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Sustainability in the Fashion Industry Master’s Degree Programme in International Management Second Cycle (D.M. 270/2004) Final Thesis SUSTAINABILITY IN THE FASHION INDUSTRY How Italian SMEs are translating the concept of sustainable fashion Supervisor Ch. Prof. Stefano Micelli Graduand Noemi Staccione Matriculation Number 850329 Academic Year 2017 / 2018 TABLE OF CONTENTS ABSTRACT ...............................................................................................................................................................1 CHAPTER 1: CIRCULAR ECONOMY IN THE FASHION INDUSTRY ....................................................3 1.1 CIRCULAR ECONOMY .............................................................................................................................3 1.1.2 Origins and definition ....................................................................................................................4 1.1.2 WHAT ITS IMPLEMENTATION REQUIRES ............................................................................5 1.2 THE FASHION INDUSTRY .....................................................................................................................7 1.2.1 Factors that are pushing fashion industry towards more sustainable practices ....8 1.3 NEW BUSINESS MODELS ................................................................................................................... 18 CHAPTER 2: GREEN AND SUSTAINABLE SUPPLY CHAINS .............................................................. 22 2.1 WHAT SUSTAINABLE SUPPLY CHAINS ARE .............................................................................. 22 2.2 THE SUPPLY CHAIN IN THE FASHION INDUSTRY ................................................................... 23 2.3 THE STEPS OF A SUSTAINABLE SUPPLY CHAIN ...................................................................... 24 2.3.3 Design ................................................................................................................................................ 25 2.3.4 Operations ....................................................................................................................................... 26 2.4 CURRENT BEST PRACTICES IN FASHION INDUSTRY ............................................................ 27 2.4.1 Design ................................................................................................................................................ 27 2.4.2 Steps of the production process .............................................................................................. 29 2.5 WHY SSCM................................................................................................................................................ 31 CHAPTER 3: ENVIRONMENTAL AND SOCIAL UPGRADING ............................................................. 35 3.1 DEFINING UPGRADING ....................................................................................................................... 35 3.2 DIFFICULTIES IN THE IMPLEMENTATION OF UPGRADING ............................................... 36 3.2.1 Supply chain governance ........................................................................................................... 36 3.2.2 Typologies of work ....................................................................................................................... 37 3.3 WHY UPGRADING IS IMPORTANT FOR FASHION INDUSTRY ............................................. 38 3.4 DEFINITION OF SUSTAINABLE FASHION ................................................................................... 40 BOX 1 - How the “big ones” are becoming sustainable: OVS GROUP ................................... 43 BOX 2 - How the “big ones” are becoming sustainable: BENETTON GROUP ................... 44 CHAPTER 4: HOW SUSTAINABILITY IS TRANSLATED BY SMALL AND MEDIUM SIZE ITALIAN FASHION BRANDS .......................................................................................................................... 45 4.1 RESEARCH INTRODUCTION ............................................................................................................. 45 4.2 RESEARCH METHODOLOGY ............................................................................................................. 45 4.2.1 Limitations ....................................................................................................................................... 47 4.3 ANALYSIS FRAMEWORK .................................................................................................................... 48 4.4 CASE STUDIES ........................................................................................................................................ 49 No need for downs: the new recycled nature of jackets ........................................................... 49 Vegan shoes: microfibres that resemble leather ......................................................................... 54 One good material is better: sustainable denim and beechwood fibres ............................ 56 Aware choices of raw materials: balancing the impact of their production ..................... 58 Upcycling waste, upgrading workers ............................................................................................... 60 4.5 RESULTS ................................................................................................................................................... 66 4.5.1 The role of suppliers in shaping green value chains ....................................................... 67 4.5.2 A comparison with the big ones .............................................................................................. 69 4.6 CONCLUSIONS ........................................................................................................................................ 70 APPENDIX A – Good Citizens Principles ................................................................................................... 72 APPENDIX B – Main fashion and textile industry certifications ..................................................... 75 REFERENCES ....................................................................................................................................................... 79 ABSTRACT This thesis explores the current situation of the fashion industry regarding its impact from an environmental and social point of view. The first three chapter are a general review of three main concepts linked to the sustainability theme, while the fourth one presents a research performed on a sample of case studies. In the first chapter, the concept of circular economy is addressed. The origins of this idea, that hopes in a system where the waste of a process can be kept in circulation as inputs for another or the same process, are presented together with the main elements needed for its implementation. The second part of the chapter is dedicated to the fashion industry by analysing why applying this regenerative theory is important for the fashion sector and the new business models that can be created on the basis of this idea. Circular economy, however, requires a revolution in the whole industry. This means that the whole supply chain has to be changed and addressed to the goals of the circular economy theory. We thus dedicated the second chapter to explore the idea of a sustainable supply chain. After having defined what they are, we presented the typical supply chain in the fashion industry. It has been compared to the ideal steps in a sustainable value chain and then some examples of brands that are currently applying these ideas have been described. The theorical part is concluded with another concept linked to sustainability, that is the upgrading of suppliers within the chain. In fact, a sustainable supply chain should include also the possibility for the suppliers to grow, gain some power and be considered partners rather than just suppliers. Together with this kind of upgrading, that is an economical one, the ideas of a social upgrading and an environmental one are considered. They involve the implementation of better working conditions and the use of new technologies to limit the suppliers’ impact on environment. This third chapter has been added because the theme is particularly important for fashion industry, where usually many steps of the supply chain takes place in less developed countries where the labour rights are not guaranteed, and where the environmental awareness is not developed. To conclude the bibliographic review, we highlighted the fact that sustainability is a wide concept and that different interpretations are given to it, especially when it is put into practice. This consideration is valid also for the fashion industry, where the application of the idea of sustainable fashion can assume different forms. In the last chapter, we present the research that we performed to understand which forms is assuming sustainable fashion in today Italian medium-hand fashion market. Analysing a sample of eleven sustainable brands, we were able to understand where they are focusing their attention. The results indicated that their main concern is the choice of raw materials. Other aspects of sustainability are underdeveloped, indicating that the path towards a sustainable fashion is still long. A limitation in their actions is given by the fact that the firms in our sample are generally small and with few resources. For this reason, we added a brief description of the sustainability
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