The European Commission focuses on the word “green”. When policymakers unveiled a plan in spring 2022 to make textiles more durable and recyclable by 2030, they weren’t just addressing waste reduction and circularity, but also how the fashion industry communicates with its customers. The strategic plan aims to combat “greenwashing”, stating that terms such as “ecological” and “good for the environment” will be “allowed only if they are backed by recognized environmental excellence”.
Although the EU’s plan is not enforceable law, its policymakers – like those elsewhere in the world – highlight the thorny questions looming over the fashion industry in 2023: what is sustainable fashion and which brands – if any – can claim to sell it? As brands grapple with their own answers for years, governments and regulators are signaling that existing definitions may be inadequate and, in many cases, wrong.
Consumer watchdogs in Norway and the Netherlands have concluded that a number of high-profile marketing campaigns by major brands have been misleading. In the UK, the Competition and Markets Authority has launched a review of sustainability claims in the fashion retail sector in 2022, targeting fashion as one of the industries with the highest greenwashing offences. The review scrutinized fast fashion brands it believes may be using misleading language or information they share with consumers in an attempt to make themselves appear more sustainable than they actually might be. As a result, some companies are rethinking the way they present sustainability claims. Meanwhile in France, legislation expected in 2023 will require brands to add “carbon labels” to clothing and textiles, displaying an environmental “grade” from A to E to help consumers make purchasing decisions.
This increased scrutiny and regulation comes as a growing number of consumers place importance on the environmental or social impact of the fashion they buy. A quarter of respondents in a 2021 survey by McKinsey in the UK said their purchasing decisions were driven by sustainability, while 80 percent of consumers in a US survey said sustainability was an important factor when choosing a fashion brand to shop at. In another 2021 survey in India, 94 percent of consumers said they were willing to pay high prices for “ethical” products. Younger consumers are particularly motivated by sustainability concerns: Half of Gen-Z shoppers in China said they intend to buy less fast fashion in a recent survey on sustainable consumption.
Fashion companies have responded to the growing interest in sustainability. Many have stepped up public disclosure of sustainability-focused initiatives in recent years, although evidence of progress on such initiatives is limited, the 2022 edition of the BoF Sustainability Index found.
In parallel, brands should be aware that even sustainability-focused consumers struggle to make sense of the information they encounter while shopping. In a 2019 survey of Australian consumers by the University of Melbourne, most respondents were “overwhelmed” when trying to understand how clothes are made and “deeply skeptical” of the claims made by the brands themselves. Similarly, U.S. respondents to a 2021 survey by biotech company Genomatica echoed these views: 42 percent of teens and adults surveyed said they weren’t sure what makes clothing sustainable, while 88 percent said they didn’t trust brands’ claims.
What is in the definition?
The complexity of sustainable business practices requires a holistic approach to address a range of environmental and social factors, from carbon emissions to garment workers’ rights. Within this, the industry does not always agree on a common vision for change, which can lead to confusion among consumers. For example, while the leather supply chain is often associated with animal cruelty and “unsustainable” farming, many “sustainable” vegan alternatives are criticized for containing harmful amounts of plastic.
Any brand that wants to act more responsibly faces tensions when trying to deliver on its sustainability promise, which is why some even avoid using the term “sustainable” altogether. American outdoor clothing retailer Patagonia — despite its efforts to introduce responsible business practices — does not call its operations or products “sustainable” as part of its company policy, explaining that “we understand we are part of the problem.” Similarly, Ganni took to Instagram in 2021 to explain “why we’re not a sustainable brand,” rather than highlighting his focus on transparency and honesty. The Danish fashion label, which worked with the United Nations Development Program to create a zero-impact collection, clarified that criticism of its progress “would probably be justified”.
“Without standardized language or regulated frameworks, deciphering what companies are actually doing is extremely challenging,” said 2022 Kenneth P. Pucker, former chief operating officer of US outdoor footwear brand Timberland and now an advisory partner at Berkshire Partners.
While third-party certification systems and impact assessment tools have emerged to guide brands and consumers, they have also fueled debate. In 2022, one of the most accepted rating systems in fashion, the Higg Index, has faced a number of criticisms, from the quality and accuracy of the data it provides to the potential for big brands to influence it. After ruling that the index’s consumer-focused effort could be misleading, Norway’s consumer watchdog banned references to the Higg Index in marketing materials in June 2022. The Sustainable Apparel Coalition, the group behind the index, paused the program and commissioned an independent review its data and methodology.
