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Sustainable Investing

Fast Fashion and Sustainability—It’s Not a Good Look

By Aditi Pai
Clothing on hangers on a rack.

Key Takeaways

Fast fashion brands may appeal to shoppers because they offer affordable trendy clothing, but we think the industry’s environmental impacts are an unattractive trade-off.

The fast fashion industry has a history of underpaying workers (mostly women) in developing countries and the U.S.

Some governments and industry groups are taking action to help address fast fashion’s negative ESG impacts.

In the late 1980s, “fast fashion” appeared on the scene as a new segment of the fashion industry. The term refers to a business model that imitates high-fashion clothing designs and mass produces them at a low cost.

Fast fashion allows consumers to purchase the latest styles seen on the runway or worn by celebrities at affordable, often extremely low prices (think Zara, H&M Group and Uniqlo, among others). And who doesn’t love new clothes at great prices? Unfortunately, these “bargains” are not as appealing as they may look in the stores–we believe fast fashion has been justifiably criticized for its negative impact on workers and the environment.

Poor Working Conditions and Low Pay

The apparel industry is often associated with poor factory conditions, worker pay below a living wage and child labor. Bangladesh has a particularly disturbing track record:

  • According to the International Labor Rights Forum, between 2006 and 2012 over 500 apparel workers died in factory fires in Bangladesh, including at least 117 workers in the 2012 Tazreen factory fire (where exits were locked).

  • In 2013, some 1,134 workers died in the Rana Plaza building collapse, and only one of eight factories in Bangladesh passed recent inspections under the Accord on Fire and Building Safety.1

Bangladeshi garment workers, primarily women, earn roughly $96 a month while the country’s government wage board suggests a worker needs 3.5 times that amount to live a “decent life with basic facilities.”2

About two years ago, a U.S. Department of Labor (DOL) investigation found that 85% of garment factories in Los Angeles violated federal minimum wage regulations, as the average worker received just $5 to $6 per hour.3 The investigation also found that contractors received only 73% of what they needed to pay workers the minimum wage.4

A 2018 DOL report found evidence of forced and child labor in the garment industries of Argentina, Bangladesh, Brazil, China, India, Indonesia, the Philippines, Turkey and Vietnam, and in their supply chains.5 In some of these countries, cotton growers hire children to pollinate cotton plants by hand. This process typically involves pesticide exposure and working long hours for pay below the minimum wage.

Making a single pair of jeans produces as much greenhouse gas as driving a car over 80 miles.

A report from the Centre for Research on Multinational Corporations (SOMO) determined that 60% of workers at the yarn and spinning mills it investigated in India were younger than 18 when they started working in these facilities. Some of the workers were as young as 15 when they started.6

Damaging Environmental Impacts

In addition to these unacceptable labor practices, the fast fashion industry is environmentally destructive, contributing to pollution, waste, greenhouse gas production and excessive water consumption. The World Bank estimates the sector is responsible for nearly 20% of all industrial pollution annually.7 The industry also creates a considerable amount of waste—estimates show that more than half of fast-fashion clothing is discarded in less than a year.8

Fashion in responsible for nearly 20% of all industrial pollution annually.More than half of fast fashion clothing is discarded in less than a year.It takes 2,700 liters of water to make one cotton shirt, enough to meet the average person's drinking needs for 2.5 years.

The U.S. Environmental Protection Agency reported that Americans sent 10.5 million tons of textiles to landfills in 2015, and discarded clothing made of non-biodegradable fabrics can sit in landfills for up to 200 years.9 Of the more than 100 billion items of clothing produced each year, nearly 20% are unsold—the leftovers are buried, shredded or burned.10

Manufacturing apparel is also resource and emissions intensive. Making a single pair of jeans produces as much greenhouse gas as driving a car over 80 miles.11 It takes 2,700 liters of water to make one cotton shirt, enough to meet the average person’s drinking needs for 2.5 years.12 Fashion also depends on and can affect biodiversity, a connection we will explore in a future article.

Steps in the Right Direction

While the environmental harms caused by the overconsumption that fast fashion promotes are significant, there are efforts to improve sustainability in the industry. In a trailblazing move, New York lawmakers in 2021 introduced the Fashion Sustainability and Social Accountability Act (S7428). If they enact the statute, New York will become the first state to hold major fashion brands accountable for their environmental and social practices.

The bill’s key provisions would require apparel companies to:

  • Document the source of every material, process and shipment involved in bringing goods to market for at least 50% of their suppliers by volume.

  • Identify adverse impacts from their greenhouse gas emissions and water and chemical use.

  • Set targets to reduce carbon emissions and energy consumption across their supply chains.

