It is, in fact, a measure usually connotated with crisis management. However, decreasing production volume does notneed to decrease profits but rather to rethink business models and introduce new revenue streams or reduce costs.

In total, 10% of global annual CO2 emissions are attributable to the fashion industry. At this pace and with unchanginggrowth rates, the textile industry will be responsible for more than 50 percent of total carbon emissions. Although consumers seem to have developed an increased awareness for sustainability and environment-conscious consumption – especially in Europe – this change in attitude does not necessarily translate into actual purchase orconsumption behavior. A post-truth era reached fashion: facts are constantly diluted and opinions manipulated,resulting in uncertainty as to which offers are truly sustainable.

Eco-friendly and sustainability-focused voices have become louder in the wake of the ongoing pandemic, allowing forthe hope that long-term effects on behavioral tendencies are in reach.

Sustainable materials are a drop in the ocean – literally.

Introducing new fibers and zero-waste designs is all fair game. Reducing travel during fashion months is commonsense considering the ongoing Covid-19 pandemic and its aftermath. However, these measures are but small steps. Itis necessary to address the elephant in the room: hyperproduction: Industry overproduction runs at an incredible 30 – 40% each season. With this continuous exponential growth, the fashion industry is expected to produce 160 million tons of clothing by 2050. The rationale behind this absurdity is evident: growth remains the central KPI, and it is currently measured as if increased production was the one and only lever to increase profits.

The majority of the $1.3 billion-strong fashion industry relies on the equation that higher production results inincreased revenue. Yet, the industry’s current state reveals the first symptoms of a looming systemic failure: tons ofunsold stock and textile waste whose recyclability and recycling quota remain largely unaccounted for.

C&A’s “Wear the change,” Zara’s “join life,” or H&M’s “CONSCIOUS” are offering cheap fashion and a clean environmental conscience. But the massive volume of items they produce at a weekly collection turnover and free & fast deliveryservice will never be sustainable. Awareness Campaigns should emphasize the fact that no matter what, cheapproducts are never sustainable. As the Author & Journalist, Lucy Siegle rightly said: “[Fast] fashion is not free.Someone somewhere is paying“. This overproduction is damaging on both ends of the supply chain -with raw material extraction, water & air pollution, and ending landfills after use or due to unsold / returned inventories.

The only way to alleviate this would be to switch to a service model and investing in digitization and transparency. We see once again the need for mandatory sustainability reports that clearly present brands’ environmental and social impacts and for brands to be held accountable for their products during their entire life cycle. Promising laws for this are France’s Anti-Waste law which bans brands from destroying unsold products and making microplastic filtersmandatory in industrial washing machines. In Germany, in addition to transposing waste legislation adopted under theEuropean Union’s Circular Economy Package into national law, [the government] introduce a “duty of care”(Obhutspflicht) which will require distributors in case of distance sales to ensure that the goods remain usable ifreturned by the customer and do not become waste.

On the other hand, service models including rental, repair, along with resale could help maintain low retail prices forcustomers who want to buy sustainably but cannot necessarily afford premium prices. Furthermore, extending the scope of business models to services like repair, redesign, and upcycling can help turn less knowledgeable consumers into customers, and thus, increase revenue for fashion brands.

Maintaining the same level or even a higher level of profitability can be achieved with the help of technology. Fordigitization to be system-altering, its challenges in the status quo must be assessed, especially considering currentonline operations.

In this context, return processes and costs continue to be the most pressing issues. Returns from online shopping range between 15 and 40 percent. Customers are prone to order multiple similar items to try on and to ship back the discarded options. This behavior can partially be explained by looking for a particular look they are not able to recreate due to inaccurate product descriptions and illustrations – and the lack of standards in fitting and sizes. By understanding key issues that trigger returns – among various other challenges – respective digital solutions can be identified. For this specific example, the integration of virtual showrooms with photo-realistic yet customizable content – similar to emerging use cases in real estate applications – might support the customer’s selection process.Furthermore, an automated similarity index and industry-overarching standardized sizes can help choose the right items and ensure their proper fit.

Another great digital solution is the in3D: 3D body scanning for capturing the exact shape and look of a human body with a smartphone camera, allowing the perfect fit for customers while capturing data sizing to reduce returnsand increase conversion.

Fashion needs a game-changer in its efforts to act more responsibly. Combining new technologies to ensure more sustainable fibers while decreasing total production volume and making sales more efficient is the equation the fashion industry should dogmatize. This new kind of growth can help us save the industry – and our planet.

Because data is based on loose standards and self-reporting, the amount of data and data quality remain a majorchallenge. If we cannot trust data, how can we implement solutions? Only large-scale service retailers, properly funded recycling technology, and predictive production will allow overconsumption to decelerate. Integrating technology throughout the fashion value chain is expensive. Due to the high initial outlay, a lack of appropriate infrastructure, and a potential lack of guaranteed return on investment, governments have the most significant fiscal power to facilitate such projects.

As Governments’ focus shifts in the aftermath of the COVID-19 pandemic and global economic crisis, the COP26 UN Climate Change Summit is considered significant. It will be the first COP to take place after the landmark Paris Agreement’s measures take effect. While it is expected for the COP26 to finalize “implementation guidelines” forArticle 6 of the Paris Agreement, which has to do with “cooperative approaches” to tackling climate change, it is the first opportunity since then for nations to come together to review commitments and strengthen ambition. Will it trigger a new wave of effective global climate action for the Fashion industry?

Fashion 4 Development & C.L.A.S.S. Eco Hub launched The ReClothe Resource Guide during a virtual exhibit in April calledDiscover the SDGs – To Make Peace With Nature — a virtual hub convened by the United Nations Office for Partnerships.

“We invited some of the most progressive and forward-thinking companies in the market to share their unique stories of responsible innovation,” says Jeanine Ballone, managing director of F4D Solutions.

The publication’s mission is to inform and educate fashion industry professionals, schools, universities, students, and new generation brands to focus on the next generation of the circular economy and make an impact on the value chain. The ReClothe guide lists all solutions, technologies, fabric suppliers, dyers, and finishers currently available. Importantly, those listed were chosen based on an ability to scale globally. ReClothe will be published quarterly and focus on innovators working the best practices and opportunities in development & manufacturing for a responsible fashion industry.

“This partnership will help promote & communicate the platforms and supply chain technologies available today for existing brands and emerging young designers to utilize now,” says Giusy Bettoni, founder of C.L.A.S.S. Eco Hub.

www.discoverthesdgs.com / www.fashion4development.com / www.classecohub.org