Overall 75% of fashion companies have improved their score compared to last year – raising the pulse of the industry by six-points

Overall 75% of fashion companies have improved their score compared to last year – raising the pulse of the industry by six-points

While sustainability is rising on the corporate agenda, the pace of change isn't going fast enough - or far enough, according to a new report.

Drawing on the Sustainable Apparel Coalition's Higg Index, a survey of 90 senior managers and over 50 interviews, the Pulse of the Fashion Industry report each year reveals the industry's current Pulse Score, a performance measure of the sector by type of company, size, region and stage in the value chain.

This year's report aims to give guidance to companies looking to start or find further advances towards more responsible ways of doing business. For the first time the report includes a Pulse Curve, enabling companies to measure their performance against other industry players, and a Roadmap to Scale, a guide for the industry built on proven best practices with industry players that offers concrete actions for businesses to immediately embark on their sustainability journey.

In the past year the Pulse Score of the fashion industry improved from 32 to 38 (out of 100), confirming that sustainability is rising on the corporate agenda.

"2017 was a turning point for sustainability. Overall 75% of fashion companies have improved their score compared to last year – raising the pulse of the industry by six-points. This is impressive and encouraging. However, more needs to be done," reads the report.

The industry's various segments, however, are moving at highly different speeds, with nearly all progress coming from companies in the mid-price segment. As this segment accounts for half of the industry, progress here is encouraging, says the report, but small companies in the entry-price segment are lagging behind the most.

Moreover, some of the frontrunners - both large companies and sustainability champions - find they have reached a technological and infrastructural ceiling on their advances, with little to no Pulse Score improvement, GFA says. This is critical since they are blazing the trail for the rest of the industry.

At the same time, almost one-third of the fashion industry has yet to take action.

While last year's Pulse report measured the financial consequence of not taking action on sustainability, this year's measures the financial gain of taking action. In fact, new data and calculations show that investments in resource efficiency, secure work environments and sustainable materials have the potential to boost the EBIT margin by up to 1-2 percentage points by 2030.

"The impact goes beyond brand building and risk management. Sustainability can actually increase profitability for fashion companies," says Sebastian Boger, a partner at BCG.

And the case for sustainability is even stronger once the profitability uplift from taking action is compared to continuing business as usual, the latter resulting in a decline in the EBIT margin by 3-4 percentage points by 2030.

To put fashion on a path to long-term prosperity financially, socially and environmentally, the Pulse of the Fashion Industry report stresses the urgency of collective effort to go beyond what is available and possible today.

But no individual commitments or actions can drive this transformation, the report argues, noting that in order to achieve lasting impact at scale, the industry needs "systemic change" through leadership, innovation and collaboration.

A number of promising, disruptive innovations are emerging to move the industry - but success will depend on a strong ecosystem rooted in the efforts of regulators, consumers, non-governmental organisations, and other stakeholders, it says.

Click here for the full report.