Executive Summary
Environmental Impacts of Overproduction In Fashion Industry and Multi-Stakeholder Approach to Policy Design
Keywords: Fashion, Overproduction, Overconsumption, Sustainability, Regulations
ProblemAndScope
The production and consumption of clothing and textiles has exponentially increased since the Industrial Revolution (Nautiyal et al 2023) Between 2000 and 2015, clothing sales doubled from 50 billion units to 100 billion units annually, while the number of wears of a garment halved (Payne and Mellick, 2022) The increasing overproduction and overconsumption have become one of the growing global environmental challenges posed by the fashion industry owing to its fast-fashion and linear take-make-waste businessmodel (EllenMcArthurFoundation)[1]
Overproduction, defined as the act or an instance of producing too much of something (Bäckström et al 2023), currently ranges between 10-40% annually, fueling a significant waste problem that continues to be an obstacle for bottom-line growth and a burden to the planet (OC&C, 2023) Of the 150 billion fashion items produced each year in the UK alone, 45 billion are never sold or worn and mostly end up either in landfill or incinerated, atagrowing costtoboththeproducersandtheplanet(OC&C[2] andWGSN[3])
Efforts to address the detrimental social and environmental impacts of the fashion industry, including overproduction waste, are currently being spearheaded by Multi Stakeholder Initiatives (MSIs) However, these attempts are being impeded by relentless growth in clothing production and consumption (Payne and Mellick, 2022) Despite industry commitments to sustainability, the sheer magnitude of production counteracts thepositiveimpactthateventhehighest-quality materialscouldhave(Dobos,2023)
Thus, to tackle the challenges of overproduction and overconsumption, the concept of endless growth itself needs to be explicitly addressed (Hirji, 2022) Brands will reconsider their production practices only when it makes a business case for them to increase profitability alongside reducing production volume A creative exploration of policies is neededtofindwaysof achieving this
This research examines roles of brands, consumers, and regulators as three key actors whocancollectively play apartinreducing theoverproductionwaste
[1]EMF,EllenMcArthurFoundation,workstoacceleratethetransitionfromlineartoacirculareconomyhttps://wwwellenmacarthurfoundationorg/ [2]OC&CStrategyConsultantshttps://wwwoccstrategycom/en/ [3] WGSN Worth Global Style Network is the global authority on change using expert trend forecasting combined with data science provide right trends https://wwwwgsncom/mywgsn
LiteratureEvaluationand Methods
Spatial and Temporal Extent
A significant volume of scientific literature addressing challenges of overproduction spans over last 13 years, starting from early 2010s when businesses in developed countries (global north) began prioritizing sustainability. The studies focus on the dynamics of fashion consumption and production between the global north and south The global north is seen as main driver of consumption, while the global south serves as the production hub to meet the demands. During recent decade, the discussion also surfaces the global environmental injustices resulting from this systemic linear operating nature of the fashion industry (Bick et al., 2018).
Literature Review Methodology
Acknowledging the complex nature of the fashion industry and the role of multiple actors, a comprehensive approach is adopted to study the issue of overproduction waste
At macro level, the studies examine Global Value Chains (GVCs) within the fashion industry and investigate the negative social and environmental impacts created at each stage of the chain. The literature highlights voluntary initiatives, termed as Multi Stakeholder Initiatives (MSIs), undertaken by the fashion industry for over two decades amidst lack of coordinated environmental regulations It assesses their effectiveness in mitigating the industry's adverse environmental effects by conducting a comparative analysis to track the growth of MSIs over time and weigh their intended impact.
Global Fashion Value Chains
Fashion Businesses
Macro Meso Micro
Consumer Behavior
At the meso level, businesses and their strategic practices are studied
Ethnographic research with business professionals examines the entire retail process, including planning, buying, production, sales, marketing, and disposal, in order to understand the factors contributing to overproduction. The studies highlighting business case of sustainability explore how effectively managing production quantities and excess unsold inventory at the brand level can benefit both businesses and the planet.
At the micro level, consumer behavior is examined as one of the driving factors influencing overproduction, establishing a correlation between consumer demands, overconsumption, and the resulting overproduction The role of consumers in highincome countries (global north) specifically has been studied to reduce overproduction and supporting practices that minimize their negative impact on humans and the environment (Bick et al., 2018).
MajorFindings
OVERPRODUCTION IS INTENTIONALLY DESIGNED.
