Social Innovation Offers Five Golden Opportunities to the Apparel Industry

The global apparel industry has grown significantly in the past decade, but at a heavy environmental and social cost. Social innovation can bring healthier, more holistic future growth.

Social Innovation Offers Five Golden Opportunities to the Apparel Industry 1 Clothing transcended its function as a basic need centuries ago. Today, the global textile industry is one of the most influential sectors in terms of financial power and how it shapes wider trends, attitudes, behaviors, identity, and culture. Valued at up to $3 trillion, the global textile market accounts for 3 percent of the world’s gross domestic product (GDP). If the textile industry were a country, it would be the seventh-largest based on GDP. Yet success has come at a high environmental and social cost. Water pollution, high use of pesticides and insecticides, and labor abuses, among other negative practices, will increase as the industry grows. At the same time, even as consumers enjoy “fast fashion,” they are becoming aware of fashion’s impact on the world.

There is a multitude of social enterprises in the apparel industry helping to solve its complex issues. We look at some of the forward-thinking companies and social movements that are poised to take advantage of consumers’ growing social awareness as they strengthen their businesses through social innovation. We believe there are five particularly crucial social innovation opportunities for apparel and textile companies to consider as they plan their short- and long-term growth strategy.

We will examine each of these opportunities and provide successful real-life examples, after taking a closer look at the industry itself.

Portrait of an Industry

Growth and manufacturing The apparel industry has enjoyed steady revenue growth—with a CAGR of 8 percent during the past 15 years—and is forecasted to grow to as much as $5 trillion by 2025 (see figure 1). It contributes a significant share to the economies of many countries and has created mega brands—such as Nike, Zara, and LVMH—while producing many billionaires, and the numbers continue to grow (see figure 2 on page 2).

Figure The textile industry has shown steady growth over the past years

Global textiles revenue ( trillion)

% increase in garments purchased annually +–% .–.

+% .–.

Sources: World Bank reports; A.T. Kearney analysis

Social Innovation Offers Five Golden Opportunities to the Apparel Industry 1 Figure Textiles account for a large share of exports in a number of countries

Textiles exports (% of total exports, )

Haiti Bangladesh Cambodia India

Sources: World Bank reports; A.T. Kearney analysis

Because of fashion’s growing importance to the global economy, textile manufacturing has become the world’s third-biggest manufacturing industry, behind only automotive and electronics manufacturing.1

The apparel industry has served as a stepping-stone to growth in many countries, especially developing ones.2 Clothing accounts for 88 percent of exports in Haiti, 79 percent in Bangladesh, 59 percent in Lesotho, 52 percent in Cambodia, 43 percent in Sri Lanka, and 18 percent in India.3

Employment Textiles are one of the most labor-intensive industries, directly employing at least 60 million people.4 Nearly twice as many people are indirectly dependent on the sector.5 Across many developing countries, handcraft production is the second-largest employer, with 30 million people employed this way in India alone.6 About 75 percent of garment workers worldwide are women.7

Global value chain The retail textile industry has a buyer-driven value chain. Large retailers decide what and where to produce and how much to charge. These retailers—and the big brands they carry—are typically in developed countries in Europe, Japan, and the United States. The brands carry out the branding, design, and marketing, and typically outsource the production of garments. Consequently, the knowledge-intensive part of the value chain is in developed countries, while the labor-intensive part is in developing countries.

1 “Mending the Capitalist Model,” Diane Francis, Financial Post, 2014 2 “Creating Sustainable Apparel Value Chains: A Primer on Industry Transformation,” Dr. Maximilian Martin, Impact Economy, 2013 3 “5 things you probably didn’t know about the fashion industry,” Michele Petruzziello, World Economic Forum, 2015 4 “Textiles, clothing, leather and footwear sector,” International Labour Organization, 2014 5 “The role of textile and clothing industries in growth and development strategies,” Jodie Keane and Willem te Velde, Overseas Development Institute, 2008 6 “To assess the value and viability of a global scale Artisan goods certification model on behalf of the Alliance for Artisan Enterprise, and determine its worth to retail and artisan partners,” by Michele Kahane, Alliance for Artisan Enterprise, 2014 7 “The values of the worldwide fashion,” TextileFuture, Virginia

