Three quarters of fashion companies have improved their environmental and social performance over the last year, a new study has revealed.
According to the 2018 Pulse of the Fashion Industry report, conducted by Global Fashion Agenda (GFA) and The Boston Consulting Group (BCG), the business case for sustainability is proving to “be nothing but positive.”
Investments in resource efficiency, secure work environments and sustainable materials also have the potential to boost EBIT margin by up to 1-2 percentage points by 2030.
Findings were reported through a Pulse Score index, a performance measure of the sector by ”type of company, size, region and stage in the value chain”.
In the last year, the fashion industry Pulse Score has improved from 32 to 38 (out of 100), confirming that sustainability is rising on the corporate agenda.
Of the executives polled for the Pulse Survey, 52% said that environmental and social targets acted as a guiding principle for nearly every strategic decision they made – an increase of 18 percentage points from last year.
BCG partner Sebastian Boger said: “The impact goes beyond brand building and risk management. Sustainability can actually increase profitability for fashion companies.”
The case for sustainability is even stronger once the profitability uplift from taking action is compared to continuing business as usual, the latter resulting in a decline in the EBIT margin by 3-4 percentage points by 2030.
Nearly all progress came from mid-market fashion businesses, with smaller companies in the entry-price segment lagging behind the most, it said.
However, the study warned that more still needs to be done with some of the frontrunners – both large companies and sustainability champions – having reached a technological and infrastructural ceiling on their advances, with little to no Pulse Score improvement.