Environmental Concerns in the Fashion Industry. An Approach to Corporate Social Responsibility (CSR)


Bachelor Thesis, 2020

122 Pages, Grade: 1,5


Excerpt

Table of Content

List of Abbreviations

List ofFigures

List of Tables

1 Introduction

2 Sustainability
2.1.1 Introduction - The Sustainable Use of Resources
2.1.2 United Nations Sustainable Development Goals

3 Corporate Social Responsibility
3.1 Concept
3.2 Reporting
3.3 CSR Policies implemented by Companies

4 The Fashion Industry Worldwide
4.1 Introduction
4.2 Textile Value Added Chain
4.2.1 Textile Value Added Chain worldwide
4.2.2 The Textile Value Added Chain and Environmental Externalities..
4.2.3 Social Impacts of the Textile Value Added Chain
4.3 Conclusion

5 CSR and Fashion
5.1 Overview
5.2 The Meaning of Fashion
5.3 Fast Fashion
5.4 Sustainable Consumption of Fashion
5.4.1 The Power of Consumers
5.4.2 The Power of Companies
5.5 CSR reports of European fashion companies
5.5.1 Mango
5.5.2 H&M
5.5.3 Inditex
5.5.4 Primark

6 Empirical Part
6.1 Research Questions and Hypotheses
6.2 Survey Tool and most important Variables
6.3 Conduct / Implementation
6.4 Methodology
6.5 Results
6.5.1 Univariate statistics
6.5.2 Models and Hypotheses Testing
6.6 Survey Results Summary

7 Conclusion

References

Annex

List of Abbreviations

Abbildung in dieser Leseprobe nicht enthalten

List of Figures

Figure 1: Left, typical representation of sustainability as three intersecting circles. Right, alternative depictions as pillars

Figure 2: Sustainable Development Goals

Figure 3: SDG Dashboard for OECD Countries

Figure 4: The stakeholder management process

Figure 5: Sections of the value chain divided into textile and fashion industry

Figure 6: Largest fashion and clothing retailers in Europe by turnover in 2018 (in billion euros)

Figure 7: Generations that are willing to pay more for products with the least negative impact on the environment (% of US Consumers in 2019 who would pay more)

Figure 8: The Textile Value Added Chain

Figure 9: Stages of the textile value added chain and associated countries

Figure 10: The different motives for purchasing and wearing clothes

Figure 11: Average number of times a new garment is worn (including reuse within each region)

Figure 12: The Buyerarchy of Needs

Figure 13: Selected Textile Seals

Figure 14: The Concept of Circular Economy

Figure 15: The 5 R's of Sustainability

Figure 16: Model 1: Antecedents and consequences of environmental awareness

Figure 17: Model 2: Influences and correlations regarding the willingness to pay more for sustainable clothes

List of Tables

Table 1: Top 5 exporters of clothing, 2018 (Billion dollars and percentage)

Table 2: Top Ten Cotton Producing Countries in from 2012 to 2018 (in thousands of metric tons)

Table 3: Production route of a T-Shirt sold in Germany

Table 4: Values of supported hypotheses

1 Introduction

Each year, between 80 and 100 billion garments are produced worldwide. About 60 million people globally work in the garment industry (BMZ, 2015; Greenpeace, 2017; Siegle, 2017).This makes the fashion industry one of the most important and powerful industries worldwide, in which enormous turnovers are achieved annu­ally. However, this does not remain without consequences. The cost of clothing is not paid by the consumer alone, but workers and environment are affected in par­ticular by the high production volumes. Every single step of the value chain in the textile industry, from the production of raw materials to distribution, is to a certain extent directly or indirectly harmful to the environment.

Current research literature such as the published work of Niinimäki et al. (2020) reveal individual steps in the value chain and show in detail the environmental im­pact of each individual stage. According to the authors, these are not only required on the side of the companies, but also on the side of the consumers. Since it is clearly shown that a rethink is needed among consumers, there is the necessity to examine more closely to what extent consumers are aware of the environmental impact of fashion at all and what effect this awareness may have.

Due to environmental disasters and climate change, the sustainable use of resources has increasingly become the focus of public attention in recent years. High through­put rates of raw materials, products and waste lead to wide-ranging impactson the environment and are reasons why the fashion and clothing industry is one of the most polluting industries worldwide. Consumers are often not fully aware of these effects, which is why increasing profits can still be recorded. While some industries are already in the focus of public interest because of their environmental impact, such conscious behaviour is not present yet in terms of fashion industries.

Personal observations shaped the image that few people consider the clothes they buy and the impact of their purchases. Many consumers pay attention to the origin, cultivation and quality seal when buying food, whereas when buying clothes, the price alone plays the predominant role. Enquiries from family and friends underlined that there is little or no knowledge onthe effects of the enormous con­sumption of clothing.

The aim of the work is to acquire detailed information about the current situation in the fashion industry and to declare implemented and taken measures bymeans of selected companies Furthermore, consumer behaviour in terms of awareness and knowledge regarding environmental impacts of clothes and their willingness to act to reduce this impact are revealed by focussing on the following research question: To what extent do environmental impacts caused by the fashion industry influence consumer behaviour? In addition to conventional fashion and current clothing pur­chasing behaviour, it is intended to enhance the understanding about availableal- ternatives and the possibility for companies to succeed in producing and selling more sustainable clothing.

