WEBVTT NOTE Created by CaptionSync from Automatic Sync Technologies www.automaticsync.com 00:00:00.006 --> 00:00:01.656 align:middle [ Music ] 00:00:01.656 --> 00:00:05.886 align:middle >> You're listening to "Fixed on ESG," a monthly podcast series brought to you 00:00:05.886 --> 00:00:11.046 align:middle by PGIM Fixed Income, an active, global fixed income investment manager. 00:00:12.256 --> 00:00:14.106 align:middle >> Hi, and welcome to "Fixed on ESG." 00:00:14.366 --> 00:00:18.776 align:middle I'm Samantha Van Belle, your host for today and ESG specialist here at PGIM Fixed Income. 00:00:19.156 --> 00:00:23.186 align:middle This month's episode focuses on a topic that pertains to each of us, fashion. 00:00:23.716 --> 00:00:26.216 align:middle Regardless of whether or not you deem yourself fashionable, 00:00:26.286 --> 00:00:29.696 align:middle nearly everyone on the planet either participates in or is impacted 00:00:29.696 --> 00:00:32.346 align:middle by the fashion industry in some way, shape, or form. 00:00:32.346 --> 00:00:38.836 align:middle In 2023, the global fashion industry's estimated worth was $1.7 trillion US 00:00:38.836 --> 00:00:44.036 align:middle and the industry employs an estimated 430 million people representing nearly 12% 00:00:44.196 --> 00:00:45.306 align:middle of the global workforce. 00:00:45.906 --> 00:00:49.166 align:middle While you may have heard the term fast fashion and its negative connotation thrown 00:00:49.166 --> 00:00:53.826 align:middle around in recent years, the breadth of impact of the fashion industry can often be overlooked. 00:00:54.186 --> 00:00:58.256 align:middle According to the Ellen MacArthur Foundation, a nonprofit that provides research 00:00:58.256 --> 00:01:00.036 align:middle on the benefits of a circular economy. 00:01:00.216 --> 00:01:02.786 align:middle Every second, the equivalent of a garbage truck worth 00:01:02.786 --> 00:01:05.396 align:middle of clothes is burnt or buried in landfills. 00:01:05.836 --> 00:01:09.416 align:middle This doesn't take into account the textiles grabs, water waste, social cost, 00:01:09.416 --> 00:01:11.456 align:middle and other byproducts of the fashion industry. 00:01:11.756 --> 00:01:15.816 align:middle In fact, it is responsible for about 10% of global carbon emissions, 00:01:16.086 --> 00:01:18.196 align:middle making it the second most emitting industry. 00:01:18.486 --> 00:01:22.086 align:middle To put that in perspective, the fashion industry produces more carbon emissions 00:01:22.086 --> 00:01:24.706 align:middle than air travel and maritime transport combined. 00:01:25.316 --> 00:01:29.986 align:middle From farmers and textile workers to designers and retailers, there are so many steps that go 00:01:29.986 --> 00:01:31.926 align:middle into every piece of clothing in your wardrobe. 00:01:32.576 --> 00:01:35.746 align:middle Here to help me make sense of the intersections between sustainability 00:01:35.746 --> 00:01:39.146 align:middle and the fashion industry is Nuvneet Dhillon, ESG specialist here 00:01:39.146 --> 00:01:41.866 align:middle at PGIM Fixed Income covering the consumer goods sector. 00:01:42.486 --> 00:01:46.206 align:middle And Alice Roche-Naude, Sustainability Strategy Director at Futerra. 00:01:46.506 --> 00:01:49.646 align:middle Who works with brands to articulate their ambition on sustainability, 00:01:49.716 --> 00:01:54.036 align:middle unpacking complexity, prioritizing issues, defining programs, and setting goals. 00:01:54.596 --> 00:01:57.876 align:middle Alice, maybe you can start by explaining what fast fashion actually is. 00:01:58.556 --> 00:01:59.736 align:middle >> Thank you so much, Sam. 00:01:59.736 --> 00:02:04.126 align:middle I'm really excited to be here to talk about fashion today and sustainability. 00:02:04.436 --> 00:02:09.856 align:middle So fast fashion fundamentally refers to the accelerated production of high-volume, 00:02:09.856 --> 00:02:12.956 align:middle trend-driven, and often inexpensive apparel. 