Who Really Pays for Our Clothing?

Last week saw the premier of The True Cost, a documentary about the clothes we wear, the people who make them and the impact the industry is having on our world. It was directed by Andrew Morgan and features interviews with leading influencers including Stella McCartney and Livia Firth. 

The price of clothing has been decreasing for decades, while the human and environmental costs have grown dramatically. The film is a harrowing look at the consequences of fast fashion, which will make many people think twice about buying that $15 dress.

We communicate who we are through our clothing, but behind the personal narrative our attire hides a story. The film seeks to tell this tale by taking viewers on a journey along the supply chain.

It shows how mass advertising and social media drive our need for more: the constantly changing trends, “haul” video bloggers bragging about their latest shopping spree including the $5 T-shirt they’ll probably never wear, and CCTV footage of stampeding shoppers on Black Friday in America.

Next we visit the factories in developing countries which too often have poor and unsafe working conditions. Some consume vast quantities of fresh water which is contaminated in the process and released as wastewater, often untreated, into rivers. Local people can be exposed to chemicals used in the industry with serious health implications.

The promise of globalization was supposed to be a “win-win.” People in the developed world would get cheaper clothes while people in poorer areas would get jobs to escape poverty. Highlighting the disconnect between some firms and their workers, a former sourcing manager of a US fashion brand says: “There are a lot of worse things they could be doing.”

This does not make sense. Why would companies erode the very things on which they rely to generate revenue? It is because human and natural capital is grossly undervalued in the marketplace. The current model is simply unsustainable, and nature and public opinion is biting back. Companies are increasingly having to pay these hidden costs:

• Target, the Australian supermarket chain, was among several clothing stores that had to recall clothing items after the Australian Competition and Consumer Commission identified carcinogenic azo dyes within 37 product lines, impacting almost 208,000 items.
• Mulberry found that the rising cost of raw materials, such as leather, caused its margins to decline, contributing to a 36 percent fall in pre-tax profits.
• H&M saw a 30 percent reduction in net profits after internalizing soaring cotton prices in 2011.

Events like these are driving a move toward more sustainable models of sourcing and production. Of the companies that come to Trucost to understand where their human and natural capital hotspots are, many are not just looking for ways to improve transparency, reduce risk and build sustainable brands, but for ways to grow their businesses. Some firms are leading the way, profiting from innovative ideas that benefit people, planet and the bottom line:

• After a Katvig swap party, customers start chatting to their friends about it on Facebook. It is a much more cost-effective marketing tool than traditional advertising and produces a sharp rise in sales.
• Vigga Svensson has calculated that through its leasing model, company revenues rise 50 percent. Clothes are not wasted, but taken back for refurbishment and recycling.
• In 2013, the US market for organic cotton increased over 16 percent compared to the previous year, reaching $690 million.
• NRDC Clean by Design found that by implementing 200 improvement recommendations, 33 Chinese textile mills achieved collective operational cost savings of almost $15 million.
• Farmers producing Better Cotton benefit from up to 44 percent higher profits when compared with farmers from the same region.

I came out of the cinema hoping that the film reaches a wide audience, especially among young consumers most in need of its revelations. We need more people asking questions about the impacts of fast fashion and demanding sustainable alternatives.

Fashion isn’t broken; it’s shifting, bringing new challenges and opportunities that require different ways of thinking and innovative business models that guarantee growth. With the number of middle-class consumers expected to rise by three billion over the next 15 years and the number of conscious consumers to grow, all these changes present an opportunity for companies to gain competitive advantage. Businesses that innovate to meet demand more efficiently while minimizing social and environmental impact will deservedly take the lead in this rapidly-changing marketplace.

Jacqueline Jackson is an account director at Trucost. She joined Trucost in 2014 and is responsible for managing corporate client relationships and business development; specializing in technology, telecommunications, media and retail. She has extensive experience of working with public and private organizations to assist with business strategy and delivery. In 2011 she founded an e-commerce site, providing designers who up-cycle a portal to promote sustainable fashion and arts to a global market. Jacqueline has an MFA in fine art from the University of Oxford.

This article was republished with permission from Trucost.