You may not think Singapore’s innovation and technology story has anything to do with fashion, but I hope to persuade you otherwise as I explain how cutting-edge tech developed in the Little Red Dot is already being used by the fashion sector in its Environmental, Social, and Governance (ESG) push to net zero.
Those of you who like to read about startups, innovation, and technology may not realise that the fashion industry is undergoing its own technology revolution with the help of sustainability data.
The clothes you’re wearing right now as you read this – do you know what their carbon footprint is? Probably not, and you wouldn’t be alone. (It’s also likely worse for the environment than you’d care to imagine). And when you scale that premise across billions of people in Asia, it becomes a challenge worth addressing.
After all, we all need to wear clothes every day, right? And most of us, if asked, would say we care about the environment and solving this climate crisis that we find ourselves in together.
Airing fashion’s dirty laundry
The fashion industry, in fact, has a reputation for being one of the world’s most polluting industries. Second, only to oil and gas, the global fashion and textile industry accounts for around 10 per cent of the world’s carbon dioxide output.
In Asia alone, where 50 per cent of all garments globally are manufactured, developing countries and industrial powerhouses alike produce up to 23 million tonnes of waste annually.
However, issues within sustainable fashion begin much earlier up the supply chain, starting with massive amounts of resources consumed to produce apparel.
The fashion industry is estimated to consume 79 trillion litres of water annually, contributing about 20 per cent of all industrial wastewater discharge.
Most retailers also outsource their operations to developing countries in Asia due to the lower cost of labour. Yet, this oftentimes gives rise to ethical issues such as abysmal working conditions, allegations of child labour, and low wages.
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According to a McKinsey study, at the current rate of emissions, the fashion industry is set to miss the goal of limiting global warming to 1.5ºC, agreed upon in the Paris Climate Agreement, by up to 50 per cent.
Fortunately, growing consumer demand for sustainable fashion has created a greater impetus for businesses to pivot towards sustainability.
Today, 68 per cent of consumers across all generations are willing to spend more for sustainable fashion, up from 58 per cent two years ago.
Consumers today also want greater transparency: they want to know that the materials used in production were sustainably sourced and that the suppliers whom brands worked with complied with ESG standards.
With such a strong business and regulatory push, it is apparent that fashion retailers in Singapore and elsewhere must embrace sustainable fashion and urgently integrate sustainability across their entire supply chain.
Difficulties with supplier sustainability monitoring in fashion
Sustainability is quickly finding its footing in the fashion industry locally and regionally.
While businesses in the fashion industry are increasingly trying to decarbonise their operations, reduce their scope three emissions, and ultimately achieve net zero, challenges remain.
Supplier sustainability monitoring refers to the act of monitoring the ESG credentials of a company’s end-to-end chain of suppliers – in this case, a fashion company.
For the fashion company in question to control its overall emission levels as it manufactures trendy dresses, shirts, and sneakers while also planning its net zero pathway, the first thing it needs to have is the visibility of suppliers in different parts of its supply chain to ensure they are making good on ESG commitments.
In sectors with complicated and extensive supply chains like the fashion industry, supplier sustainability monitoring is extremely challenging and inefficient due to the complexity of liaising with multiple stakeholders and the current manual process of questionnaires and meetings.
This leads to suppliers being under-engaged by companies and unsure of how they can progress towards sustainability.
Additionally, implementing supplier sustainability monitoring can require large sums of capital financing, further deterring companies on their green journey.
Lack of standardised reporting formats and difficulties in establishing traceability
Fashion companies mean well when they roll out sustainability initiatives, but these are usually limited in effectiveness since they cannot determine when, how much, and why emissions are being released.
Not knowing these, companies cannot pinpoint the part of the supply chain to target to reduce emissions, compounded by the fact that the fashion industry is still in the early stages of understanding and defining product-level traceability.
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Answers to questions like, “What should we be tracking – emissions from the manufacturing of garments or the origin of the raw materials?” are still being determined.
Standards within the fashion industry, which set requirements for third-party certification of recycled content, are also often nuanced and different for suppliers and end-retailers, causing confusion and uncertainty.
As a result, fashion retailers are unsure of the certification they require from their suppliers, and suppliers are, in turn, unsure of which certifications to attain.
Even when retailers and suppliers agree on the certifications required, they often struggle with understanding and obtaining the required data to acquire those certifications.
Here’s what this all means: if we are to build a sustainable fashion industry in Singapore and the wider Asia region, the synergy of technology and data is needed more than ever to help traditional fashion companies quantify emissions across end-to-end supply chains.
The good news is that digital tools that can comprehensively monitor various ESG credentials and the sustainability performance of suppliers are being built right here in Singapore.
A common digital ESG registry for Singapore’s blooming fashion industry
At homegrown ESG fintech, STACS, we contribute to Singapore’s sustainable fashion transformation in partnership with the Singapore Fashion Council (SFC), the official trade association for the textile and fashion industry in Singapore, to empower the sector to become greener through better data and green finance.
We also see this as part of a bigger picture focused on enabling the ASEAN supply chain to become sustainable and competitive on a global scale, maintaining its role as a leading supply chain for the world.
Technology is key to aggregating granular, high-quality ESG data, including industry-recognised data disclosures from disclosure platforms like CDP, ESG certificates from global certification bodies, and real-time project data from technology partners using various technologies like IoT, AI, and drones.
So how does this work if we drill down to each stakeholder in Singapore’s fashion landscape? There are broadly three: small and medium-sized enterprises (SMEs), large corporations, and financial institutions.
For fashion industry suppliers looking to attain the appropriate green certification, technology is being used to connect them with relevant certification bodies (i.e. industry-specific certifications like Better Cotton and Oeko-Tex or general certifications such as B Corp certification), removing uncertainty and expediting the process.
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The same new technologies being developed right here in Singapore are allowing fashion SMEs to enjoy lowered barriers to sustainability, gain a better understanding of their sustainability position through their digital ESG profiles, and have access to green data to evaluate their suppliers’ sustainability performances.
In addition to securing green certifications, this also helps SMEs access low-interest-rate ESG financing to enhance their sustainability practices on their journey to net zero.
Finally, a common, standardised ESG registry empowers banks and investors to achieve effective monitoring of fashion industry investment portfolios, providing confidence that the companies they choose to finance are, in fact, meeting their ESG commitments.
In the bigger picture, this is supporting effective ESG finance decisions across fashion and other industries, mobilising capital towards sustainability projects while reducing fears of greenwashing.
For the hardest-to-abate parts of the fashion supply chain, identified through tracking and monitoring using these new technologies, carbon credit offsetting can help to remove any residual emissions to attain the final step towards net zero.
Consumer trends come and go, but sustainable fashion is here to stay
Spurred by rapidly growing consumer demand for environmental consciousness and transparent fashion, designers and manufacturers in Singapore and the wider region that fail to integrate sustainability into their supply chains risk losing competitiveness and customers.
Southeast Asia, of all regions, is where the issue is most pressing, given the pivotal role it plays in the global fashion supply chain (and where ESG registry technology can be best put to use today).
Countries in the region must accelerate their green journeys or face being cut out of supply chains and consumer mindshare.
Technologies and innovation can be game changers for the fashion industry.
While net zero might seem a tall order, the first step companies must take is a simple yet powerful one: understand their sustainability profile through digital technology and hard data because the numbers don’t lie.
From there, Singapore’s fashion businesses will be better placed to chart out their sustainability roadmaps, innovate, and take the next step in their journey to net zero – while winning the hearts and minds of consumers, investors, and the planet.
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