00:02:13.426 --> 00:02:18.366 align:middle The core characteristic of fast fashion is a rapid turnover of inventory 00:02:18.596 --> 00:02:22.876 align:middle with new styles introduced frequently, sometimes multiple times a week, 00:02:23.186 --> 00:02:25.266 align:middle to capture fleeting consumer trends. 00:02:25.826 --> 00:02:28.266 align:middle Think of it like a conveyer belt of trends. 00:02:28.266 --> 00:02:34.826 align:middle So traditional fashion houses used to have four season, spring, summer, autumn, and winter. 00:02:34.826 --> 00:02:38.476 align:middle And fast fashion completely blew that out of the water. 00:02:38.786 --> 00:02:41.086 align:middle Now you have brands turning out dozens, 00:02:41.086 --> 00:02:44.056 align:middle sometimes even hundreds, of micro seasons a year. 00:02:44.406 --> 00:02:49.136 align:middle They're constantly trying to capture the very latest trends straight from the runway 00:02:49.356 --> 00:02:53.646 align:middle and get them onto the shop floor as quickly and as cheaply as possible. 00:02:53.996 --> 00:02:58.776 align:middle And just when you thought fast was fast enough, we now have ultrafast fashion. 00:02:58.986 --> 00:03:04.496 align:middle These brands, often online-centric, introduce thousands of new designs daily. 00:03:04.816 --> 00:03:09.286 align:middle This approach dramatically compresses the time from concept to consumer. 00:03:09.526 --> 00:03:15.126 align:middle Ultrafast brands, often online only, can drop thousands of new designs every single day. 00:03:15.476 --> 00:03:20.796 align:middle They use real-time data and artificial intelligence to spot trends and get a garment 00:03:20.796 --> 00:03:25.256 align:middle from concept to your closet in a matter of days, sometimes hours. 00:03:25.566 --> 00:03:32.266 align:middle It really pushes that idea of buy it now or miss out, creating an even more intensified cycle 00:03:32.266 --> 00:03:34.366 align:middle of consumption and disposability. 00:03:35.196 --> 00:03:35.806 align:middle >> Thanks, Alice. 00:03:35.806 --> 00:03:39.396 align:middle That's a really great explanation and I think anyone who spent some time 00:03:39.396 --> 00:03:42.996 align:middle on social media can attest how quickly trends go in and out of style these days. 00:03:43.546 --> 00:03:46.446 align:middle Nuvneet, given your work in the consumer space, could you describe 00:03:46.446 --> 00:03:49.556 align:middle for our listeners what has driven the fast fashion phenomena? 00:03:49.556 --> 00:03:52.236 align:middle >> Thanks so much, Sam, and thanks for having me. 00:03:52.386 --> 00:03:55.706 align:middle There's definitely a few factors at play here that's really driven this growth 00:03:55.706 --> 00:03:57.256 align:middle and momentum in fast fashion. 00:03:57.386 --> 00:04:01.126 align:middle So we've seen globalization, high inflation, and cost of living crisis, 00:04:01.506 --> 00:04:04.556 align:middle evolving demographics, and social media, to name a few. 00:04:04.766 --> 00:04:08.216 align:middle But in my view, if I had to pin it down, I would say it's consumer demand. 00:04:08.216 --> 00:04:13.756 align:middle So it's demand from consumers to access cheap, and note I say cheap rather than affordable. 00:04:13.756 --> 00:04:17.716 align:middle Because to me, cheap clothing means you can buy clothes, wear them, 00:04:17.806 --> 00:04:19.816 align:middle dispose of them, and replace them very easily. 00:04:20.026 --> 00:04:23.106 align:middle And you have this quick and rapid access to trends from the runway 00:04:23.106 --> 00:04:25.096 align:middle and social media, as Alice mentioned. 00:04:25.426 --> 00:04:27.506 align:middle You have so much variation in clothing options 00:04:27.506 --> 00:04:30.216 align:middle that you can change your looks at very little cost. 00:04:30.506 --> 00:04:31.396 align:middle And you can't deny it. 00:04:31.636 --> 00:04:32.676 align:middle Fast fashion is quick. 00:04:32.676 --> 00:04:34.986 align:middle It's easy and it's very convenient. 