Fashioning

sustainability
2013.

e d e s i g n i n g the
R n e ss
fas h i o n b u s i
Change
– where changing makes sense
This report looks at how industry may harness
sustainability as a driver for change – A change
that makes sense – A change in the fashion industry
business model, reducing business risks through
resource independence and enhancing profitability
through reduced costs, new markets and products

Global growth in the fashion industry has for some time
been centered on continuously creating new brands,
new product ranges and new products to drive sales
and growth. Season cycles have shortened, and many
high-street brands are now continuously presenting new
styles and ranges branching out from the traditional two
main seasons to shifting as often as every other week.
Consumers have been responsive as indicated by the
global per capita consumption of fibers which has in­
creased in real terms by 20%1. The development has
been coined Fast Fashion signifying a production and
consumption pattern according to which products are
produced, consumed and discarded – literally – fast. The
business model is one of which efficiency in sourcing
and production in terms of costs and time to market is
of essence to drive and meet consumer demand for new
styles at the right price.
bated by climate change and compounded by pollution
of the natural environment, leading to pressure on pro-
ductivity.
Resource scarcity is causing sluggish resource and factor
markets, contributing to unprecedented price volatility
and rationed access to production capacity. Both factors
are directly impacting on business performance even in
the short term.
Sustainability intersects with business when cotton, oil
and other commodity prices display volatility, and the
access to resources and production capacity becomes
rationed and cuts into profits. It may otherwise go lar­
gely undetected in business operations. Companies that
read the signs have an opportunity to harness sustain­
ability as a driver for change – A change where we
make more with less!

This development in the light of global population and

economic growth with a growing global middle-class
driving demand for food, housing, energy and clothing
is contributing to resource scarcity: A scarcity exacer-

2

Key results
To better understand how the fashion industry manages
the challenges of sustainability, Deloitte has in partner­
ship with the Danish Fashion Institute undertaken an
analysis based on a qualitative study and a quantitative
survey of the Nordic fashion industry – the first of its
kind.
The analysis shows that there are opportunities for the
industry to deepen and broaden management of su-
stainability to increase value, reduce lead times, costs
of raw materials, wastes and transport while increasing
customer engagement and loyalty.
But there is a wide gap between today’s reality and the
industry’s opportunity to leverage sustainability. The
report’s finding shows that:
• Management of sustainability in the fashion industry is
mainly focused on overall commitments to sustain­
ability and less so on acting on the commitment and
showing the results
• Resource scarcity and limitations in access to produc-
tion capacity are hurting business, but 7of 10 busines-
ses are not focused on managing the environment
and natural resources
• The supply chain sustainability strategies that most
companies focus on are based on the first generation
approaches looking to control suppliers, which have
shown limited results in terms of impacts
• The supply chain sustainability strategies are not focu-
sing on co-operative and collaborative approaches
involving stakeholders which make them inadequate
in terms of addressing the major challenges of social
development, resource depletion and pollution in the
primary production
• 9 out of 10 companies in the fashion industry are not
putting a high degree of effort into engaging with
consumers with regard to sustainability. Sustainable
consumption strategies are new for many companies,
and for most they are still a non-existent phenomenon.
Fashioning sustainability 2013
Looking into the future…
Fashion is changing fast – and the fashion industry needs to do the same when
it comes to sustainability. New approaches and new ideas are needed if we are
to address the significant sustainability challenges facing the industry.
Firstly, there is a need to address the question of a dwindling natural resource
base through more focus on environmental issues in the supp­ly chain, reuse of
materials and closed loop thinking.
Secondly, in the quest for transparency and the demand for results on investment
sustainable supply chain management require new, more stakeholder based
approaches.
Thirdly, the resource challenge also represents a unique opportunity for engaging
consumers through sustainable consumption initiatives and dialogue.
With this report we outline the sustainability challenges and opportunities facing
the fashion industry. We invite you to engage in the discus­sion and are looking
forward to hearing your reflections, thoughts or questions.
Anne Mette Christiansen
Partner Deloitte
The fashion industry is one of the world’s largest industries, while also one of the
world’s most polluting. Fundamental change in the dominant business model is
happening, and further change is necessary. Furthermore, the fashion industry is
an important change agent that reaches far beyond its own realms – not only
because of its size, but also thanks to its ability to constantly affect consumer
behavior and attitudes through its extraordinary communication platforms.
Through NICE (Nordic Initiative, Clean and Ethical), Danish Fashion Institute and its
Nordic partners have a shared vision to position Denmark and the Nordic Region
as pioneers of sustainable fashion while making sustainable fashion desirable,
attractive and relevant to the general public. In order to support the vision,
this report combines a deep dive into both ends of the fashion value chain
(manufacturing and consumption) to take stock and provide inspiration for
a redefined fashion industry.
Jonas Eder-Hansen
Development Director, Danish Fashion Institute
3
7 billion people today 9 billion by 2050

