Maybe environmental concerns shouldn’t focus on a carbon footprint but a wardrobe malfunction.
The fashion industry produces about 10% of annual global carbon emissions, which is more than all maritime shipping and international flights combined, according to the United Nations.
Nearly 2,000 gallons of water are used to make a single pair of jeans, equivalent to the amount of water an average person drinks over seven years. The global sustainable-fashion market, currently valued at around $8 billion, is projected to reach $33 billion by 2030 as impact investors seek to support companies innovating supply chain and production processes.
“We need a lot more consumer understanding of the dynamics of the fashion industry — understanding how much clothes are produced and thrown away right away, understanding how much toxic materials go into every [article of clothing],” Yihana Von Ritter, director of private market investments at Align Impact, told Crain Currency.
Align Impact works with family offices, foundations and individuals to advise them on impact investing opportunities. Funds devoted to sustainable fashion, such as Alante Capital and the Good Fashion Fund, typically have investment portfolios spanning 10 to 20 companies.
“If I were to have a conversation with a family office interested in sustainable fashion, my nudge would be to invest in one of these funds to get diversified exposure, and that’s typically a 10-year lockup,” Von Ritter said.
Align Impact looks to support companies using alternatives to plastics, synthetic chemicals and chemical dyes. Namastate, for instance, is a Los Angeles-based clothing brand that uses 100% plant-based materials.
“Hemp is the miracle plant,” Von Ritter said. "We’re really excited about all of the production that could come from there."
Melke is a New York City-based sustainable-clothing brand founded by Emma Gage — a member of the Carlson Family Office, started by Radisson Hotel Group founder Curt Carlson. Melke avoids using any plastic or synthetic materials and instead emphasizes lots of hemp, wool and linen, Gage said.
She also buys organic cotton through “deadstock,” a sustainable-fashion production concept that involves buying unused materials from another company.
“Organic cotton would be my least favorite to use because of water consumption," Gage said. "In terms of fabric and accessibility, a lot of people use cotton. I’ll usually buy cotton as a resale by a company that’s selling it.
“I think the number-one place that you can really focus on sustainability is making sure you aren’t overproducing, that there’s a really high sell-through rate — which means what you do produce you are selling at either full cost or not having to mark down or go into resale.”
Other sustainable-investment opportunities highlighted by Von Ritter include the invasive-species leather brand Inversa, plant-based fur maker BioFluff, nature-based dye brands Colorfix and Nature Coatings, and lab-grown leather brand VitroLabs.
“I would think of these as long-term investments,” Von Ritter said. “A lot of what we’re doing — particularly the excitement around innovation production, producing new types of textiles, new ways of dyes and clothes — all of these have a research and development cycle required in order to get to scale. These are not one year in, two years later you’re out.”
The Good Trade has compiled a list of 99 sustainable-clothing brands, including mainstream sellers such as Etsy, Allbirds and Patagonia.
High-net-worth investors searching for the next major sustainable-fashion brand should be encouraged by the 79% of consumers who have changed their purchase preferences based on sustainability practices, according to the Capgemini Research Institute.
In 2022, U.S. Sen. Kirsten Gillibrand, D-N.Y., introduced The FABRIC Act, which aims to position the U.S. as a global leader in responsible apparel production through new wage and labor regulations and domestic manufacturing investments. Co-sponsors include Sens. Cory Booker, D-N.J.; Elizabeth Warren, D-Mass.; and Bernie Sanders, I-Vt.
“Most investors don’t realize the blissful fashion industry is the second-largest carbon polluter after fossil fuels — larger than the airline industry," said Chris Kolbe, co-founder of HyperNatural, a plastic-free apparel brand. "Pollutive synthetic materials and chemicals are the most significant portion of the problem”
“When regulations mandate transparency and accountability, the consumer demand for sustainable brands will explode, and there will not be enough sustainable materials to meet the consumer shift.”