As we enter our third year of living with the pandemic, many of us are finding that it is more challenging than ever to forecast and plan during the rapidly changing nature of our world. While we are very much living in unpredictable times, there are some things that we can look towards to help guide us through the fog; such as lessons learned from past experience, trusted wisdom from experts, a solid grounding in science, and, very importantly, committed partners and fellow travellers, with whom we can achieve so much when we bring our hearts and minds together.
Before jumping to new trends though, there is comfort in knowing that much of the work needed to transform our industry for the better has already been underway for some time. Organizations such as the OECD, with their Due Diligence for Responsible Supply Chains in the Garment and Footwear Sector, and the UNGP, provide excellent frameworks for assessing the risks of adverse impacts in value-chains, while we at the SAC have spent 10 years collaboratively developing the Higg Index tools to measure social and environmental performance for the apparel industry in a consistent, comparable way. This has also included the creation of the rapidly scaling Social & Labor Convergence Program, to consolidate social and labor data.
On the environment front, we have recently aligned with the Apparel Alliance on directing the industry towards seven interventions to address the urgent carbon emissions reductions our industry needs, as identified in the most recent “Roadmap to Net Zero Report,” from the World Resources Institute and Apparel Impact Institute.
In this context, I want to remind us that before we look towards the exciting new solutions and innovations for the future outlined by some of our thought-leaders later in this piece, we should be encouraged to build on work that has already been done, and to remain grounded in tried and true processes that may seem ‘boring’ or ‘old news’, but are proven to make an enormous difference.
While making shoes out of the new and sexy plant-based material might generate great excitement and make a splash in the news, (I say this while recognizing that next-gen materials have a vital role to play as a key intervention for reducing emissions, as outlined in the AII and WRI report), we also need to double down on some of the less newsworthy interventions such as ‘maximizing material efficiency’, ‘eliminating coal in material and product manufacturing’, and ‘shifting to 100% renewable energy’. These might not make for the hottest news headlines, but they are highly critical.
As we look to 2022, the power of science must play a central role here. New narratives and stories that inspire action should have their foundation in credible, independent, and objective science that provides us with the information we need to enable us to align with the goals of the recent COP26. This year, our industry will need to further accelerate on Science Based Targets (SBTs) and act with urgency to deliver them, but we have to do it together. I am proud to say that here at the SAC, our tools and programs are science-based, and rely on high-quality, verified data. As we mobilize collective action, my hope is that the Higg Index will be adopted industry-wide at an even greater scale this year.
Returning to the Social and Labor space, another example of what might seem mundane is the topic of re-wording contracts and purchasing agreements in order to accelerate better buying practices. This type of project requires a lot of work that might appear tedious, yet it is essential for ensuring the right practices are in place to create more equality, social justice and protect worker well-being in the value chain. Yet again, there are great foundations, and work already being done to support this, from the ‘Sustainable Terms of Trade Initiative’ to ‘The Common Framework for Responsible Purchasing Practices’, which we believe will become more important, and which for the SAC, will see aligned updates through our Higg BRM module.
We really should align and bet on existing proven tools and programs, and collaborate with the right players to ensure we’re establishing the right synergy and industry calibration.
Another hot topic that will only continue to gather momentum this year is the active crackdown on greenwashing, which we at the SAC welcome. With upcoming legislation such as the proposed green claims initiative in the EU, and the newly proposed Fashion Sustainability Act bill in New York City, transparency will become more critical than ever. It is imperative again that the industry aligns on standards for communicating sustainability claims about their products and businesses, in consistent, comparable, meaningful ways, supported with objective verified data, that is easily accessible. The SAC’s Higg Index Transparency Program launched just last May with an initial focus on materials, and has been built on a decade’s worth of developing our Higg Index Tools, consumer testing, and contributed environmental impact data. We are excited to be accelerating this work through 2022 as we expand beyond just materials, and to full products, facilities, and brand and retail practices. As this NYTimes article shares, “Ultimately, fashion, like the food industry, will have to get to a point where everyone uses the same format…only then will we have a really good system.”
And then there is the world of finance, and its critical role as a potential catalyst to help transform our industry, both from an environmental and social perspective, as Larry Fink of Black Rock recently noted, “decarbonizing of the global economy is going to create the greatest investment opportunity of our lifetime”, while acknowledging “companies perform better when they are deliberate about their role in society and act in the interests of their employees, customers, communities, and their shareholders”.