Fashion waste from overproduction happens when a corporation intentionally produces more products than it sells (Bäckström et al., 2023). This is influenced by factors like the concept of infinite growth via sales only, poor demand-and-supply prognosis, changing fashion trends, and large volume buying for better cost price anticipating higher sales without considering the actual demand (Bäckström et al , 2023)
IT IS HIGHLY, COMMERCIALLY INEFFECTIVE.
Overproduction not only has large environmental implications in terms of wasted energy and material resources; it is also commercially ineffective. The huge unsold inventory of clothing blocks the profitability of the businesses by impacting their financial liquidity (Bäckström et al., 2023). To counter the same, brands engage in heavy discounting strategies that further perpetuates overconsumption amongst their consumers (Bäckström et al., 2023). Leftover inventory from discounted sales is eventually sold to second-hand markets and anything that is left beyond that gets exported to low- and medium-income countries eventually ending in the landfills (Bick et al , 2018)
OVERPRODUCTION OUTWEIGHS OTHER SUSTAINABILITY EFFORTS.
While communications in the fashion industry have turned the conversation towards green economy and responsible production, the operation of the industry is still based on take-make-waste linear model (Indvik, 2020). Any progress towards a more socially and environmentally friendly operation is being outweighed by the rapid growth of the sector (Dobos, 2023).
MajorFindings
CURRENT SUSTAINABILITY EFFORTS ARE CURATIVE, NOT PREVENTIVE.
Current industry efforts have not addressed the issue of overproduction and overconsumption but rather taken an incremental approach to sustainability through signing up to MSIs that aim to improve social and environmental impacts within the GVCs gradually (Payne and Mellick, 2022). These efforts primarily address the consequences after they occur, overlooking the root cause of the problem – overproduction and an unwavering focus on excessive growth and consumption. This can be seen as global businesses and societies being still predominantly built upon a linear economy (Bäckström et al , 2023) and yet expecting to be sustainable
BRANDS HOLD SIGNIFICANT POWER.
Sustainability is not the top consideration for customers or policymakers. Amidst the debate over regulations versus consumer-driven change, brands emerge as pivotal actors with the power to address overproduction at its source (Dobos, 2023). Customers and regulators act as secondary actors who can persuade brands to change their business practice by exerting external pressures either through incentives or punishments Moreover, when brands can recognize the self-harming impacts of their own business practices, they would proactively implement measures to rectify them
COORDINATED EFFORTS
WILL BE MOST EFFECTIVE.
Individual actions, like regulatory production limits, can inadvertently harm other stakeholders For instance, limiting production may raise consumer prices, disproportionately impacting lower-income groups. Or brands drastically reducing production volumes may lead to job losses and social costs (Chambers et al , 2017) And hoping consumers will reduce consumption faces challenges due to a gap between intentions and actions (Dobos, 2023) Hence, a coordinated approach involving all stakeholders is essential to address overproduction waste. Incentive-based policies, rather than punitive measures, would prove more effective.
Policy Recommendations
STRENGTHENING BRAND PRACTICE
Brands must move beyond the unsustainable practice of excessive garment production to fulfill their sustainability commitments. Embracing a degrowth concept, they should prioritize creating long-term consumer value over the sheer volume of sales (Dobos, 2023). Strengthening the product-consumer relationship through improved quality and adopting pull tactics can replace the push strategy (Bäckström et al , 2023) Instead of investing resources in forcefully marketing subpar products, brands can redirect them to enhance research and development. Leveraging technology for better demand forecasting enables brands to optimize their production to meet consumer needs effectively.
TAX REBATE ON LOW PRODUCTION WASTE
While the businesses operate in a free-market economy, it is important that brands also take accountability for the volumes they produce. Introducing inventory regulation could prohibit the brands from engaging in ordering and disposing huge volumes of textiles, which would encourage companies to develop innovative ways to manage their inventory while maximizing the financial value from the business. A form of tax rebate can be provided as an incentive to the brands who are able to maintain their production waste to minimum via disclosing their ratio of purchases versus sold goods annually.
PRODUCTION TRANSPARENCY MATRIX
The demand for transparency from NGOs and consumers has forced brands to disclose information about their business practices including sourcing and supply chain Customers can further demand brands to disclose the details of their inventory such as how much percentage went unsold and how did the brand deal with their unsold inventory A form of production transparency matrix can be developed by brands to build trust and relationship with their consumers.