Social Innovation Offers Five Golden Opportunities to the Apparel Industry 2 At the same time, the complexity and global nature of the industry’s supply chain obscures its overall functioning (see figure 3). Baptist World Aid Australia recently analyzed the practices of more than 200 fashion brands selling clothing to the Australian market. Seventy-five percent of the brands did not know where the inputs were coming from, including for fabric, zippers, and thread.8 Neither consumers nor employees knew how the value chain worked, from fiber production to the final product. And there was limited awareness of what happens to clothing after consumers discard it.

Figure Globally, textiles is a large, complex value chain worth . trillion at the retail consumption level

Global textile value chain billion ()

Garmenting and Retail consumption Fiber Yarn Fabric non-apparel manufacturing ~ ~ ~ ~ ~,

Airjet % Technical Others Open end Technical – % % – % – % Viscose Home % Home – % Knit – % PSF –% %

Ring spun –%

Cotton % Apparel Apparel –% –%

Woven –% Filament yarn –%

Note: PSF is polyester staple iber. Includes staple iber and ilaments; split based on volumes Split between knit and woven estimated based on trade data for fabrics and inished garments Split estimated based on value; market size is estimated at manufacturing prices Sources: Datamonitor, secondary research; A.T. Kearney analysis

The linen value chain is geographically widely spread. High-quality flax imported from Belgium, France, and Egypt is processed in China and India, and the majority of production is then exported to France, Korea, Italy, Belgium, Greece, Turkey, Egypt, Brazil, Canada, Japan, and the United States. The value chain comes full circle, ending where it began in developed countries.

8 “The truth behind the barcode: Australian Fashion Report 2015,” Gershon Nimbalker, Jasmin Mawson, Claire Cremen, Haley Wrinkle and Elin Eriksson, Baptist World Aid Australia, 2015

Social Innovation Offers Five Golden Opportunities to the Apparel Industry 3 Success Has a Tarnished Lining

The environment While the industry has generated great economic and social value, it has come at a heavy cost. In terms of the environment, producing and processing natural fibers consumes huge amounts of natural resources. Production of one kilogram of fabric, for instance, generates 23 kilograms of greenhouse gas emissions and uses 2,000 liters of water and four kilowatt hours of energy.9

Turning raw materials into textiles is a major source of water pollution, contributing to 20 percent of industrial water pollution. Manufacturers use some 8,000 synthetic chemicals around the world to turn raw materials into textiles, many of which are released into freshwater sources.10

Manufacturing clothing is a major source of pesticide poisoning. The Pesticide Action Network notes that growing non-organic cotton uses 22.5 percent of the world’s insecticides and 10 percent of all pesticides on 2.5 percent of the world’s agricultural land.11

Clothing also accounts for 3 percent of global carbon dioxide (CO2) emissions, in both its production and use phases.12 What’s more, the levels of CO2 emissions and water and land use are projected to increase in the coming years (see figure 4). Though many brands and retailers are addressing their carbon footprint now, the planet is progressing toward a temperature increase of two degrees Celsius, making it more urgent for the industry to slow or reverse global emissions.

A toll on workers There has been a high social cost as well. In terms of income, the fruits have been unevenly distributed (see figure 5 on page 5). While the retail segment of the fashion industry has grown 10 percent year-on-year from 2012 to 2016, related wages grew at a meager 4 percent.

Figure The environmental impact of producing and processing textiles is increasingly negative

CO emissions Water use Land use million metric tons billion cubic meters million hectares kg + % +% +% fabric .

