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The Business Case for Creating Sustainable Apparel

Demand for sustainable apparel is rising due to mounting concerns from consumers on the environmental effects of the goods they purchase. The fashion industry often receives a poor reputation for wasting materials, contributing to greenhouse gas emissions, or for paying factory workers low wages. Yet now more than ever, apparel companies that invest in sustainability measures see benefits from their initiatives. Sixty-six percent of those surveyed said that they would be willing to spend more on sustainable products, and 25-30 percent can say that they’ve bought clothing labeled as “sustainable, organic, ethical, or eco-friendly”. Consumers, especially in the 18-34-year-old range, want to buy products that align with their personal values and expect the businesses they buy from to engage in corporate social responsibility.

For the fashion industry, environmental sustainability can mean working with recycled materials, adopting renewable energy sources, and using natural resources efficiently. It’s often easier for smaller business and startups to be more sustainable, as transforming the supply chain can be complicated and expensive for larger companies. Two of the most common approaches to optimizing the supply chain for sustainability involve either investing in expensive but efficient equipment from the beginning or starting with smaller upgrades and putting those savings back into the manufacturing process. Considering the return on resources as well as the return on investment is important as demand for the natural resources needed for manufacturing sustainable apparel has the potentially to outweigh supply.

Reformation, Everlane, and Levi Strauss & Co. are three companies that have received attention for their efforts toward sustainability and have built the business case for creating sustainable apparel. Reformation has found commercial success by emphasizing their commitment to being eco-friendly, while Everlane is well-known for leading the industry in worker’s rights. Levi Strauss & Co is a traditional, established brand that has been incredibly transparent with their consumers about their efforts in sustainability.

Reformation

Since 2014, LA-based clothing company Reformation has grown 60 percent a year and reached $140 million in sales in 2018. Founder Yael Afalo created the brand to take advantage of an opportunity to implement new technologies into the supply chain to make clothing manufacturing eco-friendlier. By analyzing production data, the company can track waste and pollution to ensure their outputs fall significantly below industry averages. For example, an average pair of jeans takes 1, 5656 gallons of water to produce and emits 36 pounds of carbon dioxide, while a pair of Reformation jeans uses 196 gallons of water and emits 5 pounds of carbon dioxide. Sixty percent of Reformation’s products are made in LA so they can monitor the supply chain closely.

Reformation makes 80 percent of its sales online and competes with brands like Anthropologie and Free People within the market segment of higher-income millennial women. Even though they aren’t a typical fast-fashion company like H&M or Forever 21, they have been able to operate on the same 42-day design-to-rack cycle as these brands while maintaining their eco-friendly standards. Whether a consumer interacts with the brand in store or online, the item’s “RefScore,” the information about the resources used to manufacture the product, is always easy to find.

 Everlane

Like Reformation, Everlane is another apparel start-up based on values of transparency and sustainability that uses a hybrid digital and brick-and-mortar business model. They disclose how they determine the price of each of their items by releasing the materials and labor costs. The company performs audits on all their suppliers to ensure fair working conditions and fair pay. Everlane has a feature that allows consumers to see which factory produced what product when shopping online. With $35 million in sales in 2015, Everland has been taking some of the market share from more established retailers like J. Crew and Gap.

 Levi Strauss & Co.

Although it may be easier for digitally native companies to build sustainable supply chains, some traditional companies have had success innovating and building a legacy of producing sustainable apparel.  Levi’s has had a global code of conduct for their supply chain to establish standards for worker’s rights, a healthy work environment, and ethical environmental practices since 1991.  As an iconic global brand, Levi’s set the apparel industry standard and continually evolves their practices and standards for sustainable business practices today.

One strategy Levi’s uses to reduce consumption is to encourage consumers to think about durability and recycling of jeans.  Although most companies in the apparel industry are focused on new trends and the seasonality of their products, Levi’s is encouraging consumers to put their jeans to a purpose once they are done wearing them.  Our global landfills are growing because consumers are disposing of millions of tons of textiles every year. Levi’s is helping consumers find a way to give their jeans a second or a third life in order to reduce waste.

The Levi Strauss & Co. approach to business includes “Profits through Principles” which requires that the company looks for ways to reduce their environmental footprint. By simply measuring and setting corporate goals around sustainability for waste, climate, chemicals, and water usage, Levi’s is setting a global standard for how traditional apparel companies can move towards sustainability without impacting profitability.

Achieving the Sustainable Apparel Model

Although the business model of fast fashion works against companies who want to incorporate sustainable principles in their business, some apparel companies have found ways to make progress toward sustainability. Making changes to the apparel supply chain takes intentional investment, time and discipline, but today’s consumers are demanding environmentally-friendly apparel, making the investment worthwhile.

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Co-author Sabrina Zirkle. 

Tags: Specialty Retail
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