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Focus on Fashion

Focus on fast fashion

The rise of fast fashion retailers

Fast fashion describes the extremely quick turnaround times of designs that move from the latest fashion shows or celebrity culture to retail stores. The objective is to get the newest styles to the market as fast and most important, as cheaply as possible, so consumers can purchase them while they are still at the peak of their popularity. Since new styles are released virtually every day, the most recent purchases quickly become obsolete, leading to more frequent purchases. The pervasive instant gratification mindset of the “social media generation” also feeds further into the acceleration of fast fashion.

The production system of fast fashion has a material environmental cost

The production system of fast fashion requires a large amount of water and chemicals, as well as emitting significant amounts of greenhouse gases. Despite some fashion companies starting to prioritize sustainability, measures taken thus far do not make a dent to what is still a significant harm to the environment. For example, less than 50% of companies in the global fashion and textile industry disclose crucial water-related information and not a single company considers pollution at the product use and disposal phases to be a considerable risk to their business[1] . This is an issue.

The extent of the environmental impact on fast fashion can be broken down into four categories:
(1) Over-consumption, (2) high usage of raw materials, (3) water pollution, and (4) garbage.

1. Over-consumption

The rise in the fast fashion industry has led to massive growth in the number of clothing items sold per person. Fast fashion retailers such as Zara release over 20 new clothing collections each year, while “ultra” fast fashion retailers release thousands of new garments monthly. These launches are combined with instantaneous online marketing. As a result, consumers keep clothing items for about half as long as they did 20 years ago, and more than half of our wardrobe ends up in a landfill within three years.

2. High usage of raw materials

The cultivation of materials and the manufacturing process of these high consumption items are also damaging to the planet. A high proportion of cheap clothing is made from synthetic materials, mainly polyester. This material requires petroleum (crude oil) in production. If the fashion industry continues to accelerate in the manner it has over the last couple of years, the industry could be responsible for approximately one quarter of human GHG emissions by 2050 (currently at 10% of GHG emissions).

3&4. Synthetic materials, water pollution and garbage

Chemicals used in the production process pollute fresh water, which is often not filtered in developing countries. Once the garments are produced and washed, tiny fibres detach from polyester (micro plastics), which also filter into the ocean. This is not just dangerous for animals, but also for humans who eat marine animals. Considering the scale of production and consumption of clothing, it is easy to conceive the notion that this will lead to immense amounts of waste. The aggregate amount of clothes that do not get sold is generally unknown, but it is estimated to be approximately 20% of the clothing produced. Yet only 1% of all clothes are fully recycled into new garments

[1] The Carbon Disclosure Project (CDP) released a water security questionnaire in 2019. Of the 136 apparel and textile companies invited to disclose, only 62 (46%) responded.

There are meaningful negative social issues in the fast fashion value chain

In addition to the harmful environmental factor, the clothing retail industry is infamous for underpaying factory workers and exposing them to unsafe or even harmful workplace conditions. Some of the notable ones arelisted below:

  • The Boohoo scandal
  • Online fashion retailer was hit with allegations in 2020 regarding claims of health and safety issues in certain factories that supply the brand. Boohoo’s share price was inevitably impacted once the allegations were published – dropping around 23%. In 2021 the company committed millions of pounds to improving its supply chain and has pledged a series of reforms including a move to publish a full list of companies in its supply chain, reducing the number of factories it relies on, and using new ethical suppliers. Whilst several external factors have been at play, margins have deteriorated since that time and issues have lingered.

    The Boohoo scandal highlights the importance of labour practice management in the supply chain, particularly for the fashion industry. In a broader sense, the scandal reflects how important it is for companies to ensure the social aspect of their business is high up on the priority list.

    • The risk around Shein

    Shein, a multi-billion dollar China-based fashion e-commerce platform, has recently become the largest online-only fashion company in the world (second and third largest are Zara and H&M)[2]. In 2022, it was reported that Shein was valued at approximately $100bn, up from $30bn one year prior.


    The company introduces approximately 700-1,000 new styles on its platform daily. Shein’s ultra-fast fashion business model worsens the issue of textile waste, in addition to the sustainability issues mentioned above. With some garments, the quality is so low that the items will land up in a landfill without even being worn once.


    ESG concerns, including lack of transparency has been one of the biggest investor concerns around Shein over the past two years and is a key risk to the business model. Nowhere does the company publish a list of companies in its supply chain, nor do they provide any statistics relating to their sourcing of recycled fabric or insight into the production process. Without knowledge of the suppliers, there is no way in which to back up Shein’s claims of providing employees with adequate pay and industry-leading working conditions. We do not even know where the Shein factories are. The dearth of information is a clear signal that sustainability is probably not being managed properly.


    Following recent investigations into the brand’s business practices, alleging minimal pay and 18-hour workdays, Shein has pledged $15m toward improving its supplier standards. It is highly likely that ESG scrutiny around Shein will continue to grow, particularly should the company decide to pursue an IPO as has been reported.

    Buyer beware and remember fundamentals always prevail

    While fast fashion has the positive aspect of allowing consumers to get their hands on the latest fashion trends at low price points, ESG clearly remains a difficult issue to tackle for fast fashion players. While regulators have a role to play in limiting the negative impact the industry has, it is also up to consumers to consider the facts when deciding to purchase from fast fashion retailers; as well as investors to truly address these issues holistically in terms of overall sustainability and societal impact.