For this purpose, a survey will be conducted among students, which will provide information about current purchasing behaviour, awareness and attitudes towards environmental aspects when buying clothes and the extent to which these factors are interrelated. Based ona quantitative study, two models will be tested. The first Model is trying to give insights about the influencing factors and consequences of environmental awareness. Influences and correlations regarding the willingness to pay more for sustainable clothes are examined in Model 2in more detail.Asurvey as a tool for quantitative analysis isused to collect data in a practical research con­text. It supports to test the pre-defined hypotheses based on the collected data.

The following Bachelor thesis starts with the introduction of the topic sustainability in Chapter 1, which provides topics on the sustainable use of resources and the sustainable development goals of the United Nations. In Chapter 2, the issue of sustainability at company level is addressed by the topic of corporate social respon­sibility. This includes legal foundations as well as the identification of ways in which companies can integrate CSR. In order to present the industry examined in this research paper, references are made to the fashion industry in Chapter 3. In this part, the fashion industry and its importance are presented and in the further course the value chain and its elements are introducedand explained individually. Chapter 2 and Chapter 3 are brought togetherin the fourthChapter“CSR and Fashion”. This chapter presents the current fashion phenomenon "Fast Fashion", counter-models and shows what both companies and consumers can do to act more sustainably. Within this chapter, sustainability reports of four major European fashion groups are analysed and described. In the fifth chapter the empirical part of the research work is presented. Reference is made to the research question and related hypothe­ses, the survey carried out and its outcomes and the results of the analyses. Finally, a conclusion is drawn to present the most concise results, important conclusions as well at outlooks for further research.

2 Sustainability

2.1.1 Introduction - The Sustainable Use of Resources

Already at the beginning of the 18th century, the German chief mining officer Hans Carl von Carlowitz laid the foundation for the idea of sustainable use of raw mate­rials. In his work "Sylvicultura oeconomica" he states that only as much wood should be felled as can grow again through planned reforestation (BMEL, 2019). To get into the subject of sustainability, the concept of sustainable use of raw ma­terials and resources must first be examined more closely.

As a definition, natural resources are “materials or substances occurring in nature which can be exploited for economic gain” (Oxford English Dictionary, 2020). Such as biological diversity, water, soil, clean air and raw materials. Raw materials are in turn divided into renewable raw materials such as agricultural and forestry products and non-renewable raw materials such as oil, coal, ores and other minerals (Umweltbundesamt, 2017). Agricultural land is a scarce resource since it is also only available in limited quantities. In this context not only the area of land is im­portant, but also the soil and its quality. Although there is only a thin layer on the surface of the earth, ittakes two thousand years to produce ten centimetres of fertile soil (Heinrich-Böll-Stiftung et al., 2015). However, a distinction must be made between resources and reserves. Reserves are the current technically and economi­cally recoverable quantities of raw materials, while resources are proven but cur­rently not technically and/or economically recoverable or not proven but logically possible or future recoverable quantities (Bundesanstalt für Geowissenschaften und Rohstoffe, 2004).

Due to a continuously growing population, more and more resources are needed. Between 1998 and 2018, the world population grew from 5.955 billion to 7.594 billion, or the equivalent of 27.52% (The World Bank, 2019b). According to the UN(2017), the world population is expected to grow to 8.6 billion people by 2030 and even to 11.2 billion by 2050.

The more people live on earth, the more resources are needed. This includes not only living space, but also arable land to produce food or grazing land for livestock and many other resources which do not prevail infinitely.

Although the Earth's resources are limited, they are being depleted every year. Due to high populations and enormous consumption rates, mankind consumes more than the Earth can renew within a year. The day on which the Earth's renewable re­sources for one year are used up is called “Earth Overshoot Day”. To be precise, the Earth's biocapacity is 1.7 global hectares per person per year. On average, how­ever, each person consumes 3.3 global hectares per year (WWF, 2019). Conse­quently, the so-called "Earth Overshoot Day" occurs earlier and earlier. For 2019 it was 29 July, as early as never before (Umweltbundesamt, 2019a). The day is cal­culated with the so-called “Ecological Footprint” (Global Footprint Network, 2019). Wackernagel and Kitzes (2008) describe the Ecological Footprint as a tool which indicates the extent to which the Earth's ecosystem and natural resources are being used by various activities. The authors emphasise that many human activities make demands on the planet's capacity, such as food, housing, transportation and consuming goods and services.

At present, humanity is using more resources than the Earth can restore. To be ac­curate, “(...) the world population currently lives as if it had 1.75 Earths at its dis­posal. This means that people are using nature 1.75 times faster than ecosystems can generate” (Umweltbundesamt, 2019b).

Furthermore, it must be noted that the Ecological Footprint differs between regions and nations. Thus, industrialised countries usually have a higher value than devel­oping countries. If all regions of the world are considered, North America has by far the largest ecological footprint in the world. It amounts to 8.07 global hectares per capita. In second place is Oceania with 5.22 global hectares per capita, followed by Europe with 4.56 global hectares per capita and Far East with 3.73 global hec­tares per capita. The region with the smallest ecological footprint is Africa with 1.36 global hectares per capita (FAO and The World Bank, 2019).

There are several approaches to reduce the consumption of the Earth's resources. One suggestion for citizens is to save more energy, drive less cars and throw away less food. A general reduction of CO2 emissions is mentioned as well (Umweltbun­desamt, 2019b). The WWF (2019) offers approaches to solve the problem, suggest­ing, for example, more sustainable travel options, savings on food and a more con­scious purchase of clothing.

