For many workers, a return to in-person work means trading in-house clothes and sweatpants for new business-casual outfits. Companies are reporting sales also being driven by summer outings, size differences, and vaccination-related comfort with in-store shopping. In the UK, clothing sales rose by 70% in April and are expected to rise by 78% in the US over the summer, driven largely by back-to-school purchases.
While these increases are indications of an economic recovery for the global fashion industry, there are also significant environmental downsides to new clothing purchases. And the popularity of fast fashion has only exacerbated matters.
According to a report from the World Economic Forum, the fashion industry produces 10% of “all humanity’s carbon emissions and is the second-largest consumer of the world’s water supply.” In addition to toxic chemicals, dyes, and noxious emissions from the production process, modern global textile production is primarily not biodegradable, with more than 52% of fabrics being made from polyester in 2019, according to an industry report from Textile Exchange.
After production, clothing and textiles are transported from facilities in developing countries to stores worldwide. But many of the common office-attire items sold – blouses, dresses, suits, and accessories – are made of harmful plastic-based materials like nylon, acrylic, and fleece. The unsustainable impact of these materials is worsened by bracketing, a common practice in which consumers buy several items with the intention of returning most of them. Bracketing contributes to billions of tons of nonbiodegradable landfill waste, higher restocking costs, and carbon emissions from additional transportation.
Cleaning clothing also has a dirty side. Every time plastic-based textiles are washed, it results in the release of microplastics, many of which aren’t caught by wastewater-treatment facilities. Moreover, dress shirts and other officewear sent to the dry cleaner often involve the use of a chemical known as PERC, which has “serious environmental effects” and is a known neurotoxin.
According to the EPA, when consumers are tired of their clothing, including their go-to office garb, only 15% of it gets recycled. And donations to charities such as Goodwill, The Salvation Army, and TRAID? Those often end up in landfills. It all contributes to textiles being the second-largest source of global plastic waste at 42 million metric tons.
While some might go back to their prepandemic spending habits, others might be more conscious of their shopping routines. More sustainable options that help reduce the production of new clothing items include shopping on online resale sites like Poshmark, Mercari, ThredUp, and Grailed. There are also rental services like Rent the Runway, Nuuly, as well a variety of mall chains and brands. These offer consumers the option of new looks with lower environmental footprints, a choice that’s always in style.
With more people getting vaccinated in the US, discussions about employees physically returning to offices (whether full time or in a hybrid of remote and in-person work) are well underway. Signs of getting back to traditional office life raise the question: How might transportation and energy usage be affected?
Before COVID-19, Americans spent an average of 200 hours a year commuting to work. And although most of the country went into lockdown last year, causing people to ditch their regular commutes, demand for larger vehicles continued to grow, in part because of consumer perceptions about safety and greater cargo capacity. The International Energy Agency’s 2020 report said that “transportation is still responsible for 24% of direct CO2 emissions from fuel combustion.”
Traditional corporate travel for in-person meetings, conferences, and events has also been a massive source of annual CO2 emissions. For example, in 2019, Salesforce staff traveled enough to generate 146,000 metric tons of CO2, equivalent to the output of 17,500 homes in a year.
Jan Freitag, the national director of hospitality market analytics at CoStar Group, said it’s too early to tell if work-related expeditions will drastically increase this year. “After Labor Day, we expect a clear demarcated line in the sand about whether people will return to the office or not, restart business travel, as well as whether group travel will happen,” Freitag said.
The Labor Day benchmark is used in relation to the beginning of the school year when parents and children will return to the drop-off, pickup schedule. “That drives employers to say, ‘You’re back to where you were because your kids are back to school, so let’s go back to normal where you commute to work,'” Freitag said.
Purchase trends showed that regardless of commute changes, the pandemic hasn’t deterred Americans from hitting the road. Not only did electric-bike sales grow by 145% between 2019 and 2020, but this past April, 18.5 million light vehicles were sold – the highest number since 2005 – and electric-car sales saw a 249% increase compared to the same period last year.
One report predicted that electric-car sales will grow significantly in 2022 because of greater affordability and price parity with nonelectric vehicles. The sustainable effects of these trends may depend largely on subsidies and infrastructure investments, such as additional bike lanes, EV charging stations, and parking spaces at office complexes.
