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DM&T's analysis of sustainability in the Danish fashion and textile industry

Even though the entire report is only available in Danish, you can still read the executive summary for the 2023 edition.

09. april 2024

Background and methodology

For the fourth year in a row, DM&T has taken the temperature of the fashion and textile industry's sustainability efforts. This was done with a survey conducted among DM&T's members in December 2023, and more than 100 respondents participated in the survey, which is slightly higher than last year.

The participating companies are representative of DM&T's members and the industry as a whole. This is true both in terms of company size and sub-sector. Thus, we believe that the survey results help to paint a true picture of the industry's efforts in the area of sustainability.

Unlike the previous three years, DM&T has been solely responsible for the survey and data analysis. From 2020-22, the survey was conducted in collaboration with Copenhagen Business School and the Royal Danish Academy, and the 2023 edition builds on the work and question framework from previous years. Each year we have evaluated and adjusted the questionnaire, and in 2023 we have added new questions on topics such as diversity and inclusion, reorganisation of the company's production and sustainability.

As always, the new questions are based on current themes that the industry needs to address and work with.

The data was processed in January 2024 and was first presented at an event on 19 February.

Key points from this year's survey

This year's survey offers both positive and negative trends, and the responses indicate that there is greater clarity in the industry's companies. This is reflected, among other things, in the fact that far fewer people generally answer "partly" or "don't know" throughout the survey.

Here are the positives

Let's start with the positives. In 2022, we added a question about awareness of the EU Textile Strategy for the first time.

At that time, 64 per cent stated that they were aware of the strategy, which was a cause for concern as it will define the industry's work in the future. Nevertheless, by 2023, that figure has risen to 82 per cent, which is encouraging and shows that the increased information and awareness of the EU Textile Strategy has spread throughout the industry. A number of the initiatives under the EU Textile Strategy have also materialised in the intervening period, which may well have had a positive effect on awareness. At the same time, the assessment of the extent to which the EU Textile Strategy is incorporated into both the individual company's and the rest of the industry's business strategy has increased.

There has also been a positive development in the industry's work with due diligence, albeit on a smaller scale.

The proportion who say yes to working systematically with due diligence has increased from 37 to 42 per cent, but at the same time, the proportion who say no has increased by five percentage points. Again, we see greater clarity among respondents, with fewer answering partly or don't know, and CSDDD may also play a role here. On the positive side, 45 per cent (40 per cent in 2022) say yes to conducting risk assessments, while 38 per cent (33 per cent in 2022) now follow up on these with an action plan and targeted activities. There is also an increase in the share that has established a grievance mechanism. The figure has increased from 38 to 43 per cent. Here, the proportion answering "partly" has increased, and the reason for this can probably be found in the fact that both internal and external complaint mechanisms are asked about; if you only have an internal complaint mechanism, you will be inclined to answer "partly".

There has been a slight positive development in the industry's climate efforts. 28 per cent (22 per cent in 2022) now answer that they make carbon footprints, and if we look at the development over three years, the trend is even more positive. There are very large differences in the industry in this area; 74 per cent of the largest companies do carbon accounting, while only eight per cent of the smallest do it.

When we look at which scopes companies include in their carbon accounting, there has been a significant increase in scope 1, which is 91 per cent covered in their carbon accounting (79 per cent in 2022), while scope 2 has increased to 89 per cent (85 per cent in 2022). In contrast, the share of scope 3 coverage has decreased to 49 per cent (59 per cent in 2022). There is no clear explanation for the significant decrease in scope 3.

There are also positive signs in the new questions about companies' transformation of production as part of their sustainability efforts. 62 per cent have reduced the number of suppliers to focus on stronger strategic partnerships, while 40 per cent have increased the number of NOOS items and 44 per cent have reduced the number of seasonal styles. The number of collections has not changed significantly, although 18% have reduced the number of collections. 69% have taken initiatives to minimise waste to some degree, which is also positive.

If we focus solely on the clothing and footwear companies, the picture is even clearer. Here, 47 per cent respond that they have received more NOOS items, while 50 per cent have received fewer seasonal styles. This does not answer the question of whether there are fewer products on the market, but it is a clear indicator that the Danish industry is considering how they can put together their product range in a different way that gives the products a longer lifespan.

The strategic anchoring of sustainability is crucial, which is why it is interesting to see how the perceived barriers to working with sustainability, corporate social responsibility and circular economy have shifted over the past year. It is very positive that far fewer people cite a lack of management focus and support as a barrier. The figure has dropped from 39 per cent in 2022 to 13 per cent in 2023, and at the same time, 18 per cent respond that they feel there is a lack of capital to implement the relevant initiatives. The year before, that figure was 34 per cent. The strong internal support is also reflected in the fact that only four per cent in 2023 feel that it is difficult to convince the rest of the company's departments of the importance of working with sustainability in a structured way. In 2022, nine per cent and in 2021, 14 per cent saw this as a barrier.

Here there is room for improvement

Unfortunately, this does not harmonise well with the other questions related to strategic anchoring. In fact, we see a decline in all answers related to strategic activities focussing on sustainability. Looking at the overall strategic priorities of the organisation, sustainability/social responsibility is only in fifth place, while in 2021 it was in second place. There is a greater strategic focus on sustainability in the largest organisations, while SMEs are the size where it scores the lowest.

