Impact of Sustainable Announcements on Fashion Company Performance and Perception

Student

Gracie Mikol

College(s)

Mendoza College of Business

Faculty Advisor

Corey Angst

Class Year

2022

Abstract

Millennial and Gen Z shoppers say they want to support sustainable brands and are willing to pay more for sustainably sourced products. Thus sustainable business practices should increase profitability and popularity, yet many large companies aren’t taking on ambitious sustainable goals. This project is a first step in research I hope to inspire into how companies can profitably capture sustainability goals within their brand identity. I will analyze the financial statements and CRI Scorecard ratings of four publicly traded clothing brands before and after sustainability announcements in order to determine their impact on the company’s bottom line and public perception. To further get at the public perception, I will look at news articles about sustainability announcements in order to determine public reaction to the announcement.

Introduction

Why don’t more companies have substantial sustainability initiatives? I want to answer this question as a result of a discrepancy that I saw between my business and sustainability classes. Based on what I am learning in business classes, it seems fairly obvious for companies to go sustainable. In marketing classes, we are taught to highlight any social initiatives that a company is a part of because customers are more likely to buy from a company that also supports social change. In case competitions, teams that win always relate their strategy to a broader social issue that the company can incorporate into their brand identity. However, in my experience, sustainability classes don’t always focus on industry as a potential driver of solutions for the climate crisis. I have spent more time in my sustainability classes focused on governmental regulations that are enforced, not initiatives that companies take on their own. While some professors of sustainability may have different outlooks, and my experience in sustainability academia is certainly limited, the motivation of my project is to seek out academic research on private sector sustainability initiatives and see if I can witness their success (or lack thereof) in the market.

While reflecting about the use of the social impact strategy, I realized that of the thousands of marketing emails I get each week, only a few take advantage of this supposedly foolproof strategy. If I was going to discover why companies aren’t taking advantage of supporting social causes I needed to start somewhere. I decided to focus on only one industry: fashion. The top players vary widely in their commitment to social impact. Patagonia exemplifies a commitment to the environment and reaches great success, but fast fashion brands Princess Polly, Fashion Nova, and Shien are also increasingly popular, despite their extreme lack of care for the environment.

While I do not have enough bandwidth this year to do a statistically valid study, I can use the existing CRI scorecard and financial records to dive into the customer behavior behind fashion companies' decisions to not fully commit to social impact as part of their brand identity. While customers publicly say they want to buy from more socially conscious brands, are they actually voting with their dollars when it counts?