Transparency in the fashion industry: why it matters, and how to improve

Every year, the Fashion Transparency Index ranks the world’s largest fashion brands and retailers for their transparency. The organization behind the report, Fashion Revolution, began after the 2013 Rana Plaza disaster, as a way to hold the fashion industry accountable for its environmental and social impact. Fashion Revolution believes consumers deserve to know the impact of the apparel they buy, and their activism demands radical transparency in an industry that has previously operated behind closed doors.

But nine years on from the Rana Plaza incident, the world’s 250 major fashion brands’ average transparency score — (the percentage of how much information brands know and publicly share about their human rights and environmental impacts across their value chains) is just 23%.

“It begs the question,” the report’s Executive Summary reads: “what do they have to hide?”

What is transparency in fashion?

When we talk about transparency in the fashion industry, we’re talking about brands disclosing the impact their products have on the environment, and the people who work on them or are otherwise impacted by their production. For fashion brands, transparency relates to disclosing information about activities at each stage of a product’s supply chain. Brands looking to improve their transparency might disclose information around the raw materials used, the resources required to cultivate these materials (such as water and fertilizer), the carbon emissions involved in manufacturing processes, the wages of workers who make the garments, and more.

Technically transparent about environmental and social impact doesn’t mean a brand is working to improve it, but it does mean that consumers are able to make more informed purchase decisions, and disclosing impact is often motivation enough for brands to start down a better path.

Why is transparency important in the fashion industry?

When fashion brands and retailers are forthcoming about the impact of their products, it’s not just consumers that benefit. Supply chain transparency has proven effects on consumer behavior, and can even push individual brands and the global fashion industry as a whole towards positive change.

It influences consumer behavior

Disclosing information about product impact helps brands inspire trust in their consumers. Research into the factors that influence purchase decisions consistently demonstrates that modern consumers — and millennials in particular — are strongly influenced by social and environmental messaging. One study by IBM revealed that 57% of consumers are willing to change their purchase habits to reduce negative environmental impact, while 71% are willing to pay a premium for traceability. This trust helps consumers form an emotional bond with a brand, leading to a higher chance of repeat purchases and brand loyalty among existing customers. Transparency also allows brands to tap into a new category of conscious consumers who previously may not have considered buying from them.

It mitigates risk

The data collection and analysis required to improve supply chain transparency isn’t just a way to check corporate social responsibility boxes. This kind of deep, all-encompassing analysis is essential work for ESG-related risk management in the fashion industry. For example, the CDP reports that only 21% of the largest 100 apparel and textile companies report water-related data, and most of this 21% failed to acknowledge water pollution risks (beyond simply the wet processing and manufacturing stages). But this reporting failure doesn’t just hurt consumers; it hurts companies internally. “Water pollution poses a material risk to these companies”, the CDP explains, “be it through regulatory penalties and shutdowns, losing their social license to operate or damaged brand image.” Transparency is not just good for consumers; it’s good for business.

It promotes action

When fashion companies disclose information about their impact, they don’t just help consumers make better decisions; they also hold themselves accountable to improving on their impact. “Limited and inward-facing disclosure limits the scope for transformative impact,” the 2021 Fashion Transparency Index report reads. “Public disclosure drives public accountability.” Collecting and disclosing impact data is a powerful action that can serve as a benchmark for the future, allowing brands to set goals, design strategies, and make public commitments to improve over time.

It moves the industry toward a fashion revolution

Every brand that improves its transparency also raises the standards for the fashion industry as a whole. From the 2021 Fashion Transparency Index: “The public disclosure of credible, comprehensive and comparable information about fashion’s supply chains, business practices and impacts on workers, communities and the environment is crucial to driving systemic change. Transparency enables investors, lawmakers, journalists, NGOs, trade unions, workers and their representatives to hold brands and retailers to account.” In this way, the brands that disclose the impact of their products — brands like PANGAIA, Ganni, and Patagonia — help drive the industry into a new era of socially and environmentally responsible production and consumption of fashion.

It prepares brands for regulatory changes

Slowly, authorities around the world are demanding more visibility over ESG-related criteria in all industries. But with the fashion industry producing billions of tons of carbon emissions every year (4% of the global total) and regularly making headlines for its failure to acknowledge basic human and environmental rights, large fashion brands will be high on the list of organizations held accountable. Brands that take the first steps towards transparency today will avoid the costs and risks of getting up to speed quickly in tomorrow’s more regulated economy.

How can brands improve their transparency?

Most people can understand why transparency in fashion is so important, but how many know how to improve transparency? Although some brands might resist sharing product and supply chain information with consumers on the assumption that such information might reflect negatively on the brand, it’s likely that most brands are lagging on transparency simply because it takes time, effort, and resources — and if it’s never been done before, it can feel like a difficult ask. But there are a few things brands can do to make the transparency process easier.