As the Earth's resources are limited it is essential to deal sustainability with re­sources. The term sustainability has been used more and more frequently, especially since the increasing media publicity about climate change and its consequences. Accordingly, it is often used in the context of environmental concerns. Although the term “sustainability” seems to be a modern phenomenon, it was already used in the 1980s. In autumn 1983, an UN General Assembly was formed under the chair­manship of the former Norwegian Prime Minister G.H. Brudtland. This became known as the World Commission on Environment and Development. In that paper the term sustainable development was introduced (Klein, 2018). It summarises the two challenges of environmental protection and economic development (Dresner, 2009). The exact wording describes sustainable development as follows:

“Sustainable development is development that meets the needs of the present with­out compromising the ability of future generations to meet their own needs” (WCED, 1987, p. 41).

In other words, it is a question of the current generation using resources in a sus­tainable manner to prevent being used up for future generations, but still meet their own needs.

In today's literature, the term sustainability is often defined by the connection be­tween social, environmental and economic aspects. This term of the Triple-Bottom­Line was especially coined by John Elkington, a specialist in corporate responsibil­ity and sustainable development, in his book Cannibals with forks - The triple bottom line of 21st century business (Elkington, 1998). From his point of view companies should measure benefits not only from a financial perspective, but also from a social and environmental angle. Figure 1 shows two different illustrations of that concept. On the left-hand side, the three components environment, social and economic are shown as circles. On the right-hand side of the figure, the concept of sustainability is supported by three pillars, consisting of social, environmental and economic, as in the figure of the circles.

Figure 1: Left, typical representation of sustainability as three intersecting circles. Right, alternative depictions as pillars

Abbildung in dieser Leseprobe nicht enthalten

Source: (Ben Purvis et al., 2019)

Sustainable development only works where all three factors meet. The environmen­tal report of the Council of Environmental Experts of the Federal Government con­cluded that the three pillars of sustainability can only work with each other, and not without or even against each other (SRU, 1994). On the contrary, it is essential to view these three factors as a unity in order to secure human development in the long term. To focus on sustainability, it is essential to describe precise framework con­ditions and detailed objectives. This was done at international level in the form of the United Nations Sustainable Development Goals.

2.1.2 United Nations Sustainable Development Goals

By the Agenda 2030 For Sustainable Development, the United Nations aims to cre­ate a framework to improve living conditions for all people in the world as well as protecting and preserving natural resources. The Agenda includes economic, eco­logical and social aspects (Bundesregierung, 2020). For the first time, all states of the world were held accountable, whether developing, emerging or industrialised countries (BMZ, 2017). In the course of the “Agenda 2030” the UN (2015) published 17 Goals for Sustainable Development (SDG), which are visible in Fig­ure 2.Part of these are 169 sub-goals, which define the exact implementation of the overall objectives more precisely.

Abbildung in dieser Leseprobe nicht enthalten

Figure 2: Sustainable Development Goals Editor's note: This image has been removed for copyright reasons

Source: (Sustainable Development Knowledge Platform, 2020)

The areas in which sustainable development is being driven forward are summa­rised under the 5 P's: People, Planet, Prosperity, Peace and Partnership. More spe­cifically, these areas are addressed in the objectives, such as poverty reduction, sus­tainable economic growth, protection of rural ecosystems, and reduction of inequal­ity, both between and within countries (BMZ, 2019b). Thus, each country is obliged to make defined progress towards each of the objectives, even if the circumstances and existing standards are different in each country. Although the strategy of the United Nations has a solid theoretical fundament, there are many difficulties and criticisms challenging the implementation of the goals.As a consequence, there are major differences between targets and implementation, which were examined in more detail in the Bertelsmann Stiftung's “Sustainable Development Report 2019”: In Figure 3, the OECD's goals and their progress were examined more in detail. The OECD countries include 36 member states, most of which have high per capita income and can be regarded as developed and industrialised countries. A look at these states is very important, since although they are making great progress to­wards achieving the targets, they also have a strong impact on third countries through high consumption and high living standards.

Figure 3: SDG Dashboard for OECD Countries

Abbildung in dieser Leseprobe nicht enthalten

Source: (Bertelsmann Stiftung, 2019, p. 24)

The goals that have been achieved are marked in green, while the goals that still need to catch up are marked in yellow, orange and red. In particular, the targets marked in red are still considered to be very challenging for the respective coun­tries.

It is evident that the OECD countries in particular are making good progress to­wards the targets in terms of socio-economic outcomes and basic access to infra­structure, such as people at risk of poverty or social exclusion, people suffering from significant material deprivation, life expectancy at birth, or smoking preva­lence (Eurostat, 2019). Nevertheless, progress is needed regarding environmental issues (SGD 12- SGD17) to achieve the targets. Of particular concern are Respon­sible Consumption and Production, Climate Action and Life Below Water. These relate mainly to primary energy consumption, final energy consumption, marine acidification or waste generation. Nonetheless, many European countries are ranked high in a comparison of all countries. The countries with the highest scores are Denmark, Sweden, Finland, France and Austria. Germany ranked in sixth place. Many African countries perform particularly badly. Hence, the last five places are occupied by Madagascar, Nigeria, Dem.- Rep., Congo, Chad and Central African Republic (Bertelsmann Stiftung, 2019, p. 22). This is mainly due to the poor per­formance of objectives SGD 1 to SGD 9 in terms of socio-economic concerns and basic access to service and infrastructure (Bertelsmann Stiftung, 2019, p. 34).

