The backdrop of the World Economic Forum 2023

Last week, world leaders, ministers, investors, business leaders, academics, activists and more descended upon Davos to set the tone for the year ahead and consider ‘Cooperation in a Fragmented World’. With growth slowing in the global economy, climate change and its repercussions on the rise and the ongoing war in Ukraine, the return of the World Economic Forum (WEF) in Davos was situated against an ominous backdrop. Whilst this naturally led to more sobering headlines, Reuters reported that Davos concluded with a cautious optimism surrounding the global economic outlook for 2023.

Short term solutions were certainly prioritised due to the urgent economic crises at hand, so much so that certain leaders didn’t attend in order to focus on these issues at home. However, it was abundantly clear that the climate can no longer be compromised and many at Davos worked to ensure that this remained prominent on the agenda.

The WEF’s risk analysis for 2023 concluded that whilst the cost-of-living crisis is the biggest risk for the coming two years, this is closely followed by extreme weather events. Over the next decade, failure to mitigate climate change is the number one risk.

Ending the “addiction to fossil fuels”

To mark the beginning of Davos, activists Helena Gualinga, Vanessa Nakate, Greta Thunberg and Luisa Neubauer penned a ‘Cease and Desist’ letter to fossil fuel CEOs laying out in blunt terms the fragile state of the world. The letter has since been signed by over 900,000 people including António Guterres and Al Gore. It demands that fossil fuel companies “immediately stop opening any new oil, gas, or coal extraction sites, and stop blocking the clean energy transition we all so urgently need.”

At the event, Antonio Guterres, Secretary-General of the UN starkly stated: “The battle to keep the 1.5C limit alive will be won or lost in this decade”. Guterres highlighted the urgent need to close the emissions gap by ending the “addiction to fossil fuels”, phasing out coal and supercharging the renewable revolution. This was echoed by many at Davos including the likes of UK Labour Party Leader, Kier Starmer, who criticised new oil investments. Irene Vélez, the minister for mines in Colombia announced: “We have decided not to award new oil and gas exploration contracts, and while that has been very controversial, it’s a clear sign of our commitment in the fight against climate change,”

Addressing inequality

The annual Oxfam report on global inequality was published in conjunction with the start of Davos and outlined that for the first time in 25 years, extreme wealth and extreme poverty have both gone up. Since 2020, the richest 1% have captured nearly two-thirds of new wealth in the world. Despite this, wealth equality and wealth distribution were not a prominent part of the programme.

Guterres reiterated the need to double adaption finance, as promised at COP27 in Sharm El-Sheikh, and for the biggest emitters to unite around a Climate Solidarity Pact in order to keep 1.5 alive. Pakistani climate minister Sherry Rehman pushed for loss and damage funding, another key agreement from COP27.

The Earth Commission revealed that it has scientifically quantified, for the first time, a ‘long-term safe and just corridor for humanity at a global scale’. Soon to be published, the new ‘safe and just Earth System Boundaries’ will outline a set of boundaries, much like the 1.5ºC limit for climate, but for a more extensive set of biophysical domains, all of which are critical for the world economy, social stability and for human wellbeing.

Financing a low carbon economy

U.S. climate envoy John Kerry discussed how to meet the global warming targets of the Paris Agreement: “How do we get there? The lesson I have learned in the last years … is money, money, money, money, money, money, money.”

On day two, WEF launched the new initiative, Giving to Amplify Earth Action (GAEA), which will leverage philanthropic capital to help generate the $3 trillion needed each year from public and private sources to tackle climate change and nature loss.

The landmark U.S. Inflation Reduction Act (IRA) permeated dialogues at Davos. The IRA was signed into law in August last year and in part, directs new federal spending toward reducing carbon emissions whilst driving investment in domestic clean energy. It has proven somewhat controversial with worries of global companies being excluded from US markets and investment opportunities.

In a pivotal moment for the EU, Ursula von der Leyden, President of the European Commission announced that the ‘Green Deal Industrial Plan’ is in development with the ambition to “make Europe the home of cleantech and industrial innovation on the road to net-zero.” This plan will encompass regulation, the appropriate upskilling of workers, financing the transition and promoting the trade of cleantech and low-carbon industrial products. Under the plan, a new ‘Net-Zero Industry Act’ will be formed, offering clear goals for specific technologies and state aid to deliver these. This is being touted as the EU’s answer to the IRA and a bid to prevent firms from moving to the US.

Purpose-driven tech

WEF, in partnership with Accenture and Microsoft, unveiled the first prototype for a “purpose-driven metaverse” – Global Collaboration Village – where organisations can convene to learn about and take action on the world’s major challenges. Currently, 80 organisations have joined as Village Partners to bolster more diverse global collaboration and large-scale action.

Underpinning discourse around AI, innovation, tech and blockchain was the importance of maintaining human connection and striking the right balance between digital and physical.