Alignment behind a common goal
The need for common frameworks is clear. In 2021, at the request of G20 leaders, the international financial reporting standards body launched the International Financial Reporting Standards Committee to provide a publication framework to help capital market participants monitor climate impacts. “Rarely do governments, policy makers and the private sector come together behind a common goal,” said Emmanuel Faber, president of the ISSB. “However, all agree on the importance of high-quality, globally comparable sustainability information for capital markets.”
The ISSB issued its first draft benchmark in early 2022. The reporting system, if widely adopted, could allow investors as well as consumers to compare brands across industries. However, it may not be specific enough to highlight the particular challenges of the fashion industry.
At the same time, multi-player initiatives that seek to provide a framework for brands to assess and communicate their impact continue to emerge ahead of the coming regulation. In February 2022, 50 cosmetics companies, including The Estée Lauder Companies, as well as professional associations, formed a consortium in partnership with independent bodies to develop an “eco-beauty score” for cosmetics companies to assess their environmental impact. However, there are many criticisms that generally face industry-backed initiatives. As such, brands should ensure they work with independent third parties and adhere to ongoing regulatory efforts to minimize concerns about their effectiveness.
Before brands can speak accurately about their credentials, they should dig deep into their own operations and supply chains to gather data they can effectively measure. For example, Swedish fashion brand Asket has invested in tracking its entire supply chain and collecting data to communicate to consumers the origin, performance and price of each garment. As regulators increase requirements to back up all sustainability claims, investment in tools to collect and manage supply chain data is likely to become more widespread.
Stronger bridges should be built between companies’ technical sustainability teams and marketing teams to review how information can be communicated in a responsible and effective way, ensuring that marketing messages are not created in isolation. With upcoming regulation, vague marketing around sustainability is no longer just a reputational risk — it could lead to fines or even legal action.
Language that could mislead consumers – such as broad terms such as “green” or “eco-friendly” – should be avoided as it could give the impression that products have positive environmental properties. Instead, important caveats or context should be made available to consumers, such as data on specific supply chains that brands can collect to demonstrate a reduction in impact relative to a defined baseline. For example, French-based luxury company Kering created internal sustainability communication guidelines for its staff to help avoid greening-related legal issues and consumer backlash; the guidelines advise brands it owns to avoid broad, generic terms like “eco-friendly” and instead focus on clear, unambiguous statements about benchmarks such as reducing emissions.
To be sure, brands will still be able to identify and discuss the sustainability issues most important to their consumer base amid increased scrutiny, but must ensure their claims are backed up with robust work. When ultra-fast fashion giant Shein launched a resale platform for American consumers in October 2022 as part of a series of efforts to combat criticism, it was called out for greenwashing; research has shown that existing resale platforms tend not to help reduce production levels, especially for fast fashion brands. While staying on top of upcoming regulation, fashion leaders should seek customer feedback by, for example, tracking net promoter scores to understand their company’s perceived sustainability progress, areas for improvement, and preferences for how and when communications are delivered. Technology and digital tools will play a key role in ensuring better traceability along the value chain, from data platforms to facilitate the collection of information at all stages of production to rigorous data standards to track sustainability metrics.
In 2023, new communication strategies about sustainability will be needed. To move the needle, brands will also need to become more open about their progress and shortcomings, whether through public reporting or product labels. If brands don’t find a responsible and effective way to communicate their sustainability journey, they can risk damaging consumer trust or face compliance consequences, requiring brand legal teams to work closely with communications colleagues.
Fashion leaders have an opportunity in 2023 to create new rules of engagement when it comes to sustainability, from aligning company-wide marketing as well as regulatory and other disclosures to collaborating with policymakers, industry bodies and other brands to address pain points. Communication should reflect the brand’s long-term commitment to sustainability, articulating realistic, time-bound goals and progress toward them. Ultimately, though, the brands best equipped to make meaningful and credible change will be those that ensure every part of their business doubles down on sustainability, not just talking about it.
This article first appeared in The state of fashion in 2023a comprehensive report on the global fashion industry, jointly published by BoF and McKinsey & Company.