. , kg kWh greenhouse liters of energy gases of water f f f

World Bank reports LCA (life-cycle assessment) benchmarking, by Natascha M. van der Velden & Martin K. Patel and Joost G. Vogtländer

9 “LCA benchmarking,” Natascha M. van der Velden Martin K. Patel & Joost G. Vogtländer 10 “How can we stop water from becoming a fashion victim?,” Ravasio, P, The Guardian, 2012 11 “The deadly chemicals in cotton,” Environmental Justice Foundation and Pesticide Action Network UK, 2007 12 “International Carbon Flows – Clothing,” Carbon Trust, 2011

Social Innovation Offers Five Golden Opportunities to the Apparel Industry 4 Figure While the industry is growing, not everyone is growing equally

The textile industry is growing … Fashion tycoons are some of the The fashion industry contributes a high richest men on the planet share to many economies (% exports)

Amancio Ortega Inditex (Zara) billion % % % Haiti Bangladesh Lesotho Bernard Arnault LVMH billion

Phil Knight . % % Nike billion Cambodia India

… but so, too, is income disparity

Inhumane working Cotton farmers’ conditions in While the suicides in India Bangladesh have fashion industry ...wages in number ~, led to a high has grown at Asia Pacific annually number of ~% (retail)... grew at % deaths

Sources: ILO wage report - ; A.T. Kearney analysis

The legal minimum wage in most garment-producing countries is barely enough for a worker to live on. It is estimated that the current minimum wage in Bangladesh still covers just 60 percent of the cost of living in a slum.13 Many garment workers (particularly women and migrants) in developing countries work in what is known as the informal economy, with no access to employment benefits, including medical insurance and paid leave. There are multiple workers’ and human rights issues facing the industry, from safe working conditions, women’s rights (including maternity leave), and reasonable working hours, to child labor and discrimination.14 The collapse of the Rana Plaza factory in Bangladesh, where more than 1,000 workers died, was one of the deadliest garment-factory accidents in history and was caused by a lack of oversight by clothing brands and management’s turning a blind eye to safety compliance measures.15

Growing demand could worsen the situation The “fast fashion” culture filling our downtown stores, shopping malls, billboards, and magazines encourages consumers to buy more clothing at ever-cheaper prices. It has led to a proliferation of designs and made clothing as disposable as paper towels. In the United States, where each person throws away a shocking 70 pounds of clothing each year, textiles account for 5 percent of municipal waste.16 In turn, it has triggered the need to push costs down even further.

13 “Improving working conditions in the global garment industry,” Clean Clothes Campaign, 2014 14 “The Global Garment Industry and the Informal Economy: Critical Issues for Labour Rights Advocates,” Nina Ascoly, Clean Clothes Campaign, 2004 15 “Economic Development and Rana Plaza,” Richard D. Wolff, 2013 16 “Five things you probably didn’t know about the fashion industry,” Michele Petruzziello, World Economic Forum, 2015

Social Innovation Offers Five Golden Opportunities to the Apparel Industry 5 The fast-fashion consumer is always on the lookout for bargains. The shopping mindset has become buy-now, wear-now, to chase trends. Many consumers’ closets have transformed into an abundant and eclectic repository of impractical, infrequently worn items.

On the production side, fast fashion demands three distinct fulfillment calendars with different lead times (see figure 6). It has led the industry to move toward segmentation of supply chains as a result.

Figure The fast fashion culture has the textile industry trending toward segmented supply chains

Typical supply chain lead times for a yarn supplier Di erentiated calendar by product type Production Transit PLC start date In DC date Long lead time product with steady demand through the season

– months – months – months Normal idea-to-store cycle Fast fashion

Fast fashion cycle – months – months Responsive cycle for replenishment/NPD – months

Requires committing to styles and Replenishment fabrics, and reserving capacity and/or producing closer to the DC ZARA • adidas • Levi’s • Nike – days – days Victoria’s Secret • VF Corporation – days

Notes: PLC is product life cycle. DC is distribution center. NPD is new product development. Source: A.T. Kearney analysis

Yet Promising Trends Emerge

Shifting consumer preferences While some consumers fill their closets with whatever catches their eye, others are making an extra effort to purchase eco-friendly and sustainable products. They want to make an environmentally and socially constructive choice in terms of price, quality, utility, convenience, and the ethics of the company from which they are purchasing products and services. In fact, 55 percent of global online consumers across 60 countries say they are willing to pay more for products and services provided by companies that are committed to positive social and environmental impact (see figure 7 on page 7).17

