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PULSE OF
THE FASHION INDUSTRY
2019 UPDATE

The Pulse of the Fashion Industry is published by Global Fashion Agenda, Boston Consulting Group and Sustainable Apparel Coalition. It follows the strong belief that the environmental, social and ethical challenges the industry faces today are not simply a threat, but instead an immense untapped value creation opportunity. This microsite explores key findings and shines a light on most repellent outcomes of this year’s update. For full insights please download the 2019 Update.

The 2019 Pulse Score* shows that the fashion industry has improved its social and environmental performance in the past year, but at a slower rate than the previous year. Despite this improvement, the fashion industry is still far from sustainable. Furthermore, the findings demonstrate that fashion companies are not implementing sustainable solutions fast enough to counterbalance the negative environmental and social impacts of the rapidly growing fashion industry. If the Pulse Score stays on its current trajectory, the gap between industry output and the Pulse Score will widen.
As a result, if the industry does not implement changes at a faster rate, it will not be able to achieve the United Nations Sustainable Development Goals1 or meet the Paris Agreement2. The publishers call upon industry leaders to increase their pace towards a deeper and more systemic change. Companies must push harder, with more focused and coordinated efforts, to overcome technological and economic limitations that hinder progress.

PULSE
SCORE
CONSUMER
SENTIMENT

Pulse Score

Taking the Pulse of the Fashion Industry

2019
42
2018
38
2017
32

The 2019 Pulse Score increased +4pt from last year, compared to +6pt in 2018.

This means that measurable progress decreased by 1/3.

Pulse Score

Pulse Scores by performance quartile*

To provide an overview of the industry’s progress, segments are ranked in performance quartiles based on their Pulse Scores.

3rd Quartile

Players in the third performance quartile saw the largest year-on-year improvements which were mainly driven by small mid-price and medium-entry-price players by adopting sustainable strategy development and governance, by setting targets in energy, chemicals and water savings, and by aligning association affiliations.

2nd Quartile

In the second quartile, progress slowed. Nevertheless, efforts are visible: companies report that they are dedicated to sustainability, and they are investing in supplier relationships, supply chain traceability, an improved material mix and changes to their business model towards circularity. Yet, they face additional challenges, as the required resources, capabilities, funding and advanced technologies in the aforementioned areas are not yet fully established.

1st Quartile

Companies in the first quartile slowed in their trajectory this year due to increased challenges in scaling up proven measures into deeper tiers of their supply chains, in inventing and scaling transformative technologies and in achieving tangible results from collaborative initiatives. This result needs to be viewed with nuance since players at this level already have high scores, historically, have made strong progress, and their ongoing work does not necessarily immediately translate into Pulse Score gains.

2nd Quartile

In the second quartile, progress slowed. Nevertheless, efforts are visible: companies report that they are dedicated to sustainability, and they are investing in supplier relationships, supply chain traceability, an improved material mix and changes to their business model towards circularity. Yet, they face additional challenges, as the required resources, capabilities, funding and advanced technologies in the aforementioned areas are not yet fully established.

Pulse Score

Pulse Scores by segment and size

For a more nuanced understanding of the industry’s progress, the Pulse Score is broken down by segment and size to reveal patterns and to incorporate tailored recommendations.

ENTRY-PRICE
SEGMENT

Small, medium and large players in the entry-price segment increased their Pulse Score more significantly than other groups. Two factors explain the significant progress seen by these segments:

Small players
26(+6)

Small, medium and large players in the entry-price segment increased their Pulse Score more significantly than other groups. Two factors explain the significant progress seen by these segments:

Medium Players
48(+18)
Large Players — Fashion
55(+10)
The power of foundational steps

Companies progressed by integrating sustainability in their strategy, corporate identity, decision making, governance, reporting and tracking, which is reflected in the positive leaps in their scores.

 

Association membership

Given the knowledge building and collaborative nature of associations like Sustainable Apparel Coalition, joining them can strongly contribute to a company’s ability to set targets, define strategies and build governance foundations, which are especially valuable for companies getting started with their sustainability efforts.

PREMIUM
SEGMENT
Small players — Luxury
(+1)52
Large players — Luxury
(+3)54

The premium segment saw solid scores of 52 to 54, with Pulse Scores increasing by one to three points over the last year. Again, some of these advances are not reflected in Pulse Scores, but this does not mean that projects are unsuccessful, but rather that they are at a stage that does not yet yield measurable impact at scale.

ENTRY-PRICE
SEGMENT
Giant players — Fashion
67(+0)

The giant companies in the entry-price segment are finding it increasingly challenging to improve their Pulse Scores. Finding solutions for the unresolved problems is becoming tougher, and impact and returns are receding.

