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The opportunities and challenges of supply chain sustainability for fashion brands
by Amelia Zimmerman | Jun 03, 2022 | Data & transparency
In 2018, the fashion industry produced 2.1 billion tons of greenhouse gas emissions, representing some 4% of total global emissions. As fashion — and fast fashion in particular — comes under scrutiny for its environmental footprint, consumers are demanding increasing transparency into the environmental and social impact of their favorite apparel brands. In fact, some 60% of fashion consumers want to know more about how their clothes are made, and what they find out is influencing purchase decisions.
The majority of a fashion brand’s environmental impact lies in its supply chain. In this article, we dive into the challenges of sustainable supply chain management in fashion, and uncover the opportunities it presents for brands willing to embrace the challenges.
Breaking down fashion supply chains
A typical supply chain in the fashion industry consists of five stages:
- Raw materials and textile manufacturing
- Garment manufacturing
- Distribution into stores
- Final sale
Each of these stages contributes to a product’s environmental footprint, although some (manufacturing and distribution, for example) contribute more than others.
Although the design phase might not seem particularly detrimental to your product’s environmental performance, clothing design can have a significant impact on a product’s impact, as it dictates materials, manufacturing processes, and product lifespan. Recent environment-positive innovations in design include multi-use garments (think, tops that double as cardigans) which are becoming increasingly popular.
2. Raw materials and textile manufacturing
If you’re concerned about your environmental impact, you can’t ignore the raw materials that are extracted for your textile production. Today, many are popularizing the use of fair-trade and organic materials, and some are making waves with recycled fibers and materials.
But it’s not just where materials come from that warrants consideration; it’s also important to analyze materials from an end-of-life lens: in terms of recyclability, chemical impact in landfill, and durability. As far as durability goes, you can reduce the environmental footprint of a product simply by increasing its lifespan.
3. Garment manufacturing
The greenhouse gas emissions that are produced as a byproduct of manufacturing might not get as much attention as emissions from delivery fleets, but manufacturing processes can be particularly energy- and resource-intensive, requiring significant amounts of heating, cooling and water. If you’re cutting down your footprint, it’s important to research alternative production methods, and start transitioning facilities over to renewable energy sources.
4. Distribution into stores
Historically, getting products to their final retail destination contributed significantly to value chain impact and emissions. Recently, ecommerce emissions have taken some of the focus off this stage of the supply chain, but no matter where products are being distributed, it’s still important for fashion brands to optimize logistics, cut down on unnecessary miles, and improve the energy efficiency of vehicles to reduce the impact of distribution emissions.
5. Final sale
With 46% of fashion purchases made online, the emissions embodied in online fulfillment are becoming an increasingly larger percentage of supply chain emissions — and they can’t be ignored. While many brands have encouraged online shopping by offering free returns, fashion brand Zara recently made headlines for introducing an online return fee to encourage people to shop more mindfully. It remains to be seen whether this will improve the brand’s rates, but it’s one example of an innovative approach to reducing the impact of the end-user purchase stage.
The challenges of sustainable supply chain management for fashion brands
Addressing the environmental impact of your supply chain is not a small or simple undertaking. And for apparel brands in particular, it can pose some unique challenges.
Challenge #1: Fashion supply chains are complex
Most supply chains are complex, but in the fashion industry, this complexity is extreme — even though it might not appear that way on the surface. The complexity of fashion supply chains comes from their tiered nature; each supplier you engage with engages suppliers of their own, resulting in a supply chain comprising multiple tiers. Tier 1 suppliers source from Tier 2 suppliers, and so on.
When calculating the final impact of a product, you need to consider every link in the chain. In McKinsey’s 2019 State of Fashion report, Leonardo Bonanni explains: “An apparel company might think that they only have 1,000 to 2,000 suppliers, but the reality is they have 20,000 to 50,000 when you count all the sub-suppliers. It’s a real challenge [for brands] to map their supply chain because there are too many third parties involved.”
The sheer size and complexity of apparel supply chains makes supply chain management alone very difficult, without adding environmental performance to the mix.
