Sustainability Without Profits Isn’t Sustainable

SALON DIALOGUE “SUSTAINABILITY WITHOUT PROFITS

ISN’T SUSTAINABLE”

Sustainability isn’t sustainable right away – it’s a process. The salon dialogue guests of Martina MüllnerSeybold and Kay Alexander Plonka all agree on this. Verena Paul-Benz, the owner of Lovjoi, Matthias Mey, the Managing Partner of Mey and founder of mey story, Thimo Schwenzfeier, the Show Director of Neonyt and Director Marketing Communications at Messe Frankfurt, and Bernd Hausmann, the founder of ecofashion store Glore, explain why. Interview: Martina Müllner-Seybold, Kay Alexander Plonka. Text: Veronika Zangl. Photos: Yorick Carroux. Location: Ruby Leo Workspaces Munich

Coming together to reflect on sustainability in fashion: Matthias Mey (Mey), Verena Paul-Benz (Lovjoi), Bernd Hausmann (Glore), and Thimo Schwenzfeier (Neonyt) met in Munich for a salon dialogue organised by style in progress.

100 billion items of clothing are produced every year. Is there any way this industry can still be rescued from itself?

Matthias Mey, Managing Partner of Mey and mey story: We must first define the term sustainability. Are we merely talking about organic cotton or also about fair production conditions? For me, organic doesn’t equal sustainability, especially if the product in question is only BCI-certified. C&A, for example, is the world’s largest retailer of organic cotton. I recently spotted an organic cotton bra for 2.99 Euros in a C&A shop window. Is that sustainable? In my opinion, such offers have nothing to do with sustainability. Many vertically integrated businesses are currently making great promises, saying they will transition to 100% organic cotton in the next five years. For me, such promises constitute pure greenwashing, not a real effort towards sustainability. Thus, it has very little to do with sustainability. Also, considering that only a small proportion of the world’s cotton is actually organic, these goals seem rather unrealistic. The worldwide production of organic cotton stands at about 5%. Given that we exclusively use long-staple cotton in our lingerie and our share of white lingerie is very high, we have to source the finest and purest cotton. The offer on the world market is about 0.1%.

“We contradict ourselves on a daily basis. On the one hand, we tell customers to buy less and focus on quality. On the other hand, we are eager to increase our sales in order to make the industry more sustainable.” Bernd Hausmann, Founder of Glore

Thimo Schwenzfeier, Show Director of Neonyt & Director Marketing Communications at Messe Frankfurt: The issue is that sustainability is subject to evolution. What was sustainable five years ago, is not congruent with what is sustainable today or will be in five years. The term needs to be redefined constantly. To what extent can we rely on certificates in the immediate future? Which new ones should we introduce? It is important that the definition of sustainability continues to evolve. Verena Paul-Benz, Owner of Lovjoi: Seeing it as an evolution is a beautiful comparison. What used to be enough to be considered sustainable, is now obsolete. For me, today’s sustainability is defined by the factors of ecological cultivation, social delivery conditions, regionality, and vegan materials. In addition, it is important to no longer perceive oneself as an individual business, but also to consider the bigger picture of tomorrow. How could sustainability be enshrined in laws that influence the market? Bernd Hausmann, Founder of Glore: I believe the industry is being overrun. Suddenly everyone is required to be sustainable, but we’re not even ready for it on a technological level yet. We have 1% organic cotton and processing by hand remains commonplace in many segments. In terms of hemp production, there are – more often than not – no harvesting machines at all, not to mention fair working conditions and wages. Based on the speed the big players are pushing for change, sustainability is, in fact, not feasible. That’s why I agree that there’s plenty of greenwashing among vertically integrated businesses. They deliberately pick out small production steps from their chain that are environmentally friendly or fair. The aim is to make people believe that the production process is sustainable.

Do we run the risk of sustainability, which was promoted by courageous, often selfless pioneers, merely fuelling the business of multinationals?

Verena Paul-Benz: Many small eco-brands lack market access; they simply don’t have the required distribution channels. This doesn’t mean that they aren’t professional or unable to deliver. One of the reasons is that conventional retailers aren’t sufficiently informed. When attending trade fairs, I am regularly shocked by the fact that there is so little interest in sustainable brands among conventional retailers – even despite Fridays for Future and the recent success of the Green Party. Thimo Schwenzfeier: From the perspective of a trade fair organiser, I would phrase it differently. The interest is there, but there’s a lack of courage in terms of implementation. The retail trade is undergoing a drastic transformation phase. Retailers are losing sales drivers that have ensured excellent business for many years. Margins are shrinking. To be fair, however, one must also confess that sustainable labels often lack the size, marketing power, and awareness to drive demand accordingly. But I definitely don’t accept the argument that there isn’t enough choice yet. 170 green labels attended our trade fair. Depending on the criteria applied, the Berlin Fashion Week welcomed a total of up to 270 green labels. Bernd Hausmann: I agree. Conventional retailers lack courage, because they are under immense pressure. The situation is similar to the automotive industry, which is still peddling SUVs despite the fact that we all know this approach isn’t the future. Amid this uncertainty, many prefer to rely on established brands rather than unknown newcomers.