3 billion people more in the middle class by 2030

Fast Fashion growth: 40% H&M 47% Inditex 69% Bestseller

20% per capita increase in global fiber consumption

– 15 kg per capita consumption in the Nordic region with just 3% recycling

With current levels of consumption

of natural resources we need the regenerative capacity of 1.5 Earths,

by 2050 we will need 2.3 Earths

Cotton and oil prices reach all-time highs and cotton

price volatility at 50% above 30-year average

7 out of 10 fashion companies are not focused on managing

environment and resources like water and cotton neither at home nor

in the supply chain

8 out of 10 fashion companies are not using

to cooperation and collaboration

when managing the supply chain sustainability

2 out of 3 fashion companies are not focused on

engaging consumers with regard to sustainability
4
 Fashioning sustainability 2013

Business and sustainability

– The fashion industry at a
crossroads
Today the fashion industry is at a crossroads. It is locked in a
competition for market shares to improve profitability amidst
downturn in the global economy and consumer uncertainty. All
the while the industry is facing sustainability challenges in the
supply chain led by high price volatility as well as resource and
factor availability. The road that the industry takes today will
significantly impact the industry’s future growth path

60 Fast Fashion has had tremendous success over the last

decade, conditioning consumers to low-cost bi-weekly
changing styles2. Consumers have responded with
50
growing total consumption in Denmark alone by 20%
in real terms since 2000.
40
Global fiber production (mainly cotton and polyester)
has set a new global record of 86 million tons in 2011
30
reaching nearly 12 kg per capita.

20

10
Figure 1. Global production of natural and
- man­made fibers 1980-2010 (million tons)
Source: Oerlikon, 2012. Figure 1 shows the development in fiber
1950
1965
1975
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011

production worldwide since 1980. Production has more than doub-

led since 1990. Cotton is by far the most important natural fiber and
polyester the most important manmade fiber. Polyester has over­
Natural fiber Manmade fiber taken cotton to become the most important fiber overall for clothing
production.

5
 2,5
2,3
2,0
Number of Earths

1,5

1,0 Figure 2. Vision 2050 ecological footprint against

business as usual (BAU) - How many Earths will
0,5 be used?
Source: Global Footprint Network 2013. Figure 2 shows the ecologi-
cal footprint of production and consumption from 1960 to 2010
0,0 measured in terms of the Earth’s capacity to regenerate natural
1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 resources. Continuing Business as usual (BAU), there is need for 2.3
Earths by 2050. The World Business Council for Sustainable Develop-
Earths (Vision 2050) Earths (BAU) ment has agreed on a path to sustainability labeled Vision 2050.

There are no signs that Fast Fashion is trending off – on
the contrary: Companies behind high-street brands such
as Inditex (ES), H&M (SE), Marks&Spencer (UK) and Best-
seller (DK) have grown significantly over the last decade,
taking a lion’s share of the growth3. It seems bigger is
better when it comes to the fashion industry.
The underlying structural changes with global popula­
tion growth and the economic growth are increasing
demand for food, housing, energy and clothing which
are all based on the same natural resource base causing
resource scarcity. The scarcity is exacerbated by climate
change and compounded by pollution of the natural
environment. Climate change and pollution are com-
bining to drive an overall downward pressure on produ-
ctivity creating a negative downward spiral through in-
creased resource use.
As shown in figure 2, the Earth’s regenerative capacity is
currently being overspent. Staying on the current track
by continuing with business as usual will make a signifi-
cant overdraw, which will be paid for with retarded
growth prospects for future generations.In the short
term the resource scarcity is showing through high vola-
tility in resource prices and intermittent, rationed access
to resources and seasonal production capacity. This is
cutting into profits and threatening the fashion indu-
stry’s business model.

High volatility and increasing

prices.
450
400
350
300
250
200 Figure 3. Price development for crude oil, cotton,
150 fine wool and food & beverage (1982 index=100)
Source: IndexMundi 2013. Figure 3 shows the price development for
100 crude oil (primary resource for polyester – the main fiber in clothing),
50 cotton, fine wool and the food & beverage commodity index (F&B is
in direct competition with cotton for access to water, land and fer­
0 tilizer) since 1982.The medium term volatility of prices is on par with
dec-82 sep-86 jun-90 mar-94 dec-97 sep-01 jun-05 mar-09 dec-12
historical data except for cotton which is showing a historically high
volatility. Absolute prices have within the later years set global
Crude Oil Cotton Fine Wool Food & Bevarage records for the depicted commodities.