Get better data

Transparency is about sharing data, which means the first step to better brand transparency is getting better data. To do this, you’ll need to specify the kind of data you need, and hold each of your suppliers and departments accountable for providing it. You’ll also need to perform a life cycle assessment to quantify your product’s impact across its lifespan. to make data collection, collation and processing easy.

Get support from above

Holding suppliers and departments accountable is easier to achieve when there’s pressure coming above. If you can get senior buy-in on the importance of your brand’s transparency, getting compliance from other teams becomes much easier. You’ll also be more likely to get the funding you need to invest in tools and resources to make your transparency goals a reality.

Getting senior leadership support is not always easy, so we recommend outlining a business case for your initiative. Find respected sources of data, such as IBM’s 2020 consumer report and this report by NYU Stern to help persuade senior management (who are often more business- and profit-oriented) that transparency is a good move for business. If you can demonstrate that better transparency will improve your brand image, influence consumer behavior, and mitigate risk, you’re much more likely to get buy-in from above.

Report on outcomes over commitments

One key finding from the 2021 Fashion Transparency Index was that fashion brands rarely report on the outcomes and results of their environmental and social initiatives. “Even though we see that many large brands publish time-bound, measurable targets towards improving human rights and environmental issues, these targets are more-often-than-not focused on outputs and processes (services delivered or actions taken) rather than aimed at achieving outcomes and impacts (the actual consequences or way things turn out), which would be far more meaningful and indicative of tangible change for workers and the environment,” the report commented. Without quality data on the actual results of these activities, the information a brand discloses lacks real weight and meaning.

Weave transparency into every stage of the consumer lifecycle

For many brands on a transparency journey, impact disclosure often starts and ends with annual ESG reporting. But transparency over product impact belongs at every stage of the consumer lifecycle, and doing so can be a strategic marketing and sales asset for brands who get their data disclosure right. Beyond annual reports, fashion brands should think about telling their impact story in places such as:

• Paid channels, to tap into a new segment of conscious consumerism
• In-store and websites, to help with purchase decisions
• Product labels, packaging, and product pages, to improve conversion rates
• Social media and customer communications, to improve brand loyalty and connection among existing customers

It’s important to think carefully about which data to convey through which channels and at which times, as well as how to communicate that data in ways that resonate with customers. Green Story specializes in communicating product impact data in customer-friendly ways.

Consider all aspects of ESG

Even brands that do make efforts towards transparency tend to focus heavily on one particular aspect of their corporate responsibility. In particular, many major fashion brands are prioritizing environmental commitments (sustainable materials, waste management, carbon emissions) over social concerns (labor conditions, workforce diversity). Vogue Business Index data reveals that far more luxury fashion brands have set environmental targets (91%) than labor rights goals (a little over 50% of brands say they pay supply chain workers a living wage).

But consumers are demanding transparency from both an environmental and a social impact perspective, which means the best transparency strategies encompass all aspects of a company’s ESG metrics, across each of their products and supply chains. Without a complete picture of a company’s impact, radical transparency in one area is still only part of the story — and it makes crafting a successful ESG strategy difficult.

Transparency: the quickest way to being known, liked, and trusted

There’s an old business adage that says people do business with those they know, like, and trust. In the 21st century, this idea can sound quaint. These days, we do most of our business via browsers and apps, but in reality, nothing has changed. We still do business with brands we know, like, and trust — even if the channels look a little different. But a failure to provide transparency into product impact, environmental performance, and social responsibility is the quickest way to destroy this connection.

Although disclosure can be uncomfortable, it’s time for fashion brands large and small to consider the risks of failing to disclose the environmental and social impact of their products and supply chain. For a new generation of conscious consumers, what goes unanswered can be ultimately more damaging than the truth.

Green Story: The technology partner for transparent fashion brands

Are you a fashion brand taking steps to improve your transparency? Are you committing to social and environmental goals, and are you looking for a solution to help you quantify and convey the impact of your products? If that sounds like you, talk to us.

Our mission is to empower 1 billion consumers to know their impact and make choices that are better for the planet and the generations to come. We’ll help you quantify and visualize your environmental impact, and offset your emissions through verified carbon credits. We’ll also make sure your customers are along for the journey by telling your sustainability story in ways your consumers can easily grasp, integrating your story into every aspect of your communications, and achieving market-wide buy-in for your sustainability mission.

About Amelia Zimmerman

Amelia Zimmerman is an ESG and sustainability writer. She lives in Toronto with her puppy and her partner, and she is passionate about using storytelling techniques to help people understand and act on climate change.