Business Models & Sustainability in fashion

Business models are the foundation of every business. In essence, they describe how a business creates, delivers, and captures value. This section will cover what constitutes a business model, including concepts like value propositions and how these models impact strategy and growth.

Business models are at the heart of all businesses. There are many different ideas about what makes a business model. However, we generally agree that all businesses have a value proposition —that is, the reason a consumer should buy a product or use a service — and all business models concern how a business creates, delivers, and captures value. Businesses might not actively use their business model to think or build a strategy, but all businesses have a business model.

Business models for sustainability are also about how a business creates, delivers and captures value. They have many names. Maybe you have heard of green business models, social business models, circular business models, or flourishing business models? Recently, terms such as slow fashion business models and regenerative business models have started gaining broader attention.

While they differ in their focus, what sets business models for sustainability apart from what we might think of as conventional business models is that they start from a much broader understanding of value. While value within the context of conventional business models equals money and profits, value within the context of business models for sustainability concerns social and environmental values, on equal footing with economic value.

This also means that business models for sustainability try to measure impact in other ways than purely financial. For example, measuring positive as well as negative social and environmental impacts in their supply chain and/or for instance measuring impacts created after sales. Generally, business models for sustainability also take a more holistic, collaborative, and inclusive approach to innovation than what we typically find when speaking of more conventional businesses.

Over the past decades, most businesses in the textile and fashion industries have been built on a profit-driven model that: 1) extracts resources, 2) produces textiles and/or garments, 3) sells them, and 4) disregards their performance and fate after the sale. In this approach, value (profits) is typically increased in two ways: by minimizing production costs and/or by selling more. Efforts to introduce sustainability into these profit-focused models—rooted in overproduction and overconsumption—have, for the most part, failed, despite the organizations' varying levels of well-intended attempts.

Independent analyst Veronica Bates Kassatly highlights that when discussing the overall sustainability of a garment, what truly matters is its “impact per wear”. The more often a piece of clothing is worn, the smaller its negative environmental footprint becomes. It’s quite simple really. If we adopt this approach to sustainability, it becomes clear that using "more responsible materials" or implementing isolated take-back systems, for instance, will never make a business model focused on pushing more products onto consumers truly sustainable. Instead, we need to start focusing on producing garments that people will love, wear and take care of as long as possible.

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This is where business models for sustainability tools might offer some inspiration. By starting with a broader understanding of values, these models encourage engagement with a diverse range of stakeholders—both human and non-human—in discussions about a business’s purpose. Imagine inviting employees from various departments to join this conversation, along with factory workers, volunteers sorting second-hand donations, customers, and representatives of local wildlife in the area of your wet treatment facility.

Such inclusivity would undoubtedly broaden perspectives on what it means for a business to be successful, extending the definition beyond mere profit-making. While this approach may introduce additional complexities and tensions, it can also serve as a rich source of inspiration and a robust foundation for developing a sustainable business model.

As we strive for more sustainable organizational practices, let’s keep in mind that a central measure of a garment's sustainability lies in impact per wear. Let’s draw inspiration from emerging and nuanced perspectives on sustainability, and learn from the courageous and innovative businesses that are already creating value for a diverse range of stakeholders while also investing in creating garments to be worn, cherished, and cared for by real people.