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Financial Industry Insights from Advisors Asset Management

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Catwalk Worthy: Improving the Fashion Life Cycle’s Sustainability


It’s never been cheaper to be fashionable, but the problem is items don’t stay fashionable for very long, and social media influencers encourage a “wear it once” culture.

Fast fashion is cheap because it often relies on low paid, mistreated workers; and cheap synthetic materials that have negative impacts on the environment. But research tells us that consumers are increasingly willing to pay more for sustainable goods and are more aware of what sustainable indicators to look for when shopping.

Perhaps the most important question for customers and investors concerned about sustainability and fashion is: how well does a company understand its supply chain? Does the company understand where the raw materials are being sourced? The Better Cotton Initiative (BCI) estimates that only 20% of the cotton grown in the world is done in a way that protects the farmers and the environment. Moving up the supply chain to production; where are the clothes produced? It is important to understand how the company deals with issues surrounding child labor and working conditions. Do they audit suppliers and what standards are they held to? Do they personally visit the production facilities? What about the end product; is it recyclable? Most textiles used in supply chains are synthetics like polyester. They are harder to recycle and generate plastic microfibers that end up in the oceans. Finally, is the company signatory to any initiatives trying to improve the fashion life cycle? Examples include the Better Cotton Initiative, Microfiber Consortium, Ellen MacArthur Foundation or the Fashion Industry Charter for Climate Action.

Increasingly, brands are launching sustainability initiatives, but a stark gap remains between the leaders and laggards. More work needs to be done across the industry, including increased investment in new technologies that help mitigate harmful production processes, and allow products to be effectively recycled at the end-of-life stage. In addition, regulatory engagement will be necessary to encourage a more circular model across the industry.

We believe companies that don’t think about sustainability today are likely to lose out if they cannot keep up with this sustainable trend. We believe stronger disclosures around what they are making and how it was made are not just welcomed, they will be necessary to succeed.

 

CRN: 2021-0915-9464 R

The opinions and views of this commentary are that of Aegon Asset Management and are not necessarily that of Advisors Asset Management.

This commentary is for informational purposes only. All investments are subject to risk and past performance is no guarantee of future results. Please see the Disclosures webpage for additional risk information at commentary-disclosures. For additional commentary or financial resources, please visit http://www.aamlive.com/.


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