The sustainable fashion market is set to more than double over the course of about ten years. These are the estimates from which consulting firm PwC starts in its analysis produced for Pambianco on the fashion industry. What is driving the ecological transition in the fashion sector? And what lies behind it? Where does the circular economy fit in? These are just some of the themes addressed, all of which point to a system undergoing profound change.

What is changing in the fashion sector?

One of the most important findings to emerge from the analysis is that which shows how consumers, especially younger ones, are the core from which the green fashion revolution originates: in 2020, 63 per cent of them chose sustainable products, compared to 29 per cent in 2019. Could this be an effect of the pandemic? Quite possibly. The fact remains that it is an extremely significant figure when we consider that consumers are the primary driver of business growth. Equally fundamental is the change of pace undertaken by governments, which have influenced the transition to the sustainable market. Leading the way is Paris, which aspires to become the world capital of sustainable fashion by 2024, and which in February of last year passed the Loi anti gaspillage — an anti-waste regulation aimed at promoting a circular economy.

There are four key points: eliminating waste to preserve resources, mobilising industry to develop new production methods, informing citizens so that they can consume more responsibly, and improving waste collection. But the central issue is the ban on destroying unsold products, which must instead be reused or recycled.

The contribution of banks and investors

Among the key players in this journey towards sustainability are banks and investors, who are increasingly making risk-allocation decisions based on ESG factors — environmental, social and corporate governance — which can influence companies' ability to refinance. What does this mean? That when a bank is called upon to decide whether to lend or invest money in a company, it will also assess how well that company has integrated ESG issues into its corporate policies. This has an impact on what is known in the industry as the credit rating — that is, a company's ability to meet its financial commitments — but also on the ability of certain corporate borrowers to raise capital and secure financing.

According to surveys, a growing number of funds are explicitly adopting ESG mandates, giving certain borrowers in particular sectors or with particular assets greater access to liquidity. Some examples of companies that have struck agreements with the financial world on green issues? Tod's is one: it has signed a financing agreement with a pool of banks for a maximum total amount of 500 million euros. Then there is H&M, which has issued a sustainability bond worth 500 million euros. But there are also Chanel, Adidas, Burberry, Vf corporation, Moncler and Prada.

The resale business

Over the past three years, one of the businesses to have recorded the greatest growth is resale — that is, the selling of second-hand clothing — which has grown 21 times faster than the traditional clothing market. This is why brands will in all likelihood need to adapt by offering second-hand garments alongside new pieces: "Brands and retailers will not only gain additional profits, reinforcing the perception of quality, but will also increase customer loyalty through various incentives," PwC explained. "Resale will have doubled in the next five years, reaching a value of 64 billion dollars by 2024."

Confirming this trend are the stock market listing of Poshmark, a second-hand fashion platform, as well as the opening of several shops in the city of Milan itself, including, recently, Lampoo, and the partnership between Gucci and The RealReal, a platform specialising in the buying and selling of second-hand luxury goods.

Materials

Turning to materials, the research into the potential of the green fashion market conducted by PwC for the Circular fashion report 2020 identified a value of 350 billion dollars in opportunities for recycled materials in the western hemisphere, and a value of 40.38 billion dollars for the eco-friendly fibre market in 2020. The highest demand, up 69 per cent, was recorded for vegan leather, but recycled plastic also posted strong growth at +35 per cent, as did organic cotton at +23 per cent.