Across industry and academia, sustainability is the word that reigns — but there are three letters that are edging out amongst the pack: E-S-G.
Most recently, Environmental, Social and Corporate Governance has been dubbed the “new management approach,” in a report from global consulting firm Accenture and the Responsible Business Coalition at Fordham University’s Gabelli School of Business, published exclusively with WWD.
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Corporate Social Responsibility box-checking exercises and the “age-old” practices of the industry are, for the most part, being cast aside, as the report authors plead for the concrete integration of ESG practices into “every discipline of our businesses,” according to Accenture senior managing director and global head of retail Jill Standish, one of the report’s authors.
“It’s not what you say you’re going to do — it’s what you’re doing,” she added. In light of the pandemic, Standish applauded a “heightened” social and environmental consciousness, prevalent even amid the ultra-fast decision-making companies faced as their workforce and supply chains underwent the industry’s greatest stress test.
The coronavirus, despite its manifold challenges, has helped to push the industry forward in its sustainability efforts and, as Frank Zambrelli, sustainability adviser and executive director of the Responsible Business Coalition at Fordham, explained, it has helped some companies finally realize the business benefits of going green.
“For all of its tragedy, the silver lining [of the pandemic] was it demonstrated the proof-case by sustainability guidance,” he said, noting that companies that admitted to being less impacted by the pandemic boasted of more resilient supply chains, including things like greater end-to-end visibility of partners, aided by advanced technology and digital data management.
ESG, it seems, has had its first true proving ground with the pandemic.
“Sustainability is being reset and reframed,” Cara Smyth, Accenture managing director for sustainability, said. “ESG now seems more important than ever,” as market forces are, for once, aligned.
The financial community has helped streamline attention for ESG disclosures because their money is on the line, and mandatory disclosures around social and environmental issues are not yet the norm across major stock markets. Investors are increasingly pressing fashion brands for disclosures, as it represents a new piece to the “all stakeholder” vision, that brings everyone across the supply chain into the fold.
“Consumers and investors are both pressing,” Smyth said. “I think what we will see is the voluntary disclosure is now stepped up.”
Whether ESG disclosure becomes mandated or not, experts enthuse ESG data must be captured and reported — now not later.
Companies are already making valid steps to cut down on emissions, procure more responsible materials, explore circular business models and reduce waste, for example, but need to ensure leadership across every facet of operations adopts a holistic ESG mind-set.
“The worst thing we can do is say let’s not do anything because it’s too hard to manage and measure,” Standish added.
Essentially what it comes down to, as Smyth said, is: “Are [companies] capturing the good news?”
Aligning around ESG, as with any other industry-wide effort, will take teamwork. The industry is already seeing a new dialogue happening, one which brings academia in wholeheartedly to help solve challenges.
“Our mission is really about educating compassionate, global business leaders who want to make positive change,” said Rapaccioli on how Fordham, and specifically the Gabelli School, view business as a “compassionate and regenerative force for prosperity.” This approach has made it a unique partner to the industry.
With hybrid coursework kicking off late August, Rapaccioli shared how students have been jumping at enrollment in new courses in sustainable reporting and sustainable fashion, what Zambrelli emphasized is characteristic of the new time and importance of ESG.
Calling the present situation a “once in a lifetime opportunity to rebuild,” Smyth said new partnerships and ecosystems will be built that will “lead to a lot of interesting bedfellows.”
Leaders in the industry looking to sustain themselves for success into fashion’s future understand that rebuilding with ESG principles at the industry’s core, may be the only way forward.
“The principles of environmental, social and corporate governance are more relevant now than ever. As we emerge from the COVID-19 crisis, we must ensure that our industry does not slip back to a status quo that fails to adequately protect our people and the planet,” John D. Idol, chairman and chief executive officer of Capri Holdings Ltd., said in the report. “The fashion and retail sectors must collectively accelerate climate action and create more sustainable supply chains as a part of our global recovery.”