The Colour this Season is Green

By Jacqueline Jackson 17 September, 2014

Trucost's Jacqueline Jackson reviews the 2014 Copenhagen Fashion Summit and GLASA awards

For the third year, more than a thousand decision makers and thought leaders from 34 countries gathered for the Copenhagen Fashion Summit. From governments and global brands to princesses and pioneers, each attendee had one thing in common, the vision of a sustainable future for fashion.

Meanwhile, Sustainable Fashion Academy’s Global Leadership Award in Sustainable Apparel (GLASA), founded to inspire courageous leadership in the fashion industry, met to discuss natural capital accounting and incubate ideas we will use to tackle the challenges facing our planet.

The world’s resources cannot keep up with our increasing demand for throw-away fashion

One of these ideas is the potential of natural capital accounting to help the apparel sector accelerate its environmental impact reduction.

Few sectors are more emblematic of today’s consumer-driven growth model than the fashion industry. Ever more frequent overhauls of fashion ranges, psychological inducements to promote impulse buying, consumers who see shopping as their primary leisure activity, and of course – low prices.

Cotton is responsible for 2.6% of the global water use

The world’s resources cannot keep up with our increasing demand for throw-away fashion. Cotton, for example, a key input to the apparel industry, is responsible for 2.6 per cent of the global water use. However, a gap already exists between water supply and demand. If we do nothing to correct this imbalance, by 2030 demand for water will exceed supply by 40%.

~17 to 20% of industrial water pollution comes from textile dyeing and treatment

Furthermore, an estimated 17 to 20% of industrial water pollution comes from textile dyeing and treatment and an estimated 8,000 synthetic chemicals are used throughout the world to turn raw materials into textiles, many of which will be released into freshwater sources. And it is not only the production of raw material that is water-intensive, the wet processing of clothing, such as wash­ing and dyeing, also consumes huge amounts of water.

The apparel sector presents a significant opportunity for the adoption of natural capital accounting.  Image and brand value is everything, making companies highly sensitive to reputational risk due to NGO campaigns and regulatory pressure. More positively, fashion often serves as an extension of personal values. So companies are well-placed to shape more sustainable consumer behaviour.

Natural capital is the environmental resources from which we make goods and services. It includes minerals, land and forests, as well as services such as a stable climate and clean air that sustain our ecosystem.

These natural goods and services are often freely provided to business and society by a healthy planet and the result is that our natural capital is being used at an unsustainable rate and being damaged. Climate change is the leading example. Manmade carbon emissions are damaging the planet’s ability to maintain a stable climate, resulting in global warming, rising sea levels and extreme weather. The over-abstraction of water resources by agriculture and industry, as well as rising populations, is also critical.

Natural capital accounting puts a monetary figure on environmental resources so that its value can be recognized. Companies, governments and investors can start to take environmental externalities into account in everyday decision making and compare these to other impacts using a common metric.

The merits of natural capital accounting were debated, from the practical (what will it take for natural capital accounting to become embedded in the everyday financial decision making of companies?) to the philosophical (could applying a monetary metric to sustainability issues exacerbate capitalist attitudes? might pricing negative impacts imply that corporations can ‘buy off’ the environmental damage they cause?)

“We face a tipping point…
Business as usual is broken.We need to revolutionise our approach to design and production…”

Richard Mattison, chief executive of natural capital analysts, Trucost

But the world’s increasingly urgent environmental problems means we do not have time to wait. Richard Mattison, chief executive of natural capital analysts Trucost said: “We face a tipping point. The huge increase in middle class consumers across Asia is creating both an opportunity and a problem for traditional business models. Asia is viewed as a growth market with huge increases in demand but traditional forms of production come with a rising environmental cost that is unsustainable and unacceptable. For example, demand for water is predicted to exceed supply by 40% over the coming 10-15 years. Business as usual is broken. We need to revolutionise our approach to design and production, decoupling growth from environmental impact. The time to do that is now.”

Trucost has been working with the Sustainable Fashion Academy to develop the apparel sector’s thinking on natural capital. This resulted in a white paper which was launched in Copenhagen. It makes a series of recommendations on how to build on existing initiatives and accelerate uptake.

It’s people who make the clothes that we wear

When the Rana Plaza factory collapsed in the Bangladesh capital last year more than 1000 garment workers were killed, twice as many were injured and 800 children were orphaned.

“It’s a case of out of sight out of mind. We cannot keep eating from this big, cheap fashion pile without thinking about who made our clothes.”

Livia Firth, owner of Eco Age

Sixty million people globally work in the fashion industry, yet somewhere along the line – we seem to have forgotten that the clothes we buy are made by people. Livia Firth, owner of Eco Age, said, “It’s a case of out of sight out of mind. We cannot keep eating from this big, cheap fashion pile without thinking about who made our clothes.”