Circular Economy

The annual Global Circularity Gap Report, published by Circle Economy in collaboration with Deloitte was launched at WEF. The report outlines that the global economy is currently only 7.2% circular and argues that “A global circular economy will allow us to fulfil people’s needs with only 70% of the materials we now extract and use,” within the safe planetary limits. The report identifies 16 transformational circular solutions, one of which being ‘eschew fast fashion in favour of sustainable textiles’, which calls for local textile manufacturing, the reuse and recycling of garments and higher quality and more durable clothing.

Fashion industry representation

Whilst it is evident that the fashion sector must play a significant role in influencing the climate trajectory and addressing social inequality, the Davos programme was not indicative of this and there were no fashion industry-specific activations on the official agenda. This undoubtedly must shift at future forums. GFA will continue to embolden its network of committed stakeholders and give them a platform for impact, accountability, alliances, collaboration and education. For those who wish to explore how the fashion industry can have a positive impact, The GFA Monitor is a guide for fashion leaders on how to reach a net positive industry through the consolidatation of existing knowledge, clear actions, proven best practices, data insights and solutions.

Participate in the consultation

Fashion Industry Target Consultation

The Fashion Industry Target Consultation is a multi-stakeholder project led by Global Fashion Agenda and the UN Environment Programme to identify and converge existing industry aligned targets to establish a holistic industry route of travel towards a net-positive fashion industry.

2022 provided yet more evidence that we cannot continue with a business-as-usual approach and wait for the trajectory of the fashion industry to change. Much of what was reported this year, including the vulnerability of certain communities and the irreversible risks that climate change is posing, emphasised what we already knew. The various IPCC reports released throughout the year substantiated this knowledge and reiterated that systemic change is needed if we are to guarantee an abundant future for our planet and its communities.

Fashion has the ability to foster innovation, empower communities, communicate new ideas, and showcase identities and cultures. By its very nature fashion dictates trends and thus has unparalleled potential to make ‘sustainability’, in all its nuance, desirable. Moreover, the industry is uniquely positioned to influence the climate trajectory – its operations impact societies and environments around the world and it accounts for up to 4% of global emissions.

In 2022, sustainability was certainly a major focus for the industry, but which areas were prioritised and what is on the agenda for 2023?

Read more about GFA’s work in 2022 here.

Degrowth – a defining concept

Peppered throughout conversations was, once again, the concept of ‘degrowth’, an increasingly popular theme underpinning the industry, though less apparent in practice. Degrowth has been defined by Timothée Parrique as “a planned and democratic reduction of production and consumption in rich countries to reduce environmental pressures and inequality, while improving well-being.” For fashion this means for example, producing less overall and avoiding extractive practices and cheap labour. A recent report by Hot or Cool Institute found that in order to meet fashion’s environmental goals, citizens in high-income countries should only be purchasing five new items of clothing annually, amplifying the need to curb current rates of production and consumption.

Watch our explainer video to learn more about the concept of ‘prosperity vs. growth’.

Whilst this year’s monumental announcement that Patagonia Founder, Yvon Chouinard, and his family have transferred complete ownership of the company to the Patagonia Purpose Trust and the Holdfast Collective was met with near-universal acclaim, some have argued that a stronger degrowth strategy could accompany this for maximum impact. This could follow on from the brand’s infamous 2011 ‘Don’t Buy This Jacket’ campaign.

Policy and legislation – landmark proposals with more on the horizon

Increasingly evident is the salience of policy in incentivising change within the fashion industry. Up until now, much of the industry’s efforts were voluntary, but proposed regulations that materialised during 2022 are set to change this.

This year, the fashion industry came into focus for conversations at COP27, during a clampdown on greenwashing and an announcement that clothing sold in France will require labels detailing climate impact from the end of 2023.

In the European Union, March marked the landmark publication of the long-awaited EU Strategy for Sustainable and Circular Textiles which encompasses everything from design requirements for circularity, digital product passports and tackling greenwashing, microplastics and overproduction.

In the United States, The Fashion Sustainability and Social Accountability Act (or, The Fashion Act, as it’s widely known) is a bill pertaining to New York State which intends to hold big brands accountable for environmental and social impacts. Amendments in November saw stronger commitments around emissions reductions and supply chain improvements. The FABRIC Act of 2022 is a federal bill which proposes major new workplace protections for garment workers and manufacturing incentives in a bid to cement the US as a leader in responsible apparel production.

The hope is that these proposals progress in 2023 and policymakers will follow suit in pushing mandatory measures for companies globally.

Brand accountability – a call for better data and transparency 

Commitments are one thing but measuring progress is also important. This year made clear the crucial need for accurate and robust data to substantiate sustainability claims and credentials. Whilst the focus on finding ‘perfect’ data cannot be allowed to stifle progress, Global Fashion Agenda and other industry actors will continue in 2023 to consider how the industry can accurately measure and communicate sustainability performance and illuminate the data credibility challenges.

Better data is needed to ensure trustworthy traceability and transparency from brands. Taking things even further into the realm of ultimate transparency we saw ‘Mea Culpa’ marketing shine in 2022, with brands acknowledging shortcomings like never before. In the fashion industry this technique has been partly pioneered by Danish label GANNI, now renowned for its vulnerability and openness about needing to do better. Despite being a frontrunner in ‘sustainability’, a quick look at the brands responsibility page and it’s immediately evident that GANNI ‘don’t identify as a sustainable brand’ – a surprising statement perhaps, but it’s much more nuanced than that. This level of upfront honesty can cultivate new levels of trust in its defiance of carefully curated, calculated, and polished brand representations.

