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 Waste Targets:

a. Waste to Landfill, Plastic Packaging — By 2022: Eliminate waste to landfill and virgin and single-use plastic packaging.

b. Waste-Free Production — By 2022: Establish waste-free production.

c. Circular Business Models — By 2025: Establish a circular business model.

Every year, roughly 40 million tonnes of textile waste is sent to landfill or incinerated, according to the Ellen MacArthur Foundation. The rise of affordable fast fashion means consumers now buy more clothes, but use them for less time than ever before. But this isn’t just a fast fashion problem. Even before Covid-19, over-production was so prolific that just 60 percent of garments were sold at full price. The excess inventory that piled up during pandemic-induced lockdowns is a recent and visible reminder of the sector’s excess.

Publicly, this is an area that has received significant attention. Circularity has become a popular buzzword, with brands pointing to a utopian future where old products can be recycled into new ones in a virtuous waste-free loop that detaches the industry from an extractive, linear business model and enables guilt-free growth. But it is not easy to walk the talk when it comes to circularity.

Waste is the worst-performing category in the Index.

• While disclosure for all categories was universally patchy, waste is an area where information was particularly lacking, with no clear standard for reporting or target-setting.
• Almost all the companies had broad goals to reduce waste and plastic use, but information on progress towards these goals was inconsistent, making it very difficult to measure.
• Adidas, Nike and Puma were the only companies to provide data on waste beyond their own operations. Information on plastic in packaging was largely anecdotal and only a fifth of the companies provided information on how they were tackling this from a B2B perspective.
• Inventory management, which has proved a drag on companies’ financial performance during the pandemic, got little airtime. Just over half of the companies provide data on inventory levels on a quarterly basis, but only four disclosed any information about how excess volumes are managed.

Companies are talking more about circularity than they are embracing it.

• Substantial investment and innovation are required before the industry can come close to achieving its circular ambitions.
• But uptake of solutions that are available today was limited too: just six of the companies already offered some form of resale during the Index assessment period. Only VF Corp and H&M Group indicated they actively offer rental.
• Two thirds of the companies indicated they offer some form of take-back scheme for old clothes, but information on the volume they collect or what happens to those garments was limited.
• Just over a third of companies said they were already designing some products to be recyclable, a critical step to help reduce the pile-up of old clothes in landfills.

There is an urgent need, and significant opportunity, for transformation.

• There are signs of mounting interest in new business models, even among luxury players who historically have been wary of the rise of resale; Kering acquired a 5 percent stake in re-commerce platform Vestiaire Collective in March, while LVMH has also indicated it is eyeing opportunities presented by the second-hand market.
• More than half the companies indicated they are actively engaged in efforts to develop solutions for post-consumer waste like textile-to-textile recycling technologies, some of which are now reaching industrial scale.

The Sustainability Council’s Take

“There is a general belief out there that the textile, apparel and fashion industries are not doing enough for the health of our environment. We are seen to be part of the problem. Yet we know there are lots of innovations, ideas and solutions ready to deploy, at scale, to make our industry greener, cleaner and more sustainable. To get the ball rolling, we need to change the ways we grow, process and colour the materials we use, and overhaul the way we manufacture, transport and warehouse the products we sell. We need to minimise waste and stop thinking of old products as disposable. And we need more effective ways to talk about this with our customers.

“Courage, wisdom and a sense of urgency are needed in this hour.

“Environmental sustainability is bigger than any one brand, supplier or retailer. We all have to work together. This is not only our shared challenge, it is also the unifying purpose for our industry.” — Edwin Keh, CEO, The Hong Kong Research Institute of Textiles and Apparel

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.