6
 Fashioning sustainability 2013

The consequence of the changes in demand and a due to business side drivers: high price volatility and
dwindling natural resource base is that the fashion indu- short term discretionary rationed access to production
stry today has to consider its approach to sustainability capacity and resources. All of which are becoming over-
not because of reputation and stakeholder pressure but riding strategic business concerns.

Pollution Population Climate

Growth Change
Economic
Development

Labor Energy Land Water

scarcity scarcity scarcity

Driving resource depletion, price increase and volatility

Competition for access to resources – Business continuity
Figure 4. New drivers of
sustainability in business
The figure shows the new
Sustainability becoming a strategic business imperative drivers and causality for
sustainability and business.

7
The prospect is underlined by the World Economic Fo-
rum’s annual assessment of Global Risks 2013 ranking
the following sustainability challenges among the top
ten risks: ‘Rising GHG emissions’, ‘Water Supply Crisis’,
‘Failure of Climate Change Adaptation’, ‘Extreme Volati-
lity in Energy and Agriculture Prices’, and ‘Food Shortage
Crisis’.
“Most importantly it is about resources. If we are
going to continue like this, there is no other option
than to work with sustainability. In the long term
the natural resources will run out if we continue
business as usual.”
Helena Helmersson, Head of Sustainability, H&M
8
With a projected population growth of 9 billion by 2050
and economic growth driving demand in both develo-
ping and developed countries, the resulting competition
for natural resources like land, water and energy is lea-
ding to scarcity and risk of conflict
The challenge of sustainability in the global fashion
business is in short demonstrable.
“In order to work towards sustainable
lifestyles and business models, the
designer needs to share information
and provide transparency. I am
bringing back quality, heritage, style
and uniqueness to the buyers and
providing transparency throughout the
entire value chain. This first step of
transparency will in itself, I believe,
contribute to awareness and change.”
Nina Skarre, Designer
 Fashioning sustainability 2013

7 of 10 businesses are risking

their short term profits and
medium term survival by not
focusing on management of
natural resources
The Deloitte fashion survey shows that the fashion industry’s
management of sustainability is unbalanced – every other company
is talking about its commitment, but is putting less effort into
actions and results

With the rates of population and economic growth, the The Deloitte fashion survey shows that in spite of the
course is set towards absolute natural resource scarcity. daunting challenges now threatening its business mo-
A scarcity poised to undercut resource intensive and del, the management of sustainability appears to be un-
polluting industries like the fashion industry and Fast balanced: The survey shows that while many companies
Fashion in particular. commit to sustainability, few put their commitment into
actions and very few communicate about their actions
The fashion industry is already feeling how the pressures and results.
of sustainability are affecting business. The extreme
volatility of commodity prices like oil and cotton, the
primary inputs in fashion, are reaching new global highs
cutting into profits. The resource scarcity and increased
demand is limiting access to seasonal production slots
forcing especially smaller players out leaving them to
seek less competitive markets for seasonal sourcing.

9
 Commit Leadership commitment to main- Commit 18% 30% 52%
stream the Global Compact princip-
Assess 16% 24% 60%
les into strategies and operations
and to take action in support of Define 32% 28% 41%
broader UN goals, in a transparent
Implement 30% 27% 42%
way
Asseess Assess risk, opportunities, and Measure 48% 30% 22%
impacts across Global Compact
Communicate 45% 32% 23%
issue areas
Define Define goals, strategies, and 0% 20% 40% 60% 80% 100%
policies Low degree Some degree High degree
Implement Implement strategies and policies
through the company and across
Figure 5. Management of sustainability in the Nordic fashion industry 2012
the company’s value chain Source: Deloitte fashion survey. Figure 5 shows that 52% are focusing on managing their commitment to
sustainability while 23% focus on communicating resul ts of their actions. A full and balanced approach
Measure Measure and monitor impacts and
across the management scope from commitment to communication is what is required to manage
progress toward goals sustainability.
Communicate Communicate progress amd strate-
gies and engage with stakeholders
for continuous improvement

