Fashion’s Love of Tech Has Yet to Move the Needle on Sustainability

The fashion industry is often accused of ignoring new technology, then embracing it when it goes mainstream (and sometimes claiming they were forward-thinking innovators all along). That’s certainly the case with web3, where many brands have dabbled with NFTs, metaverse activations and cryptocurrencies, but analysts now suspect that leading luxury labels are quietly building virtual worlds to launch in the metaverse when the timing feels right.

“This would mirror how luxury brands approached digital,” wrote Bernstein Analyst Luca Solca in a note last week. “LVMH was not a pioneer in digital, but when they decided to move in, they devoted overwhelming force to their efforts.”

When it comes to new tools to mitigate fashion’s impact on the environment, that tipping point always seems just over the horizon. Countless companies tout their innovative approaches to addressing fashion’s ills, from blockchain-based technology to map murky supply chains, product tags that prove to consumers their purchases were made ethically, and new textiles manufactured from mushroom roots or captured carbon.

Fashion companies are predicted to invest somewhere between 3 and 3.5 percent of sales in tech by 2030, up from 1.6 to 1.8 percent in 2021, according to BoF and McKinsey’s State of Fashion: Technology report.

But will that spending result in companies that operate more sustainably? I’m not holding my breath.

Innovation takes time, patience and resources to build and deploy at scale, particularly for an industry set in its ways. It also requires the fashion industry to stay the course, and not abandon a project in order to jump on what’s trendy and sexy. That can be difficult for an industry that favours instant gratification and consumer-facing initiatives. Releasing an NFT is easier and has a quicker payoff than building out full traceability of a product’s origins and environmental footprint.

And while new technologies and innovations can offer tantalising glimpses of future solutions, they are often no silver bullet. For instance, chatter about the potential of blockchain-based platforms to demystify fashion’s supply chains depend on some intense and very analog legwork to connect up manufacturers and raw material suppliers, where digital penetration is minimal.

Most fashion companies currently don’t have that kind of visibility. Nearly a third of the 30 companies assessed in this year’s BoF Sustainability Index provide no public information to indicate they have a full understanding of even their direct suppliers.

Indeed, the annual benchmark of fashion’s sustainability performance found hot new technologies and buzzy new business models are still a long way from truly disrupting the status quo. For instance, while more companies are experimenting with resale and rental, those models have yet to scale within traditional fashion businesses. The companies assessed in the Index scored an average of just 17 points out of 100 in the portion of the assessment that examined progress towards establishing circular business models.

It was a single piece of news last week that, for me, put fashion’s lofty ambitions for tech into perspective by highlighting the far less showy groundwork that still needs attention. Calvin Klein and Tommy Hilfiger owner PVH announced it was partnering with Mastercard Center for Inclusive Growth, the Business for Social Responsibility HERproject and the Better Than Cash Alliance, all programmes that help factories pay workers’ wages through digital banking.

Advocates for such change say the socioeconomic benefits are manifold, from driving efficiency and accountability in back-office operations to promoting financial literacy, independence, savings and safety from theft or fraud for majority-female garment workers. Only about two-thirds of garment factories pay their employees by digital bank transfer, according to 2018 data by the Higg Index — and I imagine that proportion drops when taking into account the less formalised corners of fashion’s murky supply chains not caught by established reporting tools.

If the global fashion system has yet to fully digitise one of its most fundamental (and often exploited) transactions, maybe NFTs can take a backseat for a while.

The BoF Sustainability Index 2022

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