The Transition To Good Fashion - DRIFT

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reportThe transitionto good fashiondateNovember 2018authorsSophie BuchelChris RoordaKarlijn SchipperDerk Loorbachdesign & graphicsRuiter Janssen1

Contentsp. 3Forewordp. 6Introductionp. 101. A systems analysis of global fashionp. 172. Dynamics in the fashion transitionp. 243. Fashion as a force for goodp. 294. Moving towards good fashionp. 395. Fostering the transition towards good fashionp. 43Endnotes2

ForewordThe deeply rooted issues in the global fashionindustry need solutions and collaboration thatcan disrupt the status quo. Significant positivemomentum has emerged, for example, ininnovative materials with lower environmentalfootprints, in small-medium sized companiesbreaking the traditional mold of linear businessmodels and in multi-stakeholder collaborationto improve working conditions.We all share a desire to create a fashionindustry that allows people and ecosystemsto thrive. But, what pathways have the mostpower to disrupt and transform, and does thisinclude circular fashion?We posed this question to the systems changeresearch institute, DRIFT, because we wantedto stress test our hypothesis that a transitionto circular fashion is indeed necessary and thatwe have the right strategies in place to fosterthis transition.The analysis by DRIFT shows that circularfashion does have a critical role in transformingthe sector, but it also shows that there is roomto improve our strategies. C&A Foundationhas responded by increasingly focusing onfacilitating the implementation of circularbusiness models, as well as by thinking beyondthe apparel sector in policy advocacy. Inaddition, Fashion for Good will build moreprocesses that connect mainstream and nicheplayers, so that innovation has a better chanceof moving beyond experimentation in themargins.But, this report has also raised furtherquestions:1. How can we strengthen our collaborationwith other actors to create the conditions fortransformational alternatives to scale?2. What positive dynamics of change arehappening outside of the European contextthat we can learn from and utilise?3. How can circular economy promote equityand inclusion in the fashion industry?All of these questions have a common theme- additionality. We have an opportunity tobuild bridges between different areas ofsustainability, in different geographies and indifferent parts of the value chain. We hopethat this report provides inspiration to findmore ways to work together to accelerate thetransition to good fashion.Katrin LeyManaging Director Fashion for GoodDouwe Jan JoustraHead of Circular Transformation,C&A Foundation3

About DRIFTAbout C&A FoundationDRIFT is a leading research institute inthe field of sustainability transitions. Wedevelop and share transformative knowledgeto support people, cities, sectors andorganizations to engage proactively withtransitions. DRIFT has four main activities thatcomplement, ground and inspire each other:academic research, consultancy, educationand public dialogue. Together with the manypeople and institutes we collaborate with, weaim to accelerate transitions towards morejust, sustainable and resilient societies.C&A Foundation is here to transform thefashion industry. We give our partners thefinancial support, expertise and networksso they can make the fashion industry workbetter for every person it touches. We do thisbecause we believe that despite the vast andcomplex challenges we face, we can worktogether to make fashion a force for good.www.candafoundation.orgwww.drift.eur.nlAbout Fashion for GoodFashion for Good is the global initiative thatis here to make all fashion good. It’s a globalplatform for innovation, made possiblethrough collaboration and community. Withan open invitation to the entire apparelindustry, Fashion for Good convenes brands,producers, retailers, suppliers, non-profitorganisations, innovators and funders unitedin their shared ambition.www.fashionforgood.com4

Webuiltour“businessmodels basedon infinitegrowth. Thereneeds to be anew model thatsells somethingdifferent.”Edwin Keh, Hong Kong Institute ofTextile and Apparel5

