30 September 2022
September plays host to fashion weeks in New York, London and Milan, ending in Paris. With origins in the 1940s, the events preview collections from designers for the approaching season. This news post contrasts the more contemporary concept of 'fast fashion', explores the relevance to Wiltshire Pension Fund and describes how the Fund's investments are managed.
Fast fashion
Fast fashion is loosely defined as "inexpensive clothing produced rapidly by mass-market retailers in response to the latest trends."
Fast Fashion and Wiltshire Pension Fund
The Fund is a large investor with exposure to the global economy. Its investments are spread across many companies in various sectors and industries. These sectors and industries span raw materials, manufacturing, distribution and retail; and technology, financial services, communications and consumer products, which is where clothing, accessories and textiles come in.
Analysis - The list of companies involved in the garment industry held by Wiltshire Pension Fund is relatively short and mainly concentrated in large, established, multinational companies. The overall value of these stocks is around £20.8m, which represents 0.64% of the total Fund value (£3.2bn 31 March 2022).
The fashion industry and its supply chains were brought into public consciousness by the Rana Plaza Disaster in 2013. The Accord on Fire and Building Safety helped to improve building safety in Bangladesh, but tragedies have still occurred elsewhere and other health and safety hazards, labour rights and pay issues remain.
Covid-19 had dominated the news in June 2020, when investigative reports drew attention to labour rights in the UK supply chain of a well-known fast fashion retail company. Investor sentiment collapsed along with its share price. The share price made a gradual recovery, but not to the same level as before the event. Wiltshire Pension Fund was not invested in the company, but the case study serves to highlight the value of considering ESG and reputational risk for the long-term investor.
The table below is an extract from the Federated Hermes - Companies engaged by theme 2021 report for Brunel filtered to show fashion companies held by Wiltshire Pension Fund. It should be noted that Hermes do not engage with every company on every theme, but are focussed on those that are identified as priorities. This is not exhaustive, but serves to illustrate that Natural Resources, Pollution, Waste and Circular Economy along with Human Rights are recurring themes in this industry.
| Company [Brand/high street name] | Climate Change | Natural Resource Stewardship | Pollution, Waste and Circular Economy | Conduct, Culture and Ethics | Human Capital Management | Human Rights | Board Effectiveness |
|---|---|---|---|---|---|---|---|
| adidas AG | 👟 | 👟 | 👟 | 👟 | |||
| Associated British Foods PLC [Primark] | 👚 | 👚 | 👚 | 👚 | 👚 | ||
| Burberry Group PLC | 🧥 | 🧥 | 🧥 | 🧥 | |||
| Fast Retailing Co Ltd [Uniqlo] | 👕 | 👕 | |||||
| H & M Hennes & Mauritz AB | 👗 | 👗 | 👗 | 👗 | |||
| Industria de Diseno Textil SA [Zara] | 👖 | 👖 | |||||
| LVMH Moet Hennessy Louis Vuitton SE | 👜 | 👜 | 👜 | ||||
| NIKE Inc | 🎽 | 🎽 | 🎽 | 🎽 | |||
| TJX Cos Inc/The [TK Maxx] | 👡 | 👡 |
Source: Federated Hermes - Companies engaged by theme 2021
 | Wiltshire Pension Fund has a culture and vision that is supported by a series of 16 Strategic Vision Goals (SVGs). These are outcome focussed and SVG 11, Responsible ownership and stewardship, is particularly relevant in this area. You can read more about this on the 'Our vision goals and values' page. |
 | The United Nations Sustainable Development Goals are a call for action to promote prosperity while protecting the planet. They recognize that ending poverty must go hand-in-hand with strategies that build economic growth and address a range of social needs including education, health, social protection, and job opportunities, while tackling climate change and environmental protection. While primarily aimed at governments and policy making, the Goals are increasingly used in the context of institutional investment. Read more on inclusive and sustainable economic growth, employment and decent work for all and why it matters on the United Nations website. |
Where can I find more specific information?
As mentioned previously, Hermes EOS engage directly with companies on behalf of clients and have published a specific Fixing fast fashion paper, along with case studies, such as Adidas achieving certification from the Science-Based Targets initiative (SBTi). Ongoing engagements can often be on corporate activity outside the public domain and therefore issues details are confidential.
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