Regarding energy usage, as more people return to the office, the biggest difference may pertain to air-conditioning. Out of all commercial buildings, offices consume the most cooling energy. And that’s expected to intensify, as a recent report from the US Energy Information Administration predicted that energy consumption for air-conditioning will rise by 29% between 2020 and 2050 because of expectations of warmer temperatures.
Hopefully, companies will focus on sustainable business operations, including preferable work arrangements for employees, that lead to responsible corporate influence on transportation and energy usage. Otherwise, they’ll risk significant talent drain.
Just over three years ago, Insider launched Better Capitalism, a section focused on how companies are moving beyond financial targets and actively contributing to a better world for their employees, customers, and other stakeholders.
Sustainability has been a key topic we’ve covered along the way, and it’s only gaining momentum in the conversation around stakeholder capitalism. Last year, Microsoft, Apple, Ford, Starbucks, and other major corporations made big pledges to reduce, eliminate, or offset their carbon emissions. In January of this year, GM announced it would only sell electric vehicles by 2035 and pledged to be completely carbon neutral by 2040.
At the same time, the demand for ESG investing – which integrates environmental, social, and governance goals with investment – has skyrocketed, while more companies have agreed to report on their progress on ESG criteria.
Helping to lead this movement is Klaus Schwab, executive chairman and founder of the World Economic Forum, who convenes economic and political leaders annually to discuss innovative ways to reshape and advance industries. During Insider’s climate-focused virtual event, Act to Impact, on April 20, Schwab said the surge in interest in ESG means customers, investors, and leaders are focused on accountability. He also noted that there are over 300 ESG proxy issues headed to vote this spring.
“Leaders have a new mindset,” Schwab told Insider. “We have a new social consciousness.”
He also spoke about how the pandemic has only increased people’s alertness and sensitivity to corporate social responsibility, which includes how companies treat the environment.
The event also featured insight from David Sproul, the Global Deputy Chief Executive of Deloitte; Rebecca Marmot, the Chief Sustainability Officer of Unilever; Ruth Davis, the Director of IBM’s Call for Code initiative; Alice Sharp, the Artistic Director of Invisible Dust; and more.
Insider is investing more into our sustainability coverage by launching our newsletter, Insider Sustainability. With our new sustainability reporter, Karen K. Ho (who previously wrote for Quartz), at the helm, we’re highlighting the ways in which government, businesses, and society are coalescing responsible climate choice with their practices.
When Klaus Schwab thinks of climate change, he thinks of his grandchildren and their future. Schwab, the founder and executive chairman of the World Economic Forum, is worried – but hopeful.
“Many people have a tendency to see our fight against climate change as a cost, as something that is negative,” Schwab said. “Yes, it may be to a certain extent, but it’s also a great opportunity.”
For the economic leader, tackling climate change means leadership innovation. Company executives, investors, consumers, and political leaders will have to find ways to work together to enact change, he said.
And that means new economic opportunities: new infrastructure projects such as the one Congress is debating, new developments in technologies such as carbon sequestration, and new products such as expanded options for electric cars.
Schwab credits a good portion of his philosophy on climate change to Bill Gates, who he said is a leader in the green movement.
“Gates talks about how, in order to decarbonize the world or to make it carbon-neutral by 2050, a lot of new technological progress has to be achieved,” Schwab said. “I see here a great opportunity because we can move into an age of green innovation.”
Signs of this age of green innovation have increased in the past year. ESG investments, or investments that apply environmental, social, and governance principles to a company’s performance, have seen record growth and are projected to increase in the future, reports showed.
US assets under management that used ESG criteria increased 42% over the past two years to $17 trillion in 2020, up from $12 trillion in 2018, showed a 2020 report from the US Forum for Sustainable and Responsible Investment.
A growing number of companies have pledged large green initiatives. GM, America’s largest car manufacturer, said it would go carbon-neutral in its global products and operations by 2040. Apple committed to being 100% carbon-neutral for its supply chain and products by 2030.
Schwab is energized by these changes and believes the trend toward a more stakeholder-centric view of the world is ahead.
“I’m really excited,” he said, adding that society has changed over the past few years. “We have a new mindset. We have a new social consciousness.”
Insider spoke with Schwab about his new mindset and how leaders plan to embrace the ESG movement. Our interview has been edited for length and clarity.
There’s more and more recognition that a viable economy not only relies on treating people well but treating the climate well. Do you think CEOs have fully adopted this mindset that treating the climate well is good for shareholders?