IntroductionThe global fashion industry has developedinto a highly complex system entrenched ineconomic and physical structures, culturesand practices that enable fast and largescale production of apparel and providesemployment to millions across the world.Within this system, a myriad of persistentchallenges has emerged over the last fewdecades resulting in negative environmentalimpacts and severe social issues. Private,public and civil society actors havecondemned these issues, and the movementtowards a more sustainable fashion industryis growing with increasing pre-competitivecollaboration and a broadening variety ofalternative practices, materials and businessmodels that pave the way for the fashionindustry of the future.So far, however, sustainability efforts in theindustry have not yet managed to add up toa transformation of the fashion system, andthe fashion industry shows signs of initiativefatigue and slow progress. There is a need tounderstand how initiatives are reinforcing orchallenging the status quo and how collectiveefforts in the industry can more effectivelyadd up to transformative change.The deeply-rooted issues in the globalfashion industry call for solutions thatfundamentally challenge the current statusquo. For this reason, C&A Foundation andFashion for Good asked DRIFT to develop asystems change map to better understandthe dynamics of change from a transitionsperspective and to provide recommendationsfor transformative change towards aregenerative and restorative fashion industry.This report provides a number of strategicperspectives to accelerate the fashiontransition in the form of transition pathways,levers for change and suggested interventions(see Chapters 5 and 6). The transitionpathways build on the dynamics of changethat already exist in the industry (and othersectors), and by convening actors aroundthese pathways this energy can be leveragedto accelerate the transition.APPLYING A TRANSITIONSPERSPECTIVETransitions are large-scale shifts in societalsystems that emerge over decades. Theyoccur in societal systems that face complexand persistent problems due to historicalpath dependencies and lock-ins. Based onscientific research on transitions, we cansee transitions as non-linear and relativelyuncontrolled structural shifts resulting fromthe interaction between increasing societalpressures, internal crises and competingalternatives. It usually takes decades for suchpressures to build, after which, in a relativelyshort period of time (a few years), the statusquo is disrupted, a fundamentally differentway of thinking, doing and organizingbecomes dominant and the system reaches anew equilibrium.A current and well-known example of thisis the energy transition, which has beengradually building momentum since the1970s in countries in the global north. Onlywith the large-scale diffusion of renewableenergy technologies and the pressures ofclimate mitigation policies of the last decadehas real acceleration started to take place.Understanding how such transitions evolveand develop offers possibilities for achievingthe desired large- scale societal changes6

more quickly than following business-as-usualscenarios does. From the study of past andongoing transitions, insights have been gainedinto how actors can make use of the dynamicsin transitions to influence their directionand speed. From these insights, methodsof transition management and transitiongovernance have been formulated, elementsof which we used for this study.Transitions cannot be predicted, planned ormanaged with management approaches,as they emerge from complex adaptivesocietal systems. However, it is possible toanticipate upcoming opportunities, createfruitful conditions for change and reinforcedevelopments that together can influencethe direction and speed of a transition. Inorder to do this successfully, we have to becareful not to isolate or over-simplify eitherthe persistent problems the fashion industryfaces or the strategies used to address them.To understand where and how to interveneto foster transformative change, we must firstacknowledge the complexity of the system.This was the starting point of our analysis.APPROACHA systems analysis needs to address the rootcauses of persistent problems and identify thepotential patterns, pressures and levers relatedto transformative change. Therefore, we haveused transition tools to map, explore, analyzeand strategize ‘elements of transition’: thosedynamics, actors, innovations, opportunitiesand contexts that when combined couldbuild towards a desired future of the fashionindustry. We used four mapping tools basedon the scientific theory of transformativechange (transition studies): The Multilevel Perspective: the multilevelperspective allows a snapshot mappingof macro-trends, meso-level industrychange (or lack of it) and micro-levelinitiatives (niches). This provides a betterunderstanding of the interactions betweenthese different levels of change. The ‘X-curve’ of transition dynamics(transition curve): this model of transitionsshows that transformative change requiresnot only the breakdown of existingstructures, cultures and practices but alsobuilding up a new system. It allows for amore nuanced understanding of differentphases of systems change and how thepatterns of build- up and break-down coevolve. It allows more specific and targetedinterventions to be developed throughoutdesired transitions. Envisioning and back-casting transitionpathways: a collaborative method toenvision narrative pathways towardsan alternative future by back-castingfrom a guiding vision and shapingprinciples, through paths to breakthroughinterventions. Actor analysis: collaborative mapping ofrelevant actors and their position on thetransition curve and the transition pathwaysas developed using the previous tools.The systems analysis using these tools wasdone in three steps, each enriching thefindings of the previous step: desk study,interviews and participatory sessions. Theliterature review mainly used primary andsecondary sources (see references) to informthe analysis of the current system. Eightsemi-structured interviews were conductedwith experts from different parts of the worldand different types of organizations. Wefacilitated three participatory sessions forwhich we invited small but diverse groups ofchange agents, both from within and outsidethe fashion industry, who are committedto a transition in the industry. The sessionsfocused on describing the current situationand developing ways forward to increase thetransformative power of the fashion industry(using the tools mentioned above). In total, 15external participants joined our collaborativesessions, and another 14 external peopleprovided feedback during a presentationof preliminary results. We want to thank7

