This article appeared first in The Sustainability Gap, an in-depth analysis of BoF’s new report, The BoF Sustainability Index, which tracks fashion’s progress towards urgent environmental and social transformation. To learn more and download a copy of the report, click here.

Key Insights from The BoF Sustainability Index

• The inaugural BoF Sustainability Index tracks fashion’s progress towards ambitious sustainability targets for the coming decade. It examines public disclosures to rigorously benchmark performance and enable like-for-like comparisons at 15 of fashion’s largest companies.
• While fashion companies are speaking about sustainability more than ever before, BoF’s comprehensive analysis found actions are lagging public commitments, even among the industry’s largest and most highly resourced businesses.
• The average overall score of the companies assessed was just 36 out of a possible 100, with significant disparities between engagement and action. Overall, progress skews towards target setting, with data often self-reported and unverified, pointing to a wider accountability challenge.

The BoF Sustainability Index Materials Targets:

a. Preferred Materials — By 2022: Procure 100 percent of materials from preferred sources.

b. Regenerative Agriculture — By 2030: Procure 100 percent of all natural fibres from regenerative and socially responsible sources.

c. Recycled Polyester — By 2030: Eliminate virgin polyester.

Most clothes in the world are made using fossil fuels. Oil-based polyester is the most commonly used fabric in the world, with nearly 60 million tonnes produced in 2019. Fashion’s second-favourite fibre is cotton, a product with a complicated environmental footprint whose present links to modern slavery are as problematic as its past.

Shifting the raw material supply chain is both a colossal challenge and immense opportunity. The growing momentum behind more sustainable and regenerative agricultural practices holds out the prospect to not only mitigate fashion’s footprint, but perhaps one day enable the industry to have a net positive impact.

Materials certified to have a better environmental and social impact have hit the mainstream.

• All of the companies examined in the Index indicated they are turning to certifications to help them meet targets to procure more sustainable, or preferred, raw materials.
• More than two-thirds of the companies had targets to secure key materials from certified sources by 2025. Adidas says it has only sourced cotton that is more sustainable since 2018 and Nike confirmed earlier this month that it hit its target to do so last year.
• This is considered a foundational goal that companies should look to swiftly move beyond. There are significant disparities in the environmental and social requirements certifications apply and they can become a tick-box mechanism, rather than supporting more transformational approaches to material sourcing.

Data to quantify the impact of the shift to more sustainable materials is limited.

• Companies are almost wholly relying on certifications to back up claims of reduced impact.
• Quantitative data that demonstrates how changed sourcing practices have improved environmental and social outcomes was lacking.

Raw material supply chains remain a dangerous blind spot.

• Most of the companies examined had very limited visibility over where their raw materials come from. This is an issue in the news — not for the first time — because of allegations of serious human rights violations deep in the supply chain.
• Only a handful of companies met the stringent criteria laid out in the Index to demonstrate they are actively monitoring human rights at the raw material level (tier 4). This required companies to indicate they have visibility over their raw material suppliers or provide detailed information of country-level risks and how they are being addressed.
• Many companies rely on high-level due diligence and multi-stakeholder initiatives to mitigate risks at the raw material level. These initiatives have attracted mounting criticism for failing to prevent serious abuses in the past and the Index calls for more ambitious efforts to transform the supply chain.

Eliminating virgin polyester will be a long and difficult task.

• While almost all companies have released collections containing recycled polyester, only four had a time-bound target to fully replace the fibre with recycled alternatives.
• Adidas is the most ambitious, with a target to only use recycled polyester from 2024. More than 60 percent of the polyester in its products will come from recycled plastic waste this year, it said. Inditex has committed to only use more sustainable polyester by 2025, while both PVH Corp and H&M Group have set 2030 targets.
• In general, companies indicated volumes of recycled polyester are growing, but in many cases its proportion in the material mix was not disclosed or remains low.
• More investment is needed to develop and scale the technology that would enable this to become a mainstream solution.

Regenerative agriculture is attracting growing attention.

• Agricultural practices that protect and restore soil health and biodiversity are attracting mounting interest from fashion companies.
• Kering, PVH Corp. and VF Corp. have set goals to source some materials from regenerative sources.
• Kering and VF Corp. were the only companies to indicate they are already engaged in pilot projects focused on regenerative agriculture.
• Initiatives are still in very early stages and will require a concerted effort from the industry to drive impactful change. Organic cotton still has a market share of less than 1 percent, despite years of focus.

The Sustainability Council’s Take

“A transition away from fashion’s current extractive business model would be transformative. But scaling the industry’s access to regeneratively farmed materials and establishing regenerative systems requires investment and commitment. Greater education is required to ensure executives and employees understand the impact of their sourcing choices and are empowered to make better decisions for the planet. Investment is needed to build the capacity of both land stewards (so the risk of shifting ways of working is shared by all stakeholders) and distributed processing infrastructure. Outcome-based data, rather than practice-based commitments, must support any claims of land regeneration. Finally, it will require a transition from obscure and transactional supply chains to transparent and relational value networks.” — Daniela Ibarra-Howell, CEO and Co-Founder, Savory Institute

The BoF Sustainability Index is built on over 5,000 data points gathered across the 15 companies included in this year’s edition. To request access to the full underlying data, click here.

The BoF Sustainability Index is based on a binary assessment that examines companies’ public disclosures up until December 31, 2020. There are limitations to this approach and while the assessment was conducted in good faith, the results should be viewed as a proxy for sustainability performance and not an absolute measure. Where BoF was unable to identify public evidence to support a company’s performance relating to the assessment criteria, it does not necessarily mean the company is taking no action at all or that bad practices are present. Read the full methodology on pages 38-41 in the report here or see the FAQs.

Disclaimer: LVMH is part of a group of investors who, together, hold a minority interest in The Business of Fashion. All investors have signed shareholders’ documentation guaranteeing BoF’s complete editorial independence.