  • Disclose the quantity and type of materials their suppliers produce and the volume of recycled materials used annually.13

Outside the U.S., the EU is implementing new reporting and governance directives that cover environmental issues and working conditions and social impacts across the fashion industry supply chain. France passed a law requiring garments and textiles to carry a “carbon label” informing consumers of the environmental impact of these products, while Germany’s “green button” certification program requires clothing and textile companies to meet a minimum of 26 social and environmental standards to display the label.14

In general, we believe regulators should establish more stringent labor and environmental standards for fashion industry suppliers. We also see an opportunity for fashion brands that support better working conditions and seek to meaningfully reduce waste to increase market share and customer loyalty.

What can companies and consumers do to change the fashion industry?

In addition to supporting legislation to address the fashion industry’s shortcomings, companies and consumers can promote change. For example, the Sustainable Apparel Coalition has created an index for measuring the full life-cycle impact of clothing and footwear products. This information can be used to design garments that can be more easily reused or recycled.

The H&M Foundation, in collaboration with the Hong Kong Research Institute of Textiles and Apparel, created a garment-to-garment recycling machine that shreds old garments and converts them into new ones.15 Consumers can support the development of other mechanical and/or safe chemical recycling technologies.

Companies can invest in developing new fibers and technologies that reduce the environmental effects of production and garment-making. Several have already implemented circular business models to make their products more easily repaired or reused:

  • The Restory uses technology to repair footwear and handbags from luxury brands, helping these firms to develop circular business models.

  • The Cocoon Club, a membership subscription for luxury handbags, is building out a similar circular solution.

  • Reflaunt is a fashion technology company connecting brands with the secondary market, allowing customers to resell gently worn apparel via the brands’ websites.16

To support better conditions for apparel workers, over 120 brands have committed to following the Fair Wear Foundation’s Code of Labor Practices, which forbids child labor and mandates safe and healthy working conditions. Participating companies must regularly audit their suppliers to ensure compliance with these standards.

Among other things, brand representatives watch for signs that a factory is subcontracting—for example, if its output exceeds what workers could produce it may be using subcontractors, which would raise questions about adherence to the standards.17

In addition, we think companies should make supply chains transparent so consumers can make informed choices when buying all types of apparel—not just fast fashion. The software company EVRYTHNG and packaging maker Avery Dennison have launched an effort to tag clothing so that consumers can trace the production process of an item along a supply chain.18

In our view, all apparel companies should also encourage consumers to care for their clothes in low-impact ways, such as washing garments in cooler water and drying at a lower heat.

Consumers will play a pivotal role in creating change in the fashion industry and holding fast-fashion brands accountable for their environmental and social impacts. Bringing sustainability to the forefront of shoppers’ minds is a good place to start.

Aditi Pai

Aditi Pai

Senior Sustainable Research Analyst

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Dana Thomas, “The High Price of Fast Fashion,” Wall Street Journal, August 29, 2019.

Elizabeth Reichart and Deborah Drew, “By the Numbers: The Economic, Social and Environmental Impacts of Fast Fashion,” World Resources Institute, January 10, 2019.

Syama Meagher, “The Not-So-Hidden Ethical Cost of Fast Fashion: Sneaky Sweatshops in Our Own Backyard,” Forbes, February 5, 2020.

“Drop That Sweatshop Pledge,” Garment Worker, accessed April 15, 2022.

Reichart and Drew, “By the Numbers.”

Josephine Moulds, “Child labor in the fashion supply chain,” Guardian Special Section Sponsored by Unicef, accessed April 15, 2022.

Thomas, “The High Price.”

Ellen McArthur Foundation, “A New Textiles Economy: Redesigning Fashion’s Future,” accessed April 15, 2022.

Thomas, “The High Price.”

Thomas, “The High Price.”

Reichart and Drew, “By the Numbers.”

Reichart and Drew, “By the Numbers.”

Anushka Challawala, et al., “Sustainable Fashion: New York Considers First Fashion Sustainability Law,” Barclays Research, 2022.

Melissa Gamble, “Is the Tide Changing for the Fashion Industry When It Comes to Regulations?” The Fashion Law, January 4, 2022.

Adele Peters, “Bring your old clothes and this in-store recycling machine will turn them into something new,” Fast Company, May 4, 2021.

Challawala, et al., “Sustainable Fashion.”

Moulds, “Child labor.”

Nathalie Remy, Eveline Spearman, and Steven Swartz, “Style that’s sustainable: A new fast-fashion formula,” McKinsey & Co., October 2016.

References to specific securities are for illustrative purposes only, and are not intended as recommendations to purchase or sell securities. Opinions and estimates offered constitute our judgment and, along with other portfolio data, are subject to change without notice.

This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.