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G7 summit: New fashion coalition unveils sustainability pact

Quartz logo Quartz 8/24/2019 Marc Bain
Bruno Le Maire, Francois-Henri Pinault standing next to a man in a suit and tie: Officials gathered at the G7 summit in Biarritz © Provided by Atlantic Media, Inc. Officials gathered at the G7 summit in Biarritz

Many of fashion’s biggest and most influential companies have created a pact to address the industry’s effect on the environment, an issue so concerning that one United Nations agency last year labeled it an “emergency.” Among them are businesses from across the sector including French luxury giant Kering (owner of Gucci and Saint Laurent), Adidas, Chanel, Nike, Hermès, H&M, Inditex (owner of Zara), Burberry, PVH Corp (owner of Calvin Klein and Tommy Hilfiger), and Prada. In total 32 companies have joined.

The group came together with a push from French president Emmanuel Macron, who in April asked Kering CEO François-Henri Pinault to take on the mission of rallying brands across the industry. Pinault will unveil the pact to the world leaders gathered in Biarritz this weekend for the G7 summit.

Kering called the pact “unprecedented” and a “historic move, given the scale and importance of the coalition that has been created.” Together the brands represent more than 30% (paywall) of fashion’s production volume. Each signatory is committing (pdf) to sustainability targets addressing three areas: combating climate change, restoring biodiversity, and fighting ocean pollution. The goal are ambitious:

  • Reducing emissions and using carbon-offset programs to reach net-zero carbon emissions by 2050
  • Achieving 100% renewable energy across their own operations, with the additional goal of creating incentives for suppliers using “high-impact manufacturing processes” to switch to renewables by 2030
  • Eliminating single-use plastics by 2030
  • Supporting innovation to eliminate micro-fibre pollution that results from washing synthetic materials
  • Supporting regenerative approaches to agriculture and programs that protect key species and ecosystems

Action is undeniably needed. But while the pact is a positive move—and looks good for the brands involved—it has several shortcomings that could limit its effect.

It’s not legally binding

The pact states plainly that it is “not legally binding and can be seen as a set of guideline[s].” It’s based, it says, on “the collective ambition of CEOs to commit to sustainability targets.” But there is no penalty if a company fails to live up to its commitments. The companies will also report their own progress.

“This is not about regulation,” Marie-Claire Daveu, Kering’s chief sustainability officer, told the New York Times when questioned about this. “We cannot punish groups directly. But by committing to improved and collective transparency, there is an incentive for those in this pact to stick to targets and not fall behind.”

Brands also have other business incentives that could at times be in competition with these targets, such as keeping costs down and profits up.

The supply chain is the real problem

The majority of fashion’s environmental footprint lies in its supply chain. It occurs when suppliers produce the raw materials, process them with chemically intensive methods, manufacture and assemble the goods, and then ship the items to their final markets. Kering has acknowledged as much. The pact recognizes the issue too, saying that “all commitments will focus on the ‘first mile’ of fashion supply chains, as a big unaddressed part of the impacts of the industry are felt at farm level and in raw material sourcing locations.”

But the signatories to the pact, as Business of Fashion noted (paywall), generally aren’t the suppliers handling these jobs. (Hong Kong-based Fung Group is a notable exception.) They don’t directly own these parts of their supply chains, except in a few limited instances, mostly in the luxury sector—so it’s unclear how much control they can exert. They can use their considerable financial leverage to pressure suppliers to comply with the new goals. Though if big investments are needed in new equipment or technologies, it’s unclear who will pay for them, and suppliers may resist.

Sustainability can be at odds with growth

Many brands already have sustainability programs in place. But a recent report by Boston Consulting Group and two other groups that advocate for sustainability found that the industry’s efforts are not helping enough to offset its growth. The issue is one Kering itself has admitted to struggling with (paywall). “The industry really needs to pick up the pace,” Morten Lehmann, chief sustainability officer of one of the groups involved in the report, Global Fashion Agenda, told Bloomberg. “Brands are improving at a slower rate and at the same time we’re seeing a huge production increase.”

A big part of the industry’s problem lies in the volume of clothing it produces. Unless it reduces that amount, it will be tough for it to mitigate the impact.

The pact’s statement already suggests this could be an issue. Consider its wording on how it aims to address the microfiber pollution from synthetics. It commits only to “Supporting innovation to eliminate micro-fibre pollution from the washing of synthetic materials.” It doesn’t say it will eliminate synthetics or use fewer of them. The aim is to invent a way out of the problem.

Most of the industry still isn’t included

It is impressive that the coalition collectively represents more than 30% of fashion’s production. But that also means nearly 70% is not part of the pact.

To be fair, Pinault accomplished a great deal enlisting so much support in a matter of months. Kering also hopes to keep signing up fashion brands and other stakeholders. But there remains a lot of work left to do.

None of these issues means the group can’t be effective. Of course, it’s also preferable that these companies have taken this step rather than remain silent.

Still, it’s worth recognizing that brands have to do more to truly minimize their impacts. “G7 is a starting point,” a Kering spokesperson told Business of Fashion (paywall). The signatory CEOs are scheduled to convene in October to discuss further pledges and come up with action plans.

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