The fashion industry faces many sustainability challenges, and it has been financially sucker-punched by COVID lockdowns in China and surging inflation. So investors with environmental, social and corporate governance issues in mind face a host of hurdles when it comes to trying on fashion stocks. But we found a handful of companies that stand to outperform the industry on both financial and ESG measures. Apparel makers have long come under fire for being environmentally unsound.
A 2020 report by McKinsey & Co. and the Global Fashion Agenda, a nonprofit group dedicated to improving sustainability in the apparel industry, found that the industry was responsible for about 4% of global greenhouse gas emissions in 2018. That amount is on par with the annual emissions of France, Germany and the U.K. combined. Moreover, much of the industry hews to the "fast fashion" business model, which designs and markets styles in rapid cycles to increase consumption and demand. As a result, any improvements made in fashion sustainability may be erased quickly by growing consumption.
Some apparel companies have committed to achieving net-zero emissions by 2050 using transparent, evidence-based measures as part of a United Nations initiative to coordinate the fashion industry's sustainability efforts. But Lindita Xhaferi-Salihu, who leads the UN project, thinks regulation is needed to bring the full industry on board.
Managing climate risk isn't the fashion industry's only challenge. Labor and human rights issues are also tricky. The industry has a deep and complex supply chain. Most garment companies rely heavily on supply-chain workers in Southeast Asia, where human trafficking, violence and safety lapses abound, despite some improvements after a 2013 Bangladesh factory collapse killed more than 1,100 garment workers.
CHANGE IS COMING
This story is from the September 2022 edition of Kiplinger's Personal Finance.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the September 2022 edition of Kiplinger's Personal Finance.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Sign In
MAKING A DIFFERENCE IN THE LIVES OF DISABLED VETERANS
He suffered grave injuries in the line of duty. Now he helps other veterans who have disabilities.
DO YOU NEED UMBRELLA INSURANCE?
A policy can protect you from financially devastating events.
Navigating Finances as a Blended Family
Money matters can get complicated when two families unite. Planning is key.
BREAKING UP WITH YOUR BROKER
Be aware of these challenges when you move your money to a new home.
CHOOSE A MEDICARE PLAN THAT'S RIGHT FOR YOU
Consider your health care needs over the long term as you weigh costs and coverage.
Keep Faith in These Stocks
IN 1997, I coined the phrase “faith-based investing.” It has nothing to do with religion or with picking stocks at random.
OUR ESG PICKS ARE THRIVING
Despite an ongoing backlash, our favorite stocks and funds focused on environmental, social and corporate governance issues had a good year overall.
MONEY MANNERS FOR THE MODERN AGE
The customs for splitting a restaurant check, purchasing a wedding gift, tipping and more have evolved. These guidelines can help.
ELECTION 2024: POLITICS AND YOUR PORTFOLIO
Who wins the White House matters—but only at the margins when it comes to your investments.
YOUR GUIDE TO OPEN ENROLLMENT
With health care costs on the rise, it’s critical to select a plan that fits your needs at the right price.