This article is part of our Vogue Business membership package. To enjoy unlimited access to our weekly Sustainability Edit, which contains Member-only reporting and analysis, sign up for membership here.
The World Economic Forum (WEF)’s annual meeting in Davos is not known for driving radical industry change, but the themes that emerged this year could prove significant for how fashion does business.
Ongoing environmental issues, including Scope 3 emissions, the transition to renewable energy and the importance of collaboration and partnership in driving progress featured heavily across the event, which ran from 15 to 19 January. Nature, circularity and alternative economic models — which haven’t been prominent topics of discussion in past years — also rose to the top of the agenda. Organisations called on the industry to embed nature into decision-making processes; adopt circular principles and be willing to track progress and monitor challenges towards circularity; as well as develop alternative approaches to economic growth that reduce inequality rather than reinforce it.
Nature on the agenda
Extreme weather was the top concern for Davos attendees this year, according to the latest WEF global risks report. The northern hemisphere experienced its hottest recorded year in 2023, and El Niño, or the warming phase of the alternating El Niño Southern Oscillation cycle, is expected to strengthen and persist until May 2024, leading to record-high heat conditions with extreme heat waves, drought, wildfires and flooding — all of which many countries don’t have the infrastructure or resources to navigate, the report says.
The Science Based Targets Network (SBTN) released the first science-based targets (SBTs) for nature last May, which look to guide the corporate efforts around nature conservation and restoration and build on the momentum of the climate-focused SBTs initiative. In Davos, SBTN highlighted the importance of adopting “an integrated approach to climate and nature” in organisations, so that these aspects are factored directly into how companies conduct business on a daily basis. In the current model, nature appears to be an afterthought, with companies addressing impacts after they’ve occurred and often through charitable means, not through the core of their business. SBTN — which currently works with conglomerates including LVMH, Kering, L’Occitane and H&M Group — called on all companies to start implementing its technical methodologies.
“Time is running out, and we need to move from understanding to action. As we prepare for the broader roll out of SBTs for nature later this year, we’re calling on all business leaders to step up and take action to address their impact on nature,” says Erin Billman, executive director of SBTN. “While economic headwinds and geopolitics have rightly dominated the minds of global leaders at Davos, we’re pleased to see the growing recognition that addressing nature and climate is just as important for the long-term resilience of businesses.”
Experts say fashion and apparel brands are likely to struggle most with tracing their supply chain to understand where suppliers or sources impact nature, in part because those impacts — from land use change to plastic pollution to the health of aquatic ecosystems — are so complex and wide-ranging. However, they are crucial to track.
“Many companies do not have full visibility into their supply chains, know where their raw materials are sourced and/or how they are produced,” says Dr Carter Ingram, managing director at Pollination, who has worked with businesses, including in the fashion sector, on piloting the Taskforce on Nature-related Financial Disclosures (TNFD), a voluntary initiative that encourages companies to integrate nature into decision-making. “Because nature is place-based it is important that companies can trace their supply chains to the locations where raw materials are sourced and grown.”
She expects TNFD to help companies improve their supply chain traceability and raw material sourcing, and understand the link to biodiversity. Among the initiative’s 300 early adopters — announced at the event — are LVMH, Kering, Natura and other fashion, beauty and jewellery companies, who have committed to start making disclosures aligned with the TNFD “Recommendations” in their corporate reporting by the financial year 2024 or 2025. TNFD’s set of disclosure recommendations guide organisations on how to report and act on the nature-related impacts that influence financial risk or opportunity. This is based on four pillars: governance, strategy, risk management and metrics or targets.
Measuring progress on circularity
In a bid to improve circularity efforts and establish mechanisms for accountability, the World Business Council for Sustainable Development (WBCSD) launched the latest edition of its Circular Transition Indicators framework at Davos, helping brands assess levels of circularity, set targets and monitor progress. A number of brands are already on board — including VF Corp, owners of Supreme, The North Face, Timberland and Vans.
The organisation aims to consolidate the data on circularity, preparing brands for upcoming regulations such as the EU’s corporate sustainability reporting directive, while building the business case for how brands’ commitments to circularity can also increase their profits.
“The fashion and textile sectors have a desire for innovation and are already quite mature in the circular economy, but they’re finding it hard to scale beyond the level of pilots,” says Irene Martinetti, circular economy manager at WBCSD.
The idea is to tie together the parts of the circular economy that fashion has largely left unconnected. Some of the considerations the Circular Transition Indicators suggest include using materials that can be recycled at the end-of-life stage, sourcing strategies like regenerative agriculture, design that extends the life of a product and allows for repairability, and offering collection systems to take products back and deal with them responsibly. The framework tailors the suggestions based on the company’s size and position, allowing them to play to their strengths.
Crucially, fashion companies will only be able to use circularity to future-proof their revenues if they participate across the whole circular loop and are thinking about how the end of one product can lead to the birth of another. “You’re able to generate more revenue from less virgin resources, which should be any business’s concern with the current landscape around resource scarcity and price volatility,” Martinetti says.
Alternative growth models
Sustainability initiatives in fashion have ramped up in recent years, but the industry has largely shied away from discussing or questioning the core business model it relies on. Yet capitalism and globalisation were key themes in Davos, and calls for alternative growth models — particularly those that rebalance the inequalities between the Global North and the Global South — came from offices as high as the director general of the World Trade Organization, Dr Ngozi Okonjo-Iweala.
Leaders and policymakers need to “rethink old growth models”, said Okonjo-Iweala, “and ensure globalisation works for all”. She pointed to reglobalisation as a pragmatic and equitable approach that takes into account countries’ concerns around supply chain resilience. “We can diversify our supply chains, deconcentrate those sectors and geographies that are causing a problem by diversifying them to developing countries and other parts of the world that have the right business environment,” she said.
The relevance for fashion is clear: “[The] creative potential of fashion could and should extend to creative business transformation,” Katia Dayan Vladimirova, senior lecturer at the University of Geneva and founder of the Sustainable Fashion Consumption research network, told Vogue Business earlier this month.
Comments, questions or feedback? Email us at feedback@voguebusiness.com.