60%

50% 48%

40%
34%

30%

20%

Figure 6. The fashion company perspective on what

10%
issues to focus on in management in 2012
Source: Deloitte fashion survey. Figure 6 shows how relevant the
fashion companies find the environment (natural resources, pollution
prevention, resource efficiency and biodiversity) and the social (labor
and human rights) issues. There is a lot more emphasis on social 0%
issues – 50% more. Environment Social

10

The results also show that while almost half of the
companies recognize that risks related to human rights
and labor rights are relevant, only 3 out of 10 are focu-
sing on managing the environment and natural resour-
ces.
It is a concern that businesses are not prioritizing the
management of the environment in their value chain.
Managing natural resource scarcity is, given the indu-
stry’s current dependence on cotton and polyester and
impacts in terms of pollution, important albeit buried
many tiers down in the supply chain.
Fashioning sustainability 2013
In particular it is a cause for concern because the prima-
ry production and manufacturing and along with it the
majority of the social and environmental impacts are
taking place far from the Nordic region – out of sight.
The main producers of primary inputs – polyester and
cotton – are located in China, India, the U.S. and Paki-
stan. The main garment exporters are located in China,
Hong Kong, Bangladesh and India whereas the major
importers are located in Europe, the U.S., Japan and
Canada.
Exports
Imports
Cotton production
Polyester production
Figure 7. Major clothing exporters and importers 2011
and the major cotton and polyester producers 2010
Source: WTO Statistics Database 2013, U.S. Department of Agricul-
ture 2013 and Oerlikon 2010. Figure 7 shows the major exporters
of cotton (China, the U.S. and India) and polyester (China, India and
Taiwan). Furthermore the figure shows how garments are exported
from China, Bangladesh, India and Turkey to be imported in the EU,
US and Japan.
11
Most of the production is hence taking place in coun-
tries with weak governance when it comes to managing
impacts on the environment and respecting
human- and labor rights4. Regulation and standards for
the environment and social issues are dissimilar to the
Nordic region and, to the extent that regulation and
standards are similar, the enforcement of these is not
ensuring compliance. When weak governance combines
with limits to ownership and externalities the fashion
industry is at risk of becoming a victim of the tragedy
of commons – an irrational race to resource depletion
– unless action is taken to manage natural resource use
to stay within the Earth’s regenerative capacity. Conver-
sely there is risk that regulation, standards and enforce-
ment may be coming down hard and fast. There are
examples of government clampdown on industries in
China and India5.
In the face of the structural changes in world demand
and resource scarcity, a broader recognition of the
urgent strategic decisions is called for in the fashion
industry. Companies not acting today are at risk of de-
positing their future growth course in the hands of the
primary production countries such as China, India and
Bangladesh.
Depending on the nature and the approach to govern-
ment resource management and to regulation and
enforcement, impacts on the Nordic fashion industry
could be swift and quite significant.

“The fashion industries

have a lot to learn from
the cosmetics industry,
where green and
sustainable products
“To begin with, 66°NORTH is com- have gained market
mitted to using renewable and recycled shares. The products are
fibers wherever possible. The quality marketed with the right
and variety of recycled-content yarns celebrities and great
has improved dramatically in the past messaging
couple of years. In our production we – Good for you and good
also use all leftover material to make for the planet.“
gloves, children/infant clothing, etc.” Anne Lose, Editor in Chief, Eurowoman
Fannar Páll Aðalsteinsson, Project Manager Marketing 66°NORTH

12
 Fashioning sustainability 2013

Every Dane consumes

16 kg of clothes
35% above world average and the highest in the Nordic region
16 kg is equivalent to 16 pairs of jeans or 64 t-shirts

Production of 16 pairs
of jeans requires:
58.000 liters of water
48 kg of chemicals
6400 MJ of energy
208 m2 harvested land

Sources: Danish EPA 2011, Levi’s 2010, DEFRA 2009, 2010, USAID 2009 and Agricultural Outlook 20126

13
The fashion industry must
up the game in their supply
chain
The Deloitte fashion survey shows that it is predominantly the large
companies that are looking at sustainability in the supply chain and
that only 4 out of 10 are looking beyond conventional approaches
that have shown limited results