In conclusion, the United Nations' targets for sustainable development are very am­bitious but necessary. It is essential to monitor and control this progress closely to guarantee that the objectives are being met. In addition, the United Nations should offer assistance in achieving progress, particularly to African countries for which the achievement of socio-economic goals are very difficult, particularly because of the growing populations and the lack of financial resources. It is also conceivable that OECD countries, which strongly influence third countries due to high con­sumption, could support them in achieving the SDGs.

3 Corporate Social Responsibility

3.1 Concept

Since sustainability does not only play a major role at the political level, an attempt was made to bring this concept to a corporate level. In this case, the three pillars of sustainability are again taken into account, which reflects ecological, social and economic factors. This is how the term "Corporate Social Responsibility (CSR)" emerged. In practice sustainability and CSR are often used interchangeably. How­ever, these terms need to be basically distinguished from each other, since CSR is more about what contribution companies make in terms of sustainability (BMAS, 2020b) .

Historically, the term “Corporate Social Responsibility” more often under its ab­breviation “CSR” was first used in 1953. In the understanding at that time, it was rather seen as the responsibility of companies to orient themselves onthe expecta­tions, goals and values of a society (Bassen et al., 2005). According to the definition of the EC (2011), this concept goes even further. In this context, it is important to emphasise that CSR operates on a voluntary basis by companies and consequently goes beyond the guidelines imposed on companies by the state or government (IW, 2007). It should be noted that non-financial reports, unlike financial reports[I], are not required to be externally audited (IHK Frankfurt am Main, 2020a). From its concept it is important to recognise that CSR is not about using profits made to support social or similar projects, but rather about aligning the operative business, i.e. the actual actions of companies in a responsible manner. In addition, it is im­portant to take account of the stakeholders, since they are the most important factor for the development of a CSR-strategy.

Stakeholders include all internal and external parties that are currently or will in the future be directly or indirectly affected by the business activities of the company. While internal stakeholders include e.g. owners, managers and employees, external groups include e.g. lenders, suppliers, customers, competitors, the state and society (Thommen, 2018). A distinction must be made not only between direct and indirect stakeholders, but also between voluntary and involuntary ones. According to Clarkson (1995), parties who have not had the choice of entering into a relationship with the company and at the same time cannot withdraw from it are considered to be involuntary stakeholders. Even parties that are seen as indirect stakeholders of the company can be affected by the activities. If activities of the company do not or not only affect the parties involved, one speaks of so-called "external effects" or "externalities". These effects can be both positive and negative for the third party. If, for instance, the production decisions of one company are associated with nega­tive consequences for another company, is referred to as a negative external effect (Feess, 2019). An example of this would be a company polluting a river which in turn reduces or negatively affects the fisherman's production.

In addition to the stakeholders already mentioned above there exist different opin­ions when it comes to the question of whether the environment can be seen as a stakeholder or not.If the definition is based on the assumption that stakeholders are all parties that are influenced by business activities, the environment can be consid­ered a stakeholder as well. Phillips and Reichart (2000) point out that stakeholders can only be the sort of party that has a "necessary political and economic power to have their "voices" heard by the firm" (Phillips and Reichart, 2000, p. 188). On the other hand, the environment is clearly mentioned among the seven CSR core topics in DIN[II] ISO 2600, which appeared in 2011 under the title "Guidelines for the social responsibility of organisations" (IHK Frankfurt am Main, 2020b). Despite different opinions prevailing in the literature as to whether the environment should be seen as a stakeholder, it is considered as such in this paper. This is supported by several arguments. First of all, the environment and its protection are an important public focus in the current times. This focus is reinforced by increasing scientific publica­tions on climate change and its consequences. Secondly, many company activities have a direct or indirect impact on the environment. The sector covered in this pa­per, the fashion industry, is a prime example. The final argument to mention is that an intact and undamaged environment is essential for the population as well as for a (successful) economy.

A similar conclusion was reached in the publication of the DIN ISO 2600. Based on four fields of action, the core topic of the environment tries to create awareness for the responsibility regarding the environment, to identify the corresponding ef­fects and to take the environment into account in business decisions. According to this standard, companies should not only think theoretically, but also reduce envi­ronmental pollution, use resources more sustainably and treat the environment and its limitations in a respectful manner (BMAS, 2011).

In the further part of this paper, the term corporate social responsibility refers to the definition in DIN ISO 26000 and the seven core topics, with which a company should concern itself. In an orientation guide to DIN ISO 26000 published by the BMU (2014) the seven core topics are listed as follows:

- Corporate Governance
- Environment
- Human Rights
- Working practices
- Consumer issues
- Community involvement & development
- Fair operating and business practices

These core issues can be different for each company in terms of their impact on its stakeholders. For example, a chemical company or a nuclear power plant may have a greater impact on the environment than, for instance, a service company where employees or consumers/customers are major stakeholders. It is therefore important to establish a personal stakeholder management system for each company and to draw up an individual plan for CSR measures accordingly. Although there are many different approaches to stakeholder management, reference is made to the six-step- measures ofFifka (2015) which are briefly summarised below.The successive steps are shown in Figure 4.

