Sustainability at Inditex
Can sustainability and fast fashion co-inhabit?
Clothing and the environment
Clothing production has long been one of the most polluting supply chains in the world. The fashion industry faces environmental challenges at every step of the supply chain, from raw material creation to finished goods delivery [1]. Once in consumers’ hands, clothing enters another supply chain of use, care, and disposal.
Fast fashion’s increasing dominance has only exacerbated this issue as it has increased the volume of clothing made, sold, and eventually sent to landfills. Between 2000 and 2014, global clothing production doubled as a result of supply chain optimizations and lower prices that facilitated consumer demand [2]. However, the lifetime of a clothing item has been cut in half as consumers value new styles and fast fashion’s lower quality products degrade faster [3].
The majority of clothing lands in the trash. In 2012, 84 percent of the US’ unwanted clothing ended up in the garbage. Americans are now throwing away an average of 80 pounds of clothing per person per year. In total this amounts to 14 million tons, double the amount of clothing added to landfills 20 years ago [4]. The data is even worse for fast-fashion, as secondhand stores frequently reject their lower quality items, leaving the consumer with alternative but to throw them away.
Sustainability is the new hot word in fashion
Consumer interest in sustainability has increased recently. Just last month, fast fashion king H&M partnered with other major brands such as Nike and Levi’s to pledge to use 100% sustainable cotton by 2025 [5]. Brands founded on a sustainability mission have also become some of the hottest labels in fashion. One example, Reformation, even borrows from the “Zara-like fast fashion model” to make clothing from sustainable and recycled fabrics [6]. Reformation’s venture-backing, along with commercial success, provide additional validation that the sustainability trend may be here to stay [7].
Inditex examines its operations
Fast fashion pioneer Inditex, parent company of Zara, turned consumers onto the idea that they could purchase trendy clothing, en masse, at a low cost. Its revenue nearly tripled between 2005 and 2014 on the back of fast fashion [8].
In recent times, Inditex is also jumping on the sustainability bandwagon. Its supply chain improvement efforts have already received acknowledgement, and in 2017 it won a Gold Medal in the Dow Jones Sustainability Yearbook [9]. Two major initiatives Inditex is using to drive sustainability are product traceability and eco-conscious collections.
New technology allows Inditex to record all the material producers and factories involved in a garment. In 2016, it used these systems to enforce product traceability, working with 1,805 different suppliers across 53 countries to detail the factories they used. Inditex’s purchasing teams were also involved in this process, ensuring they gained greater awareness of their supplier’s relationships and were only buying from suppliers who met Inditex’s sustainability criteria. As a next step, Inditex will look to audit its traceability system [10].
Inditex is also bringing the environmental message directly to shoppers. In November 2015, it launched its first sustainable collection, named “Join Life”. Items in this line meet the following standards or demonstrate “continuous improvement” towards them [11]:
- Primary fabric is sustainable (organic, recycled, or Better Cotton Intiative approved cotton; Tencel; or recycled polyester or polyamide)
- Manufactured using Inditex-identified “Green to Wear” technologies, which include water recycling, sustainable wet processes, and renewable energy [12].
What’s next?
Inditex has the opportunity to set further standards for the rest of the industry. It can bring its product traceability to consumers and re-evaluate its core fast fashion value proposition to increase the impact of its current initiatives.
Customer savviness regarding products’ environmental impact is increasing, and Inditex should address the trend by sharing its supply chain information. This transparency can also market a point of difference against competitors. As an example, sustainability-first brand Reformation communicates its efforts through a “RefScale” [13].
However, regardless of the improvements Inditex makes in its supply chain, it faces an existential challenge as a fast fashion company. Fast fashion is built on a model of encouraging consumers to buy frequently and in high quantity. The vast majority of these goods end up in landfills. While recycling the clothing is a better alternative, it still fails to address the fact that the world simply does not need that the volume of clothing that is being produced. If Inditex is serious about sustainability, it may need to evolve away from the high volume fast fashion model.