Pulse Score

Pulse Scores by value chain steps*

Two steps within the value chain that show above-average performance are Management & Target Setting and Supply Chain. The former covers enabling activities and overarching aspects of sustainability that involve target definition, strategy setting and governance. The latter step essentially encompasses the production of garments and footwear.

Pulse Score

Pulse Curve³ and the Roadmap to Scale

The Pulse Curve showcases a five-phase trajectory of the industry’s social and environmental performance, providing guidance for fashion companies as they assess their current standing, locate themselves against their peers and map out their next steps. Each phase defines a set of priorities and milestones for companies to focus on, which are summarised by the CEO Agenda5. The Roadmap to Scale captures these priorities along the Pulse Curve and offers actionable guidance for the sustainability journey of fashion companies.

Pre-phase

  • Companies in the weakest performance tier take initial uncoordinated and opportunistic actions.
  • They have not yet fully committed to sustainability and due to lack of performance visibility, finding the right starting point remains a challenge.
  • The Roadmap to Scale does not cover this pre-phase, when companies are still becoming aware of the possibilities for change and lack a clear strategic direction and corresponding internal structure.

Phase One

  • Building the foundation depends on a formal commitment to sustainability. The aim is to build a strong groundwork based on dedicated employees, a strategy, and communication.
  • Efforts to increase traceability result in improved visibility over performance, responsibilities, and overall footprint.

Phase Two

  • The previously laid foundation enables companies to carry out the core efficiency programs—which, in turn, bring environ- mental, social, and financial improvements.
  • These programs generate proof-points to create positive momentum in the organization and unlock further resources.

Phase Three

  • The previously laid foundation enables companies to carry out the core efficiency programs—which, in turn, bring environ- mental, social, and financial improvements.
  • These programs generate proof-points to create positive momentum in the organization and unlock further resources.

Phase Four

  • The industry accelerates efforts, takes initiatives to scale, and integrates targeted programs deep into the value chain with tier-two suppliers and beyond.
  • Implementing new technologies and process upgrades will raise profitability as well as environmental and social performance.

CALL TO ACTION

The fashion industry must overcome its roadblocks to achieve more substantial improvements that lead to a systemic change. Solving the challenges of scaling and innovating disruptive technologies is a necessity for future progress.

60
60% of the industry, which already has the aforementioned enablers in place, should focus on scaling up their impacts on the core priorities for immediate implementation.
As a next step for companies moving forward with the core priorities, the industry should accelerate collective action to the next level of transformational priorities, also described in the CEO Agenda.
40% of the industry did not move beyond the Pre-Phase and Phase One of the Pulse Curve, highlighting the urgent need for these players to laying the foundation and move toward targeting core business processes and impact areas for improving their social and environmental performance.
40

The fashion industry has shown progress toward better social and environmental performance over the year, but the slackened pace is alarming. Even the most advanced brands face limits to what they can achieve in isolation. To master the significant roadblocks lying ahead, a strong ecosystem of collaboration is required to drive impact by identifying best practices and inspiring innovative solutions. Moving forward, coordinated action is crucial to overcoming the challenges of the fashion industry, given its global nature. An overall policy approach, timelines and incentives must thus be aligned at an international level.

NGOs and media must continue pushing businesses and consumers to support this transformation strongly by encouraging consumers to find and exercise their voice and urge businesses to supply high-quality sustainable products. NGOs focused on consumers have a significant role to play in consumer education.
Investors can serve as a catalyst for change toward better ways of doing business if they prioritise sustainability in their investment decisions. Investors should agree to standard disclosure requirements, driving impact and helping to push for common reporting frameworks
Governments in partnership with companies, business associations, trade unions, civil society groups and standards organisations provide a platform from which more progress toward sustainability can emerge and scale. A smart political approach will ensure a level playing field and clearly define sustainability measures. It will avoid additional reporting and auditing initiatives, instead incentivising socially and environmentally responsible business practices, assisting in proving the business case.
With 60% of companies struggling to find a way past the technological and economic hurdles, and 40% still working to catch up— the call for players in the ecosystem who have all core priorities in place to take a bold stand is urgent. The situation demands that industry players both jointly lead and push these efforts toward common standards and collaborative efforts on transformational priorities. This will unleash the forces that the fashion industry needs to be able to close the gap between its own growth and its effort to achieve a neutral, or even positive footprint, moving toward more sustainable business practices.
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Consumer Sentiment

Consumers are increasingly aware and concerned about social and environmental responsibility in the fashion industry as proprietary research by Boston Consulting Group6 shows.

Fact 1

75%

of consumers surveyed view sustainability as extremely or very important.

Fact 2

Mentions of sustainability in social media increased a third faster than overall social media growth between 2015 and 2018.

