How to know if you are being tricked

The incident in July, related to online retail giant Boohoo, brought to the fore the issue of “modern slavery” in the apparel sector. The sector also faces serious environmental challenges, as its two key raw materials-polyester and cotton-are a major cause of water pollution; the sector also generates significant waste. Growth in the fast-fashion (FF) has aggravated these environmental and social (E&S) challenges, and classifying a FF brand as “sustainable” defies prudence, in our view.

Key Takeaways

• The apparel sector is a serious offender in terms of worker rights violations. Four countries — Bangladesh, Cambodia, China, and India-that have a high concentration of manufacturing facilities, report most of the violations
• Most fashion brands claiming that they are sourcing sustainable cotton are merely greenwashing.
• These brands source BCI type cotton due to cost considerations and claim it to be sustainable, which isn’t the case, in our view
• We believe BCI’s relationship with conventional cotton is more like that of supercritical coal versus subcritical coal
• Among 15 large apparel brands we analysed, Adidas is better positioned on the worker rights criteria, whereas H&M, with only a 16% share of organic cotton, outperforms peers on sourcing of sustainable cotton; none of the brands is a clear winner on both the indicators

Originally published at https://www.acuitykp.com.

Author

Charanjit Singh joined Acuity Knowledge Partners in October 2019 as the head of ESG Research. He has more than 20 years of experience in investment research and advisory, with a focus on ESG, climate change and clean energy. Previously, he was a Senior ESG Strategist with HSBC and the co-head of its India Onshore Research Centre. During his tenure of over 11 years at the bank, Charanjit was instrumental in building and leading three sector teams for the bank’s global research business in India.

Charanjit has been rated in the Asia Money survey amongst the top five analysts in India/ Asia during 2012–15, for his sector coverage. He has been voted in the EXTEL survey during 2010–14 and in 2017 for Climate Change and SRI research. A research report co-authored by Charanjit received the first-runner up prize at the FARSIGHT Awards from London Accord in 2012. Charanjit is also a recipient of Chevening Fellowship from the British Government. He has also been a consultant on assignments funded by DFID, CIDA, and the World Bank.