But given the financial success of fast fashion, is it realistic for Inditex to migrate away from the model that drove its growth? More broadly, are its sustainability efforts honest efforts to reduce its environmental impact, or are they simply another avenue for marketing?
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Citations
- Bostrom, M. and M. Micheletti, “Introducing the Sustainability Challenge of Textiles and Clothing,” Journal of Consumer Policy (Sep. 29, 2016)
- M.S.L.J., “The Environmental Costs of Creating Clothes,” The Economist, https://www.economist.com/blogs/economist-explains/2017/04/economist-explains-6 (Apr. 11, 2017)
- Ibid.
- Wicker, A., “Fast Fashion is Creating an Environmental Crisis,” Newsweek, http://www.newsweek.com/2016/09/09/old-clothes-fashion-waste-crisis-494824.html (Sep. 1, 2016)
- Textile Exchange, “Over 36 Major Brands Pledge to Achieve Sustainable Cotton by 2025,” CSRWire, http://www.csrwire.com/press_releases/40462-Over-36-Major-Brands-Pledge-to-Achieve-Sustainable-Cotton-by-2025 (Oct. 11, 2017)
- Koblin, J., “Reformation, an Eco Label the Cool Girls Pick,” The New York Times, https://www.nytimes.com/2014/12/18/style/reformation-an-eco-label-the-cool-girls-pick.html?_r=0 (Dec. 17, 2014)
- “Reformation Company Profile,” PitchBook, https://pitchbook.com/profiles/company/111000-61 (accessed Nov. 15, 2017)
- Shinozaki, K., “Fast-growing Uniqlo still far behind Zara, H&M,” Nikkei Asian Review, https://asia.nikkei.com/Business/Companies/Fast-growing-Uniqlo-still-far-behind-Zara-H-M (Jul. 9, 2014)
- “Inditex Annual Report 2016,” https://drive.google.com/file/d/0B9vnB0oG-Ps-RERUX2c1b3djSkU/edit (accessed Nov. 15, 2017)
- Ibid.
- Fernandez, C., “What We Know About Zara’s First Sustainable Collection,” Fashionista, https://fashionista.com/2016/09/zara-sustainable-collection-join-life (Sep. 21, 2016)
- Inditex Global Water Management Strategy, https://www.wateractionplan.com/en/web/gestion-del-agua/green-to-wear-best-technologies (accessed Nov. 15, 2017)
- The Reformation Rimini Dress, https://www.thereformation.com/products/rimini-dress-gold (accessed Nov. 15, 2017)
Thank you YW for the enlightening article on the sustainability and clothes production. The trend towards affordability and disposability seems to be a phenomenon not confined solely in clothes manufacturing but applied across industries, making your analysis a relevant and an extremely engaging read. Inditex’ initiatives to enhance the traceability of products in the supply chain seems particularly appropriate and an attractive solution to the customers with increasing awareness of the sustainability issues, and such engagements shall not be discounted. Meanwhile, as you highlight at the first paragraph, the industry has a serious and fundamental problem with high rate of disposing, which requires to be re-addressed. According to these sources, textile recycling accounts for a fraction of disposed clothes (https://www.thebalance.com/textile-recycling-facts-and-figures-2878122) and while Inditex’ initiatives may raise the awareness of the issue at hand, a more fundamental approach in the change of product durability and re-usability seems to be required to address the fundamental problems, living in the era of disposal products. Companies such as Uniqlo are tackling this challenge by direct reusage of unsellable and returned products (http://www.uniqlo.com/en/sustainability/refugees/recycle/), which seems as an efficient approach, bypassing the recycle-yield problem. Additional initiatives in these direction would further strengthen Inditex’ case.
Interesting reading!
I do agree with your last statement; today, sustainability has become a source of competitive advantage in the fast fashion industry and companies like Inditex are working in this topic because, not only is good for the planet, but also because it can be the key factor to win the battle against H&M. Consumers are demanding products that are consistent with their identities as human beings, creating a need that needs to be fulfilled by companies.
