Fashion has frequently come under fire for its adverse effects on ecosystems and poor treatment of employees. Manufacturers and brands are under increasing pressure to publicly acknowledge their environmental footprint while making real improvements to their business practices.
Against this backdrop, industry leaders are taking tangible steps to operate more ethically and sustainably, while examining how manufacturers can assist brands with their environmental, social and governance (ESG) ambitions.
Current trends in the value market
Brands are tackling sustainability through various initiatives, including introducing resale services and using recycled materials to boost sustainability. However, these initiatives are often met with criticism from consumers who argue that they don’t address the bigger issues of promoting circularity and reducing waste.
A recent GlobalData report, Apparel Market to 2027, shows the biggest problem with sustainability in the industry is the ‘fast fashion’ business model that many value brands follow. This model often involves producing affordable apparel that is not designed with longevity in mind, leading to a high turnover of clothing and a significant environmental footprint.
Moving to more sustainable production methods requires investment, which will have an impact on the already thin profit margins of value brands. Further, product quality is often compromised to keep prices low, again leading to a shorter lifespan of garments and contributing to the problem of fashion waste.
As a result, GlobalData reports that there is now a growing demand for better quality, longer-lasting garments with a lower cost per wear. However, this coincides with rising inflation, which is restricting consumers’ disposable incomes.
Affordability remains a key factor when purchasing clothing, particularly for people on lower incomes.
The global value apparel market grew by a compound annual growth rate (CAGR) of 3.7% between 2017 and 2022, to reach $228.8 billion. Out of all the price positionings, this was second only to luxury.
For 2023, the market is forecast to rise 1.6%, as lasting inflation will continue to force some consumers towards more affordable brands.
GlobalData forecasts that between 2022 and 2027, the value apparel market will grow at a CAGR of 3.2% as macroeconomic challenges persist and consumers remain loyal to these brands.
Environmental: taking the initiative
Given the negative reputation that fashion has when it comes to ESG, manufacturers such as Hansae are eager to take the initiative on environmental issues, enhancing their own and their clients’ sustainable credibility.
“The fashion industry has a substantial impact on the environment due to its large and complicated supply chains,” says Daymond Ik-Whan Kim, CEO and Vice Chairman of Hansae, whose clients include Target, Gap, Walmart and Kohl’s.
“By prioritising environmental sustainability, we believe we can influence and promote our supply chains to actively participate in environmental initiatives, and to help establish industrywide standards and practices. This is not only to improve our own sustainability, but also to drive positive changes across the industry.”
Starting with their own environmental impact, the company has increased its use of biomass fuel to reduce greenhouse gas emissions. Ik-Whan Kim says this was a major step forward for the company.
“By utilising biomass to curtail greenhouse gas emissions, [we are] positively impacting society by mitigating the adverse effects of climate change,” he says. “On a corporate scale, effective management of these impacts is crucial, not only for identifying and responding to risks, but also for potentially cutting operating costs and exploring new opportunities.”
Hansae has not stopped there. The global manufacturer has also implemented major solar-panel installations in Nicaragua and Myanmar to generate renewable energy. It has also made noteworthy strides in renewables by procuring RECS Energy Certificate Association in Indonesia.
“We regard these endeavours as foundational steps towards our 2050 Net Zero plan, with plans to further expand such investments in the future,” says Ik-Whan Kim.
In another move towards reducing their environmental impact, Hansae launched its ‘10% For Good’ campaign in 2019, donating this percentage of its net income from all sustainable orders to environmental organisations and future sustainability initiatives.
The ‘10% For Good’ pledge calls for collaboration with third-party organisations on water management, green raw material research and development, hardware upgrades and sustainability retrofits. These new initiatives, along with ongoing sustainability management programmes, aim to improve the future for Hansae’s employees, partners and customers.
Social: employees as invaluable assets
Hansae operates a sophisticated welfare programme for its workers, of which Ik-Whan Kim is extremely proud.
“Employees are invaluable assets and essential allies for the company in navigating fierce market competition together,” he says. “ESG management begins with prioritising employees within the company. A healthy and motivated workforce is a fundamental component of long-term business sustainability.
“A welfare programme is a strategic investment that yields returns in the form of satisfied, loyal and productive employees. It fosters a positive environment, attracts and retains talent, and enhances employee well-being and productivity. By investing in the welfare of our employees, we position ourselves better for future success.”
This is evidenced by Hansae’s Yes24 Foundation, a cultural initiative that translates books into Korean.
Establihed in 2014, with a personal donation from Dong-Nyung Kim, chairman of Hansae Yes24 Holdings Company, the foundation’s goal is to expand cultural relationships beyond current economic cooperation to foster, encourage and expand cultural exchanges with Korea and other Asian countries.
Sponsored projects include university student overseas volunteer programmes, whereby students from Korea and Vietnam can participate in activities and cultural exchange programmes.
Governance: reporting progress
Progress in ESG programmes is notoriously difficult to audit accurately. Hansae’s solution is to operate an independent compliance team to record its progress.
“The Hansae compliance team plays a pivotal role in overseeing, reporting and enhancing ESG activities. Through systematic data collection, performance evaluation and a commitment to transparency, the team facilitates the company’s alignment with sustainability objectives, regulatory mandates and stakeholder expectations,” Ik-Whan Kim explains.
“Following a thorough analysis of the collected data, the compliance team compiles comprehensive reports illustrating the company’s progress in ESG initiatives. These reports encompass key performance indicators (KPIs), benchmarks, comparisons with previous periods and pertinent industry standards. They provide a clear assessment of the company’s ESG performance, pinpointing areas that require attention to the management.”
Ik-Whan Kim says that this approach ensures transparency, accountability, robust corporate governance and effective management of Hansae’s ESG activities.
Helping big brands with ESG issues
Hansae has partnerships with some of the largest fashion brands in the world, including GAP, H&M, Hanes and Zara.
Ik-Whan Kim says Hansae is committed to helping such brands with their own ESG commitments by understanding and ensuring their own goals align with their partners’, and then identifying any gaps between the two.
“We identify the resources available for leveraging, and strategise on how to bridge any gaps. With deeper insights into on-site operations and production sites, we engage with our partners in a more pragmatic manner by sharing this practical information,” he explains.
“Moreover, we foster collaborative ESG initiatives, such as sustainability projects, community engagement programmes and joint investments in renewable energy sources, reinforcing our collective commitment to responsible practices.”
Hansae recently celebrated its 40th anniversary. Looking ahead, Ik-Whan Kim sees big changes for the industry.
“The importance of ESG management is continually growing for fashion brands that want to secure competitiveness and protect their stakeholders – consumers, shareholders, investors, employees, community residents, etc. The fashion industry has a close relationship with the environmental and social aspects, from production to the disposal of products,” he says.
Ik-Whan Kim adds that Hansae will be playing its part in these changes.
“We are well aware that ESG management and practices are considered long-term strategies that affect corporate sustainability,” he says. “The fashion industry is expected to make many such ESG changes in the future. We will keep striving to develop eco-friendly products, and to reduce waste with circularity systems and recycled fibre.”
For more information on how Hansae is making significant strides in sustainable fashion, download the free whitepaper below.
