Permutable AI releases 2023 fashion industry ESG report: Evaluating fashion sustainability and responsible practices

In a world where style meets sustainability, the fashion industry is undergoing a profound transformation. Fashion brands are increasingly recognizing their pivotal role in shaping a sustainable and responsible future, driven by the growing pressure from consumers. In response to this shift, Permutable AI is proud to present its 2023 Fashion Sector ESG Report, shedding light on the essential role of Environmental, Social, and Governance performance in evaluating the sustainability and responsible business practices of apparel brands.

At the forefront of this transformative movement are industry leaders, including LVMH, Puma, Patagonia, Gucci, and Hanesbrands. These visionary companies have not only embraced sustainable practices but have set a benchmark for others to follow. Their journey towards fashion sustainability commitment extends from working towards ethical supply chains, using sustainable materials to fair labour practices. These top-tier companies have successfully elevated their brands while driving positive change.

On the other end of the spectrum, brands like Nike, Hermes, Boohoo Group, Balenciaga, and Adidas face challenges in aligning with ESG standards, underscoring the work that remains in their sustainability journey. While these brands have made strides in various areas, they are still navigating the path towards more responsible and ethical practices, with a growing emphasis on sustainable fashion. However much more work needs to be done in this area.

In this comprehensive report, Permutable AI has meticulously considered a wide array of ESG indicators to provide a multifaceted view of a company’s ethical and sustainable practices, firmly anchoring the concept of fashion sustainability. These indicators encompass various aspects, reflecting a brand’s commitment to corporate responsibility and its impact on the world. The evaluation covers key dimensions such as corporate behaviour, climate action, human rights, business ethics, governance, and discrimination, all contributing to the overall notion of sustainability in fashion.

Among the extensive analysis, the report highlights the top and bottom ten fashion brands and how their efforts in the ESG sphere and their contributions to fashion sustainability compare. It is illuminating to compare how these brands are perceived both in terms of understanding the importance of responsible business practices but also for how they have been implementing measures to achieve their sustainability goals, and their journey towards enhancing sustainability in fashion. 

Wilson Chan, CEO, Permutable AI comments, “Our 2023 Fashion Sector ESG Report serves as a beacon of transparency, shedding light on the essential role of Environmental, Social, and Governance performance in evaluating the sustainability and responsible business practices of fashion brands. Through meticulous analysis, we have delved into the depths of ESG indicators, offering a profound understanding of each brand’s journey towards enhancing sustainability in the sector. It’s our dedication to data-driven insights that allows us to foster a new era of transparency and accountability in the fashion industry.” 

Methodology:

Since late 2019, Permutable AI has been using its in-house software to extract news worldwide concerning companies in its database, particularly those related to sustainability in fashion. This news is selected based on the ESG and UN SDG taxonomy to assess the involvement of specific companies in these global issues, with sustainability being a key focus. Permutable AI utilizes its proprietary AI tool, employing natural language processing to determine if an article pertains to a specific company and its actions within an ESG sector, including fashion sustainability. Additionally, a layer of AI sentiment analysis is applied to assess the portrayal of a company in a positive, neutral, or negative light concerning corporate responsibilities, including sustainability.

Key Takeaways:

  • Top ESG fashion brands prioritize environmental and social issues, with a focus on emissions, diversity, equity, and inclusion (DE&I), labour standards, and pollution and waste, all linked to fashion sustainability.
  • DE&I, especially gender equality, has been a prominent social topic for top ESG fashion brands, aligning with the broader narrative of sustainability in fashion.
  • LVMH, despite being the top fashion brand by overall sentiment, faced scrutiny in 2023 due to animal cruelty and data collection allegations, posing challenges to their fashion sustainability initiatives.
  • Bottom ESG apparel brands face criticism primarily for governance issues, ranging from prosecutions to hostility and intellectual property, impacting their approach to sustainability in fashion.
  • Balenciaga stands out among the bottom apparel brands due to its ad campaign, raising concerns regarding the company‚Äôs stance on child pornography, undermining sustainability efforts.
  • Nike leads negative news on labour standards due to wage theft and forced labour allegations in its Asian supply chain, affecting their commitment to sustainability. Adidas faced similar allegations, along with scrutiny related to its association with Yeezy and his inappropriate behaviour towards staff, affecting their contributions to fashion sustainability.

This data underscores the critical role of ESG performance in evaluating the sustainability and responsible business practices of apparel brands, with a particular emphasis on sustainability. While top ESG fashion brands have shown strong commitments to environmental and social issues, addressing animal cruelty at the manufacturing level stands out as a key area for improvement in fashion sustainability. For bottom ESG fashion brands, enhancing brand image through improved governance practices should be a top priority to enhance their ESG performance and overall sustainability, especially in terms of sustainability.

The fashion industry’s journey towards sustainability and responsible business practices continues, and Permutable AI remains dedicated to providing insights and guidance in this important endeavour, with a firm focus on  sustainability.

Download the full report here

For media, data or interview inquiries, please contact: talya@permutable.ai