Figure 4: The stakeholder management process

Abbildung in dieser Leseprobe nicht enthalten

Source: Own elaboration based on Fifka (2015)

The first step in the process is to identify the existing stakeholders of a company. Its stakeholders can be divided into four areas: Market, Workplace, Natural Envi­ronment and Community. Typical stakeholders in the Market have an already ex­isting market relationship (e.g. credits, clients, suppliers). In the Workplace area, one may find stakeholders such as employees, unions, but government as well.

The field of Natural Environment belong to parties that are affected by the ecolog­ical impact of an organisation's operations. Community refers to parties that repre­sent its interests, correspondingly either governmental or non-governmental insti­tutions.

After identifying the stakeholders, the next step is to assess them. Since there are many different stakeholders it is important to focus on the most relevant ones. That can be done using the criteria Importance, Power, Urgency and Legitimacy of their claims. This classification model was published by Mitchell et al. (1997) and is described as the “Stakeholder Salience Model”. Regarding the category Power, a highly ranked stakeholder is one with a certain influence on the company. For ex­ample, one could imagine an important business partner, supplier or an important customer group. Urgency is about the time frame, in which issues must be dealt with. Urgent stakeholder concerns are higher scored than those which are less press­ing. Correspondingly, those claims with a high degree of urgency need to be real­ised as quickly as possible. Legitimacy covers matters that are legally or ethically legitimate. Legal Legitimacy refers to actions that must be carried out in accordance with the law. For example, compliance with employee rights or contractual regula­tions. Ethical Legitimacy is not about legal regulations, but about actions that are linked to certain moral expectations. For instance, animal testing is sometimes per­mitted in the cosmetics industry, but is considered morally reprehensible by some stakeholder groups such as customers. While it is easier to identify stakeholder groups according to their Importance the factors Power, Urgency and Legitimacy are partly subjectively considered and evaluated.

The third step is to enter into dialogue with the stakeholders. Here the suitable Num- ber as well as the suitable F orm of the dialogue must be selected. Regarding to the Number, traditionally communication has tended to take place with only one stake­holder at a time, it also offers opportunities to talk to different stakeholders at the same time. This allows them to recognise that they are not alone with their claims, and that enforcing them might also benefit or even harm other stakeholders. There are several F orms in which this dialogue can ultimately take place. Whereas in the past the roundtable with a small number of stakeholders was seen as a suitable form, many dialogues today take place in conferences or other forms of multi-lateral dia­logue.

Following discussions with the selected stakeholders, it is now up to the companies to evaluate the information obtained and analyse how appropriate measures can be implemented into the corporate strategy. In order to evaluate the importance and ranking of the issues, they can be classified according to importance for the com­pany and importance for the stakeholders. Consequently, issues that are very im­portant for both parties must be implemented as quickly as possible, while issues that are of minor importance for both groups can be neglected. Once strategies have been developed, it is essential to implement them with appropriate measures.

In the following step it is necessary to measure these actions and their implementa­tion. This plays a particularly important role tobe able to track whether and to what extent the desired goals have been successfully implemented. If there are differ­ences between the objectives and the states achieved, the reasons for these differ­ences must be identified so that adjustments can be made. However, some goals are easier to measure than others. For example, targets that have financial metrics are easier to measure than environmental and social impacts. The sixth and final step involves response and reporting to stakeholders. Possibilities are offered by a face- to-face dialogue, which is recommended for the most important stakeholders.

There are numerous ways to communicate CSR guidelines and results. Heinrich (2018) gives an overview of the different communication channels. He mentions media relations, publications, online and events/personal communication as super­ordinate categories for communication. These in turn are divided into internal and external. For example, press releases can be issued internally and externally inme­dia relations. For external representatives, press conferences, specialist articles or editorial visits would also be conceivable. Publications include newsletters, staff magazine and brochures on the internal site. Sustainability reports, specialist adver­tisements and job advertisements can be published externally. The website is a good tool for communicating online, both internally and externally. Social media, pod­casts or videos can as well be used to reach external groups. There is the possibility of using events or personal communication as an instrument. Internally, the options available include bulletin boards, in-house training, meetings, e-mails and work­shops. Stakeholder dialogues, roadshows, open days and job exchanges are availa­ble for external communication. As described in the section on external publications, sustainability reports / CSR reports can be prepared and published by the company to inform about its financial, social and environmental performance and activities. Only some companies are obliged to submit CSR reports. However, this measure can be advantageous for small and medium-sized enterprises in order to show their stakeholders the awareness of their concerns as well as demonstrating the effort to introduce and implement improvements.

3.2 Reporting

Due to some legislative changes in recent years, financial reports have become in­creasingly important for many companies and therefore require closer attention. In 2014, a directive was published by theEP and EUCO (2014) which states that cer­tain companies are obliged to submit a non-financial report providing information about the company's activities generating social and environmental impacts. The CSR reports, the so-called "non-financial statement", should contain information on environmental, social and labour issues, respect for human rights and the fight against corruption and bribery. The disclosure of such information on social and environmental factors should also serve to enhance investor and consumer confi­dence. The guideline highlights the importance of this type of reporting as it enables a transition to a sustainable global economy (EP and EUCO, 2014) .