Fact 3

Consumers mostly acquire information about sustainability issues through online search (35%), social media (31%) and non-digital print media (29%).

Fact 4

The strongest triggers for conscious behaviour concerning sustainability are
CLIMATE CHANGE EFFORTS (50%)
NATURAL DISASTERS (49%)

Fact 5

More than a third of consumers report they have already switched from their preferred brand to another because it credibly stands for positive environmental and/or social practices.

Fact 6

More than 50% of consumers plan to switch brands in the future if another brand acts more environmentally and socially friendly than their preferred one.

Fact 7

However, consumer considerations of sustainable practices are not yet powerful enough to be the most important driver of purchasing behaviour.

FOR 7% OF CONSUMERS, SUSTAINABILITY IS THE KEY PURCHASING CRITERION 

BUT 23% PRIORITISE HIGH QUALITY, 17% LOOKING SUCCESSFUL AND 16% RECEIVING GOOD VALUE FOR MONEY

Consumers nevertheless expect brands to be concerned about environmental, social and ethical issues and to act accordingly. Sustainability considerations are seen as a prerequisite rather than a driver of purchasing decisions. These results indicate a shift in importance of these considerations and represent a strong signal to the industry.

It is just a matter of time before responsible practices become pivotal to decision-making factors when purchasing a product. The question is no longer whether it is necessary to improve sustainable business practices, but rather how long it will take before consumers stop buying from brands that do not act responsibly. Yet, the industry cannot wait for the consumer to lead this movement—it is up to fashion leaders to take bolder moves today to transition to a sustainable industry.

Consumer Sentiment

Consumer segments and six nested subgroups

Three broad segments emerged in the survey data regarding consumer perception on the importance of switching to a brand with more responsible practices.

CALL TO ACTION

The fashion industry must overcome its roadblocks to achieve more substantial improvements that lead to a systemic change. Solving the challenges of scaling and innovating disruptive technologies is a necessity for future progress.

60
60% of the industry, which already has the aforementioned enablers in place, should focus on scaling up their impacts on the core priorities for immediate implementation.
As a next step for companies moving forward with the core priorities, the industry should accelerate collective action to the next level of transformational priorities, also described in the CEO Agenda.
40% of the industry did not move beyond the Pre-Phase and Phase One of the Pulse Curve, highlighting the urgent need for these players to laying the foundation and move toward targeting core business processes and impact areas for improving their social and environmental performance.
40

The fashion industry has shown progress toward better social and environmental performance over the year, but the slackened pace is alarming. Even the most advanced brands face limits to what they can achieve in isolation. To master the significant roadblocks lying ahead, a strong ecosystem of collaboration is required to drive impact by identifying best practices and inspiring innovative solutions. Moving forward, coordinated action is crucial to overcoming the challenges of the fashion industry, given its global nature. An overall policy approach, timelines and incentives must thus be aligned at an international level.

NGOs and media must continue pushing businesses and consumers to support this transformation strongly by encouraging consumers to find and exercise their voice and urge businesses to supply high-quality sustainable products. NGOs focused on consumers have a significant role to play in consumer education.
Investors can serve as a catalyst for change toward better ways of doing business if they prioritise sustainability in their investment decisions. Investors should agree to standard disclosure requirements, driving impact and helping to push for common reporting frameworks
Governments in partnership with companies, business associations, trade unions, civil society groups and standards organisations provide a platform from which more progress toward sustainability can emerge and scale. A smart political approach will ensure a level playing field and clearly define sustainability measures. It will avoid additional reporting and auditing initiatives, instead incentivising socially and environmentally responsible business practices, assisting in proving the business case.
With 60% of companies struggling to find a way past the technological and economic hurdles, and 40% still working to catch up— the call for players in the ecosystem who have all core priorities in place to take a bold stand is urgent. The situation demands that industry players both jointly lead and push these efforts toward common standards and collaborative efforts on transformational priorities. This will unleash the forces that the fashion industry needs to be able to close the gap between its own growth and its effort to achieve a neutral, or even positive footprint, moving toward more sustainable business practices.
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FULL UPDATE
CONSUMER
SENTIMENT
PULSE
SCORE
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FULL UPDATE
Published by
Pulse Report 2019

About the Pulse of
the Fashion Industry

The Pulse of the Fashion Industry is published by Global Fashion AgendaBoston Consulting Group and Sustainable Apparel Coalition. It follows the strong belief that the environmental, social and ethical challenges the industry faces today are not simply a threat, but instead an immense untapped value creation opportunity.

 

Acknowledgments

The authors would like to thank all of those who contributed to this update.

 

Explore Past Issues

For more information, please visit
www.globalfashionagenda.com

For questions, please contact
pulse@globalfashionagenda.com

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