everybody who participated and providedinput throughout the process (including allthe people at C&A Foundation and Fashionfor Good); this report is the result of ourcollaborative efforts.We recognize the myriad of single- andmulti-actor initiatives in the fashion sectorworking towards a more sustainable future. Indeveloping this report, we built upon variousrecent publications regarding circular fashionincluding (but not limited to) A new textileseconomy by the Ellen MacArthur Foundationand the Pulse of Fashion reports and CEOAgenda by the Global Fashion Agenda. Webuilt upon these efforts and placed emphasison transformative change from a transitionsperspective.STRUCTURE OF THE REPORTIn the next chapter, we analyze the threelevels of the current fashion system: thelandscape, the regime and the niches. InChapter 3, the dynamics of build-up andbreakdown of the fashion transition aredescribed. We explore the guiding visionand shaping principles underlying the desiredfuture in which fashion is a force for goodin Chapter 4. In Chapter 5, we introducesix transition pathways that inspire movingfrom the current system to a good fashionfuture, including an exploration of leversof change, milestones and interventionsfor each pathway. Finally in Chapter 6, wehighlight some of the key interventions fromall pathways that we feel are essential forfostering transformative change in thefashion industry.8

“The fashionsystem leavescapacitiesof peopleunderutilizedwhile exhaustingnatural resources.Humanity issmart enoughto change this.”Femke Groothuis, Ex’Tax9

1. A systems analysis ofglobal fashionproblems; landscape influences that reinforceor challenge the status quo; and nichedevelopments experimenting with alternativeways of doing, thinking and organizing. Therelations are summarized in Figure 1.This chapter outlines the analysis of thecurrent global fashion system from atransitions perspective. The fashion systemis analyzed on three levels: the regime ordominant culture, structure and practices,including the root causes of persistentThecurrentfashionsystemThe smPopulation & GDP growthChallenging:Environmental & climate policiesResource volatilityPublic attention to social Extractive & growth drivenDisposablePlatform economyRevival of cooperativesInformation technology& blockchainThe regimesustains itselfFourth industrial revolutionResponsible consumptionNatural capital paradigmNichesFigure 1: The landscape, regime and niches of the current fashion system10