Sadly, Rana Plaza is not the only example of wide-scale factory deaths, nor the only example of social inequality along the value chain. Negative social impacts occur at every stage, from the farmers who grow the cotton, to those who stitch the logos. For making a $100 pair of trainers, the factory worker will receive just 50 cents. If you buy a pair of jeans for £15 – what do you really expect the working conditions will be like for those that made them?

“It is our hope to launch this process and support its emergence as a new standard…”

Ben Ramsden, founder of Pants to Poverty and Pi Foundation

Inspiring efforts to put social capital back on the map ranged from enterprise brands to SMEs. A GLASA nominee ‘Pants to Poverty’ were not content with measuring profit alone – so went one step further by combining social capital accounting with business accounts, creating an integrated 3D Profit and Loss statement – a full picture of the business’ impact on people, profit and planet. Ben Ramsden, founder of Pants to Poverty and Pi Foundation said “It is our hope to launch this process and support its emergence as a new standard for corporate reporting. The economic analysis for our 3D P&L was done by our project partners Trucost and GIST Advisory, world leaders in business impact valuations. Together, we are proving that not only is this possible but that business is better in 3D.”

Thirsty crops – why shareholders are finally putting sustainability on the agenda

Fortunately eco-warriors and sustainability managers were not alone in Copenhagen, other attendees included investors, many of whom, are finally pushing sustainability to the top of the corporate agenda. Why? Because nature is biting back.

In 2011, drought struck Texas, forcing farmers to abandon millions of acres of cotton and corn. The price tag – $5.2 billion in losses. China’s 2010 drought resulted in knock-on price increases of cotton of 150%. H&M was one of the many companies affected, announcing a 30% drop in profits, after deciding to internalise the inflation. Perhaps it is unsurprising then, that investors are pushing companies to take a strategic approach to water risk and uncover the true cost of their natural capital dependencies.

Cotton – an essential global commodity and the largest single source of fibre for global apparel – is used by nearly every person on the planet on a daily basis. For millions of people in some of the world’s poorest countries, cotton is also a vital link to the global economy.

“Over 53% of cotton fields in the world require irrigation, and the majority are in regions where water is scarce.”

However, it is associated with significant natural capital dependency, heavily reliant on water for irrigation, land requirements, and chemicals which can result in pollution to land, water and air. The most material impact of cotton farming is water consumption, with $83 billion natural capital costs globally.

Over 53% of cotton fields in the world require irrigation, and the majority are in regions where water is scarce. The impacts on the Aral Sea, Central Asia are a notorious example: in the period 1960-2000, the Aral Sea lost approximately 70% of its volume as a result of diverting water to grow cotton in the desert. See table below for cotton’s water use by region.

It is therefore unsurprising that the sector has particularly felt the effects of natural capital-related issues, such as increasingly volatile prices of materials like cotton, due to droughts and floods, in the form of top and bottom line impacts.

“improved practices resulted in agrochemical reductions of 81%, water reduction of 49%, chemical fertiliser reduction of 18% and a 15% increase in farmer profitability.”

Activities already undertaken in the sector such as the Better Cotton Initiative have begun to work with farmers to improve cotton farming through better management, organic practices, responsible agrochemical use and other techniques. There is enormous opportunity for improving yields, quality and profitability for farmers while reducing environmental impacts. The benefits of better risk management thus manifest themselves in a range of positive environmental and societal shifts. For example, a field study in India showed that application of improved practices resulted in agrochemical reductions of 81%, water reduction of 49%, chemical fertiliser reduction of 18% and a 15% increase in farmer profitability.

Businesses that will stand the test of time will be those who understand the importance of a strategy which takes into account natural capital at its true cost. If they won’t do it for the planet – then let’s hope they’ll do it for the profit. As with increasing stakeholder pressure for ‘better’ cotton – that will be good news for investors, farmers, brands and of course, nature.

Clothing the Loop

Wasted Wardrobes

“In the U.S. the average person discards 32kg of clothing annually, of which ~85%  winds-up in landfills or incinerators”

One of the most resource-intensive industries in the world, the $1.2 trillion global textile and apparel industry is built on complex linear supply chains. Lack of visibility over what’s happening further down that chain has often resulted in toxic pollution, unethical labour practices and escalating waste, with the rise of ‘fast fashion’ sending materials hurtling towards end-of-life quicker than ever. In the U.S. the average person discards 32kg of clothing annually. The Agency estimates 85% of these wind-up in landfills or incinerators, and that’s just America. Sadly, the story around the rest of the world isn’t much different.

“China’s textile industry processed 41.3 million tonnes of fibre and accounted for 53% of the world’s total production.”

