Sustainability | ~ 4 min read

Fast fashion: costing the earth?

Fashion’s damaging environmental and social impact is drawing scrutiny. Where once retailers focused on two collections a year, consumers’ passion for fast fashion now means continuous release of new, sometimes low quality, products. How can the industry combine affordability with responsibility?

Fast fashion could be costing the earth. The industry uses more energy than the aviation and shipping sectors combined and contributes 10% of all global greenhouse gases according to the UN.1 At the same time natural resources are being increasingly depleted to meet rising clothing demand, while waste is becoming unmanageable.

There is increased scrutiny on the social impacts from cheap clothing, with many instances of poor working conditions, forced labour and child labour. Parts of the fashion industry need a makeover, but how?

New business models

Fashion retailers must transition from the current model of disposable fashion to longer-lasting and more sustainably manufactured products. We see two routes forward for fashion brands:

  • Committing to make fashion “circular”. This has the potential to couple significant economic and sustainability opportunities, through initiatives like rental, resale or repurposing of clothes. It is estimated that clothes are worn an average of seven times before being discarded,2 resulting in 85% of clothes being incinerated or piling up in landfill each year.3 The potential for circularity in the industry is enormous.
  • Addressing social issues around workers’ rights. We expect to see clothing companies setting higher labour standards, providing guidance for suppliers, and setting up mechanisms to make supply chains more transparent.
Government action

The textile industry is largely unregulated. Yet policymakers have the opportunity – and responsibility – to introduce stronger environmental standards. They should also make fashion brands accountable both for their negative impacts along the entire supply chain, and for their products at end-of-life.

Recent European Union regulations are expected to change how the industry operates by banning the destruction of unsold products, monitoring greenwashing – whereby it might overstate its green credentials – and setting new design requirements for longer-life products. But more is needed to tackle overproduction and accelerate the trend towards recycling.

Investor stewardship

Investment managers have a significant role to play in increasing fashion companies’ awareness of the sustainability implications of their operations, and in encouraging them towards circular business models. Our approach to informing our investment decision-making is broadly two-fold: analysing the sector’s most material issues and monitoring for potential company controversies. These processes often feed into our engagements with investee companies and are integral to our role as a responsible investor.

Recent insights

Five themes for 2024

Our fourth theme for 2024 looks at how sustainability regulation is beginning to promote tangible progress on climate transition.

Discover more

Five themes for 2024

We believe that ESG will return to its original purpose of risk materiality - a theme explored in the third of our blog series on sustainability in 2024.

Discover more

Biodiversity | ~ 4 min read

Clothing and consumer textiles have a heavy cost in terms of CO2 emissions and resource usage. How can the textile industry be more sustainable?

Discover more
  • Disclaimer
    Investing involves risk. The value of an investment and the income from it will fluctuate and investors may not get back the principal invested. Past performance is not indicative of future performance. This is a marketing communication. It is for informational purposes only. This document does not constitute investment advice or a recommendation to buy, sell or hold any security and shall not be deemed an offer to sell or a solicitation of an offer to buy any security.

    The views and opinions expressed herein, which are subject to change without notice, are those of the issuer or its affiliated companies at the time of publication. Certain data used are derived from various sources believed to be reliable, but the accuracy or completeness of the data is not guaranteed and no liability is assumed for any direct or consequential losses arising from their use. The duplication, publication, extraction or transmission of the contents, irrespective of the form, is not permitted.

    This material has not been reviewed by any regulatory authorities. In mainland China, it is for Qualified Domestic Institutional Investors scheme pursuant to applicable rules and regulations and is for information purpose only. This document does not constitute a public offer by virtue of Act Number 26.831 of the Argentine Republic and General Resolution No. 622/2013 of the NSC. This communication's sole purpose is to inform and does not under any circumstance constitute promotion or publicity of Allianz Global Investors products and/or services in Colombia or to Colombian residents pursuant to part 4 of Decree 2555 of 2010. This communication does not in any way aim to directly or indirectly initiate the purchase of a product or the provision of a service offered by Allianz Global Investors. Via reception of his document, each resident in Colombia acknowledges and accepts to have contacted Allianz Global Investors via their own initiative and that the communication under no circumstances does not arise from any promotional or marketing activities carried out by Allianz Global Investors. Colombian residents accept that accessing any type of social network page of Allianz Global Investors is done under their own responsibility and initiative and are aware that they may access specific information on the products and services of Allianz Global Investors. This communication is strictly private and confidential and may not be reproduced without express permission from Allianz Global Investors. This communication does not constitute a public offer of securities in Colombia pursuant to the public offer regulation set forth in Decree 2555 of 2010. This communication and the information provided herein should not be considered a solicitation or an offer by Allianz Global Investors or its affiliates to provide any financial products in Brazil, Panama, Peru, and Uruguay. In Australia, this material is presented by Allianz Global Investors Asia Pacific Limited (“AllianzGI AP”) and is intended for the use of investment consultants and other institutional/professional investors only, and is not directed to the public or individual retail investors. AllianzGI AP is not licensed to provide financial services to retail clients in Australia. AllianzGI AP is exempt from the requirement to hold an Australian Foreign Financial Service License under the Corporations Act 2001 (Cth) pursuant to ASIC Class Order (CO 03/1103) with respect to the provision of financial services to wholesale clients only. AllianzGI AP is licensed and regulated by Hong Kong Securities and Futures Commission under Hong Kong laws, which differ from Australian laws.

    This document is being distributed by the following Allianz Global Investors companies: Allianz Global Investors GmbH, an investment company in Germany, authorized by the German Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin); Allianz Global Investors (Schweiz) AG; Allianz Global Investors UK Limited, authorised and regulated by the Financial Conduct Authority; in HK, by Allianz Global Investors Asia Pacific Ltd., licensed by the Hong Kong Securities and Futures Commission; in Singapore, by Allianz Global Investors Singapore Ltd., regulated by the Monetary Authority of Singapore [Company Registration No. 199907169Z]; in Japan, by Allianz Global InvestorsJapan Co., Ltd., registered in Japan as a Financial Instruments Business Operator [Registered No. The Director of Kanto Local Finance Bureau (Financial Instruments Business Operator), No. 424], Member of Japan Investment Advisers Association, the Investment Trust Association, Japan and Type II Financial Instruments Firms Association; in Taiwan, by Allianz Global Investors Taiwan Ltd., licensed by Financial Supervisory Commission in Taiwan; and in Indonesia, by PT. Allianz Global Investors Asset Management Indonesia licensed by Indonesia Financial Services Authority (OJK).

    3050825

Allianz Global Investors

You are leaving this website and being re-directed to the below website. This does not imply any approval or endorsement of the information by Allianz Global Investors Asia Pacific Limited contained in the redirected website nor does Allianz Global Investors Asia Pacific Limited accept any responsibility or liability in connection with this hyperlink and the information contained herein. Please keep in mind that the redirected website may contain funds and strategies not authorized for offering to the public in your jurisdiction. Besides, please also take note on the redirected website’s terms and conditions, privacy and security policies, or other legal information. By clicking “Continue”, you confirm you acknowledge the details mentioned above and would like to continue accessing the redirected website. Please click “Stay here” if you have any concerns.