Where is the fast fashion backlash?

Retailers like Shein, H&M, and Zara have been repeatedly dinged by consumers, activists, the press and public officials for their mounting climate footprints – but people don’t always shop their values

Employees of Still Nua's fashion work at a textiles factory in an industrial park connected to a free-trade zone in the Moroccan city of Tangiers on March 13, 2018

In its 2021 annual report, Swedish retailer H&M identified one trend as a “high” risk to its business for the first time, higher-risk even than increased energy costs or availability of raw materials.

Should consumers increasingly prefer “products and services with low climate impacts from trusted companies that are seen as leaders in sustainability,” H&M wrote, the company might see a negative impact. If H&M were not seen as a climate leader, it could face “reputational risks related to brand perception.”

H&M brought the subject up again a few pages later, this time in sunnier terms: “There is an opportunity,” the report noted, “for H&M Group to attract more customers by providing a more sustainable and transparent offering.”

As recently as 2018, H&M didn’t list sustainably-minded shopping as a risk at all. But the past few years have seen tough feedback for fashion companies that push the limits on how quickly they can churn out clothing and accessories, alongside demands for more transparency.

Retailers like Shein, H&M, Zara and Boohoo have been repeatedly dinged by consumers, activists, the press and public officials for their mounting climate, water, and plastic pollution footprints, for labour conditions and for greenwashing. Meanwhile, report after report shows consumers signalling more focus on the environment when it comes to purchasing decisions. In one 2021 survey, for example, two thirds of US consumers said they would pay more for sustainable products.

But people don’t always shop their values. For all the talk about shifting shopping patterns, there is no clear quantitative evidence of any demographic ditching fast fashion en masse — not even environmentally conscious Gen Z.

That leaves retailers whose business model relies on fast fashion to size up the threat against it in their annual reports, sustainability reports and climate disclosures, where little consensus exists. It’s clear that shopping habits could change, but no one is sure how, when or if a more climate-conscious consumer will be good or bad for business.

What backlash?

Born in the 1990s, “fast fashion” broadly refers to the business model of rapidly converting designs and trends into cheap and readily available clothing. While it’s been celebrated for making high fashion accessible to the masses, the model is also blamed for promoting overconsumption: One estimate suggests clothing production doubled between 2000 and 2015, a period during which the Ellen MacArthur Foundation estimates a 36 per cent decline in the number of times an item was worn before being thrown out. Every year, mountains of barely worn clothing are exported to countries like Ghana, where much of it ends up in landfills or on beaches.

Piles of discarded textile waste on the shores of Chorkor beach in Accra, Ghana, in 2022

The fast fashion industry does feel pressure to resolve some of these issues, says Berkley Rothmeier, a director at the consulting company BSR. “Is it hitting literally the bottom lines in terms of quarterly profits? I think we can look at financial information and know it isn’t in a significant way,” Rothmeier says.

“However, there’s more to it.” It’s now the norm, she points out, for big-name fashion companies, including H&M and Zara, to track their climate footprints, set science-based targets for cutting emissions, ramp up reliance on clean energy, cut use of plastic packaging and water, find ways to more responsibly source raw materials, use more recycled textiles and launch resale programmes.

There’s an elephant in the room, though: the business model itself, which anticipates consumers checking for and purchasing new clothing far more often than necessity would dictate. While there is mounting evidence that companies and shoppers are paying attention to how clothing is made and how to dispose of it, the boom in resale is the only indication of anyone interrogating the quantity of clothing currently produced.

Independent analyst Veronica Bates Kassatly says any progress on this front is hard to stand up against fast fashion’s simultaneous growth. “There’s a lot of talk about these younger people wanting to shop more sustainably but when you look at the shopping patterns, there’s absolutely no evidence of this,” she says, pointing to one culprit in particular: “the rise and rise of Shein.”

Merchandise displayed at the Shein Tokyo showroom in Tokyo, Japan, on Friday, Nov. 11, 2022. Online fast-fashion behemoth Shein opened its first ever permanent physical store in 2022 in one of Tokyos most-popular areas as it seeks to live up to a lofty valuation thats been shaken by slowing sales growth and concerns about its environmental and social impacts

A Chinese e-commerce giant that took fast fashion to a new level, Shein’s ascent is one of the biggest arguments against the idea that the model is suffering. The company is part of a new cohort of ultra-fast fashion retailers that largely exist online and grow their customer base by relying on social media influencers and trends like #thehaul — social videos that include itemized breakdowns of big orders.

Shein says its approach to manufacturing allows for smaller inventories, which means less excess production. But there is no denying the company is putting massive amounts of cheap synthetic clothing out into the world. Many Shein shoppers are teens and young adults, the same group most likely to express concern about climate change.

Kassatly says Shein’s popularity with Gen Z may have to do with their believing the company is in fact acting sustainably — “like, Shein has a sustainability report,” she says. In that report, released for the first time last year, the company hadn’t yet finished calculating its climate footprint.