Puma’s pioneering Environmental Profit and Loss state-
ment from November 2012 (see p. 17) covering all pro-
duction processes from dirt to closet showed that 94%
of all of the environmental impacts took place in the
supply chain. 57% of all impacts were in Tier 47 of the
supply chain where cotton is grown and crude oil
extracted.
Conventional approaches to managing supply chain
sustainability focus on regulation and oversight through
contracts with suppliers and enforcing those contracts.
Looking at the entire supply chain leaves conventional
approaches with managing just 9% of the environmen-
tal impacts according to Puma’s EP&L. It leaves com­
panies nowhere in terms of managing resource scarcity.
Because resource scarcity originates where cotton is
grown and oil is extracted and manufactured into
polyester.
The result of the survey shows that approximately half
of the companies have found one or more sustainability
areas in the supply chain relevant to focus on. Looking
at just the environmental issues, only two out of five
companies have assessed one or more areas to be rele-
vant.
The survey also shows a big gap between large com­
panies and the rest. While almost 80% of the large
companies focus on managing sustainability in the sup-
ply chain, only 30% of the remaining companies found
this a relevant focus area as depicted in figure 88.

14
 Fashioning sustainability 2013

Supply chain sustainability aproaches

Small and Medium

Stakeholderbased
56% 30% 14% Conventional Supplier code of conduct,
approaches
approaches to Contract amendments,
include Supplier self-assessment,
Conventional 42% 29% 30% Supplier audits
Supplier 3rd party audits
Stakeholder-based Supplier worker surveys,
Stakeholderbased
37% 19% 44% approaches include Supplier stakeholder surveys,
approaches
Supplier-based partnerships
Large

Engagement with local

Conventional 15% 6% 79% networks

20% 40% 60% 80% 100%

Low degree Some degree High degree

Figure 8. Managing sustainability in the supply chain

by company size and type of approach Conventional supply chain management
Source: Deloitte fashion survey. Figure 8 shows how large com­
panies (turnover USD +500m) and small companies manage supply – lessons learned
chain sustainability. The approach to management has been classi- Supplier code of conduct and auditing have for
fied into two types: Conventional types of management and stake- long been staples of managing sustainability in
holder-based types of management. The figure shows that large
companies to a higher degree than smaller ones focus on both the supply chain. Brought to infamy by the Nike
conventional (79%) and stakeholder-based approaches (44%). Sweatshop campaign of the 1990’s and follow­
ing two decades worth of implementation
experience, where do we stand today?
However examining the approaches chosen by large
companies, only about two out of five focus on stake- Judging from Nike’s own experience, we are a
holder-based approaches. Considering the less than stel- lot farther and still nowhere: Nike today like
lar track record of the more conventional approaches most other big companies owns up to and takes
and with a view to managing the overriding impacts of responsibility for risks and impacts in its supply
resource scarcity and access to resources and production chain – it is a matter of compliance .
capacity, many fashion companies still have ways to go.
Addressing these issues requires looking beyond the tier So what about audits? Nike is through the Fair
1 suppliers and seeking a broader engagement. Labor Organization (FLA), an NGO, today openly
sharing the results of the audits of its suppliers
worldwide – a level of transparency that seems
light years away from the 1990’s.

So what about the results? Nike data from the

FLA suggest that the core problem is not solved:
Sweatshop conditions persist in the supply chain.
Similarly Puma’s 2010 audit showed that 23%
of all suppliers of the tier 1 suppliers failed to
meet Puma’s standards.

15
 Engagement With Local UN Global Compact Networks 2,7

Supplier-based Partnerships in Sustainability Aspects 3,7

Supplier Stakeholder Surveys 3,1

Supplier Worker Surveys 3,3

Supplier 3rd Party Audits 4,3

Supplier Audits 4,1

Supplier Self-assessment 4,3

CSR Contract Amendments
Code of Conduct
0 1,0
Figure 9. Approaches used by large companies to
4,5 manage supply chain sustainability
Source: Deloitte fashion survey. Figure 9 shows the different ways in
which large companies (USD +500m) manage sustainability in the
4,6 supply chain. The figure shows for example that large companies put
a great deal of effort into using supplier code of conduct and a low
degree of effort into engaging with local networks for sustainability.
2,0 3,0 4,0 5,0

Degree of effort:
0: Don’t Know
Engaging with fashion industry stakeholders indicated
1,0: Very low
that the causes of the industry’s focus on social issues
2,0: Low
and lack of focus on environment are that the input they
3,0: Some
receive from consumers and press is concerned with the
4,0: High
social issues or issues related to product quality and
5,0: Very high
safety. Furthermore the environmental issues were con­
sidered more complex and difficult to tackle.