00:04:35.536 --> 00:04:39.696 align:middle So while the environment and social costs are undeniable, fast fashion continues 00:04:39.696 --> 00:04:41.706 align:middle to have a crucial role with consumers. 00:04:41.846 --> 00:04:45.546 align:middle Particularly with lower income backgrounds or actually people who just don't want 00:04:45.546 --> 00:04:46.866 align:middle to spend a lot on their clothing. 00:04:47.256 --> 00:04:50.306 align:middle As sustainable alternatives often come with a price premium 00:04:50.466 --> 00:04:52.006 align:middle that remains out of reach for many. 00:04:52.546 --> 00:04:56.706 align:middle This combined with the industry's desire to proceed with unrelenting revenue growth 00:04:56.706 --> 00:05:01.206 align:middle and prioritize sales volumes rather than improving and investing 00:05:01.206 --> 00:05:02.926 align:middle in the durability and resilience of its products. 00:05:02.926 --> 00:05:05.916 align:middle Has led to mass production and mass consumption in this sector. 00:05:06.066 --> 00:05:09.416 align:middle And fast fashion really is the pinnacle of this. 00:05:10.406 --> 00:05:14.006 align:middle >> That's clearly a really big problem and one which we've seen portrayed in the data. 00:05:14.176 --> 00:05:19.626 align:middle So since 2000, clothing production has doubled while garment usage lifetime has decreased, 00:05:19.856 --> 00:05:22.416 align:middle exacerbating all the problems that you just discussed. 00:05:22.716 --> 00:05:27.146 align:middle So given the demand for faster, cheaper clothing, do you think there's an incentive 00:05:27.146 --> 00:05:29.686 align:middle for apparel companies to be more sustainable? 00:05:30.286 --> 00:05:33.306 align:middle >> Now I think there are some apparel companies doing amazing things, 00:05:33.306 --> 00:05:36.856 align:middle particularly on the sportswear side and outdoor brands. 00:05:37.056 --> 00:05:40.976 align:middle And there is a growing consumer base that does actually care about how their clothes are made. 00:05:40.976 --> 00:05:43.216 align:middle As part of our job, we talk to customers. 00:05:43.216 --> 00:05:44.046 align:middle We engage with them. 00:05:44.046 --> 00:05:48.196 align:middle And on the whole, we have seen a general awareness from fashion brands that they need 00:05:48.196 --> 00:05:50.726 align:middle to prioritize more sustainable materials, 00:05:50.946 --> 00:05:54.456 align:middle equitable labor practices, increase their transparency. 00:05:54.846 --> 00:05:58.906 align:middle And we are seeing [inaudible] even if progress to date has actually been slower 00:05:58.906 --> 00:06:01.526 align:middle than what's required given the scale of the problem. 00:06:01.746 --> 00:06:05.686 align:middle But back to your original question, I don't really think that the broader system 00:06:05.686 --> 00:06:09.996 align:middle in which the fashion industry operates in does actually incentivize sustainability. 00:06:10.226 --> 00:06:15.426 align:middle It's really hard to ignore the consumer demand and now the actual expectation from consumers 00:06:15.426 --> 00:06:18.006 align:middle to have access to cheap and disposable clothing. 00:06:18.446 --> 00:06:22.526 align:middle There is also a huge amount of pressure on brands to reduce their costs and sell more. 00:06:22.676 --> 00:06:26.826 align:middle And do I think that the incentives across the value chain are somewhat misaligned even 00:06:26.826 --> 00:06:29.616 align:middle if the apparel company, itself, wants to be more sustainable. 00:06:30.056 --> 00:06:33.736 align:middle >> So even if brands find a client base to prioritize sustainability, 00:06:33.976 --> 00:06:36.156 align:middle what other challenges do these companies face 00:06:36.156 --> 00:06:38.486 align:middle in ensuring their products are actually sustainable? 00:06:39.156 --> 00:06:43.566 align:middle >> So I think the largest challenge is the fact that supply chains are so large and disconnected 00:06:43.566 --> 00:06:48.346 align:middle and there's such a lack of transparency across all the different steps of the value chain. 