ASN Impact Investors, the asset manager of Netherlands-based ASN Bank made waves in the financial and fashion sectors with its landmark decision to completely divest all of its investments in the clothing industry.
The move came as ASN tightened its sustainability policies, marking a stark departure from the 12 companies it alleges to be inadequately committed to sustainable practices.
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By GlobalDataHennes & Mauritz (H&M), Inditex, Marks & Spencer (M&S), Asos, Next, Puma, Lojas Renner, Gildan Activewear, Kontoor Brands, ASICS Corporation, Hanesbrands, VF Corporation were among the firms named.
The 12 fashion brands did not respond to Just Style’s request for comment at the time of writing, however ASN Impact Investors director San Lie explains: “Despite our engagement efforts, the companies have failed to take sufficient steps to improve the situation in recent years.”
ASN’s decision raises important questions about whether sustainable investors will want to invest in the fashion industry in future and whether other investors might decide to leave in future.
Is ASN’s move a major shift or an isolated event?
Although ASN declared that it was not ruling out any future investments in the fashion industry, it highlighted that for such investments to be made fashion companies had to meet its “tightened criteria and move towards a circular clothing industry.”
GlobalData retail analyst Neil Saunders is not surprised by the move but argues it will not signal a broader industry trend.
“The decision is not entirely surprising because ASN focuses on sustainability, and it wants to divest companies which it believes do not fit with its values,” Saunders remarks.
He is sceptical that other investment firms would follow ASN’s lead, stating: “Most other investment houses will not follow suit as they have a different mix of priorities which are more focused on the returns and less on sustainability.”
ASN Impact Investors’ divestment is undeniably drastic and underscores the growing importance of sustainable investments, however its focus on environmental and social impacts is not universally shared.
Saunders describes ASN as an investor with an agenda and whilst its actions could inspire niche or impact-focused investors to consider similar moves, “most mainstream investors do not follow this playbook. They’re looking for companies that produce growth and have good business models,” he says.
Saunders suggests ASN’s move might serve as a signal, but it is unlikely to reshape the landscape of global investment overnight.
Impact on fashion companies
For the fashion companies affected by ASN’s divestment, the direct financial impact may be less significant than the symbolic one.
When asked about what the immediate consequences will be for the companies involved, he shares: “Frankly, not much.”
He elaborates that the stake held by ASN was relatively small within the context of these global firms, adding, “I also don’t think the wider market will take this too seriously.”
Some companies, such as M&S, have already made efforts toward sustainability, and Saunders suggests that targeting them in this divestment could be seen as “performative rather than serious.”
Furthermore, he questions why ASN had invested in these companies in the first place if it truly adhered to the values it is now criticising.
In making its case for divestment, ASN Impact Investors cited the rise of ultra-fast fashion giants like Shein and Temu, whose accelerated production cycles and questionable sustainability practices pose challenges for the industry.
ASN director Lie points out: “These clothing companies are now also competing with Chinese players such as Shein and Temu, which produce garments even more quickly. This hinders sustainability, which is why we have taken the drastic decision to stop investing in them.”
However, Saunders points out that ASN’s classification of some of the divested companies as fast fashion may be misleading.
He explains: “Shein and Temu are in a very different category to firms like M&S and Next.
“In fact, it is extremely odd that ASN even classifies M&S and Next as fast fashion players because they aren’t.”
He continues: “Shein and Temu’s model is far faster and relies on huge production volumes with some debate around the impact on the environment and workers.”
It is well-known that both Marks & Spencer and Next have made strides in sustainability and maintaining more responsible supply chains.
In 2024 M&S invested £89m ($112.4m) in its pay and family leave policies amid the cost-of-living crisis and trialled fibre-to-fibre recycling for a wider 2040 net zero goal.
The role of financial institutions in sustainability
ASN Impact Investors’ divestment raises questions about the role that financial institutions play in promoting sustainability within industries like fashion.
Saunders believes that while investors have some influence, their goals often clash with the realities of the marketplace. “Investors want companies to adhere to good sustainability practices and to abide by regulations and laws. However, they also need companies to make a profit,” he says.
This tension between sustainability and profitability can limit the scope of change that investors are willing to push for.
Lie believes that ASN holds a huge responsibility in building a more sustainable world due to its influence within the financial sector.
“We can and must ensure that money goes to the right places and is used to build a more sustainable future,” he notes, before adding: “This divestment sends a strong signal to clothing companies and other investors that they really need to make headway when it comes to improving sustainability in the clothing industry. We need to be moving forwards, not backwards.’
Saunders suggests ASN’s goals may be “unrealistic” for mainstream investors and concludes: “If companies followed their priorities, they’d become less profitable, and prices would rise for consumers. Everyone would become worse off.”
