COVID-19 and the corresponding lockdowns that have come with it have resulted in relatively a long list of well-known retail bankruptcies and in some cases, business casualties. Despite widespread market disruption and plummeting sales over the past year for most apparel companies, the perpetual rise of fast fashion has resulted in a sales rebound for the likes of H&M, ASOS, and co., and growth that does not appear to be slowing any time soon. In fact, global clothing consumption is predicted to rise by 63 percent by 2030, fueled both by increasing demand for readily available, mass-produced, trend-driven fast fashion, and by a growing middle class population with disposable income.
Given that the apparel industry is considered to be one of the most-polluting industries in the world, with some estimates suggesting that it produces around 8 percent of global greenhouse emissions, the social and environmental cost of this demand – as tied to the constant promotion of trendy, new clothing – is significant, and continues to make headlines.
For instance, an estimated $500 billion is lost annually due to clothing underutilization, according to the United Nations Alliance for Sustainable Fashion, with 300,000 tons of clothing ending up in landfill every year in the UK, alone. Beyond rampant over-consumption, there are enduring issues associated with waste products in the oceans, production (which requires vast amounts of water and pesticides), and the human implications of low-cost labor and poor working conditions.
The existing regulatory landscape
Globalization has fueled the rapid growth of the $30 billion-plus fast fashion industry, and yet, at the same time, it presents a barrier to harmonization. Supply chains are spread across the world, with a significant proportion of manufacturing and production now taking place in developing countries, where protections and regulations are limited. Therein lies the challenge of trying to regulate a global industry without standardized practices.
In the UK, the fashion industry is largely one of self-regulation with firms guided by industry codes, such as those set by the Retail Ombudsman. The Organization for Economic Co-Operation and Development, for instance, which counts the UK as a member, has adopted global guidance for due diligence requirements in supply chains. Similarly, the Sustainable Apparel Coalition – which has 250 global members, including many major fashion companies – provides a framework for sustainable production by which companies can measure their social and environmental impact. All the while, many fashion brands are clamoring to introduce “eco-friendly” products, oftentimes in conjunction with third-party sustainability standards.
However, most memberships and certifications like these remain voluntary, with no legal repercussions if companies fail to follow through on the relevant guidelines. And still yet, widely-used terms, such as “sustainable” and “ethical’ do not have legally objective definitions, remaining open to interpretation across the sector. Consequently, achieving any sort of regulatory harmony likely requires more action on the part of the UK and global governments, and even consumers.
In a 2019 report, the UK’s Environmental Audit Committee (“EAC”) made several retail industry-specific sustainability recommendations to the Government. The EAC suggested that tax reforms could reward retailers for reducing their carbon footprint, proposed that a ban on landfill of unsold clothing, and recommended laws requiring companies to perform due diligence checks across their supply chains. While the Government did not act on any of the EAC’s recommendations, it, nonetheless, recognized the concerns raised and highlighted other proposed actions being taken as part of its 25 Year Environment Plan and Resources and Waste Strategy. But without legal changes, critics have questioned whether this is enough.
Solutions for the future?
Given the current climate, it seems unlikely that the UK Government will pressure struggling retailers with more regulations. However, the UK – and others – could learn from other existing approaches to these issues, as the retail industry opens up again. France, for example, appointed a Secretary of State to the Minister for the Ecological and Inclusive Transition, with Brune Poirsion becoming known as the unofficial Minister of Fashion and proving instrumental in the anti-waste law passed by the French parliament in 2020. One core focus for this ground-breaking piece of legislation was to introduce a ban on the burning of unsold clothing in France.
The Swedish government has similarly considered action if its own, including the potential implementation of a tax on clothing and footwear products containing substances of very high concern – or “SVHCs” – which are identified by Article 57 of the EU REACH Regulation. The proposal recommended enforcing the tax beginning on April 1, 2021 in order to “cost-effectively reduce the incidence or risk of exposure to, and spread of, substances in clothing and footwear that are harmful to the environment and human health.” (As of this month, the Swedish government revealed that it has delayed introducing a tax on SVHCs-containing garments and footwear to January 1, 2022, without offering a reason for the action).
In the UK, retired judge Sir Brian Leveson has recently been appointed by fast fashion retailer Boohoo to assist the brand in overseeing its “Agenda for Change” and assessing the overall suitability of its supply chain after reports of poor labor conditions in its supply chain in 2020. Leveson published his first report in January on required areas of change and progress required, and just this month, the retailer revealed that it “has ceased doing business with a number of manufacturers who were unable to demonstrate the high standard of transparency required, despite being provided with opportunities to address any issues identified in the auditing process.”
On an individual company basis,potential fiscal penalties could encourage improved and updated ethical practice in the supply chain process for apparel companies across the board. The use of binding contract terms to guarantee particular standards within supply and purchase agreements could help to apply much needed pressure on brands and their suppliers, and promote forward-thinking environmental policies and sustainable practices in the sector as a whole.
Finally, as discussed above, currently voluntary certifications could become a legal requirement in the UK. “Ecolabelling” refers to labels used by fashion brands (currently on a voluntary basis) to confirm their sustainable credentials and commitment to more environmentally conscious fashion. The idea is that the label can be found on specific items of clothing and is therefore directly accessible to consumers. Mandatory certification, it is hoped, could have wide-reaching ramifications.
Following high profile movements including climate change protests across the world, there has been a marked change in consumer awareness and an increase in demand for information relating to how garments are manufactured. While the fashion industry still has a long way to go in terms of regulation, there are various strategies available that can attempt to enforce sustainable polices and therefore drive change in the industry. What is clear, however, is that most of these are local solutions. The global nature of the fashion industry requires worldwide co-operation to face these problems head on.
Manon Huckle is an associate in the commercial dispute resolution team at Penningtons Manches Cooper LLP, based in the London office. This article has been co-written with Jenny Wright, a trainee solicitor in the commercial dispute resolution team.
Share