When it comes to resources allocated to the tasks, however, only minor shifts have occurred. Nearly a quarter of respondents still answer that they have an employee dedicated to the tasks, and compared to the fact that half of the respondents answer that they allocate 0-50 per cent of their working hours to the tasks, this shows that in many companies it is a function that is handled by employees who also have other tasks.

There are big differences when we look at company size. 94 per cent of the largest companies have dedicated resources, while only 39 per cent of the smallest companies say yes to this. Almost a third of the smallest companies say they don't have dedicated resources, while in SMEs it's only three per cent and six per cent in the largest companies.

In the overview of barriers to sustainability efforts, lack of resources remains at the top of the list, although there has been a decrease from 52 to 47 per cent. When the figures are broken down by company size, the problem is most evident in smaller companies (57 per cent) and SMEs (53 per cent), while it is not a significant barrier in the largest companies (11 per cent).

In the list of barriers, there are other issues that raise eyebrows. There has been a 21 percentage point increase in the proportion of respondents who say it's not important enough for their customers. In 2023, the figure is 39 per cent. This trend is similar across all three company sizes.

In 2023, the share that states that it is difficult to find "sustainable alternatives" has increased significantly to 29 per cent (11 per cent in 2022), and while just over a quarter of smaller companies and SMEs answer this way, as many as 50 per cent of large companies state this as a barrier. This may indicate that companies are struggling to recognise what the good alternative is.

In this context, it is also worth mentioning that there has been an increase in the proportion of companies that consider a lack of competences among employees/management to be a barrier. In 2023, the figure is 18 per cent compared to 11 per cent the year before. The challenge is greatest in SMEs, where as many as 31 per cent state this barrier, while in the smallest companies it is only nine per cent and in the largest 17 per cent. This may indicate that the complexity of the transition is becoming even more apparent to companies in the industry.

The industry's circular initiatives are a slight cause for concern. We see a decline across categories, including initiatives that are within the traditional business model, such as design, customer engagement and recycled materials. These remain at the top of the list, while true transformations of the existing and new business models with a focus on, for example, resale and rental are at the bottom of the list. This trend is hopefully not permanent, as there is a growing demand and need for the fashion and textile industry to move from a traditional linear to a circular economy. 

In the new questions on durability, only 26% answered yes to working with standards for durability, while 55% work with recognised tests. The proportion working with both standards and tests increases with company size, which is not surprising. 

Other observations

Although there have been no major changes in who makes the most demands on businesses, it is worth noting that customers (in the form of retail and online trade, municipalities, etc.) have taken over the top spot from owners. There has been an increase in the perceived demands from authorities, and it is especially the largest companies that are experiencing this. In general, the largest companies perceive the demands from the outside world to be more stringent than the other business groups.

Certifications are still widespread, and there is nothing new in the fact that the majority use them without being certified themselves. There is still a broad spectrum of certifications being utilised, and this does not differ significantly from previous years. The same can be said for memberships of CSR/sustainability initiatives . There have been some slight shifts between initiatives, but 43 per cent are not members of any initiatives at all. Although this figure has decreased over the past three years, it may seem a little strange that more people are not part of collective solutions that should be attractive to smaller companies in particular.

The new questions on diversity and inclusion are interesting, and the responses suggest that the topic should be explored further in future editions of this survey. Although 73% state that they are working on the topic, it is still limited how many have systematised it with policies and goals, and only a third have considered diversity in product design. Marketing in particular pays attention to ensuring diversity, and it is also in this category that the smallest companies and SMEs are the most prominent. When it comes to diversity and inclusion policies and setting targets, large companies are significantly ahead.

Conclusion

This year's survey does not paint a clear positive or negative picture of the industry's work on sustainability, responsibility and circular economy. Last year, there was significant progress on a number of parameters, and while the 2023 responses are still more positive than in 2021, there is still a broad decline in the industry's work. However, this doesn't necessarily mean that the industry's efforts have deteriorated; it could just as easily be a reflection of companies becoming more aware of the complexity, especially with the wave of EU regulation washing over the industry. Perhaps this is also why we're seeing progress on specific topics such as due diligence and climate. Here, the requirements are perhaps clearer than in some of the other areas, and the increased awareness of the EU's textile strategy is positive, but can also help individual companies realise just how big a task awaits the industry.

Therefore, it is also clearly positive to see that there has been such a large decrease in the proportion of companies that experience a lack of management support and capital to implement the necessary initiatives. A strong management focus is crucial if the industry's transformation is to become a reality.

The answers to the new questions about production reorganisation and sustainability show that the industry is in a process and that it is working to change the status quo. There is an awareness and desire to make changes, but at the same time, the responses also indicate that it is difficult for the industry. This is reflected in the questions about strategic anchoring, lack of customer demand and, in particular, circularity, where there is not a lot of momentum. This is worrying, as better, more far-reaching circular initiatives are needed if the industry is to be prepared for future regulation and help combat global overconsumption and overproduction.

This year's survey shows that there is a need for a national action plan for fashion and textiles that ensures targeted activities and initiatives that can support the industry's companies in the required transition. With such a politically based action plan, we can ensure that the Danish industry develops in the right direction and that we do not lose it in the middle of the transition. This is particularly important as approximately 90 per cent of the Danish industry consists of small and medium-sized companies, which in the survey lag behind the largest companies. 

Find this year's report and previous editions here - all are in Danish

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