Sustainability and purpose are rightly starting to pervade all areas of our lives, and even though we are living through unpredictable times, we can still make predictions for the upcoming year, thanks to the power of science, the contributions of experts in our Coalition who have helped us build our Higg Index tools, and our partners and stakeholders. At the SAC, we will continue to evolve our tools, and move firmly into a new phase of creating programs to help scale the use of them. We will continue to support impactful collective action, and we are optimistic that we have both the sources of truth and the passion to guide us in the next phase of industry transformation.
Here below, you can view predictions that we’ve gathered from thought leaders in our community, who have shared their views on what key actions and ideas we must pay attention to in 2022. While it might be hard to plan, we can still do our very best to prepare accordingly. I hope these educated predictions lend you a compass for the year ahead as we work to transform our industry into one that gives more than it takes- to the people and the planet:
2022 should be the year in which we bring together the most promising initiatives, standards and tools for decent work that we have collectively created over the past years. By combining them in a coherent way that brings value to all stakeholders, we can support the industry in a common business logic, a shared vision of sustainable production and fair business practices. Let’s join forces and connect workstreams at theindustrywewant.com ! – Alexander Kohnstamm, ED, Fairwear Foundation
“For years we have expressed the importance of collaboration, but this year the need to surpass traditional boundaries and create new alliances is more apparent than ever. These can be within the fashion industry but also in the form of atypical alliances through which we can identify mutual challenges and learn from successful solutions that are being demonstrated. It is time to break down silos, enable impactful partnerships and drive progress on a greater scale.”
– Federica Marchionni, CEO, Global Fashion Agenda
Science-Based Targets (SBT’s)
When it comes to climate change, I foresee 2022 will be the year of actions rather than words. The Science Based Target (SBT) framework that many companies are following finally inspires actions. There is realization that we have a huge challenge ahead of us. Systemic change in any industry requires a multi-level approach where cogs in many parts of the system need to turn, not just by itself, but by connecting with other cogs in the system in an economically sustainable way. Private enterprises, government regulations and financial market forces are some of the key levers to get the cogwheels in motion. I foresee more traction in establishing economic incentives between enterprises along the supply chain. – Delman Lee, TAL Apparel
There has been tremendous growth in the number of companies in the apparel sector setting science-based climate change targets (SBTs). In 2017, roughly a dozen apparel companies had approved SBTs or commitments – this number is now over 170, and spans geographies and company types (brands, manufacturers, material suppliers, etc). This is enormously encouraging, though the sector must now act with urgency to deliver on these commitments. The sector knows what it must do to reduce emissions – reports such as the Roadmap to Net Zero lay out the steps. We now need collective industry investment of attention, capital, and innovation to transform the sector to a more sustainable and equitable future. – Michael Sadowski, World Resources Institute
One trend that dominated headlines this past year, especially surrounding the lead-up to COP 26, is the rise in greenwashing. This has, of course, followed the growing consumer awareness of fashion’s impacts on people and planet. At Good On You, we see brands making bold claims about their sustainability efforts, but then not consistently or fully disclosing that information, leaving consumers confused and distrusting. Many large brands, for example, are setting ambitious greenhouse gas emissions targets, but then nearly 70% don’t state whether they are on track to meet them. In 2022, we need to move past the greenwashing and spin, or risk consumers growing more skeptical of sustainability claims. This underscores the industry’s need to not only promote greater transparency, but to make this information accessible and actionable for consumers at scale. I’m really excited about the role the SAC’s transparency program will play in driving the industry in this direction. — Sandra Capponi, Good On You
As marketers see the growing demand and price premium opportunities for better products, the practice of “greenwashing” is accelerating. Getting to a future where markets reward only those who are meaningfully changing their business and products, starts by making the invisible, visible. Technology and data is the unlock here, connecting the products we buy to the supply chain behind them. But it’s not a change in customer behavior that will create the tipping point. It’s industry’s commitment to standards and comparable data; it’s policymakers providing a clear path and regulatory incentives and its capital redirection to de-risk investment and reward leaders. At Higg, we’re helping make it easier for committed brands, retailers and manufacturers to get a complete view of their value chain impact. Only when true impact is understood, acted upon and shared transparently, will we be able to move beyond the incremental improvements of the last decade. –Del Hudson, VP Marketing/Communications & Stakeholder Relations at Higg