DOMINANT CULTURE, STRUCTUREAND PRACTICES (REGIME)The fashion industry is a huge economicengine and its supply networks span theglobe. It is the third biggest manufacturingindustry (after automotive and electronics)1,generates over 1.5 trillion euros annually2and employs an estimated 60 million peopleworldwide. Furthermore, over 100 millionhouseholds depend on the cotton industry fortheir livelihoods3. If the textile industry were acountry, it would be the seventh largest basedon GDP.4 Because the industry is relativelyeasily accessible to low-income countries andgenerates employment opportunities andincome, it is often described as ‘an engine forglobal development’². Furthermore, globalclothing production and sales have doubledbetween 2000 and 2015, with the number ofgarments produced annually surpassing 100billion in 20145. In other words, the fashionindustry is not only large, it is also growingrapidly.The dominant regime can be broken downinto three elements: culture, structure andpractices. These three aspects of the regimeinclude institutions, social conventions,socially accepted behavior, laws, policies andinfrastructures, which together compose anddefine the fashion system.CultureThe fashion market is highly competitive anddemand is growing for increasingly low-costproducts in large quantities. This results ina continuous and accelerated race to thebottom. Yet company profits must grow,which for a large part of the industry, meansthe number of items sold must increase. Tomeet these demands, a significant part ofthe industry has developed and perfectedthe ‘fast fashion’ model over the last decade,which has transformed the seasonal turnoverin fashion into a constantly changing streamof trends and new products. The dominantbusiness model builds on the assumption ofinfinite growth.Many brands and retailers argue that theinertia of the industry is due to the lack ofconsumer willingness to pay for sustainableproducts, and the rising demand foraffordable clothing supports this claim².On the other hand, some observe a latentdemand for guilt-free consumption, andinternational surveys report that 55% ofpeople are willing to pay more for moresustainable clothing4. However, researchalso shows that there is a considerablegap between sustainability intentions andbehavior6.From a consumer perspective, clothingtranscended its function as a basic needcenturies ago. The way we dress and wherewe shop both signify and shape personaland group identity and culture. At the sametime, consumer choices are influenced bymarketing images that brands and retailerspublish across a wide variety of media and inpublic spaces, promoting new products andtrends. The short time horizon of trends andstyle-driven purchases leads to the consumer‘need’ to continuously renew products.Producers and consumers treat garments asdisposable products, which is shown by thetrend of declining clothing utilization5.StructureThe fashion industry is characterized bymature production technologies¹ and itsphysical infrastructure is based on a linearproduction and consumption process. Theindustry extracts a large amount of naturalresources, and products mostly end up inlandfill or incineration after use. Less than 1%of apparel waste is recycled into material fornew apparel5.The fashion industry is highly fragmented,anonymous and globalized. The 10 biggestbrands and retailers have a joint 10% globalmarket share, and the top 10 suppliers inChina have 8% national market share7. Thefashion industry involves numerous small andmedium-sized enterprises (SMEs) throughoutthe value chain. This fragmentation11

problematizes collective action. Furthermore,traditional retailers are increasingly strugglingto compete in the current market (especiallycompared to online retailers8), leading to anestimated closing of almost 10,000 stores in20179.Power imbalances exist within the supplychain, between governments and companies,and between the global north and the globalsouth. However, the levels of consumptionin the global south are soon expectedto outgrow those in the global north10.In other words, the north-south divide ofconsumers versus producers no longer holds.Nevertheless, the knowledge-intensive partof the value chain is still largely concentratedin the global north, while the labor-intensivepart is based in the global south4. In recentyears, manufacturers and suppliers in Asia haveconsolidated (especially in China), therebygrowing more powerful within supply chains.According to one of our interviewees, mostAsian manufacturing entities are multinationalsthat manufacture in very large volumes. Theyare in a position to invest and differentiatethemselves. Some manufacturers evenpurchased their customers and are selectingwho they do business with.However, some other nations in the globalsouth – such as Bangladesh and Cambodia –depend largely on the garment industry foremployment and economic opportunities.There is lack of regulation on environmentalstandards and little enforcement of laborregulation of the industry in most (consumingand producing) countries. Although thereis increasing EU regulation in the healthand safety domain, such as in the use ofchemicals².In response to the lack of enforcementor regulation, the private sector and civilsociety are working more closely to create,non-binding and in some cases, bindingagreements to address the issues. The mostnotable example followed the Tazreen andRana Plaza factory tragedies where brands andlocal trade unions formed the legally binding‘Accord on Fire and Safety in Bangladesh’11.PracticesThe short-term business strategy in much ofthe industry is one of lower prices and higherturnover. As a result, manufacturers have tobe increasingly flexible in switching from oneproduct to another. The traditional designto-sales process needs almost two years, butthe fast fashion model needs four months12.This leads to manufacturers subcontractingand making excessive overtime. This businessmodel is prone to the exploitation ofmanufacturing workers resulting in issues likepoverty-line wages, severe health and safetyissues and worker repression.The production of garments dependsheavily on the intense use of non-renewableresources (e.g. fossil fuels) and intensivefarming practices (e.g. using GMOs, fertilizers,pesticides and high volumes of water).There are also many externalities producedthroughout the value chain (e.g. greenhousegas emissions, freshwater contamination,over-extraction of groundwater) that are partlya result of meeting the prices demanded bymuch of the market.THE FASHION REGIME INCONTEXT (LANDSCAPE)The fashion industry does not operatein isolation. The system is subjected toglobal and autonomous developmentsand trends. These macro-developmentsare either reinforcing or putting pressureon the regime. Some trends strengthenthe persistency, contributing to a further‘lock-in’ of the system. However, theselandscape developments could also, ascounter-movements, offer opportunities fortransformation and provide the buildingblocks for pathways to a better future.Demographic developments such aspopulation growth and increasing globalwealth are global trends that lead to agrowing demand for clothing and increased12