17 “Global consumers are willing to put their money where their heart is when it comes to goods and services from companies committed to social responsibility,” Nielsen Global Survey, 2014

Social Innovation Offers Five Golden Opportunities to the Apparel Industry 6 Figure Consumers are increasingly willing to pay more for brands that are committed to a positive social or environmental impact

Percentage of consumers willing to pay extra, by region

Global Asia Paci ic Latin Middle East North Europe America and Asia America

Sources: Global Nielsen survey, ; A.T. Kearney analysis

The allure of sustainable fibers Retailers and manufacturers are becoming environmentally conscious, with many now using sustainable fibers and changing the way they do business (see figure 8). The North Face,

Figure By modifying their business practices companies can tap into the emerging trends of the new apparel world

New apparel world Key success factors

The emergence of fast fashion has led to a proliferation of designs and the transition of Excellence in product apparel to a disposable item development and new value propositions

The emerging trend for customized products has companies targeting micro-customer segments Strength in brand and customer centricity The increasing demand for sustainable products has apparel companies moving toward sustainable ibers Flexibility in manufacturing The increasing commoditization of upstream and supply chain value chains is squeezing margins

Savviness in embracing Digital technologies are expected to be embraced to address overall productivity and eiciencies digital technology

Source: A.T. Kearney analysis

Social Innovation Offers Five Golden Opportunities to the Apparel Industry 7 a leading apparel retailer, modified a popular line of its jackets using recycled yarns, including one made from fabric scraps and recycled plastic bottles. Levi Strauss recently launched its “Wasterecycling, and repurposing.

Social Innovation Comes to the Fore

The positive trends described above are promising, but there is much to do before apparel companies fully tap into emerging trends that will influence the textile and fashion world for a long time to come. Social innovation can help businesses get there. Defined as a novel solution to a social problem, social innovation can be more effective, efficient, sustainable, and equitable than more traditional solutions, with the value they create meant to benefit society as a whole over private individuals.18 According to Ashoka, this requires ambition and persistence to tackle major issues and offer new ideas for system-level change across the world’s most pressing social, cultural, and environmental challenges.

Social innovation may seem counterintuitive to business at first, yet it promises long-term benefits for the apparel industry. Various stakeholders have publicly committed to creating positive social impact and sustainability. Referring to his company’s plans, Chip Bergh, president and CEO of Levi Strauss, says, “We established the first code of conduct for apparel manufacturers, ensuring the people who make our product work in a safe environment and are treated with dignity and respect.” Karl-Johan Persson, CEO of H&M, says, “I am convinced our new sustainability strategy…will take us closer toward our vision—to lead the change toward circular and renewable fashion while being a fair and equal company.”

These CEOs and others understand the power of business and social innovation: profitability and sustainability are not actually incompatible. Businesses typically focus on high revenues and returns, and low capital requirements. In contrast, social entrepreneurs are driven by their vision to create positive impact and effect systemic change, and to minimize social and environmental damage during the production of goods and services. The large, complex, and interconnected structure of the apparel value chain actually provides multiple avenues for innovation, and no single organization will be able to find all the answers and skills in-house. Instead, collaboration among diverse stakeholders is the best way to anticipate and develop disruptive models and ways of working to achieve large-scale change.

It is important to know that collaboration and co-creation have their challenges. Internally, companies will need to instill the right vision, leadership, and culture; identify the right strategic issues for focus; and align incentives and execution in order to successfully scale these innovations. The business case is also more uncertain, often with a longer payback period, compared to traditional investments. Externally, a company may not be able to identify the right partner quickly, or may find that its operating model, culture, strategic objectives, or level of professionalism may not be compatible with that of social entrepreneurs.19

These challenges can be overcome, however, with the right mindsets and skills. Today, there is a multitude of social enterprises able to work with apparel companies to address their impact on poverty, unemployment, exploitation, excessive CO2 emissions, and other social and environmental issues.

18 “Rediscovering Social Innovation,” James A. Phills Jr., Kriss Deiglmeier, and Dale T. Miller, Stanford Social Innovation Review, 2008 19 Opinionway for Ashoka and CO Conseil

Social Innovation Offers Five Golden Opportunities to the Apparel Industry 8 The Five Opportunities for Social Innovation

Several companies are demonstrating ways to transform the industry.