Upcoming EU policy it also expected to drive transparency. The substantiating green claims legislative proposal is due to be published in 2023 and is aimed at tackling misleading green claims, i.e., “green washing”, and addresses the shortcoming in existing disclosure rules on sustainability. With the overall mission to make green claims reliable, by using standard methods for quantifying them. Our Partner, The Policy Hub – Circularity for Apparel and Footwear, also released a position paper on Green Claims, underlying their support for trustworthy sustainability communication.

Decarbonisation – considering the whole supply chain

The resounding takeaway from the April IPCC report is that unless we drastically cut emissions,  more specific and focused efforts, say around coral reefs, will be futile. Our Fashion On Climate report revealed that if the fashion industry does not accelerate its response to climate change, by 2030 it will produce around twice the volume of emissions required to align with the Paris Agreement global warming pathways.

Fashion is a major energy consumer and The GFA Monitor outlines that current operations throughout the supply chain mostly rely on non-renewable energy sources, such as petroleum, gas, oil, and coal.

During our session on decarbonization of the value chain, at COP27, Dorte Rye Olsen, Head of Sustainability, BESTSELLER said, “There will not be enough renewable energy for our growth unless we reduce our energy consumption…It’s a two-pronged approach, so insetting and reduction is key.”

Decarbonisation throughout the entire supply chain will become increasingly pertinent in 2023. The supply chain remains the most impactful part of the industry, and strong partnerships between brands and suppliers will aid the much-needed change in this area.

Watch the discussion around decarbonisation that GFA hosted at COP27 here.

Circular Fashion – the resale boom 

According to a recent report by BCG and Vestiaire Collective, the value of the resale market for apparel, footwear and accessories has more than tripled since 2020, with no signs of abating anytime soon. It has been empowering for citizens to participate in a circular economy, though it’s clear that to make real impact these second-hand buys must replace new purchases.

2022 also sparked conversations about fast fashion brands participation in the resale market and whether it actually contributes to the meaningful cultivation of a circular economy. Brands like Zara, Shein, Boohoo and Pretty Little Thing all launched resale platforms this year. Just last month, Vestiaire announced the banning of fast fashion from its resale site, explaining that it would be hypocritical to platform fast fashion.

Resale is not enough if approached exclusively as a marketing opportunity and additional sales avenue, with little to no focus on overproduction and unethical practices associated with core collections. Shifting to a circular system requires a holistic approach, encompassing areas beyond resale. For example, in November Bottega Veneta launched a lifetime warranty programme on handbags, offering unlimited refreshes and repairs as a complimentary service.

Digitalisation – metaverse momentum

Throughout 2022 the influence of the metaverse was undeniable. A report from Business of Fashion found that approximately 70 percent of US general consumers rate their digital identity as important and digital demand for fashion and luxury brands is expected to grow and result in extra sales for the industry that could reach $50 billion by 2030, according to Morgan Stanley.

There are exciting metaverse opportunities being explored by the industry – including metaverse events (April of this year marked the first ever Metaverse Fashion Week), NFTs to authenticate products, games, virtual showrooms and stores and digital clothing and sampling. However, digitalisation isn’t a fail-safe answer. The often-invisible infrastructure of the technology sector is more polluting than some may think.

As we head into 2023, explore the current scope of sustainability challenges and opportunities in the metaverse here.

Social Justice – intersectional approaches  

Solely acknowledging the environmental degradation associated with many fashion industry practices is not enough if we fail to also address the social issues so closely linked to the industry. Sustainability must be understood in all its nuance.

Coined by Kimberlé Crenshaw, ‘intersectionality’ encompasses the broad scope of identities and subsequent interplay of social justice issues that exist, allowing us to recognise that hardships are borne differently for everyone. Social injustice embeds itself in fashion on a multitude of levels.  Read about how the 2022 IPCC report reiterated the importance of intersectionality.

Whilst this year has seen promising shifts in some areas, there remains much work to be done in 2023. Remake outlined six key wins from its 2022 Accountability Report, this progress demonstrates “… that the industry is ready and willing to become more ethical, more just, and more sustainable through tangible, positive actions – even in the face of seemingly insurmountable odds.” We hope to see legislations materialise, bold action from brands, progress with the likes of the Good Clothes Fair Pay campaign and the voices of those most impacted being amplified and listened to.

Download The GFA Monitor here, to discover how the fashion industry can shift towards being net-positive by 2050.

 

Participate in the Fashion Industry Target Consultation here, to help identify industry aligned targets and a holistic route of travel towards a net-positive industry.

Participate in the consultation

Fashion Industry Target Consultation

The Fashion Industry Target Consultation is a multi-stakeholder project led by Global Fashion Agenda and the UN Environment Programme to identify and converge existing industry aligned targets to establish a holistic industry route of travel towards a net-positive fashion industry.