Part 2 | The Changing Face of Fashion: Fixing Fashion in the UK
On the last day of London Fashion Week, the Environmental Audit Committee (EAC) published the concluding report from its inquiry into the sustainability of the fashion industry. As Britain’s brightest designers set trends for the next season, the EAC set out recommendations to make the industry as sustainable as possible. The report acts as a milestone for the industry, signalling for the first time a recognition from government in its economic value – £32 billion for the UK in 2017[i] – and importantly the interlinked social and environmental consequences it has on our society. Covering major issues from modern slavery to waste, there are no major surprises in the report, and it ties into the Government’s broader priorities around the Resources and Waste Strategy and Modern Slavery Act. The inquiry has held considerable attention throughout its course and one hearing had the largest audience for a select parliamentary committee in history. The Committee received over 90 submissions of evidence from brands, academics, campaigners and consumers, showing a high level of engagement and urgent need for industry to engage with the recommendations. Looking at people, planet and waste, this insight will explore some of the key recommendations and what they mean for business.
People
The Committee accuses the fashion industry of ‘chasing the cheap needle round the planet’, referring to the fact that manufacturing sites have moved around the world depending on where costs are lowest, resulting in a degradation of working conditions and environmental standards. That said, there has been a recent reshoring of garment manufacturing in the UK, with hubs rising out of Leicester promising short lead times for growing online retailers. This has resulted in an intense working environment where workers have been paid as little as £3.50 an hour due to poor enforcement of the National Minimum Wage (NMW), an open secret in the sector[ii]. Although the EAC has made no explicit recommendation with regards to wages, they do support the Director of Labour Market Enforcement in his call for a more proactive approach to the enforcement of the NMW.
A key component of the discussion on the social cost of the fashion industry was around modern slavery. In keeping with wider discourse on the UK Modern Slavery Act (MSA), the EAC states that legislation should be strengthened. Following its current review, the EAC makes three key recommendations: Government should provide a public list of companies that are legally required to produce a statement, to fine those that do not report, and for the Act to apply to Government procurement. The Committee also suggests that large companies undertake due diligence checks to ensure goods are not produced using forced or child labour. This means that the estimated 6,000-8,000[iii] businesses that have not published a statement will need to get their house in order quickly, and those that are reporting need to step-up their transparency efforts. In a more unexpected move, the EAC recommends updates to the Companies Act 2006. This would require companies to include statements in their annual reports detailing their approach to respecting human rights in the supply chain. Should this not be possible, the recommendation is to consider a Corporate Duty of Vigilance law, similar to France.
The final recommendation regarding the social implications of the fashion industry is for Government to work with industry to better trace where raw materials are coming from, for example cotton from Turkmenistan – which is banned by several brands including H&M and Gap – often ends up in supply chains via Turkey[iv]. As the fashion industry becomes ever more digital, technologies including Blockchain show promise in aiding the traceability of materials, but there is still a long way to go in terms of scale. Leading brands should invest in these technologies, while carefully analysing their potential impact on production methods and the workforce.
The growing scrutiny of the vulnerability of the fashion supply chain to human rights abuses, as well as the likelihood of increased enforcement of the Modern Slavery Act to improve transparency in supply chains demonstrate a clear direction of travel on social sustainability. This will require businesses to take a holistic approach to identifying human rights risk, develop the appropriate frameworks to manage risk, and ensure they are communicating progress to stakeholders.
Planet
An environmental challenge that is becoming synonymous with the fashion industry is microfibre pollution. The shedding of microfibres from synthetic textiles has been cited as one of the biggest contributors to microfibre pollution in our oceans, with stakeholders looking to textile manufacturers and retailers for solutions. There is a need for further research on the solutions to microfibre shedding, but the EAC warns industry that this should not be an excuse for inaction. It is encouraging to see the EAC recognising that solutions need to be broad-based and come from industry working as a whole, recommending that Government facilitate collaboration between different actors across the supply chain. Companies without microfibres on their radar should speak to peers and industry leaders to ensure they are not excluded from key solutions. Sancroft currently convenes a group that brings together retailers, water companies and washing machine manufacturers to explore this topic, which will be discussed in further detail in our next insight.
The impact different materials have on the environment cannot be underestimated but comparing the qualities and impacts of natural fabrics like cotton, animal products like leather and synthetic materials like polyester is extremely difficult. Brands are making commitments to source more sustainable materials every year but an important first step is undertaking a full product life cycle analysis, as garments made with synthetic fibres may have less of an environmental impact than natural fibres, despite their impact on marine habitats. The EAC cautions brands against making kneejerk decisions and switching from synthetic to natural fibres without deeper analysis, as resultant pressures on natural resources will be extreme. Brands considering switching to alternative materials should first understand their product lifecycles and look to source materials with less resource intensive production methods, for example shifting from conventional cotton to more sustainable cotton. To encourage brands to design products with less impact and to stimulate the UK recycled fibres market, the Committee suggests rewarding brands that do so, and to look at whether the plastic tax proposed in the Resources and Waste Strategy (RWS) should be applied to textile products with less than 50% recycled PET.