International frameworks can be used to provide information. In this context the UN Global Compact, the OECD Guidelines for Multinational Enterprises, or the ISO 26000 Guidance Standard on Social Responsibility are worth mentioning. For example, the ten principles of the UN Global Compact (2020) could be used as a guideline for the preparation of the report as well as for corporate action. The ten principles are divided into four sub-categories: Human Rights, Labour, Environ­ment and Anti- Corruption. These include principles such as the respect for inter­national human rights, the abolition of child labour, the use of environmentally friendly technologies and the fight against any form of corruption.

In the directive it is mentioned that although it may be beneficial for small and medium-sized (SME) companies to publish a non-financial statement, the obliga­tion to do so should be limited.

The following companies are affected by this obligation, on condition that they have at least 500 employees (EP and EUCO, 2014):

- large undertakings which are public interest entities
- public interest entities which are parent undertakings of a large group

These requirements are first applied to companies from the 2017 financial year.

The EU-wide directive from 2014 was introduced throughout Germany by a reso­lution of the Bundestag on 9 March 2017 (Deutscher Bundestag, 2017). The Ger­man government cites the fact that companies today are no longer valued solely on the basis of their financial data. According to own statements, investors and con­sumers have become more and more aware of working and living conditions in the producing countries.

The implementation of the directive caused an extensive discussion inbusiness and political circles. The new regulations can be understood as a benefit or as a burden. On the one hand, stakeholders gain a more precise insight into corporate activities with regard to ecological and social components, and on the other hand it means more bureaucratic effort for the companies (Fifka and Loza Adaui, 2015). Although companies can benefit from CSR reports, negative aspects are far more plausible for them than for the stakeholders. Fifka (2014) points out that for example, meas­urability could be a challenge when preparing reports, as the benefits and revenues from this type of reporting can hardly or not at all be valued in monetary terms. It is also possible that the reports could provide critical organisations with a target for attack and provide important insights for competitors.

Nevertheless, according to Fifka (2014) CSR reporting offers many opportunities. Companies can improve the relationship totheir stakeholders and demonstrate open communication. Not only costumers are affected, but also suppliers, who can better assess the social or environmental risks to which the company is exposed. The re­ports may also be of interest to potential employees, as the corporate culture regard­ing social and environmental aspects also plays an increasingly important role in the choice of an employer.

Non-financial reports offer many opportunities for companies and stakeholders but are simultaneously subject to some criticism. There is a risk that the report will lack credibility if adverse information is withheld and only positive aspects are presented (Fifka, 2014). It is therefore conceivable that reporting serves far more as a Public Relation (PR) measure than as an actually reliable source of information. Ulrich (2010) considers a risk that terms such as “Sustainability”, “CSR” or “Corporate Citizenship” will be used by the PR departments of companies to represent socially responsible action and to advertise it externally. Moreover, there are big differences in the CSR reports and their quality. While some companies publish clear and trans­parent reports, others have considerable shortcomings in reporting quality. Accord­ing to a report from 2017, only just under a third of the large companies surveyed had precise, measurable information in their supply chains, while for the smaller companies it was around 20 Percent (Socaciu, 2017). Although there are still dif­ferences in the quality of the reports, legislation and the obligation for selected com­panies to disclose CSR reports has brought about a far-reaching adjustment. The law clearly establishes that if important information is omitted, a comprehensible justification must be provided by the company (Deutscher Bundestag, 2017). In recognition of good CSR reports, there is an annual ranking of the best sustainabil­ity reports in Germany, sponsored by the Federal Ministry of Labour. In this con­text, it is examined to which responsibility is assumed for employees and their in­terests, which aspects of sustainability flow into the supply chains, the extent to which ecological aspects are taken into account in production and other criteria (IÖW and Future e.V., 2018).

3.3 CSR Policies implemented by Companies

There are many ways to integrate CSR concepts into companies' business. The larger a company is, the more stakeholders there are who are interested in asserting their interests in relation to the company. But especially regarding sustainability, companies can make a difference even with small measures, for example reducing Greenhouse Gas Emissions. In this context, the guideline is: avoid, reduce and com­pensate emissions (BMZ, 2019a). One way to avoid these emissions is to avert pos­sible business trips by plane. Although there may be necessary business trips, it is advisable to weigh up whether the distance can be covered by train or whether the meeting can be held via video conference. There are ways to make everyday office life more sustainable and reduce emissions: a paperless office can be introduced, printing can be avoided, letters and parcels can be sent in a climate-neutral way or computers and laptops can be switched off during the lunch break and after work to save electricity (Linsenmaler, 2019). However, if it is neither possible to avoid nor reduce, the emitted CO2 emissions can be compensated. There are a number of vendors that allow you to invest money in projects that protect the climate and offset your emissions elsewhere (Müller, 2020).

In order to motivate companies to commit themselves more to sustainable manage­ment and to show those who have already achieved this, the Federal Republic of Germany has been awarding the "CSR Prize of the Federal Government" annually since 2013. The nominees are renowned for their commitment to socially, econom­ically and ecologically compatible working methods (BMAS, 2020a). A further po­litical initiative is the "Climate Protection Company" award, an initiative of the German Federal Ministry of Economics and Energy, the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety and the German Chamber of Industry and Commerce. The basic idea behind this is to create a plat­form for companies to transfer knowledge andto recognise their achievements. The measures are divided into four categories: Renewable energies, energy and resource efficiency, sustainability management and employees & mobility. Several compa­nies and examples of how they contribute to the above categories are given. In the area of energy and resource efficiency, the food discounter ALDI SÜD plans to reduce its greenhouse gas emissions by up to 30% by 2020. One measure to achieve this goal is returnable transport packaging (MTVs), some of which has been recy­cled from MTVs that are no longer functional (BMWi et al., 2019). The measures show results: a CO2 equivalent of -24,225,100 kg was achieved (Klimaschutz­Unternehmen, 2019).