1. Change-maker leadership Embedding socially conscious initiatives into a company’s strategy can positively impact society. Yet, apparel companies can find that catering to one social need requires addressing other social needs as well, which can be challenging. This is where businesses can develop change-making leadership that considers the overall community when they develop or revise their long-range planning—in effect, becoming social entrepreneurs.

Industrialization, for example, has brought hardship to large artisan and handcraft communities, especially those in developing countries such as India, Sri Lanka, Bangladesh, and Indonesia, where automated production has replaced handwork, leading to layoffs and economic peril for many workers. Government, the private sector, and nonprofits have tried helping these workers, but their roles have been limited in nature and their efforts not sufficiently collaborative to bring enough positive change.

Businesses can develop change-making leadership that considers the overall community when they develop or revise their long-range planning— in effect, becoming social entrepreneurs.

In contrast, retailer Anokhi, as a social entrepreneur, demonstrates a different path private players can take. This India-based apparel chain, which specializes in block-printed textiles using vegetable-color dyes, has produced eco-friendly textiles for 40 years. Using a socially conscious value chain, it employs more than 1,000 village artisans who work from home, in conditions they control, while it promotes the appeal of handcraft to contemporary consumers. The company consciously focuses on employment options for women, offers healthcare benefits to all employees, provides childcare on its factory premises, and offers educational support for workers’ children. By becoming stakeholders in employees’ welfare, Anokhi helps ensure a qualified workforce and a profitable business—bursting the myth that businesses and community empowerment cannot successfully coexist.

2. New customer value propositions Exploring new value propositions is an excellent area for businesses to collaborate with social entrepreneurs. Consumers demand new value propositions every day, often fueled by their growing awareness of the environmental and social impact of industry.

Apparel companies are increasingly using alternative or sustainable fibers in their designs, for example. Sustainable fibers are derived from resources that are friendly to the environment and

Social Innovation Offers Five Golden Opportunities to the Apparel Industry 9 produced in a way that maintains the dignity and the respect of the people who were involved in producing them. Thus, using sustainable fibers is a conscious effort on behalf of companies to reduce or eliminate their environmental and social impact, and helps consumers feel good about their purchasing decisions.

Bombay-based BOHECO realized this when it worked to make hemp a mainstream textile to replace cotton. Hemp is three times as strong as cotton, biodegradable, and very durable. It also requires less water and land, and fewer pesticides and herbicides than cotton for cultivation. Through its innovation lab, BOHECO is finding ways to convert hemp into food, clothing, and shelter products, and the company created its own label, The Hemp Couture, under which it brands and sells its products.

3. Transparent and responsive supply chain The global nature of this industry and its multi-tiered supply chain make it difficult to answer questions such as:

• Who made the product? Were the people involved in its making treated in a humane manner and compensated properly?

• What inputs went into making the product? Could they be harmful to someone?

• How responsive is my supply chain? Can I make changes to the supply system quickly in response to dynamic consumer, business, and regulatory requirements?

Organizations such as Fairtrade India and the Global Organic Textile Standard (GOTS) are making it easier to answer these questions by issuing certifications to producers and organizations for having a more responsible supply chain.

Fairtrade certifies farmers and businesses with its Fairtrade mark, which guarantees the consumer that farmers have received a fair price for their crop and that businesses followed environmental standards during production. More than 139,000 producers work with Fairtrade, which has helped lower their environmental impact by 30 percent.

GOTS is a worldwide textile-processing standard for organic fibers (those materials with at least 70 percent organic fiber). The standard also covers all dyestuffs and auxiliary chemical inputs, which must meet environmental and toxicology criteria. Some 4,600 entities worldwide (employing 1.4 million workers) have the GOTS certification.