Conclusion
The fashion industry's exponential growth in clothing production and consumption presents pressing environmental challenges. Despite Multi Stakeholder Initiatives' attempts to address environmental impacts, relentless growth in production and consumption impedes progress The industry's commitment to sustainability faces a formidable challenge, necessitating explicit attention to the overproduction and endless growth for a truly sustainable fashion future
To effectively address this situation, there is a need for collective action from regulators, brands, and customers, that benefit each of their interest and act as a motivational driver of change. Brands benefit greatly by improved sell throughs and increased financial liquidity once they address their buying and production behavior Inventory in form of tax rebate will further incentivize brands to keep their sell-through rates high, thus avoiding the excess unsold inventory And disclosing this information readily to the consumers through a production transparency index will create accountability from the brands end to maintain this practice and reduce their overall waste generated via overproduction
AppendixI
KeyLiteratureReferred
Bäckström, K., Carys Egan-Wyer, Samsioe, E., 2023. The Future of Consumption. Springer Nature. Pg 205-224. Chapter 13, The Challenge of Overproduction and Overconsumption, examines the connection between overproduction and overconsumption in the fashion retail industry It focuses on discount sales as a common factor and discusses the causes and negative impacts of overproduction on brands. The chapter also suggests actions that brands can take to address this issue
Payne, A., Mellick, Z., 2022. Tackling Overproduction? The Limits of Multistakeholder Initiatives in Fashion. International Journal for Crime, Justice, and Social Democracy 11, 30–46. https://doi.org/10.5204/ijcjsd.2424 Articles offers limitations of MSIs and gives a radical approach to sustainability by challenging the concept of excessive growth
WGSN x OC&C Report: Doing more with less. https://lp.wgsn.com/WGSN-OCCReport.html Overproduction is a long-lasting and deep-rooted challenge for the apparel industry. Insights on how data can help brands tackle the issue head on - significantly improving margins and efficiency and reducing wastage Connecting commercial and sustainability agendas, and better align with future demand.
AppendixII Bibliography
Bäckström, K , Carys Egan-Wyer, Samsioe, E , 2023 The Future of Consumption
Springer Nature
Bick, R., Halsey, E., Ekenga, C.C., 2018. The Global Environmental Injustice of Fast Fashion. Environmental Health 17, 1–4. https://doi.org/10.1186/s12940-018-0433-7
Chambers, D., Collins, C.A., Krause, A., 2017. How do federal regulations affect consumer prices? An analysis of the regressive effects of regulation. Public Choice 180, 57–90 https://doi org/10 1007/s11127-017-0479-z
Dobos, E , 2023 From below or from above: How to force fashion MNCs to be more sustainable Society and Economy 45 https://doi org/10 1556/204 2023 00017
Hirji, zahra, 2022. Big Fashion’s Sustainability Push Has a Huge Hole. Bloomberg.com.
Indvik, Lauren, 2020. "Does Sustainable Fashion Exist? Fashion Marketing may be Ultra-Green, but the Reality is very Different. Financial Times.
Lauren, A , 2019 Why Regulations aren’t Solving the Fashion Industry’s Environmental Problem | by Ashley Lauren | Age of Awareness | Medium [WWW Document] perma cc URL https://perma cc/4L2L-6JMS
Manufacturing Platform for Apparel Industry | Fast & Sustainable - Fashinza [WWW Document], n.d. fashinza.com. URL https://fashinza.com/fashion-designs/designtrends/a-report-on-overproduction-in-the-apparel-industry/
Nautiyal, M., Hunting, A., Joseph, F., Cleveland, D., 2023. Examining Practices of Apparel Use and End of Life in New Zealand Sustainability 15, 5141 https://doi org/10 3390/su15065141
News-Desk, A R , 2023
Carbon impact reduction by fashion companies negated by consumer demand | Manufacturing News UK [WWW Document]. Apparel Resources. URL https://apparelresources.com/business news/manufacturing/carbon-impactreduction-fashion-companies-negated-consumer-demand/ (accessed 11.10.23).
Niinimäki, K , Peters, G , Dahlbo, H , Perry, P , Rissanen, T , Gwilt, A , 2020 The environmental price of fast fashion Nature Reviews Earth & Environment 1, 189–200 Payne, A , Mellick, Z , 2022 Tackling Overproduction? The Limits of Multistakeholder Initiatives in Fashion International Journal for Crime, Justice and Social Democracy 11, 30–46. https://doi.org/10.5204/ijcjsd.2424
Kavita Mishra | MS Strategic Design & Management | Fall’23 Parsons school of Design