If reports are to be believed, Chinese fast-fashion behemoth Shein is trying to make amends, shifting its image to justify a steadily dropping $100 billion valuation ahead of an ambitious IPO in 2024. It’s got a lot of work to do. While the company controls most of the category at 28 percent, racking in $15.7 billion in sales 2021, it’s also among the worst in environmental sustainability, social justice and corporate governance (ESG). To keep prices low, and to stay relatively free of regulation, it relies on suppliers in China, where the Uyghur populations suffer forced labor and dangerous working conditions. Also, with wasteful environmental practices ingrained in its model, fast fashion is so harmful that most regulators believe it is irredeemable. As the king of fast fashion, Shein has a lot to answer for.
Still, as the company hires new sustainability-focused leaders and promises a new conscious approach, its efforts to market an enthusiastic ambition to jump on the ESG bandwagon should put it on the path to redemption, right? Not quite.
ESG is not a marketing tactic
Businesses, fast fashion included, often fundamentally misunderstand ESG. As a result, there have been plenty of talking heads wrongly criticizing ESG as “corporate cancel culture,” reacting as if ESG is “woke” marketing or PR run amok. Then others, like Shein, also hope to use ESG to their advantage by engaging in ESG messaging and storytelling without realizing that the model is, at its core, antithetical to ESG’s mission to save the planet.
For Shein and their contemporaries, ESG storytelling without business transformation is a thinly veiled strategy.
Addressing failed and surface-level ESG efforts, Kenneth Pucker, former COO of Timberland, explained in Harvard Business Review that adjusting for climate change within the current framework of a business (called “parameters”) is flawed from the start. He added that simply turning up or down dials within those parameters without altering underlying systems will not yield results.
For fast fashion, effective ESG demands that rather than existing within their usual parameters of manufacturing disposable clothing and cynically moving a dial up or down, that they rethink their entire business, from manufacturing and pricing to employees and supply chains, with the goal of reaching true social justice and climate progress. To most companies, that is a scary notion, particularly if they’re doing it for reputational reasons. However, if a company realizes its responsibility and is compelled to actually help, the “ask” becomes more understandable despite its difficulty.
That’s why for Shein and their contemporaries, ESG storytelling without business transformation is a thinly veiled strategy. Even companies with the best intentions, those that understand and are driven by the U.N. Sustainable Development Goals, find it challenging to meet the standards necessary to actually create change. So there’s no way that companies adopting ESG for storytelling alone can even hope to move the needle. And studies suggest that if they try to tell stories without making meaningful change, it will not fly with the American consumer.
Transparency as a real strategy
While fast fashion may be beyond repair, certainly other leaders in fashion are ready to embed ESG at the heart of their organizations with the right guidance. It’s important to find partners — whether that’s an ESG or social impact consultancy or agency — who can help provide that guidance.
For example, the right partner can push fashion brands to open source their ESG successes. Having worked with global apparel brands, I can attest that their business cultures are still largely old school and they tend to see their ESG innovations and successes as a competitive edge. So they wouldn’t, for example, allow others to copy their revolutionary, organic system for cleaning the chemicals out of water used in clothing manufacturing. They fail to see that this can both be a broader environmental benefit, as well as the story of their company and how they want to help others make change.
While fast fashion may be beyond repair, certainly other leaders in fashion are ready to embed ESG at the heart of their organizations with the right guidance.
Partners can also encourage truth-telling and humility in a brand’s ESG approach. After all, there is no such thing as truly sustainable fashion. All fashion practices cause some environmental harm. Understanding this can allow an organization to level-set both its actions and messaging and help the consumers learn to lessen that negative impact by avoiding excessive buying and waste. The famous “Don’t Buy This Jacket” ad from Patagonia was based on this philosophy and could be leveraged industrywide.
This commitment to truth also extends to reporting, a contested and ineffective staple of ESG that nevertheless needs oversight and verification. Consultancies and agencies can help bridge the gap between fashion brands and these third party “verifiers.” Organizations such as the Fair Labor Association or U.S. Cotton Trust Protocol can supply actual metrics in ESG reporting that prioritize impact.
While there’s no way fast fashion can ever be, or claim to be, environmentally sound, other fashion brands (and partners that help tell their ESG stories) can contribute to the industry shift required to truly do right by our planet, and our future.