While there also are systems in place that assess ethical compliance in four-walled factories, there is a pressing need for industry-accepted standards for ethical compliance in the homes, small workshops, and cottage industries of artisan producers. Nest is one organization with a program of proprietary ethical compliance standards, assessment, and remediation that is bringing unprecedented transparency and investment to the informal artisan sector.20

CanopyStyle is another example. The organization represents 105 brands that have committed to eliminating ancient and endangered forest fiber from their supply chain.21

The journey toward transparency and responsiveness is in its infancy, especially in the developing world. There is tremendous potential for collaboration among governments, industry bodies, businesses, and social innovators to increase the transparency of global apparel supply chains.

20 Nest company website 21 “3 Telltale Signs You’re Shifting the Supply Chain,” Nicole Rycroft, 2017

Social Innovation Offers Five Golden Opportunities to the Apparel Industry 10 4. Closing the loop through recycling Recycling concepts such as “closing the loop” or “cradle to cradle” have become more pronounced and important as fast fashion leads to excessive consumption and discarding of clothing. More businesses today are talking about recycling, reusing, and repurposing to help reduce the waste that the industry is creating at nearly every step in the value chain. Along with the positive environmental impact, recycling helps improve customer satisfaction and reduces cost as well.

New recycling technology is also emerging. Evrnu is a social-purpose corporation founded in 2014 that addresses the problem of the resource-intensive, environmentally negative impact of the textile and apparel industries. Evrnu technology safely converts post-consumer cotton garment waste by breaking it down to the molecular level and converting it to a high-quality, premium textile fiber. Levi Strauss has partnered with Evrnu to develop prototype jeans that are created from five discarded cotton T-shirts and use 98 percent less water than virgin cotton textiles in their production.22

More businesses today are talking about recycling, reusing, and repurposing to help reduce the waste that the industry is creating.

Elsewhere, the nongovernmental organization Goonj has partnered with apparel maker Raymond on a campaign called “Look Good, Do Good,” which offers free customized tailoring on a new pair of trousers in exchange for a used pair. Goonj recycles the old trousers, the customer enjoys custom tailoring, and Raymond strengthens its brand image and benefits from higher sales.

5. Lower costs Socially conscious practices can lower costs. Certain sustainable fibers have lower processing costs, a part of which may be passed on as a benefit to the end customer.

Apparel maker and retailer Patagonia heavily promotes its use of Tencel, a closed-loop fiber made of pre-consumer waste-cotton scraps and wood pulp, in its garments. Tencel production uses 95 percent less water than cotton.

On the other hand, sustainable cotton has its advantages too, including the use of less water than conventionally grown cotton and fewer pesticides. It also can reduce growers’ use of genetically modified seeds. Many firms, including Levi’s and The North Face, are trying to make cotton production more sustainable by taking advantage of these pluses as much as possible.

22 “Evrnu and Levi Strauss & Co. Create First Jeans Made from Post-Consumer Cotton Garment Waste,” BusinessWire, 2016 23 “Social entrepreneurs’ perspectives that are transforming the apparel industry,” Social Innovation Mapping in partnership with C&A Foundation and Ashoka, February 2016

Social Innovation Offers Five Golden Opportunities to the Apparel Industry 11 Scaling Up Is Imperative for a Real Difference

It takes strong commitment to overcome the status quo and break through a vicious cycle of unsustainable, traditional business practices. One of the biggest roadblocks to transformation in the apparel industry is the commonly held belief that the current system dis-incentivizes a value-driven business—that it has a long way to go before sustainability is part of its DNA.23

Today, the apparel industry generates billions of dollars in revenue every year, growth that has been achieved through inhumane and unsustainable practices that have persisted since the Industrial Revolution. The not-so-hidden costs of fashion that we have discussed are tremendous, yet many in the industry continue to follow the old ways of doing business.

The inability to transform can be attributed to another vicious circle: The economic risks for investing in sustainable aflternatives are perceived as too high.24 Many firms consider the value proposition for sustainable alternatives as weak, and hyper competition in the industry, coupled with rising input costs, have put pressure on maintaining low costs to continue earning profits.

Almost half the workforce now wants to work for an organization that has a positive impact on the world. Of those born between 1981 and 1996, 62 percent want to work for a company that makes a positive impact.