Between the limited focus on the environment with just

a third of the companies reporting this as a focus area,
the limited focus on managing suppliers except for the
large companies and the focus on chiefly conventional
“The politicians have a respon­sibility approaches to supply chain management, the fashion

to create incentives and positive upside industry is risking not just short term profits but also
longer term viability.
for products that are sustainably pro­
duced, especially when it comes to
facilitate the price setting. Price is in
the end of the day a crucial factor for
many end consumer’s to choose a
sustainable product.”
Claus Jørgensen, Senior Environmental Advisor Tænk

16
 Fashioning sustainability 2013

Environmental Profit and Loss

In November 2012 Puma published a pioneering Environmental Profit & Loss statement.
The statement is considered a key first step in the development of a natural capital
accounting framework. The tool calculates the environmental impact for greenhouse
gas emissions, water use, land use, air pollution and waste, generated through the ope-
rations and supply chain of PUMA all the way through to tier 4 the producers of primary
resources. The Environmental Profit & Loss statement is projected to be rolled across the
PPR group including brands like Gucci, Alexander McQueen and YSL by 2015.

“I believe and hope that in 10-20 years,

the Higg index will enable the consu-
mer to compare different H&M produ-
cts with each other, but also create
transparency between different brands
in the industry. It will be a great tool
for the customer and put pressure on
the entire industry. Sustainability will
next to price and quality be a competi-
tive parameter.”
Helena Helmersson, Head of Sustainability, H&M

The Higg Index

The Sustainable Apparel Coalition is a group of more than 60 leading apparel and
footwear brands representing in totality about a third of the industry, retailers, sup-
pliers, non-profits and NGOs working to reduce the environmental and social impacts
of apparel and footwear products around the world. The focus of SAC is the Higg In-
dex that measures the environmental performance of apparel products from cradle to
gate with a view to enable and drive continuous improvements when it comes to env-
ironmental sustainability. The Higg is based on the rating materials according to wa-
stes, chemistry, energy, water and land use intensity. The index allows designers to
choose between materials based on environmental trade-offs. Source: Nike Materials
Sustainability Index July 2012 SAC Release.

17
15 kg of clothing
– that is how much every
Nordic consumer uses per year
Few companies engage with their consumers to drive
sustainable consumption, but among those that do,
smaller companies are overrepresented. They seem to
display a greater interest and see more opportunities
in finding new models for sustainable consumption

Sustainable consumption may sound to some as an Six strategies for driving sustainable consumption
oxymoron: Is consumption not just about consuming a
Develop new consumption models and business
lot? Is sustainability not about consuming nothing at all?
innovation through co-creation: Innovation
Well, at face value it may seem something of a contra-
through co-operation with end-users
diction so a definition may be in order.
Develop more sustainable consumption models
Sustainable consumption is the kind of consumption eg. collaborative consumption
that meets the needs of the present without compro-
mising the ability of future generations to meet their Impact consumer decision-making through
own needs. In the face of population growth and eco- attributes, price and performance
nomic growth, more than outpacing gains in producti­
Impact consumer decision-making through brand,
vity, the sustainability of the current levels of production
beliefs and emotions
and consumption is called into question.
Impact consumer decision-making through social
To meet the needs of today without comprising the norms and social networks
needs of future generations the economic growth needs
to be decoupled from resource extraction and use. So Potential for improvement through product life
while it is crucial to continually improve resource efficien- cycle approaches
cy, minimize pollution and social impacts what is needed
Source: Deloitte Touche Tohmatsu and World Econo-
now is reduction in the resource extraction in absolute
mic Forum 2010 and 2011
terms and an absolute reduction in adverse impacts9:
Reducing throughput of materials, labor and capital.

18
 Fashioning sustainability 2013

The fashion industry is responsible for a considerable

throughput of materials, capital and labor. The clothes Cooperative and collaborative consumption 41% 26% 26%
and textile consumption in the Nordic region is esti-
mated at 15 kg per capita and just 0.6 kg of that is
Co-creation and innovation with consumers 38% 29% 28%
through purchase of secondhand clothes.

Only a fraction of total consumption – 3% of total volu- Impact through attributes, price and
25% 36% 30%
performance
me – is recycled. 20% is getting a second lease on life
through re-use10. But 8 kg is going directly to incine­
ration or ending up in landfills. With just 3% of materials Improvement through life-cycle approaches 26% 30% 31%
getting recovered through recycling in the Nordic region
the amount of clothes and textiles ending up in landfills Impact through social norms, social
27% 31% 35%
or for incineration is ultimately close to 97%. networks

