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Regulation around sustainability reporting is rapidly evolving, increasing the pressure on brands to gather complex, in-depth data from their supply chains. The influx of data is posing a logistical challenge for brands and suppliers.
Earlier this month, Vogue Business published its second annual sustainability leaders survey, an in-depth analysis of how 45 leading fashion and beauty companies — representing 90 brands — structure their sustainability teams. Asked what limitations their sustainability employees report facing, many of the companies cited data.
An exclusive survey covering 90 fashion, luxury and beauty brands shows sustainability teams are still limited on time, money and people power, without which it will be difficult to achieve their ambitious targets.
British luxury brand Mulberry pointed out that not all of the required data is directly accessible to brands, and certain third parties in the supply chain are either unwilling or unable to provide the necessary data. Capri Holdings — which owns Versace, Jimmy Choo and Michael Kors — said that one of its main challenges with data is finding the right technology and systems to store and process it at scale.
Many of the European Union’s incoming regulations are underpinned by transparency and traceability. Top priorities are the digital product passports, designed to convey supply chain information to consumers so they can make more informed decisions, and the green claims directive, which aims to curb greenwashing and encourage only accurate, validated claims about sustainability.
Then there is France’s Anti-waste and Circular Economy Law, effective since January, which mandates that apparel and footwear labels include information about the percentage of recycled material by weight; the product’s future recyclability; the presence of harmful or hazardous substances; a warning about microplastic shedding if a garment contains more than 50 per cent synthetic fibres by weight (recycled or virgin); and traceability information (such as the country of origin for various steps of the manufacturing process, not just the finished garment).
Global brands also need to keep an eye on the Uyghur Forced Labor Prevention Act, a US federal law effective since December 2021. According to US Customs and Border Protection, in April 2023 alone, 377 shipments valued at more than $159 million were inspected on suspicion of containing Chinese cotton linked to alleged forced labour. Without supply chain transparency data, brands cannot prove otherwise, facing fines and delays.
Accurate data isn’t just essential for ensuring supply chains comply with current regulations. It’s needed to measure progress too. “Everything we want to improve depends on our ability to measure it,” says Shameek Ghosh, co-founder and CEO of supply chain traceability platform TrusTrace. “Currently, most sustainability efforts are broad-based, working off generalisations or assumptions, so companies are not making decisions based on their actual supply chains and impacts.”
Good data takes time
In the sustainable fashion space, there are three key data sets that fashion brands must get to grips with, says Ghosh. First, brands should have a full breakdown of the components and materials in their products because this affects the weight, which is used in lifecycle assessments to calculate, for example, transportation emissions. Then, for each of these components, brands should know the place of origin and place of manufacturing, going up to Tier Four (the raw material source). A third data point is the final place of manufacturing for the product, which is where brands typically get exposure to their social impact data, Ghosh explains.
The process of assembling this data can take two or three years. “You need to build relationships with suppliers to gather this data,” says Ghosh. “If brands want to achieve full traceability and transparency in this timeframe, brands need to set goals. For a large brand, this might mean gathering data for 20-25 per cent of their products in the first year, 30-40 per cent in the second year and 100 per cent in the third year. This was the timeline for early movers, but the rest of the industry only has two years before regulation comes into play.”
Experts say brands should support suppliers in upskilling staff to use databases and incentivise them to do this. Otherwise, the financial burden for gathering data falls on already underpaid and overstretched suppliers, often in the Global South.
“Brands not only need the data itself but evidence that the data is robust,” says Ghosh. “They need people in place — and a solid IT architecture — to track this in real-time.” Per the recent Vogue Business survey, many brands are creating new job functions to navigate data challenges. Mulberry added a business analyst to its sustainability team in February to deal with science-based targets and carbon data, while H&M Group says it has strengthened its data governance function in the last 12 months. Head of traceability roles are also starting to pop up.
Specificity versus scalability
Historically, many brands have used global industry averages to estimate their impact. This won’t be enough to comply with incoming regulations. Now, best practice is all about specificity and granularity, says Gediminas Mikutis, co-founder and CTO of Haelixa, which sprays unique DNA onto physical products to improve traceability and authentication from raw material to end-of-life. “In many countries, you now cannot use certain labels on a product if you cannot guarantee that that specific product was made according to those specific standards. There is still a lot of work to do to achieve that level of granularity.”
Still, there are necessary compromises to collect data at scale. “The first step is for brands to map their supply chains and locate their raw materials. Then, we go to the cotton gin or the cashmere buying stations — whatever the first consolidation stage is in the supply chain — and mark the materials from there,” Mikutis explains. “It’s not perfect, but many natural fibre producers in regions such as Pakistan, India, Tanzania and Turkey are smallholder farms. This is a good compromise between the best quality data — which would come from the farm level — and a process that is relatively scaleable.”
Haelixa trains existing staff at these consolidation points to spray the DNA to save time, money and emissions, sending its own staff to visit partners’ supply chains constantly. “Even if you train people, there might be opportunities to try and cheat the system, to get cotton from uncertified locations and spray the DNA on that,” says Mikutis. “We have automated controls using GPS to check this, and we also do third-party audits in most cases.” Brands are given hang tags with QR codes that allow them to communicate traceability data with consumers, he adds. The whole process adds approximately between two and five cents to the cost of each garment, depending on the scale and complexity of the supply chains.
Hugo Boss, C&A and two large European fashion retailers are already using the system, our survey shows. Others have started working with Haelixa on limited product categories, planning to roll it out at a later date. “Brands are cautious about communicating it to consumers until they have scaled it up,” says Mikutis. “Our competitors say they experience the same thing.”
Lack of standardisation
This influx of data poses a logistical challenge for brands and suppliers. They now require more sophisticated data management systems to collate, store and process the data, especially when multiple teams within a company are using the same data simultaneously. The process is complicated further because many third-party certifications and providers use different platforms, meaning one brand or supplier might be operating across five different data management systems. “This is a huge bottleneck,” says Mikutis. “Interoperability is the key word here.”
“There is a need for better, more accurate and standardised data in the industry in general,” a spokesperson for H&M Group tells Vogue Business. “We are continuously working to improve the collection and quality of our data and matching our strategy with upcoming regulations.”
As with the systems designed to hold data, the actual metrics collected by brands lack standardisation, says Ghosh of TrusTrace. But they shouldn’t hang about. “Brands need to get started on this,” says Ghosh. “Within the next three years, you will not be able to run a global business without good data.”
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