In this line for example, Inditex competitor, H&M has been working in these topics too and they are launching new lines of apparel 100% recycled.
One of the remaining challenges for the industry overall is how to make this initiatives profitable from a business perspective as well.
Thank you for bringing forth a fundamental tension that exists in fast fashion today: how far can any one fashion player go to decrease the footprint caused by the very nature of the business they have propagated in society? I was impressed that Inditex seems to be attempting to engrain the pursuit of sustainability into their entire organization, involving purchasing + other operational teams rather than just spearheading the mission through a single centralized Sustainability team. One question I ask here is, how, as the company continues to incorporate the goals into their processes, will they address misaligned incentives? For example, sourcing and processing fully recycled raw materials will add to lead time of a product, conflicting directly with a Merchandisers goal to get the right product in the right place as quickly as possible(https://www.fastcompany.com/3055925/5-new-solutions-for-the-fashion-industrys-sustainability-problem). I am hopeful that giants like Inditex will be willing to evolve their key performance metrics today to account for and incentivize sustainable sourcing of goods.
Thanks for a very interesting article about how a company that has created a harmful behavioral shift with consumers can still work to have a positive environmental impact. The story of Inditex reminds me a lot of our case on Ikea and some of the same fundamental questions we faced in that case apply here.
I’d love to see Inditex continue and increase their focus on sustainability to become an industry leader in fashion. In response to your question about whether their efforts are honest or opportunistic, I’m not as concerned with their motives as long as they walk the talk and continue to take steps to improve sustainability. I’m optimistic that fast fashion retailers can lead change and develop practices that can filter throughout the fashion industry. Given the industry growth you note in the article, I think the fast fashion business model is here to stay and the best way to address the core issues it creates is through dedicated sustainability programs. Hopefully, Inditex will not only focus on the creation of the clothing in its sustainability efforts and will, as Motoaki mentions above, take steps to reduce the environmental impact of used clothing through recycling and reusability.
Very interesting read YW! I just find it hard to fathom that they can move away from their core competency and point of differentiation. I do appreciate the steps they are taking towards sourcing from sustainable sources but the fact remains they produced 1.4bn items in 2016 alone, and are hoping people get rid of most of those items and buy again next year. There were also recent findings from “Changing Markets Foundation” that Inditex was among global fashion houses that were sourcing from factories in China, Indonesia and India that were dumping toxic wastes into waterways: https://sourcingjournalonline.com/hm-zara-levis-slammed-dirty-viscose-production/
I think it’s when customers start moving business away from Inditex that we’ll force them to change their model in the long run, but that’s easier said than done. (I love Massimo Dutti clothes too 🙁 )
Thank you for the read, fascinating facts ! I find many similarities to this problem with the Ikea case, companies encourage recyclable materials and green suppliers but due to inherit conflicts with their business model do not offer “buy back” program. I believe growing awareness is needed from the consumer side. I’d like to mention Urban Outfitters who are offering “renewal” garments: http://www.businessinsider.com/urban-outfitters-buys-yard-sale-clothes-2012-12. You mentioned Reformation in your article, they are truly in the front of fast and sustainable fashion but I wonder, why does it come with a price tag ?
Thanks YW for shining a light on the sustainability-related impact of a company, Inditex, and an industry, fast fashion, that I find quite fascinating from an operating model perspective. Fast fashion has become such an integral part of millennials’ and young professionals’ wardrobes that it begs the question – can we as individuals, especially those of us who are becoming increasingly aware of the adverse environmental impact of some of these business models, actively move away from them given the amount of waste they generate simply to satisfy our obsession with sporting the latest fashion trends?
I do believe that by running their own proactive sustainability campaigns such as Selfridge’s Buying Better, Inspiring Change initiative (http://www.selfridges.com/GB/en/features/articles/selfridges-loves/selfridges-lovesthebrightnewsustainables) or Inditex’s “Join Life” collection, companies are at least attempting to influence consumer behavior to some extent, even though financially speaking this might not be in their best interest. We, on the other hand, could certainly do more.