- The paper highlights the detrimental environmental impact of the fast fashion business model
- Sets out our expectations for companies to manage this impact
- Identifies key performance metrics such as carbon emissions and water use
The fast fashion industry has thrived by constantly refreshing product lines and leveraging rapid response supply chains to meet consumer demand for the latest trends. But the low cost of many of these products encourages consumers to wear items only a handful of times before throwing them away.
In a new white paper from EOS at Federated Hermes – Fixing Fast Fashion – engager Lisa Lange examines the detrimental environmental impact of the linear fast fashion model, and outlines ways for companies to move to more circular approaches. “Changing consumer perceptions and the high probability that emerging regulations will impact profitability suggest that apparel companies should invest in more sustainable fibres and production processes and review their existing business models,” she says.
The paper outlines our expectations of fast fashion companies, while recognising that they are at different levels of maturity in terms of their management of environmental impacts. To gain a greater understanding of this, investors can consider factors such as a company’s governance of sustainability issues, the integration and prevalence of sustainability in its business strategy and risk management, the setting of ambitious goals and targets, and the reporting of progress in a transparent manner.
“Some of the key performance metrics that we have identified include carbon emissions and water use per unit of production,” Lange says. “With improved disclosures, investors will be able to compare companies’ performance on a per unit or per sales basis.” It is also critical to see reporting on circular innovations such as the proportion of recycled materials inputted, the roll out of take-back schemes, and consumer education on recycling.
Fixing Fast Fashion
Fixing Fast Fashion