The paradigm shift in consumer priorities from extravagance to ethically-sourced and environmentally-viable products has driven the
US$24-trillion luxury fashion industry to re-strategise and incorporate sustainability as a core value in their business practices. A growing understanding of
climate sensitivity and increased awareness of the
unsustainable practices employed by the fashion industry have also contributed to this change in consumer behaviour.
The global fashion industry employs around
300 million individuals across its value chain, a significant number being women between the ages of 18 and 35, and is predicted to further expand in the years ahead. It is also responsible for
up to 10 percent of global emissions.
A growing understanding of climate sensitivity and increased awareness of the unsustainable practices employed by the fashion industry have also contributed to this change in consumer behaviour.
While the concept of fast fashion (mass-produced, low-priced fashion products, especially garments, usually carrying global brand labels) does hint at the social and environmental degradation it is capable of, consumer opinion generally differs for luxury fashion brands. Given their high price points and global reputation,
consumers assume that these luxury products follow ethical and relatively more sustainable business practices, and that their products would last longer and fetch better resale value. Disclosure of Corporate Social Responsibility (CSR) initiatives, eco-friendly product lines, and sustainable manufacturing processes by some leading luxury brands also
contributes to such positive consumer perception. However, that has not been the case as the supply chains of even some of the top global brands, including Gucci, Dior and Saint Laurent, can be traced back to
vendors with dubious employment records, mainly in South Asia, which are often purposely kept
hidden.
Sustainability in luxury fashion
At its core, sustainability
entails, “meeting the needs of the present without compromising the needs of the next generation.” This all-encompassing concept involves the harmonious integration of environmental, social, governance, and economic considerations. From the responsible use of natural resources to the ethical treatment of workers, sustainability aims to minimise negative impacts throughout the production process, ensuring the well-being of future generations.
The complexity of the multi-layered fashion industry’s supply chains cannot be underestimated. The journey of a single product involves an intricate network of suppliers, ranging from raw material producers and processors to certifying bodies, subcontractors, logistics providers, and retail outlets, before reaching the consumer. Each supplier performs a specific function within defined tiers, transforming raw materials into the final product, and charting its journey from procurement and production to retailers.
The journey of a single product involves an intricate network of suppliers, ranging from raw material producers and processors to certifying bodies, subcontractors, logistics providers, and retail outlets, before reaching the consumer.
The key areas of concern in this journey include the irresponsible use and disposal of chemicals and water, human rights abuses, and deforestation for increased farmland. To truly embrace sustainability, luxury brands must prioritise supply chain
transparency. Having visibility over the entire supply chain enables brands to identify and address environmental and social risks effectively.
Moreover, deeper tiers of the intricate fashion industry supply chain often involve subcontracting, making it challenging to trace the contributors to the final product, especially for more prominent brands. These supply chain
tiers play significant roles, each with its array of potential risks.
The multi-tiered luxury fashion supply chain
At Tier 0, we find the brand's offices, distribution centres, and retail locations, where sustainability efforts can kick off with
initiatives like adopting renewable energy sources and eco-friendly
practices such as efficient energy consumption, textile reuse, reverse logistics, and ethical sourcing of recyclable fabrics.
Moving to Tier I, we encounter the factories and facilities responsible for cutting, sewing, packaging, and preparing finished garments for shipment. Building strong relationships with Tier I suppliers becomes crucial to ensure compliance with garment worker rights and safety codes.
Tier II involves suppliers responsible for producing the fabrics used in manufacturing, often entailing chemical-, water-, and carbon-intensive processes with large-scale environmental and community impacts, especially from their hazardous waste disposal practices.
Supply chain transparency, thus, is crucial for unravelling these complexities and aligning luxury fashion with sustainable practices.
Tier III deals with transforming raw materials into fibres, a stage with limited brand contact and visibility, making it challenging to assess human rights, animal welfare, and environmental implications.