China’s textile industry processed 41.3 million tonnes of fibre and accounted for 53% of the world’s total production. Millions of tonnes of unused fabric at Chinese mills go to waste each year when dyed the wrong colour. In 2010, 234 tonnes of textiles went into landfill in Hong Kong alone. Meanwhile, customers in the U.K. have an estimated $46.7 billion worth of unworn clothes lingering in their closets.

Educating Consumers & Designers

“Designers are effectively running on a creative treadmill that is unsustainable”

Vanessa Friedman, chief fashion critic of the New York Times

It is shocking facts like these that brought closed-loop-textiles to the tip of everyone’s tongue in Copenhagen. Helena Helmersson, Head of Sustainability at H&M, spoke about their eco-efforts, including their new in-store garment collection programme which gathered 5,000 tonnes of used clothes last year. Meanwhile, Vanessa Friedman, chief fashion critic of the New York Times had another serious criticism to make. Fashion, by nature, is about this season, it’s about the latest – out with the old, in with the new; new cuts, new colours, new fabrics, not only every season but every month. “Designers are effectively running on a creative treadmill that is unsustainable”. Vanessa harked back to the days of her Nan, who bought a couple of key items of quality clothing and loved them for life. This, is what we should be doing today – building a timeless wardrobe which doesn’t need monthly revamps just because Vogue says so.

Further Down the Chain

Dutch aWEARness, creates clothes from 100% recyclable polyester. It uses 95% less water & 64% less energy during production than standard cotton

One company that has mastered the intricacies of textile recycling is London-based LMB. The company has found a goldmine in Britons’ annual one million tonne apparel disposal, and either recycles or finds an alternative use for everything from saris to flares. Over in the Netherlands, Dutch aWEARness, creates clothes from 100% recyclable polyester. It uses 95% less water, 64% less energy and produces 73% fewer carbon emissions during production than standard cotton. Once the products reach end-of-life, they are transformed back into new clothing, with no loss of quality.

We’re not there yet, but with product innovation, consumer education, pioneering brands and a little attention to the supply chain we might just begin to see less clothes travel from cradle to grave and many reincarnated time and time again.

Further Reading

Situation Overview

• Dirty Thirsty Wars – Fashion Blindsided – CLSA report titled “Dirty Thirsty Fashion: Blindsided by China’s water wars”, examines how China’s water risks could blindside the US$1.7 trillion global fashion industry. Is this the end of fast fashion? Debra Tan expands
• OEM: Stuck in the Middle – China National Textile & Apparel Council’s Hu Kehua on challenges ahead for textile OEMs in meeting the new textile industry standards and brands’ product needs and why joint efforts  all parties along all stages of the supply chain including design are needed to move towards a circular economy
• Brand Rankings Through A Chinese Lens – See how global and local brands rank across 8 sectors in terms of their supply chain’s environmental impact in this review of the new Corporate Information Transparency Index (CITI) report by IPE & NRDC
• Cotton Farming: How Deep Is Your Well? – Can cotton flourish in water scarce areas? Cotton Connect’s Lort-Phillips shares key messages from their latest report on how to extract more crop per drop and how brands need to do more than address water at a farm level in China
• Fashion Update: Brand Winners & Sinners – With the new Phase III Textiles Investigative Report released by 7 China NGOs through IPE, we look at who has managed to stay on top since the first report published in April 2012
• Leather: Time for Business Unusual – Leather is amongst the top ten most polluting industries globally. Are ‘eco-leather’ efforts ‘green’ enough given renewed attention by the Chinese government? We take a closer look at hides & tanning
• China Water Woes: The End of Fast Fashion? – Lincoln Poon, Global Brand Manager of Pinneco Research worries about water, the fast fashion business & global dependence on made-in-China products: can it last?
• Can Fashion Be Green? – With Nike, Puma and Adidas committing to zero-liquid discharge by 2020, is fashion finally going green or is it all a greenwash? China Water Risk takes a look at where brands stand on pollution

What’s Being Done

• One Year On: H&M & Water Stewardship – H&M’s Sustainability Relations Responsible, Julia Bakutis updates us on their Water Stewardship programme one year on. Find out what they have done & what challenges lie ahead for H&M as a water steward
• Materials Sustainability in the Higg Index -Sustainable Apparel Coalition’s Sousa & Young on how Nike’s Materials Sustainability Index can help brands & suppliers make the right water-friendly choices in raw material selection
• Higg Index: The Challenges of Measurement – The Higg Index, launched in July this year is a tool developed by the Sustainable Apparel Coalition’s (SAC) membership. Jason Kibbey, SAC’s Executive Director walks us through its development
• To Dye or Not to Dye – Textile dyeing is water intensive and polluting. Elisa Sellam & Sushil Hada, from Birla Cellulose, discuss how their new SpunDyed VSF process uses less water & produces less pollution than traditional piece dyed VSF process