00:06:48.346 --> 00:06:50.526 align:middle And unfortunately, for these companies, 00:06:50.616 --> 00:06:53.626 align:middle most of the negative impacts lie within the supply chain. 00:06:54.216 --> 00:06:58.756 align:middle >> Yes, and most of these large companies have a complex, multi-country, 00:06:58.756 --> 00:07:02.676 align:middle tiered system for their supply chain, as Nuvneet just mentioned. 00:07:02.846 --> 00:07:07.646 align:middle And it begins with raw materials suppliers, seeing cotton farms in one nation, 00:07:07.646 --> 00:07:09.846 align:middle synthetic fiber production in another. 00:07:10.116 --> 00:07:15.376 align:middle From there, it flows through spinning wheels, dyeing facilities, and fabric manufacturers, 00:07:15.586 --> 00:07:18.166 align:middle and then it goes to garment assembly factories. 00:07:18.506 --> 00:07:23.546 align:middle The goods then will pass on through logistic providers before reaching retailers 00:07:23.546 --> 00:07:24.646 align:middle and then consumers. 00:07:25.036 --> 00:07:31.016 align:middle Plus, you often see a lot of subcontracting and informal labor embedded in these operations, 00:07:31.016 --> 00:07:33.706 align:middle making traceability even more challenging. 00:07:33.706 --> 00:07:35.356 align:middle >> Yeah, that's a really good point. 00:07:35.356 --> 00:07:36.556 align:middle There are so many steps. 00:07:36.656 --> 00:07:39.656 align:middle And just as an example, if you take a brand that actually wants 00:07:39.656 --> 00:07:43.966 align:middle to source its raw materials sustainably, this is really tough problem to solve. 00:07:44.186 --> 00:07:47.546 align:middle Most commodity systems don't really have traceability 00:07:47.546 --> 00:07:49.586 align:middle as they're designed to be interchangeable. 00:07:49.586 --> 00:07:53.416 align:middle So the challenge for brands isn't actually getting to the farm, but instead, 00:07:53.416 --> 00:07:55.826 align:middle it's getting sustainable fibers from the farm 00:07:55.986 --> 00:07:58.746 align:middle through these complex value chains with good disclosure. 00:07:58.746 --> 00:08:03.426 align:middle So that the end customer can see what they're actually buying and for the company to prove 00:08:03.426 --> 00:08:06.016 align:middle that they are being sustainable with respect to sourcing. 00:08:06.016 --> 00:08:10.716 align:middle If you take cotton traceability as an example, growers and farmers get the same price 00:08:10.826 --> 00:08:13.936 align:middle for cotton because the market does not value sustainability. 00:08:14.156 --> 00:08:17.756 align:middle The market doesn't price in the negative X analyses associated 00:08:17.756 --> 00:08:20.106 align:middle with the environmental and social cost of cotton. 00:08:20.376 --> 00:08:23.426 align:middle So a farmer with the most sustainable practices versus a farmer 00:08:23.426 --> 00:08:26.676 align:middle who is doing nothing will receive the same price for their cotton. 00:08:26.676 --> 00:08:30.376 align:middle So as you can see, there's actually little incentive for the grower, 00:08:30.706 --> 00:08:33.386 align:middle who's right at the beginning of the supply chain, to change. 00:08:33.956 --> 00:08:36.216 align:middle >> Those are really great insights, so thank you, both. 00:08:36.636 --> 00:08:40.316 align:middle Given these obstacles, where do you feel that there are opportunities for innovation 00:08:40.316 --> 00:08:43.396 align:middle in the industry and do you believe that these are cost effective? 00:08:43.446 --> 00:08:45.156 align:middle >> I mean, it's no secret. 00:08:45.336 --> 00:08:47.056 align:middle Addressing sustainability challenges 00:08:47.056 --> 00:08:49.916 align:middle in the fashion industry is hard and it's often expensive. 00:08:49.916 --> 00:08:54.286 align:middle But with that said, the consequences are just too great to simply ignore the problem. 