What if there isn’t a business case for sustainability? #841


Sustainability is good business, advocates like to say. But the real test comes when sustainable measures don’t produce a return on investment. Some brands are proving progress is possible anyway.

A small but growing crop of brands has begun doing things differently, laying down a blueprint for other companies who may be unwilling to lose money, even in the name of real progress. These brands green-light policies or initiatives that don’t necessarily make financial sense, but are vital for the companies to tread lighter on the planet.

Ganni discontinued two of its bestselling colourways in one of its popular footwear styles, the Western boot, because it couldn’t produce those colours in the materials it has turned to in order to meet its sustainability goals (which included the elimination of virgin leather, a pledge it says it achieved last year). Veja moved away from shipping products by air because of its disproportionately high carbon footprint compared to ocean freight, convincing retailers to adjust their purchasing timelines to accomodate. Mara Hoffman has switched entirely from wet printing to digital printing, which is much more expensive but much less resource intensive. In 2021, Credo Beauty announced it was doing away with all single-use plastic, including not only the industry-beloved sample packet, but also things like makeup wipes, sheet masks and products with plastic spatulas, some of which were the retailer’s top-selling SKUs.

The financial risks and impacts of these initiatives vary, but what unites them is that the brands behind them saw a need and took a risk, even in spite of their best financial interest — not because of it. These moves may even materialise into steps towards embedding sustainability directly into their business models rather than treating it as an optional externality, a common practice that many attribute as a root cause of the conflict between business and the environment. (Companies are not held financially responsible for the damages that their operations cause, such as water pollution, which then become externalised costs that the rest of society must pay.)

These initiatives represent a willingness to take on risk in the name of doing right by the planet, something most of fashion has so far resisted — a major holdup, experts say, to progress for the industry as a whole. Until companies recognise and accept that sustainability won’t always produce a return on investment, they are likely to hold off taking decisive actions while they wait for the business case to materialise — which means that if it never does, the necessary steps may never be taken.

Making sustainability the cost of doing business

Ganni’s decision to discontinue its tiger’s eye (camel) and cherry-red Western boot colourways was a significant sacrifice for the brand, says co-founder Nicolaj Reffstrup. “We gathered all stakeholders in a meeting and had to decide what to do. Those two colourways [risked $450,000 in lost sales], a significant amount of money for us — we’re not that big,” he says; the brand hit €160 million in revenue in 2022 (it has yet to report for 2023). “That was definitely a decisive moment for me.”

t would be a major financial hit, but Ganni won’t meet its sustainability goals without bold changes, he says, and it’s hard to see how any company with ambitious goals is serious about meeting them if it isn’t making sacrifices somewhere in its business to do so.

Veja, meanwhile, overhauled its distribution strategy after an internal audit in 2019 revealed that while 81 per cent of its products were transported by sea, the remaining 19 per cent that went by air generated 95 per cent of the brand’s distribution-related carbon emissions. Some freight decisions came under Veja’s purview; some came under that of the brand’s clients, in cases where retailers purchased FOB (freight or free on board, meaning they took ownership of the shoes before they left Brazil) and shipped the products themselves, says co-founder Sébastien Kopp.

Veja decided to be proactive, reducing its own use of air freight and encouraging retailers to do the same. By 2022, less than 0.5 per cent of its own products were shipped by plane and air freight for FOB orders is down to 10 per cent, a drop of about 75 per cent, Kopp says. “The goal for the commercial team is to convince our clients to stop using planes,” he says. Because retailers used air freight primarily to receive new styles as quickly as possible, Kopp says Veja worked with them to find workarounds — showing them new styles earlier, for example. “There is a large panel of things you can do to compensate.”

This isn’t about altruism; it’s about operating a business according to the principles that so many brands claim, externally, to be adhering to, says Bédat — and a willingness to take actions that cost money in the interest of protecting people or the environment is, for her, where the rubber hits the road for brands and their sustainability commitments.

“So much of this comes down to real, human leadership — or lack thereof,” she says. It also underscores why legislation is so necessary, in part because it would help to level the playing field for brands that are trying to do the right thing. “We need business leaders to step in and say [that] we will be at a competitive disadvantage for doing this until you make it law and we all are required to do it.”

Legislation can also drive investment in areas, such as traceability technology, that are expected to accelerate progress in the industry. “Over the past few years, it’s been a technology that interested brands were excited about to increase transparency in their supply chains and verify the social and sustainability practices of their suppliers. We are seeing some of these traceability platforms evolve to enable brands to ensure compliance with changing legislation,” says Karla Mora, founder and managing partner at Alante Capital. “This shift to making it a core business tool let us get confident that there would be broader market adoption.” Alante has since invested in traceability platform Retraced.

Whether brands come out and support legislative efforts in the works is a sign in its own right, Bédat says, of how committed they are to change. “Time is ticking. It’s time for them to actually show up and support these things, and if they’re not, I think we really need to question all these other things that they’re claiming to do.”

Drastic efforts, big pay-off

In the meantime, some brands are finding ways to get creative and offset the financial risk or costs associated with bold, sustainability-focused steps.

redo, which had also braced for financial losses when announcing its single-use plastic ban in June 2021, found unexpected opportunities for collaboration with brand partners and for engagement with consumers. “This was an action where, from a financial standpoint, a lot of people might have scratched their heads,” says Boma Brown-West, Credo’s VP of sustainability and impact. “We did it because we recognised that when it comes to clean beauty, when it comes to sustainability, there are certain actions that companies have to be willing to take if we’re really committed to dramatically shifting the impact that beauty has on the environment.”

In 2015, when Mara Hoffman began her pivot to a sustainability-first business model, one of the first things her team did was rethink how they print their fabrics. Previously, they had used screen or rotary printing, a water-intensive process that generated a lot of fabric waste. Digital methods would slash the footprint of the printing process, says Dana Davis, VP of sustainability, product and business strategy, by reducing water usage and virtually eliminating fabric waste — but this had always seemed out of reach financially. It took more work, including permanently adding steps to the product design process, yet the team figured out how to design products and order fabrics efficiently enough to be able to offset — or mitigate enough to be able to afford — the increased cost of digital printing.

It’s hard to see the examples of seemingly drastic actions by relatively small brands rippling up to the industry heavyweights, at least directly. “While larger brands may take notice of the innovative sustainability practices of their smaller competitors, how often do they actually follow suit?” says Brittany Sierra, founder and CEO of the Sustainable Fashion Forum. “Larger brands have different business models, scales and strategic priorities, which can significantly influence their ability and willingness to adopt similar sustainable practices.”

Still, the larger concept — of finding ways to integrate the costs of sustainability into the business model — is something that could be relevant for all brands. It’s extra work and it’s extra cost. But these designers have something to teach the larger industry, including its biggest brands: once you start incorporating sustainability into the company’s balance sheet, you no longer treat it as an extra or discretionary expense. It is simply the cost of doing business.

“This shift in mindset ensures that sustainability is not only adopted, but also financially sustained in the long term,” says Sierra.

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