Zara, H&M and Zalando – all advocate so-called fast fashion: cheap, short-term mass fashion. But that should change. Big industry players want to become more sustainable. What is a promise?
Microplastics, pesticides, modern slavery: The gloomy balance of the world fashion industry. According to the United Nations Economic Commission for Europe (UNECE), the 2.5 trillion heavy industry accounts for about ten percent of all carbon emissions – more than the total for international air and maritime transport. Cotton cultivation alone, although accounting for only three percent of the world's agricultural land, accounts for 24 percent of all insecticides and 11 percent of all pesticides. Each year, textile washing infuses half a million tons of microplastics into the oceans. Jackets, shoes and T-shirts are often manufactured in devastating working conditions. UNECE therefore speaks of a time of "fast fashion": short-lived trends and cheap fashion.
But the industry boasted an improvement. For example, Zalanda CEO Ruben Ritter says: "The entire fashion industry faces major sustainability challenges and we are part of the problem. In the future, we want to be part of the solution. "From now on, Zalando wants to commit to climate neutrality: For example, disposable plastics should disappear from their packaging by 2023. Already, more than 90 percent of power at all locations of the company has been converted to renewable energy. Further CO2 emissions will offset There is a lot that can be done in this area: According to the company's budget, the entire Zalando trade in 2018 caused about 247,000 tonnes of carbon dioxide – a fifth more than the previous year.
The same thing happened in July in Zara, the largest brand of the giant textile company Inditex: By 2025, the entire Zara collection should consist of sustainable, that is, ecological or recycled materials. Other Inditex brands follow. Also by 2025, 80 percent of Zara's energy, factories and stores are expected to come from renewable sources.
Working conditions must improve
In addition to environmental issues, working conditions in production in producer countries must also be fair. Zalando also announces this and should be particularly cautious, because again and again poor working conditions in Zalando's European warehouses are due to criticism.
By 2023, 20 percent of Zalando's total trade volume should be achieved through more sustainable products. According to the co-executor of Ritter, this corresponds to goods worth between three and four billion euros. By 2019, this should already be € 260 million. That would be ten times more than two years ago.
And since 2016, a small box with green letters flashing on the Zalando store says: "Sustainability". But shoes, clothing and T-shirts can already be decorated if they meet only one of Zaland's criteria. These are social, environmental and animal welfare "adapted to the international standards of the fashion industry." Some products are also certified by third parties, such as Fairtrade or the Global Organic Textile Standard.
Thus, Zalando does not commit to one or more existing seals in the field. That abundance of certifications – and the own standards of corporations like Zaland – barely give clarity and pose a problem, which also arises from the fact that it is not clearly defined, what exactly clothing should do.
100 percent sustainable fashion – an illusion?
Economist Monica Hauck conducts research on sustainability and innovation. She is the director of the WHU – Otto Beisheim School of Management's Center for Entrepreneurship in Vallendar and Dusseldorf. She says, “There is no exact definition of sustainable fashion.” In addition, no one, not even pioneers like the Armedangels brand, 100 percent guarantees that every step of production is sustainable – from human rights to environmental responsibility. Hauck says the fashion industry is too complex. "There are a lot of outsiders. The bigger the companies, the more complicated it is to control everything." Still, she believes that if big players are now committed to sustainability, it will already be a "very positive sign." It is not enough if only small businesses are started with innovative materials and sustainable supply chains. Only with the help of Zaland and Co. could something be changed in the industry.
In fact, according to Zaland, 29.5 million active users use an online platform founded eleven years ago in Berlin. The account seems to be of the controversial Rocket Internet company, which at the time was a small start-up Zalando making money and has now entered the real estate business as an investor. In the third quarter of 2019, Zalando recorded more than one billion page views – a 37.3 percent increase over the previous year. In terms of sales, the Group increased 26.7 percent to EUR 1.5 billion compared to 2018, recording a loss of EUR 13.6 billion, resulting in an operating profit of EUR 6.3 million – less than in the previous year Quarter, when it was still minus EUR 41.7 million.
Sustainability as a profitable strategy?
How does the new sustainability strategy and future growth fit together? "There is clearly a conflict of objectives. But we are ready to make short-term reductions in growth and profitability," says CEO Zalando Ritter. In the long run, however, honest and environmentally friendly goods should pay off: "Only businesses that incorporate sustainability into their business strategy will remain relevant to customers." Zalando sees long-term competitive advantages in strategic sustainability.
Buyers are increasingly seeking credible social and environmental sustainability, according to October research firm McKinsey. Search queries for "sustainable fashion" would therefore triple between 2017 and 2019, with Instagram under the hashtag #SustainableFashion even increasing.
Returns remain a big problem: Zaland's customers return every other clothing piece across Europe. The platform therefore wants to use better algorithms in buying tips to reduce rates, and emphasizes: 97 percent of returns are recycled and resold, just under three percent through Zalando Lounge discount channels or outlets. Less than 0.05 percent of the goods were destroyed, according to Zaland, partly due to Schimmel. Other companies destroy tons of clothing. H&M burns mass production surpluses, and luxury brand Burberry patches clothing worth millions.
The H&M boss is spending less
H&M also sees sustainability as a purely strategic asset and has received a lot of criticism lately. Fashion group boss Karl-Johan Persson said in an interview with Bloomberg: "The climate problem is incredibly important, it is a huge threat and we need to take it seriously." But Persson argued that the actions of climate activists "may have little environmental impact but have dire social consequences." In no case should less (clothing) be consumed, because in the eyes of the H&M boss, only economic growth can lead to more jobs and better health care. Instead of buying waivers, "eco-innovation, renewable energy and improved materials" should combat climate change.
André Reichel, professor of sustainability at the International School of Management in Stuttgart, sees a greater challenge: despite all attempts to use natural resources as efficiently as possible and produce them more sustainably, our carbon footprint is growing. Therefore, Reichel advocates that growth and value creation should no longer be measured on the basis of economic factors alone, but also with regard to environmental and social aspects. Ultimately, we would have to consume less. But in a panel discussion on Zaland's sustainability strategy, he made it all clear: Less spending doesn't necessarily mean less profit. "If customers buy smaller clothing in the future, businesses can make up for it by selling, for example, more expensive clothing."
People have to buy less but better quality.
Economist Monica Hauck
Monica Hauck also says, "People have to buy less, but for better quality." It also focuses on used hands. "This is one of the fastest growing segments of clothing in which a lot of venture capital is poured."
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Used Zalando will also be included in the future: At least 50 million fashion products should have a longer life by 2023 through the "Wardrobe" app introduced in the summer. There, customers can transfer their clothing to resell it to others or to Zalando.
Between 2000 and 2014, global apparel production doubled. For Hauck, the bill is pretty simple: "We have too many clothes in the world." A key solution to the problem is "Consumers need to maintain, repair, and possibly resell or distribute clothing." The most effective and sustainable is actually existing clothing.