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Fashion Won’t be Sustainable Without Government Oversight

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?

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