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If reports are to be believed, Chinese fast-fashion behemoth Shin is trying to shake up its image to show it’s steadily slashing its $100 billion valuation ahead of a massive IPO in 2024. A lot of work awaits him. While the company controls 28 percent of its $15.7 billion in sales by 2021, it ranks among the worst in environmental sustainability, social justice and corporate governance (ESG). In order to keep prices low and remain relatively unregulated, it depends on suppliers in China, where the Uyghur people suffer from forced labor and dangerous working conditions. Also, the wasteful environmental practices ingrained in the model are so damaging that fast fashion is so damaging that most regulators believe it is unsalvageable. As the king of fast fashion, Sheen has a lot to answer for.
Still, as the company hires new sustainability-focused leaders and promises a new conscious approach, its efforts to market an eager desire to jump on the ESG bandwagon should put it on the road to redemption, right? Not exactly.
ESG is not a marketing tactic.
Businesses, fast fashion included, often misunderstand ESG. As a result, there were many talking heads who mistakenly criticized ESG as a “corporate cancel culture” when they responded that ESG had attempted “proactive” marketing or public relations. Then others, like Sheen, hope to use ESG by engaging in ESG messaging and storytelling, not realizing that the model is fundamentally at odds with ESG’s mission to save the planet.
For Shin and his contemporaries, changing the story of ESG is a thinly veiled strategy.
To address failed and superficial ESG efforts, former COO of Timberland, Kenneth Pucker, explained in the Harvard Business Review that addressing climate change in the current business framework (so-called “metrics”) was flawed from the start. He added that simply unlocking or downloading dials in those parameters without changing the root systems won’t work.
For fast fashion, effective ESG requires them to rethink their operations, from production and pricing to workers and supply chains, rather than living within their conventional parameters and moving the dial up or down. Real social justice and climate development. For most companies, that’s a scary thought, especially if they’re doing it for reputational reasons. However, if a company recognizes its responsibility and is truly compelled to help, the “ask” becomes more understandable, albeit difficult.
That’s why for Shin and his contemporaries, the ESG story without business transformation is a thinly veiled strategy. Even well-intentioned companies that understand and are driven by the United Nations’ Sustainable Development Goals find it challenging to meet the standards necessary to drive change. So there’s no way companies that embrace ESG just for myth can hope to move the needle. And research suggests that trying to tell stories without making meaningful changes won’t fly with the American consumer.
Transparency as a real strategy
While fast fashion may be beyond repair, other leaders in fashion are poised to embed ESG at the heart of their companies with the right guidance. It’s important to find partners — whether that’s an ESG or social impact consultancy or agency — that can help provide that guidance.
For example, the right partner can push fashion brands to unlock their ESG achievements. Working with global apparel brands, I can confirm that their business cultures are still largely old school and tend to see their ESG innovations and achievements as a competitive edge. So they don’t allow others to copy, for example, a revolutionary, organic system to remove chemicals from the water used in clothing production. They both fail to see the wider environmental benefits, as well as their company’s history and how they want to help others make a difference.
While fast fashion may be beyond repair, other leaders in fashion are poised to embed ESG at the heart of their companies with the right guidance.
Partners can speak the truth and encourage humility through a brand’s ESG approach. After all, there is no such thing as truly sustainable fashion. All fashion practices cause some environmental damage. Understanding this can help a company plan its actions and messages step-by-step and help consumers learn to reduce that negative impact by avoiding over-buying and waste. The famous “Don’t buy this jacket” ad from Patagonia is based on this philosophy and can be used industry wide.
This commitment to truth also extends to reporting, a contentious and ineffective ESG core but requiring oversight and assurance. Consultants and agencies help bridge the gap between fashion brands and these third-party “verifiers.” Organizations such as Fair Trade Union or the US Cotton Trust Protocol can provide accurate metrics that prioritize impact in ESG reporting.
While there’s no way fast fashion can be or talk about being environmentally friendly, other fashion brands (and partners who help tell their ESG stories) can contribute to the industry change needed to do right by our planet and our future.
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