consumption and thus further reinforcethe current regime. As a result of thesedemographic trends, geopolitics and theglobal economy, the power dynamics in theindustry are shifting. The market shares ofbrands and retailers in the global north aredeclining as competitors in other parts of theworld grow7, and SMEs and online retailersgain momentum8. At the same time, theyare losing their leadership role as suppliersgrow and consolidate, pulling power in theirdirection.Due to the global consumption increase, thestrain on resources has also increased. Themodes of production in the fashion industrycontribute to the depletion and pollution ofnatural resources, thereby posing a threatto the natural capital on which it depends13.The increasing global urgency to deal withenvironmental issues and climate change ispushing governments to take measures tominimize the emissions of greenhouse gasses(symbolized by the Paris Agreement)14 andimplement strict environmental regulations,including policies that integrate measuresrelated to circular economy (e.g. wastemanagement legislation in the EU15, China16and India17). These policies increase thepressure on the industry to address itsenvironmental footprint.Consumerist culture is also expandingaround the globe18. The values and behaviorof most people feed the current businessmodel of the fashion industry because theydemand high quantities of new products andaffordability drives purchasing decisions morethan durability. This trend is not limited to thefashion industry, but apparel takes a centralplace in consumer culture. On the other hand,there is also growing attention to social andenvironmental injustices19, not just in thefashion industry, but across industries andconsumer goods. This public attention puts aspotlight on the issues of the fashion industryand creates pressure for change.EMERGING FASHION ALTERNATIVES(NICHES)The term ‘niches’ refers to initiatives thatexperiment with new and/or alternativeways of doing, thinking and organizing. Theexperimentation that is happening in thefashion industry is very diverse, but can bebroadly characterized into three categories: Technology and FibersRecycling innovations (e.g. automatedsorting, chemical recycling); 3D-printing;virtual prototyping; robotic or AIautomation; design for circularity; use ofnew materials (e.g. fruit leather or algae);rediscovery of existing materials (e.g. hemp,flax); innovations that reduce the impactof the dyeing process and water, energyand chemical use (e.g. with enzymes andnanotechnology) Business Models and Customer RelationsFashion as a service and longer-term orpersonalized relationships with customers(e.g. lease/rent models, reuse, remake,repair, resell, personalization, on-demandproduction); customer behavior and socialmedia customer trends (e.g. minimalism,capsule wardrobes, zero waste, slowfashion, sharing initiatives, vintage20) Value Chain Models and PartnershipsEthical brands working closely withmanufacturers; short supply chains; local forlocal (or regional) production and reshoring;radical transparency initiatives; IT-basedtraceability initiatives using blockchain (e.g.Bext360); environmental profit and lossaccounting (e.g. Kering)The 2018 Pulse of Fashion report21 contains anoverview of disruptive innovations throughoutthe fashion supply chain, including many ofthe ones listed above. The report Servicebased Business Models & Circular Strategiesfor Textiles by SITRA and Circle Economy22showcases case studies of a wide variety ofniche innovations and initiatives, includingmany (SME) companies working on newbusiness models or circular products.13