So what are the levers to go about transforming the Impact through brand, beliefs and emotions 22% 31% 39%
prevailing pattern of production and consumption?
0% 20% 40% 60% 80% 100%
In table 1 six different strategies for sustainable con-
sumption have been compiled based on the work on Don't know Low degree Some degree High degree
sustainable consumption prepared in collaboration
between Deloitte and the World Economic Forum11.
Figure 11. Assessment of approaches to sustainable
The Deloitte fashion survey shows that the sustainable consumption strategies
consumption strategies are relatively new for many Source: Deloitte fashion survey. Figure 10 shows how fashion
companies are weighing the approaches to sustainable consump­
fashion companies and for some they are still a non- tion. Almost 40% are focusing on consumption strategies related to
existent phenomenon. For those that work with su- brand, beliefs and emotions whereas just 25% are putting emphasis
stainable consumption strategies most rely on the on collaborative consumption strategies.

familiar levers within the fashion industry: Impacting

consumer deci­sions using brand beliefs and emotions
(40%), and impacting consumer decisions using social
norms and networks (35%).

However, one third of the companies did focus on im-

provement through product life-cycle approaches (30%).
Overall the survey shows that it is particularly the small-
sized companies (turnover USD 11-50m) that focus on
using sustainable consumption strategies

Results from the qualitative study furthermore shows “I believe we will not be auditing our
that smaller companies appear to be finding ways to
turn sustainable consumption strategies into a compe­
suppliers as much as we do today in
titive advantage: Smaller companies are working on life- the future, but rather help them to
cycle approaches, considering collaborative consumpti-
on models and developing business models based on drive different improvements to
co-creation and innovation with end consumers. They
are focused on creating new strategies based on trust,
transform their facilities.”
co-creation and consumer engagement. Helena Helmersson, Head of Sustainability, H&M

19
Considering the overriding concern of resource scarcity The absence of collaborative or cooperative sustainable
threatening the business model of Fast Fashion in the consumption strategies across the board is also surpris-
medium to long term, it is surprising to note that ing. It is another opportunity to stretch the resource
it is primarily the small-sized companies that are onto base by applying leasing or lease-subscription models
sustainable consumption strategies. maintaining ownership of the clothing, and hence har-
nessing the opportunity to take advantage of the full
It is surprising especially considering the potential for technical product life while reducing costs of goods
harnessing the vast material flows by closing the loop sold.
through clothing materials re-covery and up-cycling.
Closed-loop approaches are a way to diversify the basic
resource base away from virgin polyester and cotton.
Another aspect is that the clothing recovery presents an
opportunity to build consumer loyalty and engagement
and secure sales.

Sustainability: The Brundtland report Our Common

Future coined the definition of sustainability: Sustain­
able development is the kind of development that
meets the needs of the present without compromis-
ing the ability of future generations to meet their own
needs. Development is about qualitative improvement
of people’s lives, not narrow economic growth and
it’s about satisfying consumers’ needs not creating
wants.
Sustainable consumption: “The use of services and
related products which respond to basic needs and
bring a better quality of life while minimizing the use
of natural resources and toxic materials as well as the
emissins of waste and pollutants over the life-cycle so
as not jeopardize the needs of future generations.”
– 1994 Oslo Symposium on Sustainable Consumption
Our garment has by design a use
capacity of 200 daily wears, but it is
only used around 10-20 times by the
end consumer. This opens up for new
business models in terms of swopping,
which gives the apparel an additional
value. We are looking to implement
a subscription-based lease model. It
enables us to lease out the same
garment several times, taking full
advantage of the technical life of the
product widening our product offering
while strengthening consumer and
brand loyalty.“
Vigga Svensson, CEO, Katvig, Denmark

20
 Fashioning sustainability 2013

Suppliers and creditors (50%)

Staff (55%)

Customers (60%)
Public authorities (45%)
Shareholders (40%)

Consumers (55%)
Competitors (30%)

NGOs (45%)

Fashion
Industry

Civil society (35%)

