Recent graduate Hugh Williams summarises the issues explored in his MSc dissertation. He asks whether the increased focus on supply chain resilience, post-pandemic, will distract fashion brands from their sustainability goals and finds some worrying results.
Prior to the outbreak of COVID-19, increasing public engagement with movements like ‘slow fashion’ and ‘eco-fashion’ saw fashion supply chains start to mitigate their impact on global greenhouse gas emissions and boost supply chain greenness. However, the pandemic changed things – fashion houses had to balance environmental priorities with staff absences, supply chain issues, and the increased consumer demand for fast delivery (despite many national borders shutting).
To overcome this burden, and ensure they are prepared to handle similar challenges in the future, fashion brands are now prioritising resilience in their supply chains. This means that supply chains which were already committed to developing greener strategies are suddenly also trying to embed ways to boost their resilience into these plans. Nations are already struggling to meet climate targets established by the Paris Agreement and COP26. If an industry with such high emissions as fashion shifts its attention from creating green supply chains (GSCs) to ensuring supply chain resilience, we may hear the death knell of any hope of achieving those targets.
The impact of switching focus
Despite this deprioritisation of supply chain greenness, academics remain conflicted as to whether a surge in resilience will positively or negatively impact GSCs. One on hand, resilience strategies (particularly those which acknowledge climate change a major threat to business operations, as well as the larger, more existential threat) could in fact help GSCs thrive. However, the change in focus could equally destroy plans for GSCs, and with them, hope of achieving international climate targets.
Therefore, I wanted to understand how the performance of GSCs in the fashion industry had been impacted during the pandemic, when supply chain managers had strived to develop resilience-focused strategies like nearshoring, dual sourcing, and flexible transport and logistics arrangements. For the purpose of this project, I focused my research on publicly-traded European fashion retailers.
To measure GSC performance, nine companies were assessed across four categories of green supply chain management, to compare pre-pandemic performance in each category with mid-pandemic performance. The categories studied were: green procurement, green manufacturing, green distribution, and reverse logistics – each of which had a set of quantitative and qualitative KPIs that could be measured through analysis of corporate reports.
The good get worse, the bad get better
Ultimately, it became apparent that under certain conditions the increased focus on resilience that came with the pandemic improved supply chain greenness, while under other conditions it worsened it. For instance, those with relatively high levels of supply chain greenness before the pandemic saw their GSC performance deteriorate during the pandemic. These businesses seemed to reach a saturation point for environmental sustainability in their supply chains, where green rhetoric was embedded in the organisation, but was not supported by actions. On the other hand, those with weaker pre-pandemic GSCs improved their supply chain greenness during the pandemic by targeting qualitative, so-called ‘low hanging fruit’ GSC KPIs, in which the stronger GSC performers in the industry had already excelled.
The findings also showed improvements in GSC KPIs tended to be seen in qualitative KPIs, while progress in quantitative KPIs generally floundered. This again signals that the companies studied here focused more on green rhetoric – in the form of the softer, qualitative KPIs – than green actions, which are represented by quantitative KPIs.
A false sense of progress
Research from management consultants Capgemini suggests that the supply chain resilience brought on by the pandemic is here to stay. In fact, the research discovered that 66% of businesses stated they’ll have to adjust their supply chain strategies to become more resilient and adjust to the ‘new normal’. Capgemini’s study suggests that these more resilient supply chain strategies will focus on agility, localisation, diversification, and contingency planning. However, the fact that this interest in supply chain resilience is sticking around has some worrying implications for the fashion industry, and society as a whole.
The apparent link between resilience strategies and the worsening performance of companies with strong pre-pandemic GSCs suggests that attention is indeed being taken away from environmental issues.
Similarly, the ‘improved performance’ of organisations with weaker pre-pandemic GSCs looks to be a consequence of prioritising ‘low hanging fruit’ rather than making impactful changes, and may in fact mean that they deprioritise their performance in quantitative GSC KPIs, which the research showed do more to drive supply chain greenness.
What’s more, the fact that some businesses only focus on these inferior KPIs could mean that there is false confidence placed in the GSCs of the European fashion industry. This is since strong performance across ‘low hanging fruit’ KPIs will mean many in the industry will perceive that the sustainability of these supply chains is improving, which would be a false perception. That misplaced confidence in the fashion industry’s GSCs creates a smokescreen. This means the industry is shielded from the poor state their GSCs are in, causing fashion retailers to become complacent about the work that needs doing.
Compulsory measurement could provide future direction
Given the levels of corporate greenwashing businesses have engaged in recently, it is disappointing rather than surprising to find that green rhetoric does not result in green strategies for many businesses. Studying the corporate reports necessary to undertake this research was an eye-opening experience. I witnessed the fashion brands’ lack of understanding of the implications and impacts of their KPIs, as well as their negligence towards their supply chain’s environmental impact. The lack of improvement in quantitative KPIs show - as many who have accused businesses of greenwashing have already noted - that little more than lip service is being paid to environmental sustainability.
However, the research also gives cause for optimism by indicating common themes among the companies with the strongest GSCs. In tandem with an intensified focus on resilience, businesses who improved their GSCs during the pandemic tended to place an emphasis on boosting their supplier environmental evaluation and on increasing the number of GSC KPIs they measured. This suggests that if the European fashion industry is to truly become greener, focusing on those areas can play a key part in achieving that goal.
But what could this look like in practice? Minimum reporting standards which necessitate environmental screening of suppliers and the measurement of more quantitative GSC KPIs will be complex to introduce. However, this research shows that if these are embedded successfully, they could help turn the tide on the development of green supply chains in the European fashion industry. In that way, studies like this have the power to illuminate the path ahead for businesses in a variety of industries looking to build their green strategies, if they would only be willing to match their actions to their words.