If reports are to be believed, Chinese fast-fashion giant Shein is trying to make amends, changing its image to justify its continued decline in its $100 billion valuation ahead of an ambitious IPO in 2024. It has a lot of work to do. While the company controls the majority of the category at 28 percent, amassing $15.7 billion in sales in 2021, it is also among the worst in environmental sustainability, social justice and corporate governance (ESG). To keep prices low and remain relatively unregulated, it relies on suppliers in China, where the Uighur population suffers from forced labor and dangerous working conditions. Also, with wasteful environmental practices embedded in its design, fast fashion is so damaging that most regulators believe it is irreversible. As the king of fast fashion, Shein has a lot to answer for.
However, as the company hires new leaders focused on sustainability and promises a new conscious approach, its efforts to market an enthusiastic ambition to jump on the ESG bandwagon should put it on the road to redemption, right? Not enough.
ESG is not a marketing tactic
Businesses, including fast fashion, often fundamentally misunderstand ESG. As a result, there have been many talking heads who have wrongly criticized ESG as a “corporate culture of cancellation,” reacting as if ESG was “awakened” by bad marketing or PR. Then others, like Shein, also hope to use ESG to their advantage by engaging in ESG messaging and storytelling without realizing that the model is, at its core, antithetical to ESG’s mission to save the planet.
For Shei and their contemporaries, the ESG story without business transformation is a thinly veiled strategy.
Addressing failed and surface-level ESG efforts, Kenneth Pucker, former COO of Timberland, explained in the Harvard Business Review that adapting to climate change within a business’s current framework (called “parameters”) is flawed because in the beginning. He added that simply turning the numbers up or down within these parameters without changing the underlying systems will not yield results.
For fast fashion, effective ESG requires that instead of existing within their usual parameters of producing disposable clothing and cynically moving a dial up or down, that they rethink their entire business, from manufacturing and pricing in workers and supply chains, with the goal of achieving true social justice and climate progress. For most companies, this is a scary notion, especially if they do it for reputational reasons. However, if a company understands its responsibility and is obliged to actually help, the “question” becomes more understandable despite its difficulty.
That’s why for Shei and their contemporaries, telling ESG stories without business transformation is a thinly veiled strategy. Even the best-intentioned companies, those that understand and are guided by the UN’s Sustainable Development Goals, find it difficult to meet the standards needed to really make a difference. So there’s no way companies that adopt ESG just for storytelling can hope to move the needle. And studies suggest that if they try to tell stories without making meaningful changes, it won’t fly with the American consumer.
Transparency as a real strategy
While fast fashion may be beyond repair, other fashion leaders are certainly poised to embed ESG at the heart of their organizations with the right guidance. It’s important to find partners – whether it’s an ESG or a social impact consultancy or agency – who can help provide that guidance.
For example, the right partner can push fashion brands to open source their ESG successes. Having worked with global clothing brands, I can attest that their business cultures are still largely old and they tend to see their ESG innovations and successes as a competitive advantage. So they wouldn’t, for example, allow others to copy their revolutionary, organic system for cleaning chemicals from the water used in clothing production. They fail to understand that this can be a wider environmental benefit as well as their company’s story and how they want to help others make a difference.
While fast fashion may be beyond repair, other fashion leaders are certainly poised to embed ESG at the heart of their organizations with the right guidance.
Partners can also encourage truth-telling and humility in 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 allow an organization to level its actions and messages and help consumers learn to reduce that negative impact by avoiding over-purchasing and waste. Patagonia’s famous “Don’t buy this jacket” ad was based on this philosophy and could be used throughout the industry.
This commitment to truth also extends to reporting, a contested and ineffective core element of ESG that nevertheless needs oversight and verification. Consultancies and agencies can help bridge the gap between fashion brands and these third-party “verifiers.” Organizations such as the Fair Labor Association or the US Trust Protocol can provide actual metrics in ESG reporting that prioritize impact.
While there’s no way fast fashion can be, or pretend to be, environmentally sound, other fashion brands (and partners who help tell their ESG stories) can contribute to the industry change required to truly done right by our planet and our future.
