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.
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.
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.
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.
Last week the financial sector and the international development sector gathered in Geneva to discuss how asset managers, asset owners and banks can contribute to achieving the UN’s Sustainable Development Goals. Here is why one should resist the temptation of cynicism.