00:08:54.286 --> 00:08:58.746 align:middle There are areas that exist where companies can reduce their negative impact 00:08:58.806 --> 00:09:00.686 align:middle where it makes sense from a business perspective. 00:09:01.246 --> 00:09:03.516 align:middle For example, knowing your supply chain. 00:09:03.726 --> 00:09:06.746 align:middle A lot of companies don't have a good understanding and a good grasp 00:09:06.746 --> 00:09:11.136 align:middle of what their entire supply chain looks like, particularly beyond Tier 1 suppliers. 00:09:11.456 --> 00:09:13.336 align:middle So going back to the cotton example, 00:09:13.336 --> 00:09:17.656 align:middle the 2022 floods in Pakistan is a really interesting case study. 00:09:17.876 --> 00:09:20.386 align:middle It destroyed 40% of the annual cotton crop. 00:09:20.716 --> 00:09:24.216 align:middle Some brands actually rely 100% on Pakistani cotton. 00:09:24.446 --> 00:09:26.536 align:middle So there was this huge supply chain disruption 00:09:26.666 --> 00:09:29.966 align:middle which impacted business operations and it impacted revenues. 00:09:30.366 --> 00:09:34.886 align:middle Knowing ones supply chain and having better transparency and oversight is a first step 00:09:35.066 --> 00:09:37.956 align:middle in being adequately prepared for certain ESG risks. 00:09:38.156 --> 00:09:40.306 align:middle In this case, it was physical climate risks. 00:09:40.966 --> 00:09:44.436 align:middle From that, then companies can work in reducing negative impacts. 00:09:44.716 --> 00:09:48.936 align:middle So if they know where they're sourcing their cotton from, they can then engaging with farmers 00:09:49.046 --> 00:09:53.066 align:middle on things like regenerative agricultural practices to improving soil health 00:09:53.266 --> 00:09:54.856 align:middle and using water more efficiently. 00:09:55.066 --> 00:09:56.586 align:middle So on and so forth. 00:09:56.586 --> 00:10:00.246 align:middle Overall, what we've seen is that companies may need more staff than countries 00:10:00.246 --> 00:10:02.926 align:middle that they're sourcing from because this appears to be a bit of a blind spot. 00:10:03.126 --> 00:10:06.966 align:middle We have seen that the leading brands tend to have more boots on the ground 00:10:07.196 --> 00:10:11.156 align:middle and are more vertically integrated, all the way from board level to farmers. 00:10:11.986 --> 00:10:15.466 align:middle Also, investing in technology like robotics and AI, 00:10:15.466 --> 00:10:17.766 align:middle it doesn't have to always be big and expensive. 00:10:17.906 --> 00:10:20.496 align:middle There are people working on small-scale solutions. 00:10:20.736 --> 00:10:24.526 align:middle For example, we've seen technologies that are giving companies data on soil. 00:10:24.676 --> 00:10:28.816 align:middle This allows them to reduce pesticide residue, reduce fertilizer use, 00:10:29.106 --> 00:10:30.626 align:middle monitor pollution levels in water. 00:10:31.016 --> 00:10:34.586 align:middle We have seen also brands adopting digital IDs and keeping data 00:10:34.586 --> 00:10:36.296 align:middle on the journey of their products. 00:10:37.146 --> 00:10:42.656 align:middle >> Yeah, great point, Nuvneet, and to add to that, I'd love to just dive into the fact 00:10:42.656 --> 00:10:47.826 align:middle that the rules of the game for global fashion sourcing are fundamentally changing. 00:10:48.026 --> 00:10:52.316 align:middle And this is creating a compelling business case for sustainable solutions. 00:10:52.726 --> 00:10:58.336 align:middle Geopolitical shifts and evolving trade policies, particularly those tied to human rights 00:10:58.336 --> 00:11:02.316 align:middle and environmental performance, are no longer just nice to haves. 00:11:02.536 --> 00:11:05.056 align:middle They're becoming financial gatekeepers. 00:11:05.476 --> 00:11:12.296 align:middle So, for example, recent changes to US de minimis tariff exemption previously allowing duty-free 00:11:12.296 --> 00:11:16.656 align:middle entry for low-value imports under $800 was ended 00:11:16.656 --> 00:11:21.246 align:middle for Chinese-origin goods on May 2nd of this year, 2025. 