A few months later, Shein disclosed emissions totaling 6.3 million tonnes of carbon dioxide equivalent (CO2e) for 2021, inclusive of emissions stemming from use of its products; that’s less than H&M’s disclosed emissions of 7.8 million tonnes of CO2e in 2021.

Sheng Lu, an associate professor of fashion and apparel studies at the University of Delaware, says Shein is an example of “the popularity of cheap products.” But he also sees signs that sustainable shopping is gaining traction, including the boom in resale (which Shein has also jumped on). “We need patience,” Lu says. “We need to create an environment that can really encourage companies, not just punish them, to do more to make their products sustainable.”

The risk of inaction

Perhaps the best way to understand how fast fashion companies think about a potential backlash is to look at how they talk about it — or don’t — with investors and the public.

After endorsing the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures (TCFD) in August 2018, H&M conducted a detailed financial risk analysis the following year, where it first identified shifting consumer preferences as both a business risk and an opportunity. In detailed climate disclosures shared last year with the nonprofit CDP, H&M went a step further: estimating how those preferences could impact its sales over the next three to 10 years using a range of hypothetical scenarios.

“If we assume a hypothetical 10 per cent drop in our European markets and a 5 per cent drop in our remaining markets, based on the higher awareness of climate change in Europe, that would mean lost sales of approximately SEK 16.6 billion,” the company detailed in a high-end estimate. That translates to roughly $1.5 billion (€1.4 billion) in lost sales. On the low end, H&M anticipated lost sales of SEK 6.6 billion ($630 million or €585 million).

H&M is the only major fast fashion retailer to have assigned numbers to the risk of more climate-conscious consumers

H&M also estimated the possible financial upside of catering to evolving climate-driven tastes: increased sales of SEK 2.6 to 8 billion, or $248 million (€230 million) to $764 million (€710 million). The company posted revenue of $22.4 billion last year (€21 billion).

H&M spokesman Iñigo Sáenz Maestre emphasizes that those numbers are hypotheticals “to explain different scenarios” and “not [an] actual prognosis we are working with.” He added that “customers are more aware of the impact of the fashion industry and pay more attention to companies' efforts to tackle their impact.”

In its own 2021 annual report, Zara parent company Inditex calls the potential for consumers to strongly prefer more sustainable products an “acute” risk that could reduce earnings in the short and medium term.

That’s assuming the world is actively rallying to mitigate climate pollution in line with the Paris Agreement; the company frames the risk as less urgent if the world is slower to respond. Inditex also identifies a “minor” reputational risk stemming from customers engaging in climate activism and souring on companies with carbon-intensive businesses. While Inditex doesn’t detail what such a hit could mean for sales, in its latest filing with CDP the company did find that shifting preferences could help sales — identifying it as a €2.7 billion opportunity. Inditex declined to comment.

H&M appears to be the only major fast fashion retailer to have assigned numbers to the risk of more climate-conscious consumers. “It’s certainly not super common right now, at least externally, to see those,” Rothmeier says. But that could change as more companies endorse the TCFD, and with more regulatory pressure, particularly in Europe. (Michael R. Bloomberg, the founder and majority shareholder of Bloomberg LP, parent company of Bloomberg News, is chair of the TCFD.)

Last year, the UK enshrined climate financial disclosures into law for large companies, based in part on the TCFD recommendations. The new requirements prompted Asos and Boohoo to conduct their first detailed climate analyses.

Both companies are under investigation by the UK’s Competition and Markets Authority for possible greenwashing. In its latest annual report, Asos identified “changing consumer preferences” as a moderate risk and opportunity to the company in both the short term (2025) and medium term (2030).

Meanwhile, Boohoo wrote in its latest annual report that “consumers may reduce consumption of fast fashion due to environmental concerns” and noted it could take a reputational hit by not doing enough on environmental issues. Neither company responded to requests for comment.

In its 2022 CDP disclosures, Associated British Foods — parent company of Irish fast fashion retailer Primark — said that its reputation could take a hit from investors and customers if the company doesn’t do enough or is perceived to not be doing enough on climate.

In response to questions from Bloomberg Green, ABF said the company believes its “communication on climate change to be a ‘low risk’ because of our approach” of regularly engaging with investors and others about its climate response.

Other private fast fashion retailers, including Fashion Nova and Forever 21, have yet to make any CDP disclosures, mention sustainability in their annual reports or talk publicly about what more climate-conscious consumers could mean for business. Neither responded to questions from Bloomberg Green.

Shein, which is privately held but has been eyeing a public offering, also declined comment. In its sustainability report, the company noted that it is always looking “for opportunities to support the causes [our customers] care about, from product design and material choice to product end-of-life, circularity and charitable giving.” On its website, a spring sale features a belted romper for €5.55 and a kids’ denim jacket for €11.15.