Commitments from fashion brands around emissions, water footprint, chemical use and waste vary considerably. WRAP’s Sustainable Clothing Action Plan (SCAP) was set up to create an aligned ambition across the industry, but it has faced significant cuts in recent years despite increased awareness of the industry’s impacts. The EAC acknowledges progress made by signatories, however, argues that this has been outweighed by their increasing production and sales. They suggest for SCAP to be funded by retailers as part of an Extended Producer Responsibility (EPR) scheme (discussed in more detail below) and for targets to be mandatory for all retailers with a turnover of more than £36 million, in line with the MSA threshold. Mandatory environmental targets would offer a huge opportunity for the industry to review and reduce its impact. It is important that industry has an opportunity to be consulted on these targets and current signatories should ensure they are transparently communicating progress to stakeholders.
Waste
The recommendation that has garnered most media attention is the introduction of an EPR scheme for textiles. To encourage fashion brands and retailers to take responsibility for the overwhelming volume of clothing being produced, and subsequent waste created, the EAC proposes a charge of one penny per garment made. It is projected that this could help raise around £35 million in investment to improve textile collection, reuse and recycling in the UK. A similar scheme currently operates in France, which has seen textile collection rates rise dramatically with over 97% of retailers taking part[v]. This charge could be substantial for brands producing millions of garments a week and they will need to consider reducing the volume of product entering the market. Furthermore, the struggling UK sorting industry could enjoy a boost to business, potentially funding hundreds of jobs in regional hubs around the country.
As part of the RWS, Defra has committed to consult on measures such as EPR for waste streams including textiles by 2025, however the EAC has recommended this be completed no later than 2022. The EAC also encourages the RWS strategy to incorporate eco-design principles[vi], so products are designed to be more durable and more easily recycled and disassembled. This would have a huge impact on retailers, forcing design teams to consider the lifelong sustainability of the garment from the start – integrating sustainability knowledge and principles throughout the business. Several brands are already doing this, including ASOS[vii]. The consultations offer an important opportunity for business to actively engage on these issues and ensure legislation helps business advance solutions for the industry. The RWS and EPR will be explored in more detail in the third insight in this series.
In addition to emphasising producer responsibility for managing waste, the EAC highlights that consumer mindset around buying and disposing of clothing is a fundamental challenge for industry. Pressure to never be seen in the same outfit twice – 17% of young people wouldn’t wear an outfit again after it appears on Instagram[viii] – has been driven by social media’s constant stream of advertising, facilitated by a seemingly unlimited supply of cheap clothing. An interesting recommendation that challenges this mindset is school lessons on designing, creating, mending and repairing clothes. The hope is that teenagers will benefit from the satisfaction of designing and repairing their clothes, and that it might offer balance to the rising occurrence of anxiety among young people. This links to the EAC’s review of alternative and emerging business models based on the sharing and rental economy, where consumers can hire, swap and subscribe to clothing services. To encourage the use of these models, the Committee recommends Government review tax incentives in favour of businesses that offer reuse, repair and recycling services, as has been successfully implemented in Sweden[ix].
Conclusion
The Government now has two months to respond to the recommendations outlined in the EAC’s report – and it remains until then to see what proposed legislation and policy changes will impact business. The inquiry signifies a shift in the industry that will require government, industry and consumers to re-think the principles of fast fashion and reduce its negative impacts.
How can Sancroft help? We can…
- Help identify the most significant social, economic and environmental challenges and opportunities through materiality assessments, and translate these into a comprehensive strategy with goals, reporting and communication plans
- Evaluate your business’ position following key legislative and policy developments (e.g. Resource and Waste Strategy, Modern Slavery Act review, Sustainable Fashion Inquiry) and understand your exposure to challenges and opportunities
- Review current purchase, use and disposal of materials and determine actions to future-proof your business, including textile recycling schemes
- Carry out a supplier risk assessment, including questionnaire design and the development of corrective action plans.
[i] https://www.britishfashioncouncil.co.uk/pressreleases/London-Fashion-Week-September-2018-Facts-and-Figures
[ii] https://www.ft.com/content/e427327e-5892-11e8-b8b2-d6ceb45fa9d0
[iii] https://www.business-humanrights.org/sites/default/files/FTSE%20100%20Report%20FINAL%20%28002%291Dec2017.pdf
[iv] https://apparelinsider.com/nike-gap-hm-sigh-turkmen-cotton-pledge/
[v] http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/environmental-audit-committee/sustainability-of-the-fashion-industry/written/87877.html
[vi] The European Economic and Social Committee’s Ecodesign Directive ensures more energy efficient products enter the market and consumers are informed on purchasing the most efficient products available.
[vii] https://www.vogue.co.uk/article/asos-sustainable-fashion-training-programme
[viii] http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/environmental-audit-committee/sustainability-of-the-fashion-industry/written/88375.html
[ix] https://www.theguardian.com/world/2016/sep/19/waste-not-want-not-sweden-tax-breaks-repairs
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