Several years of data has confirmed that companies with high ESG performance are leading on critical financial indicators such as operating margin, and they’re also being incentivized by banks with new credit instruments that reward sustainability performance with lower rates. The fashion industry is leaning in, with companies like Prada and PVH closing multi-million-dollar green bond offerings with the intention of achieving their sustainability goals.
The new role of sustainability in fashion and the uptick in fashion brands and retailers utilizing ESG financing is transforming business education and has left a gap in graduates’ skill sets that is crucially needed today. Fordham University’s Responsible Business Coalition (RBC) in New York City is playing a major role in this transformation by engaging fashion industry leaders with diverse expertise to advise on impact strategies and better serve business school curricula.
We talked to RBC Executive Director Frank Zambrelli about the transformation of business education to cater to the growing focus on ESG investing – particularly in the fashion industry.
You’ve got a long history of working closely with luxury fashion brands, but it wasn’t until fairly recently that you began focusing on the ESG outcomes of businesses. Why this, and why now?
Frank: My efforts in sustainability were gradual, at best, until April of 2013. [The collapse of the garment factory at] Rana Plaza changed everything for me and for so many in the fashion industry. I had spent my life personally supporting environmental and social causes, even as a child, but that moment was like the flip of a switch … a realization that I could leverage my experience and connectivity to influence industry’s approach to sustainability. There was no going back from there.
Tell us about the work you’re doing at Fordham.
Frank: The work at Fordham actually has two tracks. We’re helping the fashion industry solve some of its ESG issues by creating a discreet forum for research and collective coordination. Then we’re creating a learning loop to bring the new and dynamic changes the fashion industry requires back to curriculum, educating the next generation to meet new and emerging challenges.
Things are beginning to change, and the RBC at Fordham’s Gabelli School is leading the way – but in general, business education has followed the Friedman theory of economics, maximizing shareholder value over all else. In our societal shift to stakeholder capitalism, that view is myopic. The finance industry has realized the materiality of sustainability, and we’re beginning to see fundamental shifts in assessment because of it. Combined with changing consumer behavior, these market forces are starting to create the necessary pressure for movement.
We know that fashion, as a broader industry, has been detrimental to the environment and society in many ways. How does the shift toward more responsible practices in this industry compare to others you’ve witnessed? Is it happening faster or more slowly?
Frank: We absolutely need to pick up the pace, but I do believe many leading businesses are under transformation. There are remarkable programs underway with brands and retailers that are a 180° shift from business as usual just five years ago. With that said, there is a vast subset of fashion that remains stagnant. Consumers, investors and regulatory pressure will accelerate the shift in many companies over the next few years.
How is the RBC ensuring that the fashion industry leaders with which it consults are diverse and representative?
Frank: In general, the RBC works across brand and retail companies, with large and small companies, homing in on a diversity of issues across environmental, social, and governance-oriented impacts. Working collectively is part of the coalition’s efficacy, as is finding ways to mitigate impact while respecting the needs of the fashion industry to earn a profit.
What is the future you wish to see via the work you’re doing?
Frank: The future I wish to see is one in which environmental and social impacts are considered as key elements in any business proposition. The same way we understand consumer targets, profit and loss, revenue and margin, we will naturally integrate ESG as a material factor in the success of business. Companies that perform poorly along these lines would fare no better than a company whose revenue and profitability were insufficient. I’m hopeful because of the market forces I mentioned earlier … investors and consumers are powerful movers in how businesses operate. I am also seeing supportive regulatory efforts underway around the world, from Europe’s new taxonomy and disclosure requirements to the new U.S. administration’s focus on a more sustainable society. Some of the biggest struggles will come in the form of metrics and measurements, uniformity in reporting, and the homogenization of assessments that will bring required consistency to sustainability. But I have a lot of faith. There’s so much work to do, but the motivation increases every day.
Listen to Causeartist podcasts about the fashion industry here.
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With a formal education in journalism and mass communications, Lindsey has spent her professional life helping national brands and publications hone their voices and grow their digital audiences. She is a co-founder of Bark Media, a content marketing agency dedicated to telling the stories of impact brands.