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 Water & Chemicals Targets:

a. Water Use — By 2030: Reduce water use to naturally replenishable levels.

b. Harmful Pollution — By 2030: Eliminate harmful pollution.

c. Hazardous Chemicals — By 2030: Eliminate hazardous usage of chemicals.

d. Microfibre Pollution — The Baseline: Actively engage in industry efforts to minimise microfibre pollution.

The fashion industry’s impact on global water supply stretches from notoriously water- and pesticide-intensive cotton farms to the chemicals required to process materials and dye fabrics, and the microfibres that escape in the wash and reappear in the oceans.

Despite this, fashion is a laggard in disclosing its water risks and how companies are addressing them, according to a report published last year by environmental disclosure system, CDP. This lack of awareness suggests many companies may be underreporting or underestimating their risk exposure, the report found.

Companies’ approach to water management is becoming more sophisticated.

• A small but growing group of leading companies indicated they are looking to set context-based targets, which aim to align water management strategies with local resource constraints.
• Levi Strauss & Co. has set a target to reduce water used for manufacturing in areas of high water stress by 50 percent by 2025 compared to a 2018 baseline, making it a stand-out performer on the Index’s water-focused target. Gap Inc. and H&M Group explicitly indicated they also plan to set context-based targets.

More momentum is needed to eliminate hazardous chemicals.

• A decade of advocacy has helped establish minimum standards to mitigate the worst chemical pollution in fashion’s supply chain; more than two thirds of the companies are members of ZDHC, a 10-year-old industry organisation established for this purpose.
• However, fewer than half of the companies had time-bound, quantitative targets to reduce water use in their manufacturing supply chain, and the same goes for pollution.
• Targets to reduce pollution were largely focused on compliance with ZDHC’s framework, which critics argue has been slow to evolve. The group’s chemical guidelines for manufacturing have been updated once in the last decade and only just expanded to cover leather processing. Until January 2021, companies could self-declare conformity with the group’s guidelines. ZDHC did not provide a comment.
• Around a third of the companies provided no data on wastewater pollution and a similar amount disclosed it irregularly, for a limited proportion of the supply chain or in a format that is not comparable.

Microfibre pollution is an emerging area of focus.

• Nearly two-thirds of the companies examined for the Index indicated they are taking steps to understand their contribution to the problem.
• Action is limited: only five of the companies indicated how these learnings are affecting design decisions.

The Sustainability Council’s Take

“The UN Environment Programme’s latest global chemicals outlook reports that millions of tonnes of synthetic chemicals enter the global environment annually — many of which are hazardous to humans and the environment. Companies in the global fashion industry have worked for many years, collaboratively and individually, to address fashion’s portion of this problem. The reduction commitments and the infrastructure for more effective supply chain oversight mostly exist. But as this report shows, significant reductions in the industry’s chemical pollution are not evident. The industry would benefit from holding itself publicly accountable to reducing its chemical pollution by requiring companies to annually publish their chemical footprints, i.e. the quantitative measurement of the chemicals of high concern in products, manufacturing processes, facilities, supply chains and/or packaging. One structured mechanism for doing so is the Chemical Footprint Project, which allows companies to demonstrate to investors and the public the tangible outcomes of their chemicals management programmes.” — Boma Brown-West, Director, Safe and Healthy Products, Environmental Defense Fund

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.