Fashion Opens the Door to the ‘Economy’: When Sustainability Brings Economic Benefits

The difficult economic situation and the need to focus on sustainability are factors driving change in fashion companies.

On the one hand, we are witnessing a market shaken by inflationary volatility, causing some brands to slow down or discontinue sustainability initiatives—even as digital channels expand and new supply chain models emerge. On the other hand, new regulations on sustainability and environmental responsibility are driving consumer demand for transparency, especially among younger buyers.

The economics of the fashion supply chain and its environmental footprint can no longer be seen as opposites, but as complementary priorities that contribute equally to business success, both in terms of brand image and revenue. Companies are now signaling a desire to combine corporate social responsibility (CSR) and economics, to the point where a new term is emerging to define this approach: Economy.

Introduced in the context of the broader fashion supply chain at Techtextil and Texprocess in Frankfurt in 2023, the concept combines “economy” and “ecology.” It promotes a vision of economic and ecological perspectives as fundamentally linked, so that brands no longer have to choose between sustainability and profitability.

The benefits of an economics-based approach are numerous. In addition to its direct impact on sustainability, it enables process efficiencies, cost savings, and long-term brand competitiveness. It also helps companies meet changing customer needs, including the desire for low-impact, affordable products.

Industry 4.0 Solutions

Technology is key to enabling this. The fashion industry needs Industry 4.0 applications that provide full connectivity and visibility throughout the supply chain. Cloud, IoT, big data and AI are among the modern tools that optimize processes and increase efficiency, while improving the use of energy and natural resources and reducing the carbon footprint.

In the fashion industry, econogy can start at the very beginning of garment production. Raw materials make up around 60%-70% of production costs, and smart, connected technologies—implemented, for example, in the cutting room in line with ecodesign principles—can significantly reduce material waste.

In addition, technologically advanced systems supporting on-demand production improve warehouse management, limit excessive material consumption and reduce the risk of unsold items.

Sustainable business models

Such activities are not limited to the production phase. It is important to look at the broader possibilities in solving CSR problems.

New technology platforms can track and trace the origin of fabrics from fiber to consumer. They ensure compliance with increasingly stringent regulatory requirements while providing brands with the information they need to make informed decisions about using sustainable, certified and recycled materials.

This path to change is being driven by the introduction of standardised tools and regulations for sustainability assessments. In the EU and North America, new regulations require every garment to have a digital product passport (DPP) or digital identifier. The EU DPP is expected to be adopted by the end of 2025. Although the law will not come into force until 2027, it is likely that we will see many European brands adopting it as early as 2025.

Implementing DPP enables the tracking of the entire life cycle of products and materials, providing much greater transparency for companies and consumers. For this reason, companies must be aware of the potential impacts of the new regulations and adapt their business models accordingly. They must embrace the paradigm shift towards circular economy practices, sustainable materials, carbon neutrality, social responsibility, consumer awareness and compliance.

Organizations today are expected to be agile and fluid. They must have the skills to navigate a range of complexities, including an ever-changing regulatory landscape. They must also leverage the opportunities offered by new technologies that promote, among other things, traceability and sustainability. Systems that centralize data and make it available in real time can help make quick and informed decisions.

Brands are adopting different strategies to move towards econogy. Some are focusing on manufacturing and design, while others are investing massively in an omnichannel strategy or exploring how the concept can lead to the adoption of solutions based on Industry 4.0 principles.

With many fashion companies still at the beginning of their sustainability journey, expert support will continue to be essential. Brands need to see sustainable practices as an opportunity to pave the way for innovation, cost savings and increased productivity.

By requiring short-term investments, the econogy approach promises to enable fashion companies to offer a completely new value proposition to consumers. The way forward is an industry that can embrace transformation and the entire ecosystem of organizations, people, skills and technologies.

Leonard Marano is the president of the Americas region Lectra.