2021 Market Forces Conference Explores Fashion’s interface with Finance

| May 07, 2021 | Gabelli School of Business

By Claire Curry

The impact of the COVID-19 pandemic on consumer attitudes, the need for clear and consistent sustainability standards, and the ways in which consumers and investors are reshaping ESG in fashion were key topics of the PVH 2021 Market Forces conference held virtually on Tuesday, April 27.

The event, sponsored by fashion giant PVH Corp. and the Gabelli School’s Responsible Business Coalition, featured 18 speakers from around the globe and nine presentations. More than 350 attendees tuned in.

The Influence of COVID-19

No business conversation can overlook the impact the year 2020 had on everything from supply chain management to advertising and marketing to finance and investing. As businesses pivoted to stay afloat when the pandemic hit last year, many expected the growing focus on ESG to lag. Surprisingly, the opposite happened.

“In this year alone, global assets under management in the ESG category increased by an astounding 96%,” said Donna Rapaccioli, Ph.D., dean of the Gabelli School, in her opening remarks. “This unprecedented growth shows that our attitudes toward sustainability are changing more rapidly than we could have imagined.”

The impact of the pandemic on investing and consumer behavior was the topic of the conference’s first session. Three experts—Rose Marcario, former CEO of Patagonia and board member of Rivian and Meati Foods, Herman Bril, CEO of Arabesque Asset Management, and Cara Smyth, Gabelli Fellow and Founder of the Responsible Business Coalition—said that COVID-19 illustrated how drastically things can change overnight and how important it is to be mindful about how we live and conduct business.

“I think the interest [in ESG] is informed by the magnitude of the [COVID-19] crisis,” Marcario said. “It’s a health crisis. It’s a climate emergency. They’re both about life and death choices. I think about the speed and the flexibility that businesses reacted with COVID and that’s the same action and the same urgency that we need to fight the climate emergency right now.”

New Trends Reveal What’s Important to Today’s Consumer

Throughout the conference, the resounding sentiment was that the changes and crises of 2020 forced consumers to reprioritize and focus on what’s most important— health, social justice, and the environment. This shift in the collective mindset is influencing the ways in which consumers interact with organizations and brands.

Reflecting on the past decade in the fashion industry, PVH Corp. Chairman and CEO Emanuel “Manny” Chirico, BS ’79, noted a movement toward the broader purpose of business and corporate responsibility. While financial success will always be important, he said, companies are now being asked about their sustainability, supply chains, and positions on social issues.

“We need to be judged by more than just our bottom line or by the strength of our balance sheet and cash flow,” he said. “And consumers want an emotional connection with your brand. In the past, that would be more about image, but today it’s about what you stand for as a brand and as a company.”

Whitney Dailey, senior vice president of marketing, research, and insights at Porter Novelli, explored consumer trends that emerged in 2020. More than 75% of American consumers surveyed reported a deeper connection to companies that share values similar to their own and more than half felt that advertising should be more diverse and representative.

“Companies are recognizing that this is not only a moral imperative to make products and services more widely accessible, but also a business opportunity,” Dailey explained. “Brands are now thinking about how they can close the loop on their environmental impact but also extend the relationship with consumers beyond a new product purchase.”

The New Post: Chief Sustainability Officer

Along with growing considerations around sustainability, organizations are creating internal positions to specifically to ensure regulatory accountability and that all aspects of a business are examined through an ESG lens.

Marissa Pagnani McGowan, the first appointed chief sustainability officer at PVH Corp., discussed what this responsibility entails in a spotlight conversation with Frank Zambrelli, executive director of the Gabelli School of Business Responsible Business Coalition. She described the role as the equivalent of being a “seer” and a “translator,” one who looks ahead into the future and translates sustainable development goals into actionable plans.

“The exciting part of my job is how we embed sustainability,” she said. “How do we make it part of day-to-day decision making? How do we build that into the business process and systems so that you have default settings for designers and product development choices that are easy to make because the information is at your fingertips? There is so much more to come!”

Growing Regulation & Policymaking

Several conference presentations explored the strides being made in ESG regulation and policy. Since the U.N. Global Compact and the 2015 Paris agreement, there have been many other milestones, including the SASB initiative and the sustainable finance directive recently published by the EU.

“That will impact the investment universe in Europe, but also, U.S. asset managers who have clients in Europe will have to comply with these rules, the same as global brands with big global companies who have businesses in Europe,” said Herman Bril, CEO of Arabesque Asset Management. “If you want to do business in a certain region, you have to meet the ESG bar.”

Speakers also emphasized the need for simplification and consistency in regulations and in communicating with consumers and investors, so they have the information they need to make informed choices. Neil Stewart, director of corporate outreach for the Sustainability Accounting Standards Board (SASB), said that SASB was created to help companies provide standardized ESG data to investors.

“We provide industry specific ESG disclosure standards for 77 different industries, so that covers the whole business universe,” he said. “And the reason they have to be industry specific is that ESG is not one-size-fits-all. Different factors—for example, climate risk—could matter in different ways to different industries.”

Looking ahead, Stewart expects greater harmonization and cooperation at the global level. “It’s a very dynamic space with a lot of moving parts, but we are moving toward a simpler landscape,” he said.

Scaling Impact

Pagnani McGowan dreams of the day when there is a “food label” for clothing, a concept shared by many conference participants. In the session “ESG and Fashion Tech,” leaders from the Apparel Impact Institute, Textile Exchange, and the Sustainable Apparel Coalition shared new initiatives to help fashion brands better understand their full material impact. These include peer-to-peer comparisons and tools like the Preferred Material Matrix, which the Textile Exchange is launching in June. It will look at factors including animal welfare, climate, and biodiversity, to provide more holistic impact insights beyond the traditional data landscape which includes energy, chemicals, and water.

“You can’t manage what you’re not measuring,” said Amina Razvi, executive director of the Sustainable Apparel Coalition (SAC). “Over the past ten years, SAC member companies have been working together to ensure that we are measuring the right metrics in a standardized way so that ultimately, companies can communicate their performance not just to investors, but to consumers.”

The conference participants concluded that consistent industry tools, standards, and reporting will drive change as consumers and investors better understand impact. Technology innovations still to come will also help the industry achieve action at scale.

“Some of the things that we want to do, we don’t have the technology yet to do at scale,” said Pagnani McGowan. “The example we sometimes use is breaking down a blended fabric, putting that back into the system, and doing that at scale and in a cost-competitive way. So, whether that’s investing in green chemistry or circular innovations that allow for more circular business models, whether that’s working on our data and our industry systems and tools—all of these things I see as both hurdles and as opportunities to unlock.”