Global Fashion Brands: Does Sustainability Make Business Sense?

Abstract

Sustainable fashion has gained significant importance with growing awareness of the real cost of fashion in terms of its impact on people and the environment. Large fashion firms have responded with sustainability policies to address these real costs. This leads to an interesting interplay of sustainability and financial performance which may not be entirely in alignment with each other. The paper has empirically assessed the sensitivity of changes in financial metrics to changes in sustainability metrics using the Fashion Transparency Index. The statistical tool of correlation is used for this assessment. We find that brands who show above average sales growth and profit margins are three times more likely to meaningfully adopt sustainability, than others. In other words, global brands need to "do well" (in financial terms) to "do good" (in terms of sustainability).