This and other examples demonstrate the possibility for any company to contribute to sustainability in the business sector. Moreover, it is important that these measures are recognised and valued by politicians. In the long run, customers will also rec­ognise and appreciate awarded climate-friendly companies.

4 The Fashion Industry Worldwide

4.1 Introduction

The fashion industry is one of the largest industries in the world. However, it is important to distinguish the textile and fashion industries. Thus, the textile industry can be seen as the most important preliminary stage to the fashion industry. As illustrated in Figure 5,the textile industry is necessary to be able to produce textiles at all, which in turn can be sold as clothing by the fashion industry.

Abbildung in dieser Leseprobe nicht enthalten

While the fashion industry is responsible for the pre-design of the garment and after production for marketing and distribution to wholesalers and retailers, the textile industry produces the actual garment. This begins with the production of the fibres, i.e. natural or synthetic fibres, and continues through textile production to the man­ufacture of the garment. The finished textiles can be used not only for further pro­cessing into garments, but also for all other types of textiles. Textiles are used in many areas, such as clothing, home textiles, industry, and medicine. Consequently, it is conclusive that the turnover of the textile industry is in most cases higher than the turnover of the fashion industry. As an example, the turnover of the German textile industry in 2018 was 12.28 billion euros (Statistisches Bundesamt, 2019b), while the turnover of the German clothing industry amounted to 7.01 billion euros (Statistisches Bundesamt, 2019a). For the sake of simplicity, when the textile value- added chain in the further course of this paper is mentioned, it concerns the entire path of a garment: from the production of the yarn, through wearing, to disposal or recycling.

The worldwide fashion industry is an important sector and has been growing stead­ily for years. According to prognoses, sales in the clothing market will amount to about €1,717,614 million in 2020. It is assumed that a market volume of € 1,956,347 million will be reached in 2023; this corresponds to an annual sales growth of 4.4%. The largest market segment, with a value-based market volume of around € 880,590 million in 2020, is the womenswear segment (Statista, 2020). The steadily growing numbers go hand in hand with a steadily growing consumption. In 1975, the world­wide textile production per capita was 5.9kg per year, while in 2018 it reached 13kg per year (Niinimäki et al., 2020).

China, the European Union and India are the top three textile exporters worldwide. China is the world's largest textile exporter, in which the textile industry constitutes for around 37% of world exports in 2018, followed by the European Union (23.5%) and India (7.2%) (WTO, 2019). As can be seen in Table 1, China is leading in clothing exports as well, with clothing worth 158 billion dollars exported in 2018. This corresponds to 31.3% of the world's clothing exports.

Table 1: Top 5 exporters of clothing, 2018 (Billion dollars and percentage)

Abbildung in dieser Leseprobe nicht enthalten

Source: Adapted from (WTO, 2019, p. 120)

The European Union ranked second with 143 billion dollars and Bangladesh third with 32 billion dollars. These figures make clear how important the fashion industry is for the global economy in general and many countries in particular. In addition, the fashion industry and its entire supply chain creates several jobs: In 2016, about one in six employees worldwide was employed in the fashion industry (Cheney, 2016). Across the entire value chain, 80% of employees in the fashion industry are women (GCNYC The Fair Fashion Center).

In addition, the fashion industry has changed a lot since globalisation. In many Eu­ropean countries, for example, almost no clothing is produced in-house, but the majority is imported, often from countries such as Bangladesh, Turkey or China. In Germany this import share reached about 90% (Umweltbundesamt, 2019d).

Despite high sales figures, a decline in growth is expected for the coming year 2020. According to the McKinsey Global Fashion Index (2019, p. 12) the industry will grow between three and four percent, which is slightly less than the year before, when the forecast was 3.5 to 4.5 percent.

Nevertheless, the turnover figures in the fashion industry are still very high, espe­cially for the big fashion houses, which make billions in profits every year. The Spanish group Inditex is the top-selling fashion group in Europe, followed by the Swedish company H&M and the British group Marks&Spencer (see Figure 6).

Figure 6: Largest fashion and clothing retailers in Europe by turnover in 2018 (in billion euros)

Abbildung in dieser Leseprobe nicht enthalten

However, the global fashion industry not only makes sales, but also generates costs. Hereby, it is elementary to highlight that these costs are not only referring to finan­cial terms. The textile and fashion industry is the second most polluting industry in the world (UN, 2018). It is not only polluting, but also wasteful and extremely en­ergy consuming. Although this has been known for several years, the fashion in­dustry has made little effort to change these circumstances (McKinsey and The Business of Fashion, 2019). A transformation is made since many people no longer want to accept these circumstances and therefore environmental activists are not only drawing attention to climate change and ecological problems, but also to the grievances in the fashion industry. During the London Fashion Week in February 2020, the protest group Extinction Rebellion[III] campaigned for more attention for sustainable fashion designs and quick action on the side of environmental policy (Badshah, 2020). Similar protests already took place during the Fashion Week in September 2019, where the protest group described the fashion industry as "major offender in the climate crisis" (Cochrane, 2019).