weighing
stakeholders

21
Methodology
The survey design builds on the UN Global Compact
Principles and the UN Global Compact Management
Model. Deloitte has designed the survey and undertaken
the qualitative study and drafted this report. The Danish
Fashion Institute has rolled out the survey to its own and
the Ecotextile news sub-scriber database
The definition of the fashion industry is by default deter-
mined by the coverage of the databases. The databases
have not been analyzed in terms of their representative-
ness of the Nordic fashion industry, nor have we verified
whether the distribution of responses is representative
of the subscription databases. Accordingly the results
may be biased insofar that the databases are not repre-
sentative and insofar that there is bias in terms of self-
selection of responses-non-responses. The quantitative
Respondents by size and sector
10%
51% 26%
13%
Micro Large Medium Small
22
survey is based on the data self-reported by respon-
dents. With reference to this report, the Nordic data has
been applied. The survey reached 220 respondents glo-
bally and 90 in the Nordic region.
The distribution of the respondents according to size and
by reported industry is depicted above. Altogether the
industry breakdown shows a diverse set of respondents
in relation to a delineation of the fashion industry.
The quantitative data has been supplemented by quali­
tative interviews of nine fashion industry stakeholders
throughout the Nordic region (six in Denmark and one in
each of Norway, Finland and Iceland)12. The qualitative
interviews have been based on a structured question-
naire build around the findings of the quantitative survey.
3% 2%
5%
10%
42%
13%
25%
Manufacturing Other
Consumer business & transportation Public sector
Technology, media, & telecommunications
Financial and business services
Life sciences and health care
 Fashioning sustainability 2013

”Good design plays a significant role in Marimekko’s

responsibility. Timelessness, quality, and functionality
are the cornerstones of Marimekko’s design. We want
our products to withstand time and we want our
customers to get attached to the products. Durability
is also a key indicator of a product’s ecological
quality.”
Minna Kemell-Kutvonen, Creative Director, Marimekko

1
Cf. The Fiber Year 2012 Oerlikon, May 2012.
2
We apply the term Fast Fashion throughout the report to describe a development whereby population and economic growth combine with fashion industry innovation to
increase throughput of resources, capital and labor by continuously presenting new brands, product ranges, products and styles in high volumes at low prices.
3
Cf. H&M, Bestseller, M&S and Inditex annual and quarterly reports.
4
Cf. World Bank Worldwide Governance Indicators (http://info.worldbank.org/governance/wgi/sc_country.asp)
5
Cf. for example Marquis, Zhang and Zhou, ‘Regulatory uncertainty and corporate response: How China’s Environmental Enforcement Is Catching Up to Regulation and
How Business Can Keep Up’, 2011. At the height of price volatility in 2011, India instituted a moratorium on cotton exports.
6
Water consumption during production is dependent on the need for irrigation: 576-4.377 l/kg with an average of 1.818 liters/kg and for finishing 105-145 l/kg cf. Chapagrain et
al (2005) & Blackburn and Burkinshaw (2002) quoted in DEFRA 2010. For chemicals cf. ‘Mapping Chemicals in Textiles’, Danish Environment Protection Agency, Publication no.
113, 2011. Water and energy consumption during production, manufacturing and care cf. Levi’s LCA for Levi’s 501 Jeans (http://www.levistrauss.com/sites/default/files/library­
document/2010/4/Product_Lifecyle_Assessment.pdf) Levi’s 2010. Land use based on Global Cotton Yield 2011/2012 of 752 kg/hectare Cf. Agricultural Outlook Forum 2012,
February 2012.
7
Tier 4 is for 4 chains removed from Puma.
8
One caveat: Almost all companies indicated that they had drawn up a supplier code of conduct.
9
While resource efficiency has improved by 26% since 1980, GDP doubled in the same period the net effect of which that resource extraction increased by more than 50%
’The Consumption Dilemma’, Deloitte Touche & Tohmatsu and World Economic Forum 2011.
10
Re-use in either the collecting country or through exports cf. NWG 2012
11
Cf. ‘Redesigning Business Value – A roadmap for Sustainable Consump-tion’ Deloitte Touche Tohmatsu and World Economic Forum, 2011 and ‘The consumption dilemma
– Leverage points for accelerating sustainable growth’, Deloitte Touche Tohmatsu and World Economic Forum, 2011 and ‘Driving Sustainable Consumption’ on ‘Consumer
engagement’ and ‘Closed loop systems’ Deloitte Touche Tohmatsu and World Economic Forum, 2010 and ‘A roadmap for sustainable consumption’ Deloitte Review Issue 7 2010
and ‘Consumer 2020 – Reading the signs’ Deloitte Touche Tohmatsu, 2010
12
The stakeholders include representatives from Bestseller, BTX Group, Noa-Noa, H&M, The Danish Consumer Council: Tænk, Eurowoman and Katvig.

23
Kontakt
Anne Mette Christiansen
Partner
amchristians@deloitte.dk
+45 30 93 65 13

Kristoffer Hvidsteen
Manager
khvidsteen@deloitte.dk
+45 30 93 62 27

Bahare Haghshenas
Senior Consultant
bahahag@deloitte.dk
+45 31 31 04 31

www.deloitte.dk

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