The fashion industry is at an inflection point at the moment where we see tremendous efforts towards circular business models and we are also seeing a strong momentum building up to shift from synthetic materials to renewable, nature-based materials with lower environmental impacts. This has resulted in sharp growth of recycled fibers, viscose, lyocell, organic cotton, vegan leather etc. At Birla Cellulose, we are aligning to increased demand of such materials by aggressively scaling eco-enhanced fibers like Livaeco and circular fiber Liva Reviva. We are also seeing the increasing use of transparency tools by brands, such as block chain based platform GreenTrack and Higg MSI data, Higg (3.0) FEM data, for making buying decisions and communicating the sustainability aspects to end consumers. – Mukul Agrawal, Chief Sustainability Officer, Birla Cellulose
My expectations for 2022, specifically for Bangladesh, are very bullish. Due to a confluence of geopolitical issues, Bangladesh is in a unique position in being able to provide a level of transparency, sustainability, compliance, quality and volume, with an acceptable cost. Bangladesh has a high likelihood of achieving its much vaunted target of $50 billion in exports in the calendar year of 2022 and a focus on sustainability is central to this success. – Miran Ali, BGMEA
There will be more focus (and pressure) on strong decarbonization and climate action in manufacturing. While the majority will focus on energy efficiency and renewable energy, sustainability leaders will be looking beyond the current technology to envision/invent deep decarbonization and net zero pathways. The enhanced asks on audits/certifications and reporting will be a burden and will continue to draw critical resources away from sustainability solutions and performance improvement. This is why convergence on assessments will be a key priority for manufacturers for 2022. -Vidhura Ralapanawe, EVP, Epic Group
In 2022, more regulations for our sector will be drafted, voted and applied. Europe will keep driving the push, while new movements in the US are also emerging, like in NY State early this year with the proposed Fashion Sustainability Act. The appetite to quickly regulate our sector is strong, impacting marketing efforts, material and supplier management, design, and virtually all departments in an organization. As a leader in a retailer, brand, manufacturer company, you still have time to strategically include those core demands in your plans; this shall be at the top of your 2022 agenda. The Policy Hub, the SAC, and our partners are here to help you navigate the situation. -Baptiste Carriere-Pradal, Chair of the Policy Hub
I also foresee that upcoming policies will force the industry to adapt by enhancing transparency and providing clarity for consumers. With upcoming EU legislation including the Sustainable Products Policy Initiative, I expect that there will be clearer requirements for brands to adhere too when making sustainable claims – which I hope will minimise greenwashing and empower consumers.” – Federica Marchionni, CEO, Global Fashion Agenda
2022 marks the 5th year since the OECD Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector was finalized based on consensus between business, trade unions, civil society and governments, creating the due diligence standard for the sector. This year I expect to see much wider uptake of due diligence by companies in the sector, driven by at least three key developments:
- Increasing mandatory due diligence expectations from governments to businesses to identify and address human rights and environmental impacts in their supply chains, in line with the OECD Guidance.
- A growing sense of urgency for the private sector to address its climate impacts, and
- Lessons from COVID that shone a light on the inadequacy of current business models in the sector to support decent working conditions and environmental stewardship, with the linear sourcing model largely unchallenged and unchanged.
These issues are not acknowledged nor resolved overnight, but there are moments of collective clarity, such as the one forced upon us by the pandemic, that we can’t let pass us by. At the OECD’s 8th annual forum on due diligence in the garment and footwear sector, taking place virtually on 23-24 February, we’ll gather to explore these issues and continue to push the sector forward. -Dorothy Lovell, Garment and Textiles Lead, OECD Centre for Responsible Business Conduct
Finance & Investments
“It is time for collaborative action in the industry. The pandemic hasn’t resulted in any significant shift towards more sustainable business operations, which is a missed opportunity. Brands should jointly agree on a pragmatic and actionable plan to cooperate with their manufacturers and stakeholders and start implementing actions towards a circular, sustainable and responsible sector. Real frontrunners don’t await new government-instigated regulations and requirements but move by themselves. Investments in a transparent, fair and sustainable value chain pay off, providing financial, environmental and social returns. This could range from circular designs, disruptive technologies and recycling equipment to paying living wages. Sustainability is the
only way forward for the sector, also as consumers will increasingly demand transparency and fair and responsible products. 2022 is the year to make a real start.” – Bob Assenberg, Fund Director, Good Fashion Fund
At HSBC, we have committed $750 billion to $1 trillion of sustainable finance because we believe that we can be a catalyst to the change needed in the world. The apparel sector has been a real leader in pushing for that change, with enormous credit to the SAC for creating the practical solutions and tools the industry needs. For HSBC, we believe in partnering with our clients and industry leaders like the SAC to drive our financial programs forward, like our sustainable supply chain finance partnerships that focus on both the environmental and social impacts of global supply chains and use capital to drive for improvement. As the apparel industry, and its clients, continue to push for transparency and change, the financial sector has a key role to play in providing the capital needed to make that change a reality. – Kelly W. Fisher, Head of Corporate Sustainability, HSBC Bank