So the executives who have a longer-term thinking have clearly adopted this mindset. And if you look, there are two reasons – they are very obvious. So there’s first an economic reason. I think what we have learned from the coronavirus is that prevention – the cost of prevention is much lesser compared to the cost of responding afterward to the damage. So we have a situation where you have a kind of free ride because you don’t have to integrate all your external costs into your business model, but someone will have to pay for it. And it will be down the road.
And my fear is that we may end up like tobacco companies, which means, we will be in a situation where, down the line, you will have class action. Already today, investors recognize this danger, this risk. There are investors who hesitate to provide capital to companies who really are damaging the environment.
But there’s also a moral reason. I’m thinking of my grandchildren. I don’t want to have them facing a crisis that may be much worse compared to what we are seeing today with the COVID-19 pandemic.
Do you believe that investors are recognizing the risk?
I said investors who are thinking long term. Of course, if you want to make a fast buck, it’s a different matter.
But in the end, I think companies will recognize they will be better off economically if they take care of nature, because young people – I mean, at least my employees – they don’t want to work anymore for a company or for an organization that is damaging nature.
And I think clients and customers do not want to buy the products of such a company. So I think it’s in the direct, commercial business interest of companies to take care of the planet.
Here in the US, the Securities and Exchange Commission just created an ESG task force to promote the disclosure and transparency of ESG criteria. And a report showed that over 300 ESG proxies are headed to a vote this spring. How do you feel about the surge and attention to ESG reporting?
I think it’s a great evolution. Some people would say even a revolution. But we should not forget that the ESG metrics – so measuring responsibility – are only part of a total integrated system.
It starts with defining your strategies, where you have to take into account the present and maybe even future expectations of your stakeholders. So it’s a strategy formulation. It’s the responsibility of the board. Then it is of course execution, not only inside the company itself but also in the supplying network. And at the end, you have some measurement system, the ESG metrics.
So we should not look at ESG metrics just as some kind of a formal, additional reporting system. I think to do ESG performance in the right way, you have to look at it as an ecosystem, which integrates a company as a whole.
There are those who are still against certain ESG metrics, for example, the billionaire investor Warren Buffett recently urged shareholders to reject proposals for more transparency of climate-related risks and diversity and inclusion efforts. What would you say to Buffett and others who reject more transparency?
I would like to have a discussion with him.
I would tell him: “Look, I can understand that on the level of Berkshire Hathaway, which is a kind of conglomerate, you will have difficulties measuring the ESG responsibility of each of your companies where you have a shareholding in. So, here, I would understand.”
But as far as his companies are concerned, where he has invested in, I would tell him: “Look, particularly because you are very heavily exposed to the insurance business, why don’t you engage actively into more ESG of responsibility? Because it may backfire on you one day, in your insurance business. You may be caught by not having an integrated policy where you pursue profitability but also take care of people and the planet.”
President Joe Biden is asking Congress to approve hundreds of billions of dollars to remake transit infrastructure in the US in a plan that the White House says will fight climate change. What do you think of this kind of package?
It’s not enough to hold only corporations responsible. I think we have a common responsibility, all stakeholders of global society, which means corporations have to absolve a lot of their responsibilities in this respect, but it’s also us individual consumers, and it’s the government.
And the government has to contribute to fighting climate change by creating the necessary incentives and also disincentives. I think there are still too many governments around the world that provide subsidies for activities that actually are damaging the climate. And I think we need the government to step in to build the necessary infrastructures.
What we need is an integrated approach. We cannot fight climate change by doing here a little bit, there a little bit. We need to have an integrated ecosystem approach. And I think here the government has a major role to play, to provide the kind of integrated vision for the future.
Going back to the corporate world for a minute: Doesn’t the case of Danone and the recent ousting of its CEO show that focusing on ESG metrics can lead to a nonconfidence vote of shareholders?
Yes, so we have the famous case of Danone. The CEO was ousted and the criticism was that he has been devoting his time and his attention much too much to the ESG dimension, and not necessarily giving sufficient attention to his shareholders. But I think that’s a wrong dichotomy.
We shouldn’t make an artificial polarization between profitability on the one hand and people and the planet on the other hand. I think the art of good management today is to create the right balance and not to be too much just keeping in mind stakeholders or shareholders. I’ll give you a practical example – if we compare Danone with Unilever.