What’s more, driving a culture of sustainability is difficult, considering the highly fragmented supply chains. Short-lived supplier relationships dis-incentivize both brands and suppliers from investing in sustainable practices and true transformation. Unfortunately, many of today’s factories use their familiarity with how to comply with surface-level audits, which can document the appearance of regulatory compliance while failing to address the deeper issues.25 The prevalence of these unfair practices leads to social innovation being pushed to the fringes.

Developing a critical mass of voices to demand change and a conscience that attacks the problem at its roots are powerful components of systemic transformation (see figure 9 on page 13). Millennial customers and employees have begun to demand products from conscientious businesses with a social purpose. Almost half the workforce (42 percent) now wants to work for an organization that has a positive impact on the world. Of those born between 1981 and 1996, 62 percent want to work for a company that makes a positive impact.26

24 “Social entrepreneurs’ perspectives that are transforming the apparel industry,” Social Innovation Mapping in partnership with C&A Foundation and Ashoka, February 2016 25 “The Myth of the Ethical Shopper,” Hobbes, Michael, The Huffington Post, 2015 26 “Millennials want to work for employers committed to values and ethics,” Matthew Jenkin, The Guardian, 2015

Social Innovation Offers Five Golden Opportunities to the Apparel Industry 12 Figure Initiatives that can transform practices—and make sustainability a way of life—are needed

Change the • Break the mindset that business and social impact are mindset antithetical—identify co-creation opportunities • Use regulation and a few industry leaders to drive change

• Create forums for visibility to social innovators • Conduct pilots, demonstrate success Scaling up— • Scale up pilots, tap into collective key imperative resources and community capital

Prove the Build value • Think end to end—what is needed to make concept chains and this a way of life? is self- capacity • Place disproportionate focus on the sustaining weakest link in the value chain

Source: A.T. Kearney analysis

This has direct implications for employers: social innovation is a powerful way to engage and inspire top talent. Not heeding the expectations of Millennials will close employers off to a large portion of the talent pool.

Grasping the five opportunities for social innovation that we propose can help apparel and textile companies transform the industry and drive sustainability for the future.

Authors

Neelesh Hundekari, partner, Mumbai Pei Yun Teng, global director, [email protected] social impact, Amsterdam [email protected]

Siddharth Jain, principal, Mumbai Ashok Bhardwaj, consultant, Gurugram [email protected] [email protected]

Sreejith Edamana, consultant, Mumbai [email protected]

The authors wish to thank Stephanie Schmidt, Rajesh Varghese, Michela Fenech (Ashoka), and Tanya Khera (A.T. Kearney) for their valuable contributions to this report.

Social Innovation Offers Five Golden Opportunities to the Apparel Industry 13 About A.T. Kearney

A.T. Kearney is a leading global management consulting firm with offices in more than 40 countries. Since 1926, we have been trusted advisors to the world’s foremost organizations. A.T. Kearney is a partner-owned firm, committed to helping clients achieve immediate impact and growing advantage on their most mission-critical issues. We continually strive to improve our diversity and inclusion policies, structures, and support networks to ensure that we fully meet the needs of our people and our clients—and help set the standard for our industry. We actively promote a diverse and inclusive culture through a variety of channels, including our diversity networks and our equal employment opportunity policy. For more information, visit www.atkearney.com.

About Ashoka

Ashoka is the world’s largest network of social entrepreneurs and institutional change leaders with more than 3,600 leading social entrepreneurs, 200 leading schools, 40 universities, and 100 corporate partners in more than 85 countries. Ashoka has developed and led social entrepreneurship, ultimately introducing this movement to the global mainstream. Its work demonstrates that the surest way to create lasting change in any area is to be prepared to thrive in today’s rapidly changing world. The best way to achieve that goal is to create a society of problem-solvers by equipping everyone to act as an agent of change. For more information, visit www.ashoka.org.

Ashoka has launched Fabric of Change—a global initiative to support innovators for a fair and sustainable apparel industry—in collaboration with C&A Foundation. This initiative aims at leveraging the unique power of social entrepreneurs and their solutions and engaging other changemakers from the corporate and public sector to advance toward an apparel industry as a force for good. For more information, visit www.changemakers.com/fabricofchange.

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