Highlight from our ESG Research: Fashion with a More Inclusive and Sustainable Approach

November 2023

At Domini, we conduct proprietary in-house research to evaluate the social and environmental performance of our investments. Our in-depth ESG research and standards help create value not only for portfolios but for people and planet, too. During our research process, we discover many innovative initiatives worth sharing.

Held in the Domini International Opportunities Fund

Fast fashion is recognized today as the third-largest global polluter and poses a substantial threat to our environment, with textile production alone contributing significantly to climate change. The need for transformative action is urgent. Over the past two decades, the production of fashion items has doubled, exceeding 100 billion annually. In contrast, the average number of times an item is worn has halved. Interestingly, 82% of discarded fashion items could be cleaned, repaired, or resold. 

One brand with a deeply rooted commitment to sustainable fashion is Zalando. Amidst the current environmental challenges in the fashion industry, Zalando, a fashion retailer turning into a leading European online platform for fashion, accessories, and beauty, emerges as a pivotal player in helping reshape the narrative of the industry’s environmental impact.

Based in Berlin, the company’s influence extends far beyond its German roots, with a presence in 25 European markets, including 13 outlet stores and a logistics network comprising 12 fulfillment centers. As the fashion industry grapples with improving its environmental impact, the multifaceted approach introduced serves as a model for responsible, forward-thinking business practices, helping ensure a positive impact on the fashion industry and the planet.

By actively engaging in circular economy practices, investing in recycling technologies, and championing inclusivity in its product offerings, Zalando addresses several urgent issues within the industry. The company’s goal by 2023 is to apply its circularity principles to extend the lifespan of at least 50 million fashion products. Progress has already been made, with more than 4 million of its fashion products benefiting from extended lifespans since 2020. Zalando’s impact lies in helping to mitigate the detrimental effects of fast fashion and challenging the prevailing lack of action while seeking to foster a more sustainable and conscientious approach to fashion consumption.

The firm’s strategic investment in a cutting-edge fiber-to-fiber recycling tech company utilizing hydrothermal processes to break down textiles exemplifies a warranted dedication to pushing the boundaries of sustainable practices. In collaboration with other shoe manufacturers, the company helped launch the Reshoes technology transfer program, which utilizes cutting-edge technology to extract the soles from used shoes, followed by sorting and preparing the materials that will make up the deposits ready for recycling.

Furthermore, Zalando’s initiatives extend beyond collaborations. The company operates a pre-owned clothing platform in 13 countries, offering a diverse collection of over 400,000 items and 1,000 brands. Every pre-owned product undergoes rigorous quality checks and is delivered in plastic-free packaging, a tangible effort to minimize the company’s ecological footprint. Notably, these efforts led to the avoidance of 919 metric tons of single-use plastics in 2022 alone. The company also introduced its first adaptive collection, featuring over 140 products designed for accessibility and functionality for people with disabilities–a substantial and diverse range of products for a community often overlooked in the fast fashion industry.

In a world where the fashion industry’s environmental footprint is immense, companies must pave the way toward a more sustainable and inclusive future by incorporating circular initiatives, upcycling, and investments in recycling technology, among other approaches. Yet, fashion can have an additional impact on society. Cultivating inclusivity in fashion can lead to a better society where we can all work together to foster acceptance and understanding.