Unfortunately, the situation is even more tragic. When we address the topic of sustainability, retailers often tell us that there’s no demand in the store. However, there was a lecture at the Neonyt that debunked this argument. A consumer survey has proven that this issue does drive consumers, but that the majority of customers seek answers from brands or on the internet. A mere 27% of the customers named retailers as their contact point. Have retailers lost their status as opinion shapers?

Thimo Schwenzfeier: Yes, the reactions to these findings were really exciting. Even men as experienced as Mark Ramelow, who was in the audience, recognised the significance. He expressed his concern at the fact that retailers are losing credibility as mediators. Matthias Mey: He is, by the way, also among the first retailers to act. Modehaus Ramelow contacted all its suppliers and asked them about their sustainability initiatives. Ramelow didn’t allow them to fob him off with random certificates and greenwashing. The survey really took us deep into the matter. Even we found it exciting to reconsider the topic in such depth.

14–16/01/2020 Tempelhof Hangar 4

“Given that true sustainability also means operating profitably, I believe it’s complete nonsense to deny sustainable labels their pursuit of profit.” Matthias Mey, Managing Partner of Mey & Founder of mey story

Let’s delve into the certification topic a little more. Do you have any experiences in this respect?

Matthias Mey: Yes, a very recent one at that… We started exploring the field of certificates while looking for an alternative to GOTS that would allow us to certify our more conventional products too. We ultimately judged the Fair Wear Foundation (FWF) to be among the most suitable certificates for our brand. Our enquiry to FWF was dealt with very swiftly. We were rejected! On the grounds that we manufacture in completely uncontroversial countries such as Portugal, Hungary, and Poland. Now imagine our non-certified products being placed next to a competitor’s goods. Those goods are certified despite being produced in Bangladesh, for example. I do wonder which product will come across as more sustainable to the consumer. Certificates initially calm the consumer’s conscience, nothing more. Thimo Schwenzfeier: What do you think of a meta seal like “Grüner Punkt”? The various certifications must seem like an impenetrable jungle for both customers and salespeople. Matthias Mey: I agree. Ultimately, the consumer needs orientation. Personally, I would like to see something like the energy efficiency classification for electrical appliances: a standardised certificate that includes a classification. We can, for example, subject our NOS products to the toughest certification processes – such as Bluesign – that thoroughly check the entire value chain right back to the initial supplier. In the totality and complexity of a fashion collection with ever-changing components, this scale is no longer feasible. As it stands, 95% of our suppliers are based in Europe. Two manufacturers of coloured ribbons were just forced into administration, because they were no longer capable of withstanding international price pressure. As a consequence, we need to consider refocusing on Asia too. By the way, this doesn’t mean suppliers there cannot provide quality or sustainability. Nevertheless, it makes it more challenging to ensure that our philosophy remains fully transparent. In addition, we, too, are increasingly exposed to price pressure and have to maintain marketable price benchmarks. With the responsibility for the wages of more than 1,000 employees in mind, we are required to think economically. The so-called Partnership for Sustainable Textiles was an excellent idea. Initially, it seemed like a first step towards standardisation. My brother, the driving force behind the sustainability issue in our company, was sceptical as to whether we would be able to meet all criteria. When we had done our research and decided to join, businesses like Primark and Kik joined with declarations of intent. It instantly became clear that we couldn’t – and didn’t want to – bear the same seal as those companies. At the end of the day, the consumer is led to believe that these are equivalent production standards and that this standardisation will raise low-cost suppliers to a much higher level. This means they benefit from many other brands that have actually addressed the issue of sustainability properly. Verena Paul-Benz: That’s true. Many are afraid of exactly this situation, which is why they are shying away from the “Grüner Punkt”. They aren’t willing to risk tarnishing their image. Thimo Schwenzfeier: We tried to convey this to the minister and his team. The team behind “Grüner Punkt” believes that it is important to start with the implementation and then adjust the subtleties while the system is in operation. But this first step has such a massive impact. Running off without knowing the exact goal is challenging. Our position is that we are willing to support meta seals like “Grüner Punkt” in principle, but believe that the implementation could be improved. Bernd Hausmann: One also has to admit that customers aren’t really interested in such seals. Their main concern is the use of organic cotton, be it GOTS-certified or not. I do, however, firmly believe that a neutral authority should take a close look at the supply chain.