00:11:21.506 --> 00:11:24.626 align:middle And this is effectively making those ultra-cheap, 00:11:24.626 --> 00:11:27.856 align:middle direct-to-consumer imports less viable, 00:11:27.956 --> 00:11:33.206 align:middle forcing brands to truly reevaluate their entire sourcing strategies based 00:11:33.206 --> 00:11:35.246 align:middle on more than just initial cost. 00:11:35.736 --> 00:11:38.606 align:middle Proactive investment and transparent, auditable, 00:11:38.606 --> 00:11:42.756 align:middle and resilient supply chains isn't just about ethics, anymore. 00:11:43.096 --> 00:11:48.326 align:middle It is a strategic imperative to avoid significant tariff penalties, 00:11:48.556 --> 00:11:53.516 align:middle costly supply chain disruption, as mentioned in the Pakistani's cotton, 00:11:53.746 --> 00:11:58.206 align:middle in the example Nuvneet gave us, and senior reputational damage. 00:11:58.386 --> 00:12:04.876 align:middle This pressure directly forces new innovation in how brand design, source, and produce. 00:12:05.186 --> 00:12:10.506 align:middle And it also creates ripple effects as brand demand higher standards from their suppliers, 00:12:10.686 --> 00:12:12.796 align:middle driving industry-wide improvement. 00:12:13.376 --> 00:12:17.616 align:middle And this leads directly into why the linear take, make, 00:12:17.616 --> 00:12:20.976 align:middle dispose model is increasingly being challenged. 00:12:21.206 --> 00:12:24.256 align:middle It is simply unsustainable from an economic standpoint. 00:12:24.486 --> 00:12:28.586 align:middle Our reliance on constantly constructing virgin materials is subject 00:12:28.896 --> 00:12:32.296 align:middle to volatile prices and increasing viscosity. 00:12:32.476 --> 00:12:36.346 align:middle While the cost of waste disposal are skyrocketing due 00:12:36.346 --> 00:12:39.436 align:middle to limited landfill space and structure regulation. 00:12:39.676 --> 00:12:42.376 align:middle And this is precisely why waste reduction 00:12:42.376 --> 00:12:46.986 align:middle and circularity initiatives are becoming massive drivers of cost efficiency 00:12:47.166 --> 00:12:51.766 align:middle and new revenue streams, truly building the business case for sustainability. 00:12:52.026 --> 00:12:54.716 align:middle So, for instance, by investing in innovation 00:12:54.716 --> 00:12:58.036 align:middle like fiber-to-fiber recycling of post-consumer waste. 00:12:58.216 --> 00:13:00.966 align:middle Brands can drastically reduce their reliance 00:13:00.966 --> 00:13:05.406 align:middle on those volatile virgin materials market and lower disposal fee. 00:13:05.706 --> 00:13:09.836 align:middle It's about recovering value from what was once considered waste. 00:13:10.236 --> 00:13:15.226 align:middle I'm personally very, very interested in the breakthrough in new materials here, 00:13:15.616 --> 00:13:19.636 align:middle things like bio-based materials or advanced textile recycling. 00:13:19.836 --> 00:13:23.006 align:middle And these aren't just about reducing environmental impact. 00:13:23.216 --> 00:13:28.576 align:middle They're about redefining economic value, creating more resilient businesses, 00:13:29.086 --> 00:13:31.136 align:middle and more resilient business models, 00:13:31.376 --> 00:13:35.166 align:middle through things like rentals, resell, and rebirth services. 00:13:35.166 --> 00:13:38.526 align:middle It is about grasping the opportunity here. 00:13:38.826 --> 00:13:44.746 align:middle And so when leading brands adopt these circular strategies, most in desperate need of scaling, 00:13:44.746 --> 00:13:50.246 align:middle if I'm being honest, then creates a powerful ripple effect once more across the industry. 00:13:50.456 --> 00:13:55.716 align:middle Setting new benchmarks and accelerating the broader shifts towards a more sustainable 00:13:55.856 --> 00:13:58.276 align:middle and economically sound fashion future. 