Unilever is certainly recognized worldwide as a company that is at the forefront of ESG thinking, but at the same time the share price of Unilever has doubled more or less in the past 10 years. The share price of Danone has quite had some difficulties, especially over the past year. Shareholders are also stakeholders. Unilever is an example that you can give [attention] to your shareholders as well as your other stakeholders.
What company stands out to you as doing especially well when it comes to tackling climate change?
I’m looking at the hardest-hit companies, hardest in terms of those being confronted with a major need for transformation. Here – if I look at the oil industry – I take as an example Total, the French oil company. Total is one of the 70 companies that the World Economic Forum brought together to commit to report on the ESG metrics we have developed with the International Business Council, under the guidance of Bank of America’s CEO, Brian Moynihan, together with the Big Four audit companies.
If we’re talking about persons, I would say Bill Gates. I just read his newest book [“How to Avoid a Climate Disaster”]. I think he has a very great contribution to offer us. Because he says, “Look, we need a systemic approach to fight climate change. Even if we take all of our goodwill, it will not be enough. What we need is innovation.”
He talks about how in order to decarbonize the world or to make it carbon-neutral by 2050, a lot of new technological progress has to be achieved. Our present technology does not suffice to get to the target in 2050. So I see here a great opportunity because we can move into an age of green innovation.
Many people have a tendency to see our fight against climate change as a cost, as something that is negative. Yes, it may be to a certain extent, but it’s also a great opportunity.
If I look at the young generations – the World Economic Forum has a community of 10,000 young leaders – if I talk to them, they have a different mindset. They have a different picture of the world.
It’s not only the material dimension, income, or GDP. It’s well-being. And climate change is interconnected with pollution. It’s interconnected with life expectancy. It’s interconnected with a lot of health issues. So if we want to invest in our well-being, then we have to invest in fighting climate change.
Recently, a number of major corporations such as GM and Apple have made pledges to go carbon-neutral – GM by 2040, and Apple by 2030. Do you think these timelines are realistic? And are they fast enough?
We speak about a carbon-free world by 2050. That’s the objective of the Paris Agreement. Most countries have subscribed to this objective. And many, many companies have now also issued statements that they would achieve carbon neutrality.
Now, we have to be aware that the situation is not the same for each company. We have the energy companies – the Exxons, the Chevrons, and so on – that will have much more challenges to reach this objective of carbon neutrality in 2050, compared to Google, or even a car manufacturer that understands the technology to make this transformation to the electric car.
So it’s good if companies that have fewer challenges, such as the high-tech companies, provide an example by setting very ambitious objectives. But again, I come back to this: Setting objectives is not enough. Being measured in the execution is important, and here the ESGs come in again.
Do you think the energy-sector companies such as Chevron and Exxon have fully bought into the stakeholder-capitalism model? Have they bought into addressing climate change?
I would answer that in the following way: If they haven’t bought in yet, into the stakeholder concept, they are on the wrong side of history, because I’m deeply convinced that we are now really at an inflection point where society as a whole does not tolerate any more companies that are damaging nature or that are not upholding diversity and social justice.
I think we have a completely new social consciousness. We now also have a world where every deficiency can be reported very fast, and that can create a negative reaction. So if I were Exxon or a company that’s really challenged – we should not forget, these companies need a complete transformation of their business models – I would commit to the stakeholder concept, but would also try to create understanding in the public. For me, being in the energy sector, it may be much more difficult compared to a company that’s already producing products that do not necessarily damage the environment. So it’s a communications effort.
How are you feeling about the corporate fight to tackle climate change? What, if anything, are you excited about?
I’m really excited because, as I just mentioned, we have a new mindset. We have a new social consciousness. People like Greta Thunberg got very aware that something is wrong here in our lifestyles – that either we will have to suffer down the road or our children will have to suffer.
So we are now in a situation where climate change, or the attention given to climate change, provides a higher sensitivity for other deficiencies that we have.
I mentioned already a lack of inclusion, a lack of social justice, a system that is not necessarily fair in providing everybody with the necessary opportunities. And I think the pandemic has contributed to this new alertness, to this new sensitivity. Some people may say this is inconvenient because we pinpoint weaknesses in our society, but it’s a wake-up call to adapt and to make sure that we have better lives. That’s what we’re fighting for.