Often niche initiatives also encompass newand/or alternative (power) relations, roles,narratives and words. This becomes especiallyclear in niches on the consumer side. Vintageclothing and the use of alternative naturalfibers show that niches are not a synonymto new, in that alternatives could also be oldsolutions reinvented. Niches (or upcomingalternatives) harbor the arguments forchange and thus offer the building blocks forpathways (see Chapter 5).UNSUSTAINABILITY OF THECURRENT FASHION REGIMEIn spite of improvement efforts to turnthe fashion industry into a force for good,it seems that the mainstream industry’sdevelopment pathways remain along thelines of expansion, optimization, growth,low-cost production and high consumption.This is largely due to the industry’s pathdependency: the established structures,networks, routines, technologies andproduction processes keep the fashionindustry locked in. Rather than looking atthe symptoms of unsustainability of theseprocesses, we need to look at the underlyingstructural characteristics of the fashionindustry that keep it locked in. Only whenthese fundamental persistent problems arestructurally addressed (e.g. in a transition) canthe fashion industry secure a future wherepeople can thrive.Emerging from the transition perspective andour analysis of the fashion regime, we haveidentified the following four characteristics atthe root of the unsustainability of the fashionsystem. These characteristics of the regime– combined with some of the landscapepressures – reinforce each other and create acycle of persistency: DisconnectedThe transactional relationships, fragmentationand unequal power relations that characterizethe industry lead to collective irresponsibility,conservatism and risk aversion (withmanufacturers and suppliers carrying adisproportionate amount of social andenvironmental risk). UncontrollableThe industry operates in an unregulatedglobal market where negative externalitiescan be produced freely, becoming a‘footloose’ industry that moves production towherever it is cheapest, with strong vestedinterests to keep practices opaque. Extractive & growth-drivenWhen price is the major point of competitionbetween companies in the supply chain,margins and externalities are squeezed tomaximize profits, and sustainability is oftenconsidered a costly additional feature. Thesupply chain relies heavily on non-renewablefossil resources and virgin resource inputs. DisposableThe culture in the global north andincreasingly in the global south valuesconsumption and individualism and often atthe expense of durability. Customers demandquantity and novelty and they dispose ofitems quickly.These four characteristics combined helpexplain both the relatively marginal effect ofmany attempts to move towards sustainabilityand the longer-term inevitability of structuralchange. The marginal effects of interventionsand sustainability efforts relate to thecomplexity and incumbent nature of thefashion regime: small changes are absorbedby the regime as it continuously adapts tochanging contexts through, for example, thegeographical movement of manufacturing,the invention of new materials and chemicalsthat are not yet regulated or illegal practices(e.g. forced labor or discarding untreatedwastewater into the environment). However,a lock-in is also the early phase of a futuretransition: society will increasingly push forstructural changes and provide a fruitfulcontext for it, and entrepreneurial actors willdevelop new alternatives. We have describeda number of the niches, but we can alsopoint to a number of broader landscape14

developments that gradually increasepressures for transition.While the above landscape trends influencethe regime, other landscape influences canoffer inspiration for niche developments infashion. The growing importance of socialmedia and digitalization are changing theface of the fashion industry23, pushing retailonline and creating new interactive platformsfor communication and interaction betweenconsumers and producers and within thesupply chain. The emerging availability of ITinnovations, for example data tracking andsharing technologies such as blockchain, hasthe potential to change traceability in theindustry. The growth of the platform economyand the sharing/renting economy in otherindustries (including fast-growing serviceplatforms such as Uber, AirBnB and Deliveroo)is transforming the way value chains operateand how customers find suppliers.An emerging policy and academic discourseon natural capital solutions27 is trying todevelop assessment and reporting standardsfor ecosystems and natural resources to aidthe limitation of environmental degradation.On top of this, geo-political developments– such as the currently strained China-USArelations and ‘trade war’28 – affect economicpolicies (i.e. increased protectionism) andtrade relations within markets or industries.Should this trend continue, it will likelychange the geography of production andconsumption as well as the resources used(and wasted) in the fashion industry.Other innovations such as 3D-printing andautomation could change the nature ofmanufacturing. Besides the opportunitiesthat the ‘fourth industrial revolution’ has froma business perspective (to lower productioncosts and change the quality of work, forexample), it could also mean the loss of manyjobs in textile and garment manufacturing ifthe disruption is unmanaged24.There is a revival in cooperatives and otherstructures of decentralized local ownershipand governance25. These cooperativesare popping up in agriculture, energy,healthca

to good fashion. 2 p. 3 p. 6 p. 10 p. 17 p. 24 p. 29 p. 39 p. 43 Contents Foreword Introduction 1. A systems analysis of global fashion 2. Dynamics in the fashion transition 3. Fashion as a force for good 4. Moving towards good fashion . new model that sells something

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