00:13:58.986 --> 00:14:02.216 align:middle >> You both make some really great points and I think it really drives home 00:14:02.216 --> 00:14:05.976 align:middle that the industry is a lot more complex than it may seem on the surface. 00:14:05.976 --> 00:14:08.416 align:middle And, ultimately, the system is no longer working 00:14:08.416 --> 00:14:11.456 align:middle and we can't ignore the environmental and social cost any longer. 00:14:11.596 --> 00:14:15.106 align:middle As put by the Fashion Index, "Unless brands commit to reducing the number 00:14:15.106 --> 00:14:17.856 align:middle of new items they produce, they are only expanding the quote, 00:14:17.856 --> 00:14:19.406 align:middle 'circle,' rather than reducing it." 00:14:19.606 --> 00:14:22.686 align:middle So while improving circularity offers some hope for the industry, 00:14:22.796 --> 00:14:26.196 align:middle do you believe that fast fashion can truly ever be sustainable? 00:14:26.196 --> 00:14:28.526 align:middle >> So this is really the big question. 00:14:28.656 --> 00:14:33.756 align:middle So as investors, when we assess the issue impact of the company, we consider the products 00:14:33.756 --> 00:14:37.196 align:middle and services of the company and the impact on the environment and on society. 00:14:37.196 --> 00:14:40.676 align:middle And then we assess how a company is managing its operational impacts. 00:14:40.976 --> 00:14:43.696 align:middle So in this case, what are they doing to reduce their emissions? 00:14:43.746 --> 00:14:45.166 align:middle How are they addressing human rights? 00:14:45.166 --> 00:14:49.276 align:middle Fast fashion companies can improve their operational impacts 00:14:49.276 --> 00:14:50.746 align:middle and we have seen them do this. 00:14:50.946 --> 00:14:52.856 align:middle So there's an increase in companies that are setting 00:14:52.856 --> 00:14:57.366 align:middle that zero targets emission reduction targets that are approved by the SBTI, 00:14:57.556 --> 00:14:59.176 align:middle the Science-Based Targets Initiative. 00:14:59.536 --> 00:15:01.976 align:middle We've seen companies increase the amount of recycled content in their clothing. 00:15:02.376 --> 00:15:07.046 align:middle We've seen companies enforce policies that ensure safe working conditions 00:15:07.046 --> 00:15:09.406 align:middle for employees and implement living wage. 00:15:09.406 --> 00:15:12.146 align:middle So there is stuff that can be done on the operations side. 00:15:12.486 --> 00:15:17.936 align:middle The question really remains can you produce excessive amounts of clothing at a very low cost 00:15:18.076 --> 00:15:22.346 align:middle when we have such finite resources on our planet. 00:15:22.586 --> 00:15:27.956 align:middle And I just want to be clear. 00:15:27.956 --> 00:15:33.846 align:middle There is a huge amount of disparity between companies and there are ones 00:15:33.846 --> 00:15:35.156 align:middle that are doing a lot more than others. 00:15:35.156 --> 00:15:41.136 align:middle So we are absolutely seeing companies that are leading the way, but unfortunately, 00:15:41.136 --> 00:15:47.266 align:middle the fast fashion industry as a whole is so far away from where it needs to be. 00:15:47.266 --> 00:15:54.686 align:middle >> Yeah, and building on that, the reality is that most companies in fashion were indeed ahead 00:15:54.686 --> 00:16:01.796 align:middle of the curve in setting bold sustainability and vision just a few years ago pre-pandemic. 00:16:01.866 --> 00:16:03.146 align:middle Compared to other sectors. 00:16:03.406 --> 00:16:10.846 align:middle They put out impressive targets for mission reduction, circularity, and ethical sourcing. 00:16:10.926 --> 00:16:17.096 align:middle But the last few years, we've now moved from the idea of mission setting to tangible action. 00:16:17.096 --> 00:16:20.526 align:middle And these companies, they now need to show receipts, true, verifiable, 00:16:20.526 --> 00:16:27.526 align:middle and meaningful action on the ground, not just pledges as we are approaching very rapidly 2030. 