Fashion Industry Valued at Over $2.5 Trillion, but will it remain competitive?
The global fashion industry was valued at over $2.5 trillion in 2020 and is projected to grow to $3.3 trillion by 2025. However, the industry’s rapid growth has come at a cost to the environment. According to data, the fashion industry accounts for 10% of global carbon emissions and is the second-largest consumer of water worldwide.
Climate Change’s Economic Toll: Fashion Industry Loses Over $4 Billion in 2019
The economic cost of climate change is significant and affects many industries, including fashion. Extreme weather events, such as floods and droughts, disrupt global supply chains, affecting the production and transportation of goods. In 2019, the fashion industry suffered losses of over $4 billion due to the impact of climate change on cotton production.
Climate Change Sparks Rise in Sustainable Fashion Market, Valued at $9.81 Billion by 2025
Rising temperatures can also significantly impact fashion customers’ behavior, which in turn can affect the fashion industry’s bottom line. According to a survey by McKinsey & Company, 66% of global consumers are willing to pay more for sustainable products, including clothing. This shift towards sustainability is also reflected in the growth of the global sustainable fashion market, which is projected to reach $9.81 billion by 2025.
Transforming the Fashion Industry: Climate Action as a Key Business Strategy to Reduce Environmental Impact
Although the fashion industry’s environmental impact is significant, from the production of synthetic fibers to the use of toxic chemicals in textile manufacturing, not to mention that the industry is also known for its high-water consumption, with an estimated 2,700 liters of water required to produce one cotton shirt, introducing climate action at the core of the industry business model, would reduce its carbon footprint, water consumption, and waste generation.
Climate Inaction Could Cost Fashion Industry’s Financial and Reputational Losses
One compelling argument for the fashion industry to engage in climate action is that failure could lead to significant financial and reputational risks. As climate change becomes an increasingly pressing issue for consumers, investors, and regulators, fashion companies that do not take action to reduce their environmental impact may face negative consequences such as consumer boycotts, regulatory penalties, and decreased investor confidence.
Leading Fashion Brands Take Action to Mitigate Environmental Impact and Reap Long-Term Benefits
In contrast, companies that take proactive steps to mitigate their environmental impact and demonstrate a commitment to sustainability are more likely to attract consumers and investors who value responsible business practices, potentially leading to long-term financial and reputational benefits.
Here are a few recommendations and examples of how lead fashion brands are progressively engaging in serious decarbonization:
- Sustainable Materials: One of the most effective ways for the fashion industry to mitigate its environmental impact is by using sustainable materials, such as organic cotton, recycled polyester, and biodegradable fibers. By using these materials, the industry can reduce its reliance on non-renewable resources and reduce waste. Adidas has introduced a range of sustainable materials in its products, such as recycled polyester and ocean plastic.
- Circular Economy: The fashion industry can adopt a circular economy approach, which involves designing products to minimize waste and maximize resource use. Nike is using recycled polyester to create new products and has implemented a circular business model where it collects and recycles old shoes.
- Supply Chain Management: The fashion industry can also apply climate mitigation measures in its supply chain management, such as reducing transportation emissions by sourcing materials and products locally, optimizing shipping routes, and reducing the use of air transport. Adidas is implementing its “Better Cotton Initiative,” which aims to promote sustainable cotton farming practices by working with cotton farmers and suppliers to reduce water use, pesticides, and synthetic fertilizers.
- Energy Efficiency: The fashion industry can reduce its carbon footprint by improving energy efficiency in manufacturing processes, such as using renewable energy sources, and reducing energy consumption through process optimization. One of H&M’s key climate initiatives is using renewable energy in its stores, offices, and warehouses. H&M has set a target to use 100% renewable energy in all of its operations by 2030,
- Water Conservation: The fashion industry is a significant consumer of water, and reducing water usage in manufacturing processes can significantly reduce the industry’s environmental impact. One of Levi Strauss & Co.’s key initiatives is the implementation of water-saving techniques in its manufacturing processes. Levi’s has developed a “Water<Less” process which reduces the amount of water used in the finishing process of its denim products by up to 96%.
Overall, strong market arguments exist for the fashion industry to shift towards low carbon emissions and sustainable fashion. By doing so, fashion brands can reduce their environmental impact and appeal to consumers, mitigate risks, improve their reputation, and realize cost savings.
Green Initiative Empowers the Fashion Industry to Embrace Sustainability, Mitigate Risks, and Save Costs
At Green Initiative, we are working with the Fashion and Textile industry to support them in adopting climate-action best practices that are helping them adapt to intense climate regulation and a net-zero emissions economy.
Click here to contact our team of experts and find out how we can help empower your fashion business.