Challenge #2: Extracting data from suppliers is difficult
Conducting a Life Cycle Assessment (LCA) can yield invaluable insight into where your products make the majority of their environmental impact, and provide a clear baseline for improving supply chain environmental performance. But LCAs require accurate and reliable data from every link in a product’s supply chain, and getting this data can prove challenging for multiple reasons. Suppliers might provide data at different times and in different formats; some won’t have or might struggle to provide the data you need; and even if you do get the right data, it can be extremely difficult to keep track of such large and complex quantities of data without the right sustainability data management system in place.
Challenge #3: It’s hard to hold vendors accountable
With so many vendors in your supply chain, it’s difficult to set universal standards for environmental performance, and even more difficult to ensure they’re upheld across the board. For brands working on the sustainability of their products, a supply chain analysis may reveal that switching suppliers is the fastest way to reduce environmental impact, rather than requiring vendors to change to meet new standards — but this comes with its own challenges.
Challenge #4: Fashion requires fast turnarounds
The fashion industry’s famously short product cycles and ever-shifting market demands mean that supply chain needs change fast, and sometimes new suppliers, products and materials need to be brought on quickly. And while traditional supplier and material evaluations might focus on quality and cost, brands focused on managing their environmental impact must also evaluate potential suppliers from a sustainability lens. With time and cost constraints putting pressure on the procurement process, it can be difficult for brands to maintain consistently high standards for environmental performance across their supply chains.
The opportunities of sustainable supply chain management for fashion brands
The challenges of ‘greening’ supply chains are clear, but for brands willing to get started, the opportunities are immense.
Opportunity #1: Improved brand image
As more brands are scrutinized for their negative environmental impact, setting high standards for the environmental performance of your products is one way to stand out positively in a crowded industry. ‘Green’ is an increasingly popular label, and brands that take a strong stance on sustainability and social impact (and communicate it well) can become status symbols in the age of conscious consumerism — think Tesla, Patagonia, and TOMS.
A better brand image is its own reward, but it also brings co-benefits of better talent acquisition and retention (64% of millennials won’t work for companies that don’t have a strong CSR policy in place), increased investor interest (ESG funds now comprise 10% of worldwide fund assets), and better sales performance.
Opportunity #2: Increased market share
Consumers are more determined than ever to reduce their carbon footprints and leave a lasting positive impact on the environment — and for many, that determines where they’ll spend their money. 57% of consumers have made significant lifestyle changes to improve their environmental impact, and 67% consider the use of sustainable materials when making a purchase. If you can improve the environmental performance of your products, and communicate your impact clearly, your market share will reap the benefits.
Opportunity #3: Financial benefits
Although ‘greener’ might not always mean ‘cheaper’, many companies will find that switching to environmentally responsible suppliers and eco-friendly materials also has a positive impact on their bottom line. Additionally, the process of conducting thorough life cycle assessments and supply chain analyses often reveals opportunities for increasing efficiency and cutting down on costs — opportunities that might not otherwise have revealed themselves.
Opportunity #4: Market leadership
Brands who master their supply chain sustainability and learn to tell that story well are positioned to become market leaders in their categories. Pioneering brands can set new benchmarks for consumer expectations, influence competitor performance, and raise the standards for their suppliers, moving the entire industry forward as a result, and achieving impact at a scale far beyond their own direct operations.
Embracing sustainable supply chain management
Assessing and improving the environmental impact of your supply chain is a significant undertaking, but in an industry increasingly under fire for its impact, doing so has never been more important — or more urgent.
The good news is that, for brands ready to take the challenge, improving the sustainability of your supply chain can do more than simply improve your environmental impact. It can revolutionize your brand presence, improve performance across the board, and reshape your future trajectory.
How Green Story can help
If you need help quantifying the environmental impact of your supply chain, talk to Green Story. We partner with pioneering fashion brands to de-risk their businesses from an environmental perspective, and stay ahead of regulatory changes. Our unique software solutions, LCA methodology, and marketing integrations offer full transparency across your supply chains and the lifecycle of your products, ensuring you’re protected against greenwashing, and your customers understand — and can make decisions based on — the environmental impact of their purchase.
About Amelia Zimmerman
Amelia Zimmerman is an ESG and sustainability writer. She lives in Toronto with her puppy and her partner, and she is passionate about using storytelling techniques to help people understand and act on climate change.
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