00:16:27.526 --> 00:16:33.536 align:middle So for investor, it's about seeing tangible reduction in an environmental footprint 00:16:33.536 --> 00:16:40.186 align:middle and demonstrable improvement in human rights across their complex supply chains. 00:16:40.186 --> 00:16:44.466 align:middle And this kind of authentic, systemic progress, however, will only ever happen 00:16:44.466 --> 00:16:46.926 align:middle if they truly, truly collaborate together. 00:16:46.926 --> 00:16:52.106 align:middle And the problems, they're just too deep-seated and spend too many tiers 00:16:52.106 --> 00:16:58.556 align:middle of the global supply chain for any single company to solve it alone. 00:16:58.626 --> 00:17:05.336 align:middle It demands collective investment in new technologies, shared data platform, 00:17:05.336 --> 00:17:12.206 align:middle and cross-industry advocacy to shift the entire cost system towards a more sustainable 00:17:12.206 --> 00:17:13.596 align:middle and equitable future. 00:17:13.596 --> 00:17:20.416 align:middle >> Great. So while companies can help improve the situation, the problem with access, demand, 00:17:20.416 --> 00:17:27.166 align:middle and over-consumption can't be solved without changes in consumer demands, as well. 00:17:27.166 --> 00:17:32.186 align:middle And this may all sound very daunting and ominous, but there are brands focused 00:17:32.186 --> 00:17:36.446 align:middle on innovation and environmentally-friendly habits. 00:17:36.446 --> 00:17:42.056 align:middle Alice, as you mentioned before, we've seen an increase in popularity of rental 00:17:42.056 --> 00:17:45.746 align:middle and resale platforms which promotes buying second hand. 00:17:45.746 --> 00:17:51.346 align:middle And renting items rather than purchasing them for wearing just once or twice. 00:17:51.346 --> 00:17:57.066 align:middle In terms of innovation, we've seen a lot of new companies in the textile space, 00:17:57.066 --> 00:18:04.986 align:middle including a material technology company which creates fabric to widen as it stretches. 00:18:04.986 --> 00:18:09.476 align:middle Enabling them to design children's clothes that grow with the child over time. 00:18:09.476 --> 00:18:11.876 align:middle Another inventive company in that space uses the hides 00:18:11.876 --> 00:18:15.336 align:middle of harmful invasive species to create leathers. 00:18:15.336 --> 00:18:21.126 align:middle And in doing so, they help regenerate native biodiversity and create jobs at the same time. 00:18:21.256 --> 00:18:28.336 align:middle And so while brands like this won't solve the fashion crisis, it is a step in the direction 00:18:28.486 --> 00:18:34.836 align:middle that we want to go and an indication that there is consumer interest in sustainable habits. 00:18:34.836 --> 00:18:39.626 align:middle With that, I want to thank Alice and Nuvneet for joining me today. 00:18:39.756 --> 00:18:41.926 align:middle >> Thanks for having us, Sam. 00:18:42.046 --> 00:18:42.426 align:middle >> Thanks, Sam. 00:18:42.426 --> 00:18:43.906 align:middle Really interesting conversation. 00:18:44.146 --> 00:18:47.106 align:middle >> Thank you both, again, and as you both help unpack, 00:18:47.106 --> 00:18:49.086 align:middle there is still a long way to go in the fashion industry. 00:18:49.126 --> 00:18:51.376 align:middle However, listeners should not be discouraged. 00:18:51.376 --> 00:18:54.876 align:middle There is lots of room for improvements for both producers and consumers. 00:18:54.906 --> 00:19:00.476 align:middle So maybe the next time you go shopping, you'll think about all the hands that went 00:19:00.476 --> 00:19:03.316 align:middle into making your garment and where the materials came from rather 00:19:03.416 --> 00:19:05.526 align:middle than just the price and ask yourself is it worth it. 00:19:05.526 --> 00:19:09.066 align:middle Thank you and come back next month for another episode of "Fixed on ESG." 00:19:09.376 --> 00:19:10.976 align:middle >> We hope you enjoyed today's podcast. 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