These and similar protests strengthen consumer awareness of the environmental impacts of the fashion industry. Differences seem to exist in terms of awareness and action: only a minority of consumers are prepared to pay more for sustainable fash­ion, so-called Eco Fashion. The basic concept of Eco Fashion includes the biologi­cal production of textile raw materials, a low and appropriate use of chemicals dur­ing processing and an optimization of the manufacturing processes (BMVIT, 2020). The aim is to improve every step in the value chain in a sustainable manner. Re­garding the price of Eco Fashion, it seems that younger generations are willing to pay more for sustainable fashion than older generations. According to a survey con­ducted by McKinsey (2019) among US consumers in 2019, 31% of today's under- 24s are willing to pay more for sustainable fashion (see Figure 7).

Figure 7: Generations that are willing to pay more for products with the least nega­tive impact on the environment (% of US Consumers in 2019 who would pay more)

Abbildung in dieser Leseprobe nicht enthalten

Source: (McKinsey and The Business of Fashion, 2019)

Older generations are less willing to spend more money on ecologically responsible clothing. As can be seen in Figure 7, only 12% of those surveyed, born between 1946 and 1964, would be willing to spend more.

To analyse more precisely the causes of environmental impacts on the fashion in­dustry, it is useful to take a closer look at the entire value chain.

4.2 Textile Value Added Chain

Depending on how deeply the value chain is broken down, it consists of up to eight links. The individual steps are shown in Figure 8 and consist of fibre production, the further processing into yarn, textile production, manufacture, distribution, use, care and recycling / disposal.

Figure 8: The Textile Value Added Chain

Abbildung in dieser Leseprobe nicht enthalten

Source: (Löffle et al., 2015), (Südwind - Institut)

In fibre production, either cotton is produced, or fibres are obtained from chemicals. In cotton cultivation, the seed is produced, cultivated and then harvested. Man­made fibres are produced artificially in a chemical process. This differentiates them from natural fibres. For example, polyester and polyamide are substances of this fibre group (Hessnatur Lexikon, 2020a).

Spinning is the process of converting the spinnable fibres into yarn structures. These are called webs or yarns. Spinning is carried out using appropriate working pro­cesses and the associated technical equipment such as machines and other auxilia­ries (Bergmann, 1927).

The third step in the textile chain involves processing the yarn into textile fabrics. After spinning the fibres, the yarn is further processed into textiles. Processes such as weaving, knitting or warp knitting are used to produce the textile surfaces. Dur­ing production, the fibres and yarns are exposed to high forces due to mechanical processes. Chemical preparations are needed to protect the fabric. Substances used in these processes include spinning oils, melts or sizing agents. In the next step these fabrics are refined. Coloured textiles with special properties are produced from raw textiles. Hereby, water, energy and chemicals are used. The process con­sists of several stages, starting with pre-treatment, which includes bleaching and washing, through to dyeing, printing and finally laminating and coating the textile (Umweltbundesamt, 2019c).

The fourth section of the chain deals with the manufacture of the textile. It is cut, sewn and packed. This is where the actual clothing item is created. Once the final garment is finished, it is shipped to warehouses for online sale or to retail for local purchase. If the garment is purchased by the customer, it is worn or used. The care part of the value chain involves washing, ironing, drying or similar processes the garment goes through before it is finally thrown away or recycled. A report from the EC (2019) states that the recycling economy in the textile industry is not applied in almost all cases. In most cases, therefore, a linear rather than a circular value chain predominates. In fact, less than 1% of material from recycled clothing is used to create new ones (Ellen Macarthur Foundation, 2017).

4.2.1 Textile Value Added Chain worldwide

In the production process of a fashion piece, it not only passes through many parts of the textile chain but is also often transported around the world. It often occurs that each step takes place in a different country. This phenomenon is due to differ­ences in wage structures or production costs, which are partly caused by globalisa­tion. Figure 9 identifies the different stages of the textile value added chain and the countries where they take place.

[...]


1 This obligation applies to German law to medium-sized and large corporations according to para­graph § 316 HGB.

2 DIN (2020) is the independent platform for standardisation in Germany and worldwide

3 Extinction Rebellion is an environmental movement that uses civil disobedience to put pressure on governments to take measures to protect the environment and species (2020).

Excerpt out of 122 pages

Details

Title
Environmental Concerns in the Fashion Industry. An Approach to Corporate Social Responsibility (CSR)
College
Pforzheim University
Grade
1,5
Author
Year
2020
Pages
122
Catalog Number
V1030462
ISBN (eBook)
9783346434791
ISBN (Book)
9783346434807
Language
English
Keywords
CSR, Sustainability, Fashion Industry
Quote paper
Nathalie Martin (Author), 2020, Environmental Concerns in the Fashion Industry. An Approach to Corporate Social Responsibility (CSR), Munich, GRIN Verlag, https://www.grin.com/document/1030462

Comments

  • No comments yet.
Read the ebook
Title: Environmental Concerns in the Fashion Industry. An Approach to Corporate Social Responsibility (CSR)



Upload papers

Your term paper / thesis:

- Publication as eBook and book
- High royalties for the sales
- Completely free - with ISBN
- It only takes five minutes
- Every paper finds readers

Publish now - it's free