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December 2022 – During the ‘Venice Sustainable Fashion Forum’, the initiative designed together with Sistema Moda Italia, Camera Nazionale della Moda Italiana and Confindustria Venezia-Rovigo with the aim of indicating an agreed path of change and launching a transformation roadmap for the Italian fashion industry, The European House- Ambrosetti presented ‘Just Fashion Transition’.

The survey, carried out with the contribution of a number of major brands, local institutions and industry associations, assessed the state of the Italian supply chains. In addition to being an important means of collecting up-to-date data on the state of sustainable transition of Italian companies, it serves as a stimulus for companies to reflect on their level of maturity in the process towards sustainability.

The ‘just transition’

The challenge of an equal transition is unprecedented and the fashion industry qualifies as a key player to address the major challenges related to it

  • It is one of the most globalised and heterogeneous industries in the world, with long and complex global value chains that play a key role in climate change, raw material and land use, water exploitation, chemical use and labour exploitation
  • The fashion industry is currently responsible for 2-5% of global greenhouse gas emissions
  • If the industry continues to operate business as usual, emissions are projected to increase to 1,588 Gt by 2030, a trend that cannot be reconciled with the goal of reducing them by 45% to meet the Paris targets.
  • The fashion industry and the textile production chain are responsible for around 20% of water pollution

Fashion can (and must) be a leading sector in the fight against climate change

New obligations and regulatory pressures turn the spotlight on the fashion industry

The goal of limiting global warming to 1.5 °C compared to pre-industrial levels has set a clear deadline for climate action worldwide and consequently created momentum in global political agendas.

The European Union is moving faster than other countries: it aspires to become the first climate-neutral continent by 2050, and to establish itself as a pioneer of sustainable transition.

The fashion industry is no exception to the growing global regulatory trend, with more than 130 international and national regulations coming into force by 2021, mapped by the United Nations Economic Commission for Europe (UNECE) in an ongoing effort to identify all policies and legislation related to transparency and traceability for sustainable value chains in the apparel and footwear industry.

Three years after the presentation of the Green Deal, the textile sector is back in the European spotlight thanks to the recently proposed EU Strategy for Sustainable and Circular Textiles: 25 lines of action to be implemented by 2027 and to ensure that by 2030 the products sold within the European Union are durable, recyclable, non-hazardous and have a low impact on sustainability.

Sustainable finance to support the transition

“Finance is becoming a strategic lever to push the corporate system towards a sustainable transition across Europe; mandatory reporting of non-financial performance is planned for at least one thousand European fashion companies, which will also have to publish revenue percentages aligned to the Taxonomy on Sustainable Finance” – Carlo Cici, Head of Sustainability practice The European House-Ambrosetti

Between certifications and ratings

To date, there are more than 400 sustainability certificates applicable to the fashion industry on the market. Eighty-two per cent concern only products (the characteristics and materials), while only 18% concern operational processes, which in fact places a significant burden on the actors upstream in the supply chain.

Furthermore, another important aspect for the transition emerges from the Ambrosetti survey, namely the need to measure the sustainability of companies with a single tool: in 2018, there were more than 600 ESG ratings and rankings globally, and they have been growing ever since, which creates no small amount of confusion in the financial markets as to which companies are the most virtuous, as investors tend not to trust ESG ratings.

Consumers at the heart? Between sustainability and convenience

In contrast to the clear case of regulatory actors, whether consumers represent a real source of pressure for sustainable fashion remains a controversial topic. A screening of surveys over the past five years did not reveal a consistent increase in consumer behavioural change in favour of sustainable products.

For example, the results when asked ‘whether consumers consider sustainability an important factor in their purchasing decisions’ in two surveys conducted during the same period ranged from 24% to 61%.

Sustainability-conscious consumers also routinely trade sustainability for convenience: affordability is the factor that far outweighs the importance of any sustainability concerns.

Underlying the mistrust, there is certainly a real problem of a lack of consumer-oriented tools.

ESG – not only ‘environmental’ factors for a concrete transition for all

While half of the certification instruments integrate both environmental and social criteria, certifications dedicated to social issues account for only 6%.
Of the 100 largest European fashion companies that fall under Corporate Sustainability Reporting, 64 already have a structured approach to sustainability management and are the largest.
Business models are therefore changing, but a clear roadmap to 2030 is needed to facilitate the transition, and this cannot be achieved without a real consideration of the societal issues related to this sector.

Read the full report HERE