Carlo Capasa, Livia Firth, Antonio Achille and Elia Maramotti

MILAN — “The only future for fashion is sustainable and ethical.”

With those words, Carlo Capasa, chairman of Camera Nazionale della Moda, on Tuesday inaugurated the third edition of the “International Roundtable on Sustainability,” an annual event organized by the Italian Fashion Chamber aimed at raising awareness, promoting the exchange of experiences and boosting the conversation among the main players in the fashion industry’s sustainability push.

This year’s event — which was organized with the support of official partner Brandart, an Italian company in the production of packaging and displays, as well as of an institutional partner, the Milan Bourse — focused on several main topics, spanning from social sustainability to the development of a circular economy and the impact of companies’ environmental, social and governance criteria on financial investments.

Based on the premise that sustainability doesn’t only have an ethical value for companies, but it is also a fundamental asset for their businesses, the Italian Fashion Chamber and McKinsey & Co. released their first “Global Sustainability Report,” which for the inaugural edition was titled “Sustainability matters, but does it sell?” The study focused on the economic return of sustainability.

As McKinsey’s senior partner and global head of luxury Antonio Achille explained, the report involved more than 80 buyers of leading department stores in 25 countries, including Isetan, Saks Fifth Avenue, Barneys New York and Printemps, who were interviewed through online surveys, focus groups and one-on-one meetings.

Among the main conclusions, Achille pointed out that 68 percent of the interviewed buyers consider sustainability linked to “hard-core” elements, including fabrics, processes, traceability and labor conditions, rather than to “soft elements,” such as marketing, brand reputation and philanthropy.

“This implies a bigger economic effort for brands, since the development of hard-core sustainability requires investment between 8 and 12 percent of total revenues,” Achille said.

The research also put the focus on the fact that EMEA — a region combining Europe, the Middle East and Africa — the U.S. and the Asia-Pacific region are the most sensitive markets when it comes to sustainability. This is confirmed by the fact that 26 percent of buyers operating in those countries have delisted at least one brand because of sustainability concerns, including social justice issues, as well as problems related to animal welfare and brand image.

“This means that not embracing a sustainable approach is extremely risky for companies,” said Achille, who added that if department stores’ buying currently includes 23 percent of sustainable products, in five years 40 percent of their purchases will be sustainable.

From a customer’s point of view, the “Sustainability matters, but does it sell?” research found out that 70 percent of final customers would accept a price premium for sustainable products. In particular, 48 percent of them would be fine to pay an extra 5 percent, while 22 percent would accept a 10 percent price premium.

How do department stores communicate their investments in sustainability? Forty percent of the buyers surveyed said they communicate sustainability with corners, windows and a visual strategy and 70 percent also communicate sustainability in partnership with labels through product and brand storytelling.

With Europe, especially Italy, and Japan leading the pack in terms of sustainability, this is expected to have a growing impact on the business of brands and departments stores. In particular, while in five years the percentage of international brands and department stores embracing sustainable practices will be around 50 and 60 percent, respectively, 60 percent of international customers will consider the sustainable aspect a key factor driving their purchases.

“If the Eighties were all about craftsmanship, the Nineties saw the rise of powerful brands, the Aughts were defined by the boom of retail, the 2010’s centered on digital, the new decade will be dominated by sustainability, which is a prerequisite for luxury brands,” Achille said.

“The commitment to sustainability starts with the involvements of the top management. In our case, our chairman and chief executive officer François-Henri Pinault not only believes in sustainability for ethical reasons, but also for business reasons,” said Marie-Claire Daveu, Kering Group’s chief sustainability officer and head of international institutional affairs, confirming the results of the research conducted by the Italian Fashion Chamber and McKinsey. “Customers and clients care more about sustainability and because we are a luxury group we have the responsibility to work on this since we set trends.”

In particular, Daveu pointed out that at Kering sustainability is treated like finance with targets, KPI, calendars and bonuses for those reaching specific sustainability standards.

Max Mara "CameLuxe" project

Max Mara “CameLuxe” project  Courtesy Photo

Sustainability is also instrumental for LVMH Moët Hennessy Louis Vuitton, explained Sylvie Bénard, the group’s corporate environment director. The company’s sustainability strategy focuses on four main areas — product, supply chain, sites and CO2 emission — and she showcased the results LVMH reached in 2018, including the that the company’s three alligator farms and its exotic skin tannery have received certification by specialized organizations. She added that in 2018 the company couldn’t further reduce its use of water due to the droughts in California and Argentina. “Everything is not so easy,” she said, highlighting the difficulties of the sustainable path.

Embracing a circular economy model, Max Mara unveiled “CameLuxe,” a new project based on the idea of upcycling.

“Camelhair is our bread and butter, it’s a special fiber to use,” said Elia Maramotti, a member of the third generation of Max Mara’s founding family. “Giving new life to camelhair, we are opening a new chapter for our company.”

In particular, Max Mara, under the aegis of nonprofit institutions Textile Exchange and ICEA, have developed an industrial process, which transforming discarded camelhair fabrics, used, for example, for the brand’s signature coats, enables to obtain a high-end, performance insulation padding. After being sorted from the company’s manufacturers across Italy, the camelhair fabrics are mechanically transformed into fine fibers, which are then blended with recycled polyester in an insulating mix processed to become the padding used in a range of garments.

“The final product is even better than fully artificial padding,” said Maramotti, highlighting the process doesn’t require high water usage and energy consumption.

Packaging company Brandart is developing an environmental-centered auditing of its supply chain. As Etienne Carnaghi, the company’s deputy general manager, revealed, Brandart this year will release its first sustainability report for 2018 and in the second semester of 2019 will focus on a program aimed at gathering together and recycling discarded products.

The sustainability revolution doesn’t only focus on the supply chain’s dramatic impact on the environment, but also takes into account the human factor.

While Eco-Age cofounder and creative director Livia Firth put the focus on the leading role that the fashion industry should have in the promotion of inclusivity and diversity, Fair Wage founders Auret van Heerden and Daniel Vaughan-Whitehead, just back from a trip to Ethiopia, raised an alarm over a “crisis of social sustainability.” According to them, 700 million workers in emerging and developing countries live in poverty with a wage of less than $3.10 a day and in every region worldwide the minimum wage is well below parity with the living wage.

In keeping with their vision, companies should not only ensure legal minimum wages, but also promote fairer wage levels, strengthen wage adjustment mechanisms, improve their paying systems and develop communication and social dialogue. Following this strategy, companies would not only increase their reputation, but at the same time would significantly increase their profits, the duo said.

Van Heerden and Vaughan-Whitehead, which are launching a pilot Fair Wage assessment program with the Italian fashion chamber examining 40 Italian suppliers of luxury brands, pointed out that fair wage requirements are becoming a key factor among the financial community as well.

As highlighted by Kerry Kennedy, president of Robert F. Kennedy Human Rights, sustainability and risk management are deeply connected in an investor’s perspective.

“When we talk to our clients we see increasing concerns about the planet and society,” said Caroline Reyl, head of premium brands at Pictet Asset Management. “They are more and more willing to invest into top-scoring ESG [Environmental, Social and Governance] companies, which enable to limit investors’ risks and at the same time can guarantee long-term performance.”

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