With industrial and commercial activity on pause due to coronavirus, a striking set of images have emerged: Venice, with crystal clear canals; a map of Hubei showing vastly reduced air pollution levels. The world’s first priority at this time must be to control the spread of the virus. However, these images help us visualise what less damaging patterns of consumption might mean for the environment.
If we are to move to a sustainable world, shifting to a circular economy where the raw materials we consume are recycled as far as possible, is crucial. Our ‘linear’ economy today is defined by its ‘take, make, dispose’ method. Raw material is turned into a product, which is then thrown away when it reaches the end of its lifecycle. This model results in waste, pollution, and depleted resources; and only works for as long as raw materials exist.
A circular economy offers a sustainable alternative: instead of ‘dispose’ we ‘reuse’, reducing waste and – critically – demand for raw materials. Moving to a circular economy also offers to cut our harmful carbon emissions – and for that reason is a key pillar in Europe’s ambition to become climate neutral by 2050.
So, the logic and ambition for a circular economy is there, but today we are falling a long way short. As it stands, only 12% of the material used in the EU comes from recycled materials. In some member states the picture is even more bleak, in Spain and Ireland for example, the equivalent rates are a woeful 7% and 2% respectively.
One of the key challenges to a lower-waste world is fast fashion, an accelerated version of the fashion industry that produces huge numbers of new clothes at a price point that encourages regular purchasing. While affordable clothes have made it possible for a wider group of people to explore the latest looks and trends, it has also led to a throwaway society.
Why fast fashion is so damaging
At every stage of its lifecycle, fast fashion has a negative environmental impact. From the outset, textile production is resource-intensive. The fashion industry is the fourth most polluting industry after housing, transport and food, and uses more water and causes more greenhouse gas emissions than all international flights and ships combined. The clothing industry’s carbon footprint is growing significantly – by 2030, it is estimated that CO2 emissions will reach nearly 2.8 billion tonnes a year. According to the Ellen MacArthur Foundation, if the fashion industry continues on its current path, it could use more than 26% of the global carbon budget associated with a 2°C pathway by 2050.
Caring for fast fashion items is also polluting. Clothes are a major contributor to the problem of plastic in the ocean because washing synthetic materials such as polyester, nylon, or acrylic generates plastic microfibres. It has been estimated that each year, around half a million tonnes of plastic microfibres are shed during the washing of these synthetic textiles. These eventually end up in the ocean.
And finally, one of the most significant problems generated by the fashion industry is waste. On average, people wear an item of clothing ten times before getting rid of it. More than half of all clothes produced in this manner only manage a year before being thrown away, an unsurprising statistic considering that it is often cheaper to buy a new piece of clothing than repair a damaged one. This means around 350,000 tonnes of textile waste ends up in household bins every year in the UK, sent to landfill or incinerators. This might be mitigated somewhat if clothing were recycled to any meaningful degree but less than 1% of material used to produce clothing is recycled into new clothing at the end of its life.
Fast fashion is not only damaging from an environmental perspective, but also raises social concerns. Cheap clothes are often produced in poorer countries, where workers receive very low pay and few rights. Additionally, right here in the UK, concerns have been raised that workers at online fast fashion retailers still do not have sufficient access to unions. In this time of crisis, workers – particularly those working behind the scenes in warehouses – may be put at unnecessary risk. While clearly, the benefits of employment need to be considered alongside these risks, the informal nature of the sector’s supply chain makes external scrutiny and controls difficult.
How can fast fashion be tackled?
Clearly, the fashion industry’s business model is problematic. There are some signs that change is coming at least on the regulatory front. The EU has launched an updated Circular Economy Action Plan, which includes new legislative proposals to reduce waste and increase recycling rates. The Commission’s stated aim is to make all packaging placed on the EU market reusable or recyclable by 2030. The UK Government has declared that it will introduce an extended producer responsibility system for packaging in 2023. Yet more must be done, and sooner.
In response to criticism, companies are also beginning to step up. ASOS has stated that it is currently operating a closed-loop system where returned packaging from customers is recycled by their plastic manufacturer and made into new ASOS plastic packaging. It is also transitioning to 65% recycled materials in packaging. Retailers like M&S, H&M and Primark are participating in textile recycling schemes but the impact is not yet significant compared with the growth in demand. Primark, however, is reportedly working on bringing a much larger recycling scheme to the market to help drive efficiencies.
In the end, demand for low-quality clothing must be tempered. With global clothing consumption expected to increase by 63% to 102 million tonnes by 2030, the final piece of the puzzle is changing our own patterns of consumption. A societal move towards repairing, re-wearing or renting clothes could help encourage more sustainable behaviour. We need governments and companies to do more to deliver this change.
As investors, we have an opportunity to encourage better behaviour. While our own exposure to fashion companies in our clients’ portfolios is limited, we are in the process of engaging with those we do own, both with regard to increasing circularity within the industry and protecting vulnerable stakeholders in light of the pandemic.
It is right for companies and governments to devote their time and resources to tackling the immediate crisis, but we must not lose sight of the bigger picture. One thing the pandemic has shown us is the extraordinary ability of governments to mobilise for action. It has also been an abject lesson in the huge relative disadvantages suffered by lower paid workers, many of whom work within the fashion industry’s supply chains.
We have an opportunity to learn from this crisis. Concerted action from companies and governments will give us the best chance of a sustainable future.