Lastly, Tier IV encompasses the sources of raw materials, such as cotton farms or livestock raising, where the impact reaches soil health, biodiversity, waterways, and air quality. Understanding and addressing risks at each tier are pivotal steps towards a more sustainable and responsible fashion industry. Supply chain transparency, thus, is crucial for unravelling these complexities and aligning luxury fashion with sustainable practices.
The urgency of supply chain transparency
Statistics reveal the urgency of embracing supply chain transparency in luxury fashion. For instance, globally,
83% percent of drinking water samples test positive for microscopic plastic fibres from laundry wastewater, with polyester garments shedding over 1,900 fibres per wash. Furthermore,
20 to 60 percent of all garments end up as waste within their first year, contributing to the staggering 13 million tonnes of textile waste generated annually by manufacturers and retailers. Approximately
30% percent of produced clothes still need to be sold each season.
The Fashion Transparency Index, prepared by Fashion Revolution, a United Kingdom (UK)-based global fashion activism movement established following Bangladesh’s
Rana Plaza disaster in 2013, ranks 250 of the world’s largest fashion brands and retailers based on their public disclosure of human rights and employment policies and practices and their impacts across their operations and supply chains. The Index aims to hold the industry accountable for its actions. However, the
2022 edition of the Index revealed that only 23 percent of these brands and retailers made any such public disclosures, while just 7 percent disclosed wastewater test findings. Less than half of the Tier I manufacturers publicly disclosed their supplier lists.
Source: Fashion Revolution | Fashion Transparency Index 2022
Supply chain transparency goes beyond merely addressing environmental and social concerns; it influences consumer behaviour and builds trust. When brands are transparent about their sourcing and production practices, consumers feel more confident in their purchasing decisions, favouring brands that align with their values. As
transparency becomes a defining factor in consumer choices with growing environmental and sustainability awareness, luxury brands have an opportunity to drive responsible practices within the industry.
Various fashion houses in France, Italy, the United States (US) and the UK have acquired partial stakes in suppliers to achieve transparency.
Chanel and Brunello Cucinelli recently acquired partial stakes in Cariaggi Lanifico, a family-owned cashmere and natural fibre supplier. Through this partial stake acquisition, Chanel will gain more control over how Cariaggi Lanifico sources the natural fibre and over its business practices, enhancing the brand’s sustainability efforts. With growing incentives from the government in
France, luxury brands have moved their operations to their home country to be able to track their supply chains. Similarly,
Levi’s has adopted manufacturing processes to reduce water usage, while
Patagonia introduced a recycled and organic clothing range to its product line.
Promoting responsible business initiatives
Responsible Business Initiatives (
RBIs) are initiatives that may go by different names or be referred to as “sustainability initiatives,” “corporate social responsibility (CSR) programmes,” “industry collaborations,” or “collective impact initiatives”. They have a crucial role in accelerating the
adoption of supply chain transparency. Funding initiatives by governments—such as the Sustainable Apparel Coalition funded by the government—that create shared value by investing back in the people involved in the supply chains and providing fair pay and decent work are all examples of RBIs.
With growing incentives from the government in France, luxury brands have moved their operations to their home country to be able to track their supply chains.
Embracing supply chain transparency is no longer an option but a necessity for luxury fashion brands, which are aspiring for a more sustainable future. By understanding their supply chains, brands can make informed decisions that prioritise environmental protection, ethical business practices, and social responsibility. Transparent supply chains safeguard a brand's reputation and pave the way for a more just and equitable fashion industry, aligning with the United Nations Sustainable Development Goals.
With consumer demand for sustainability on the rise, transparency can catalyse a sustainable revolution in luxury fashion. Governments must push the transition towards sustainability through regulations and incentives. They must enact laws mandating companies to conduct regular due diligence on human rights and climate responsibilities and hold corporations accountable for lapses and violations across the supply chain. Public disclosures of all the parameters included in the Fashion Transparency Index must also be mandated by law, with periodic audits and scrutiny of the luxury fashion industry.
Radhika Purohit is an intern at the Observer Research Foundation
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