The New Era of Corporate Responsibility
Alvanon - Corporate Responsibility

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A new era of sustainability is upon us, based on a growing awareness of our personal wellbeing and the impacts of pollution on our planet. The digital landscape facilitates constant and instant access to information (fact and fiction), empowering consumers to demand more transparency; which in turn informs choice and opinion like never before.

Sustainability has become the challenge of our time; evoking passion and confusion in equal measure. We struggle to define sustainability challenges and what we can do to address it.And consumer demand for transparency is becoming a guiding principle.

At the center, we see the corporate brands and retailers who are accused of reaping the benefits of globalization over recent decades. The corporates are perceived as the bad boys, cited as responsible for mass consumerism, price deflation and chasing profit, at the cost of sustainability or ethical best practices. Is this a justifiable accusation? What are the hard facts behind the hype? What role can business play to deliver against the wider sustainability agenda? To answer these questions, we need the facts, so we can understand the truth and find solutions.

Sensationalized press reports and statistics relating to sustainability grab attention, and gather support, but also make it difficult for even the most informed audience to understand what is true, and what they should do in response.

  • The most famous example is the often-cited claim (which has since been debunked) that: \”Fashion is the second most polluting industry\”. This theory, which seems to have been reported by Deloitte as early as 2013 seemed quite feasible to me, since textile, apparel and footwear manufacturing is dependent on high consumption levels of water, energy and chemicals, alongside a poor carbon footprint and waste to landfill performance.
  • Fact: The apparel industry doesn\’t perform well in terms of its sustainability score (as defined by the Higg Index) and is still described as weak, with a score of 38 out of 100.

Forward Progress?

The Global Fashion Agenda\’s Pulse of Fashion Industry reports progress in 2018, with the sustainability score improving by six points, from 32 to 38. Progress was attributed almost entirely to small and medium companies in the mid-price segment. This is described as encouraging, given this group accounts for half of the industry by revenue.

The news was not all positive, however, with low-performing companies in the entry-price segment remaining significantly behind, making little to no progress since last year. Giant companies and luxury companies are still leading the way, but finding solutions for the unresolved problems is becoming tougher, with impact and returns receding.

Case Study

The results indicate the changing shape of our industry and different challenges faced by business models at opposite ends of the scale. For the giants and luxury players who are committed to sustainability, mobilizing change through the entire supply chain takes time, tenacity and innovative thinking with huge costs involved in getting it wrong, especially if end-to-end processes solutions are not coordinated.

Taking a closer look at the changing shape of the UK fashion market might explain the challenges faced by smaller businesses worldwide. Although the UK big players (Burberry, Next, M&S and ASOS) continue to dominate the UK market, it\’s the emergence of small pure-play e-tailers like Boohoo, Missguided and Pretty Little Thing, who have really disrupted the retail landscape since 2012. The fast-fashion e-tailers are reported to be growing at a rate 24 times faster than brick-and-mortar retailers. They are now facing the challenge of how to deliver sustainability, alongside speed-to-market and competitive pricing. Is this achievable, especially when their business models are based on light-touch product development and sourcing strategies?

A Sustainable Future

Where should we concentrate our focus to drive a real-step change in performance over the next five years? Do we continue to push the giants to move faster, or encourage and accelerate change within the small-to-mid size companies (with 50 percent of the industry revenue) who are taking steps to improve their business practices, or is the answer to target the newcomers and support them with the basics in delivering speed sustainably?

We could assume that speed to market (the fast-fashion model) exists as an inhibitor to progress, but what about other factors such as price deflation and consumer awareness?

So, how will corporate social responsibility shape up in 2019? How do businesses need to change, to keep pace and evolve in a market which demands, speed, newness and competitive pricing, yet also expects us to safeguard its people and the planet?

In considering whether sustainability and efficiency are one in the same, and accepting businesses are more accustomed to defining success measured by a set of financial roadmaps and KPI\’s (sales, market share and profit), the solution may be to simply give corporate social responsibility more meaning and focus in today\’s market by using financial revenue growth and efficiency as the hook.

This article appeared first in When Caring for People and the Planet Means Profit, an in-depth sustainability report on the global apparel industry, published by Alvanon. To learn more and download a copy of the report, click here.



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