Generally speaking, sustainability is a topic high on the agenda of the younger generation. Is that the reason why classic retailers still don’t take it seriously enough? Because they cater for an older target group?

Bernd Hausmann: This particular argument is certainly supported by retailers such as Zalando or About You. Both now focus on sustainability and serve a younger audience. Thimo Schwenzfeier: Zalando has many young employees. In other words, Zalando has employees that might even attend Fridays for Future demonstrations. This automatically lends the topic more weight, which means it reaches the executive floor.

“I believe that the principle of true sustainability needs to ensure that everyone involved is satisfied with their respective piece of the pie.” Verena Paul-Benz, Founder of Lovjoi

Classic stationary retailers, at least in the form we known them, serve an older audience. They state quite clearly that fashion comes first. And some sustainable labels simply still aren’t “fashion enough”. Matthias Mey: That’s true, but the situation is changing. At mey story, we benefit greatly from being able to offer a sustainable background story to upscale retailers. It’s exciting for the consumer. Verena Paul-Benz: We sustainable labels mustn’t ignore the fashion aspect. But the more fashionable the garment is, the more expensive the production. Lace appliqués and sustainable sequins cost significantly more due to their technical requirements and purchase prices. Surprisingly, conventional fashion seems to accept high prices without complaint. It would never occur to anyone to criticise that Gucci is too expensive. We sustainable brands, however, are quickly accused of luxury. It is vital for this market to develop a variance in price levels and fashion grades – the same variance we already have in conventional fashion.

Isn’t it a political matter to calculate what damage a t-shirt that costs 3 Euros really causes? It not only destroys resources, but also the environment.

Thimo Schwenzfeier: There’s the discussion regarding a CO2 tax. The problem is the liberal economic world order. Prohibitions are equated with communism. Politicians are called upon to create framework conditions for a social, market-liberal, and environmentally compatible economy. Bernd Hausmann: We have been discussing the question of why sustainability seems to be progressing so sluggishly ever since I launched Glore 14 years ago. Is it the consumer’s fault, or the retailer’s? Should politicians become involved? Of course, politicians need to create a suitable framework. At the moment, sustainability tends to experience a boom when disasters like Rana Plaza happen. This is highly cynical, but even our energy policy needed Chernobyl and Fukoshima to push through the nuclear phase-out. My experience is that simply wagging a finger has no effect. We need brands that not only operate professionally, but also understand how cool, desirable products should look and feel.

What triggers consumers to buy a sustainable brand?

Verena Paul-Benz: Marketing. The crucial factor is that big brands have larger advertising budgets, which they are currently using to wash themselves green. Thimo Schwenzfeier: Fashion is swiftly becoming a low-interest product in the eyes of mass consumers, regardless whether it’s sustainable or not. That’s a great pity, actually. In fact, many consumer believe it is more important to own the latest iPhone.

How can fair fashion and the rapid change demanded by fashion be reconciled?

Verena Paul-Benz: That’s an exciting aspect! Everything must always be brought to market and sold as quickly as possible. If eco-labels strive to prove themselves as an alternative to the conventional market, they can only succeed if they adhere to the cycles of the aforementioned conventional market. However, this means that they are moving in the same direction as fast fashion suppliers. That gives me goose-bumps. I’m highly sceptical of this development. Bernd Hausmann: We contradict ourselves on a daily basis. On the one hand, we tell customers to buy less and focus on quality. On the other hand, we are eager to increase our sales in order to make the industry more sustainable. (laughs) Inventing trends was probably the most brilliant marketing idea ever. Buy red today, green tomorrow. It’s quite a feat to come up with the claim that everything goes out of fashion at one point! It’s the most horrific idea of the fashion industry, yet also the most brilliant. At the end of the day, that’s how we generate revenue. But this discrepancy will always haunt us.

Who should be in charge of establishing true sustainability: the brands, the distributers, or the retailers?

Verena Paul-Benz: Definitely the brands… Matthias Mey: It should be the brands, without a doubt. Given that true sustainability also means operating profitably, I believe it’s complete nonsense to deny sustainable labels their pursuit of profit. Even we family businesses need to make profits, otherwise we won’t be able to pay our employees in the future.

