The social risks of fast fashion

The fast fashion industry has been a significant economic success story of the last two decades, nearly doubling in size, employing 70m people worldwide and contributing 2% to global GDP. This has been driven by huge advances in supply chain management, shrinking lead times from six months to two weeks and enabling retailers to stock more choice, reduce prices and respond rapidly to consumer demand.

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Family ownership and sustainability

An inherent aspect of sustainability is about encouraging the players of a market economy to consider the long term. This is explicit in the European Commission’s Action Plan on Financing Sustainable Growth; one of the plan’s three aims is to ‘foster transparency and long-termism’. If all CEOs and investors were only concerned about the next few quarters, or even years, then it’s easy to understand how sustainable factors such as finite resources, climate change and diversity wouldn’t feature high on the agenda.

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The legal framework for sustainability

There is a consensus emerging that society and investors are best served by companies that focus on sustainable value creation rather than short-term profit. Many companies communicate increasingly loudly about how sustainability is core to their purpose, producing shiny brochures full of positive stories and setting targets such as the wave of 2050 carbon neutrality targets seen in recent months. However, one of the great challenges of sustainable investing is identifying the difference between company rhetoric and action.

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ESG rating bias and the key role played by internal bottom-up ESG analysis

European Small Cap Equity

We’re regularly baffled by the ESG scores for companies we know are committed to a sustainable future

We are often vocal about the shortcomings of ESG ratings. This frustration is particularly acute for our European Small Cap Equity team who invest in companies that often do not have any coverage from ESG agencies. For those that are rated, the grades rarely reflect what we understand of the company through our bottom-up analysis and regular company interaction. We’re regularly baffled by the ESG scores for companies we know are committed to a sustainable future.

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Can fast fashion be sustainable?

Shopping streets around much of the world are lined with Christmas decorations, ready to welcome the hordes of shoppers in what is usually the busiest shopping period of the year. But there is a backlash emerging in response to our growing consumerism and the clothing industry is under increasing scrutiny. Not long since the flight shaming movement started, a new trend is gradually emerging in Nordic Countries: the Köpskam – literally the shame of buying, and mainly aimed at the fashion industry.

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Engagement efforts with CDP

Earlier this year QUAERO CAPITAL became a signatory to the Carbon Disclosure Project (CDP), an organization that campaigns for better disclosure of environmental performance data from companies, cities, states and regions. It aims to make environmental reporting and risk management a business norm, and drive disclosure, insight and action towards a sustainable economy.

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