What is ESG?
ESG stands for Environmental, Social, and Governance, and it refers to the three main areas of non-financial performance that investors and stakeholders use to evaluate a company’s sustainability and ethical impact. ESG factors include everything from carbon emissions and waste reduction to human rights and worker safety. ESG consulting for the fashion and apparel industry is crucial for brands.
ESG is becoming increasingly important to the fashion and apparel industry, as the industry has a significant environmental and social impact. The fashion industry is responsible for 10% of global carbon emissions and is known for its poor labor practices and waste production. As a result, investors and consumers are increasingly demanding that fashion and apparel companies prioritize sustainability and social responsibility.
In the United States, the Securities and Exchange Commission (SEC) is introducing new regulations that require public companies to disclose information related to ESG factors. These regulations will include requirements for companies to report on climate-related risks and opportunities, human capital management, and diversity and inclusion, among other areas.
There are also several standards and frameworks that fashion and apparel companies can use to guide their ESG efforts, including:
- The Global Reporting Initiative (GRI) Standards: These are widely recognized as the leading framework for sustainability reporting and provide a comprehensive set of sustainability indicators.
- The Sustainable Apparel Coalition’s Higg Index: This is a tool that enables fashion and apparel companies to measure their environmental and social impact across the entire value chain.
- The United Nations Sustainable Development Goals (SDGs): These are a set of 17 goals that provide a framework for businesses to align their ESG efforts with global sustainability goals.
- Science Based Targets (SBTi)
- Task Force on Climate Related Disclosures (TCFD)
- Sustainability Accounting Standards Board (SASB)
- United Nations Global Compact
- World Resources Institute
- World Wide Fund for Nature
- United Nations Principles for Responsible Investment
ESG is important to the fashion and apparel industry because it can help companies mitigate risks, improve brand reputation, and create positive social and environmental impact. By addressing ESG factors, fashion and apparel companies can reduce their environmental impact, improve working conditions, and contribute to a more sustainable and equitable future.
SASB and TCFD – here is a little more detail
SASB is a set of industry-specific standards that provide guidance on the most relevant ESG topics to report on for a given industry. For the fashion and apparel industry, the SASB standards cover topics such as labor practices, human rights, greenhouse gas emissions, and waste management. By using SASB standards, companies can ensure they are reporting on the ESG topics that are most material to their industry and stakeholders.
TCFD, on the other hand, is a framework for disclosing climate-related financial risks and opportunities. The TCFD framework helps companies identify and report on the physical, transitional, and liability risks that climate change poses to their business. In the fashion and apparel industry, these risks could include supply chain disruptions due to extreme weather events or reputational damage from using unsustainable materials.
Both SASB and TCFD are important because they provide a standardized approach to ESG reporting, making it easier for investors, stakeholders, and customers to compare companies’ ESG performance. By reporting on ESG, companies can also demonstrate their commitment to sustainability and social responsibility, which can improve their brand reputation and help attract and retain customers and employees.
What companies should consider
In terms of what to report on for ESG, there are several key areas that companies should consider, including:
- Environmental impact: This includes greenhouse gas emissions, water usage, waste management, and the use of sustainable materials.
- Social impact: This includes labor practices, human rights, health and safety, diversity and inclusion, and community engagement.
- Governance: This includes issues related to board composition, executive compensation, and ethical business practices.
Reporting on ESG adds value to the company by improving transparency and accountability. ESG reporting helps companies identify areas for improvement and set sustainability targets, which can drive innovation and cost savings. Additionally, investors and stakeholders are increasingly using ESG performance as a key factor in their investment and purchasing decisions, so companies that perform well on ESG may have a competitive advantage in the market. Overall ESG consulting for the fashion and apparel industry is crucial for brands that want to stay competative in this day and age.
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Our team of experts has extensive experience in sustainable fashion, and we offer a range of services to help businesses reduce their environmental impact, improve their supply chain transparency, and create positive social impact.
If you’re a fashion or apparel business looking to make a positive difference in the world, please reach out to us! We’re excited to work with you and help you achieve your sustainability goals.
Together, let’s make fashion more sustainable!
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