Fashion For Change expert interview with Veeli Oeselg
Veeli Oeselg is Fashion For Change expert and a partner in CIVITTA. She has a long background in sustainability consulting, funding for flagship investment projects, public policy analysis and in fashion stylistics. We asked Veeli about the current trends in the fashion industry and which signals are coming from the decision makers in the EU. Read this expert interview to find out more. You might also find some tips on how to attract more investments!
Please describe the current trends in the fashion industry in regards with sustainability and innovation?
When we look at the fashion industry in comparison to other industries, then I must admit that fashion is dragging behind in implementing sustainable practices. Today more than 2000 global pioneers have joined the Science Based Targets initiative with what they have committed themselves to reduce their emissions over the whole value chain in line with the Paris Agreement. However, with 6% only a fraction among these are companies from the fashion and apparel industry with such examples as Prada, LVMH, New Balance, Zadig & Voltaire, s.Oliver, Kappahl, G-Star, Ted Baker and VF Corporation.
It is understandable, as the majority of the fashion industry has worked for decades on the principle of enforcing over consumption with fast-fashion, seasonal collection and short-lived product quality. In order to turn the industry around, having a lower climate impact or creating less waste would require a drastic change in the mindset, but also innovation and heavy investments, because to all problems in the industry solutions do not exist yet.
Luckily, there are pioneers in the industry who have dedicated themselves to reduction of climate impacts and implementation of circular economy principles, but there are still too few of them. Therefore, I strongly believe that Fashion For Change can bring the topic to a wider audience and inspire as well the very much needed innovation.
How do these trends affect companies’ access to funding?
The trend is similar for different types of financial instruments – grants, loans and equity investments. Starting with grants, the EU and many national governments in the EU are launching funding programmes dedicated to green innovation, product development or investment to foster sustainable development. Also financial institutions are developing their policies for financing different sectors. They aim to set frameworks for managing climate risks of their portfolios and nudging their clients towards environmentally conscious investments with green lending products. In the Venture Capital and Private Equity investment world, funds have started to pay attention to the ESG performances of their portfolio companies and even separate sustainable investment focused funds have been launched aimed to reduce CO2 emissions with their emissions.
In your experience, how related are companies’ environmental performance and being successful in finding funding sources?
I would not say that the environmental performance per se is the key to receiving funding, but investors are now paying broader attention to how companies have embedded ESG strategies and what steps are being taken to reduce their climate impact. A study carried out already more than 5 years ago by EY showed that 60% of investors consider non-financial topics more important while making the investment decision, including ESG topics. This tendency has grown in the recent years even more due to stronger political focus on sustainable finance. For investment funds completely dedicated to green or sustainable investments, the sustainability and environmental performance of targets is key for making the investment decision.
However, the change towards more sustainable investments is not only in the field of equity investments, but also visible already in banking. In the Baltics, we have seen in the last year the start of a shift where banks are bringing sustainability topics to the attention of their corporate lending clients. Often lower interest rates for loans are offered to companies who have started to look into their sustainability practices by measuring their carbon footprint or setting a roadmap with initiatives for reduction of climate and environmental impact.
I believe that the attention of financing institutions will shift even more towards sustainability, as they also need to reduce sustainability related risks in their portfolio.
Is this also the case for the fashion industry?
Yes, certainly. Fashion industry is having an immense environmental footprint to our planet not just because of the emissions from production of fabric or the clothes itself, but also through the waste generation problem coming from fast-fashion.
There are still limited feasible and large-scale solutions for reuse, re-manufacturing or recycling of textile waste. Thus, naturally the investors and financing institutions recognise the environmental risk coming from investments to this industry. Resulting in their preference to invest in fashion companies that measure and manage their sustainability impacts. Likewise, innovative business models that try to find scalable and commercially viable solutions to the climate impacts and waste problem of the fashion industry are sought-after by investors.
What are the signals from the policy and decision makers?
The European Commission is strongly driving Europe to be the pioneer in addressing climate change with the EU Green Deal and Fit for 55 package. In order to make actual change happen, they have started by regulating the financial sector with the Sustainable Financial Disclosure Regulation, large companies with the Corporate Sustainability Reporting Directive and sectors wider with the EU Taxonomy.
In my view, the EU has taken a very smart approach to ensure the shift to sustainable practices in all industries – they are tackling large companies and financial institutions who work through their value chain with many stakeholders and partners on the market, through this bringing the topics to the attention of SMEs and consumers as well.
However, we see some threatening signs that the uptake of these new regulations might be too slow in some countries. Therefore, companies themselves, despite the industry or size, can be the front-runners and inspire others by their positive steps towards more sustainable practices. Acting now would enable them to use this also as their competitive advantage.
You also have a background in Fashion Stylistics. Please give us your TOP5 sustainable fashion tips.
As I really care about reducing the environmental and climate impact of fashion, then the focus of my tips is fully on reducing carbon footprint:
- Less is more – consume responsibly and if you buy something new, then rather better quality as the lifetime is longer. As an example, the carbon footprint of leather shoes is 50x higher than for Crocs. So, if you buy leather shoes, then of better quality that lasts for many years.
- Classics forever – trend clothing will be worn for a season, maximum for a year, but if you shop according to your personal style, you will wear it for many years. Through this, dividing the carbon footprint of your clothes over a longer period of time.
- Care is essential – 50% of a t-shirt’s carbon footprint comes from the usage stage, not from production. So, wash your clothes cold, don’t tumble dry and less ironing. And when something breaks, repair it!
- Reuse rules – you can find real treasure in second hand shops. And when you are tired of your old clothes, sell them or donate to charity. Thus, someone else can enjoy them as much as you did once.
- Information is king – there should not be any excuses anymore that a single person cannot do anything to live more sustainably. Look into the sustainability principles and practices of the brands you wear and go for the ones who care for our planet.