In contrast to international conglomerates, your profits are taxed in Germany.

Matthias Mey: Exactly. We pay tax in Germany. This constitutes a distortion of competition, because it puts us at a disadvantage compared to companies that exploit international tax loopholes. But that’s a different issue, so let’s not go there now. I enjoy asking which role the retail trade plays within the value chain. How much of the retail price should the brand take, how much

“Sustainability is subject to evolution.” Thimo Schwenzfeier, Show Director of Neonyt & Director Marketing Communications of Messe Frankfurt

the retailer? I firmly believe that excellent retailers are entitled to a large share. They guarantee well-trained personnel on the sales floors, who – in turn – provide arguments in favour of products manufactured to a high standard. This means we can ask higher prices and, at the same time, results in less write-offs. That’s what we thrive on. This is, however, becoming increasingly difficult when retailers try to cover their existing sales floors with ever-decreasing staff numbers. This approach won’t work in the long term, at least for our products. Verena Paul-Benz: This is where we come full circle. I believe it’s very important to include the retail trade in the sustainability aspect. I, as a brand, have to do more than merely say that I produce fairly and ecologically without any regard for others. We always think of that pie chart that tells us that the seamstress making our t-shirts doesn’t earn enough. But what about the retailers? They also need to make a living. That’s why I believe that the principle of true sustainability needs to ensure that everyone involved is satisfied with their respective piece of the pie. Matthias Mey: The biggest problem is the lack of price sovereignty. We brands have no control over the retail price, which is why we are now facing a situation in which the weakest link is dictating the market. In other words, the weakest link in the chain starts to reduce goods extremely early and thus puts the stronger retailers under pressure. This makes prices inflationary and retailers lose margins unnecessarily, especially the excellent ones. Verena Paul-Benz: Yes. As a brand, you can, however, also destroy yourself by raising your minimum orders too much, thus inflating the volume. Retailers can’t shift the surplus, resulting in excessive discounts and considerable image damage. Brands need a more global approach, always one or two steps ahead. Matthias Mey: In terms of excellent retail partners, we are now facing increased vertical competition. Take Everlane in the US, for example, with its concept of transparency pricing. Everland makes its supply chain and production steps quite transparent. An approach that shouldn’t be underestimated in the context of the sustainability debate. We are spending almost all our time talking about organic products and organic cotton, but we should take a much closer look at the entire process chain and evaluate it in terms of sustainability. Our strategy is to successively allow consumers an insight into our production process, be it our own sites in Germany, Portugal, and Hungary or one of our partners’ sites in Eastern Europe and Turkey. Thimo Schwenzfeier: I believe the negative impact of a product also needs to be quantified and included in the price. Other than that, I see no solution for the enormous impact our industry has on the environment. Everything that has a negative impact needs a price tag. This price can be negotiated individually or by region. Naturally, the price tag in Germany has to be assessed differently than the price tag in Bangladesh. However, the fundamental idea is incredibly exciting. I am utterly convinced that we won’t change our consumer behaviour until buying non-sustainable products affects our wallets.

Which incentives are necessary?

Thimo Schwenzfeier: This overwhelms the textile industry as a whole. I have to consider which goal I set for myself. I believe that the sustainable sector needs to be professionalised in order to stimulate growth. So, my definition of sustainability also includes transparency. We need a seal – a third party so to speak – that scrutinises our actions. Bernd Hausmann: I’d like to introduce another aspect that we haven’t talked about enough yet: regional consumption and the development of regional products. Let’s compare the organic apple from Chile to an apple that grows near Lake Constance. Which one is better, as in more sustainable? We consume in Germany, meaning we need to take the CO2 footprint into account. If we don’t, we create a major imbalance. Verena Paul-Benz: It would also be helpful if consumers could start thinking about both the monetary and circular economy. Those who shop in supermarkets hand their money to conglomerates. That’s why it’s helpful to buy regionally. However, we are still miles away from that. It’s my hope that we’ll get there gradually.

Is sustainability the last chance for fashion to finally come up with a different argument other than: buy it because it’s new?

Matthias Mey: It would make more sense to invest more in the product, thus creating favourite pieces that can be sold at a reasonable price-performance ratio. That’s our approach. We manufacture pieces that are placed at the top of the wardrobe, because they make the wearer feel most comfortable. This approach, when paired with sustainability, is an excellent combination. Verena Paul-Benz: I find it incredibly exciting to extend the lifespan of a product, to make it so balanced and perfect that it attracts attention for a long time.

Thank you for taking time to discuss with us!

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