close
ESG: Sustainable design in consumer products

 

esg investing

esg

 

Last month Ama Seery, Sustainability Analyst on the Global Sustainability Equity Team, explored how the team incorporate sustainable design into their investment decision making. In the second in the series on sustainable design, Charlotte Nisbet, Governance and Responsible Investment Analyst, takes a deeper look into its role in consumer products.

 

Key takeaways:

 

  • The apparel sector is well known for its detrimental effects on the environment. However, as consumers become more aware of their own environmental footprints, there has been a surge in demand for sustainable goods.
  • A circular economy is based on the principles of designing out waste and pollution, keeping products and materials in use, and regenerating natural systems.
  • Companies including Nike, Adidas and DS Smith have incorporated a circular approach to the design and production of their goods, creating durable and long-lasting products with a reduced environmental footprint.

 

The Janus Henderson Global Sustainable Equity Team believe there is a strong link between sustainable development and innovation. The team look for companies across various sectors that have adapted their business models and invested money to solve environmental issues through the development of sustainable product and service design.

Out with the old, in with the new

 

It is well documented that the apparel sector has a long history of detrimental effects on the environment as a result of production, including depletion of non-renewable resources, high greenhouse gas emissions, and excess amounts of water and energy usage.

However, as consumers have become more aware of their own environmental impact there has been a rising demand for sustainable apparel.

Global consultancy firm McKinsey found that searches made on the internet for “sustainable fashion” tripled between 2016 and 2019.1 Compared to standard clothing, sustainable textiles should be longer lasting, be produced in a safe and renewable way and be recycled wherever environmentally beneficial.

Despite the prevalence of resource-guzzling textiles, there are companies within the apparel sector that have reshaped their business model to become more circular, as opposed to linear, using circular design to create new products.

The concept of circular design is linked to the idea of a ‘circular economy’. As defined by the Ellen McArthur foundation, a circular economy is based on the principles of designing out waste and pollution, keeping products and materials in use, and regenerating natural systems.

It is estimated that 80% of a product’s environmental impact throughout its life cycle is designed into the product, meaning that the design stage is critical to minimise environmental impact effectively.2

Creativity in design has always been a key component but now more than ever the apparel sector is being forced to think outside of the box and explore new ways to create more sustainable and circular designed products that are built to last.

Going toe-to-toe with linear design

In a previous article on fast fashion we discussed how Adidas and Nike have invested into technology and operations to create more circular business models with durable products.

Since then, Nike has launched a shoe which showcases its innovative approach to sustainable design. The Nike Air VaporMax 2020 Flyknit has at least 50% recycled content by weight.

In fact, the recycled Flynknit yarn used in the shoe was made from around 67% post-industrial recycled content by weight as well as different recycled components.3

Adidas, too, has partnered with Parley Ocean Plastic to create a line of sustainably made, high-performance sportswear. Parley Ocean Plastic used marine plastic waste to replace virgin plastic in its collaboration with adidas.4 Adidas has also committed to shift to use 100% recycled polyester in their products by 2024.5

Sticking with the footwear theme, Reebok has gotten creative too, launching plant-based performance running shoes which maintain the important features of a running shoe – breathability, support and water resistance – without the use of animal and petroleum-based products.

Instead, the footwear utilise four key sustainable materials including an algae-based sock liner, a eucalyptus and castor bean shoe and a natural rubber outsole.6

These brands highlight the positive impact that their investments into circular design can have on the both the environment and the fashion industry.

Longevity is also a key consideration in the circular design process as sustainable retailers strive to create apparel that can last for a long time or which can be resold thanks to the quality of the product.

Extending the life of clothing by an extra nine months could reduce carbon, water and waste footprints by approximately 20 to 30% each.7

Nike employs its own circular design guide outlining 10 principles of design, which includes ideas such as ‘refurbishment’ and ‘durability’, helping the company to target its commitment to create products that are built to last.

Adidas similarly has a range of innovations developed internally to aid in the circular design process. Sports Infinity is a research project launched in 2015 between adidas and the European Commission, which aims to create sporting goods ‘that will never be thrown away’.8

The project brings together industry and academic experts to determine how broken down sports products can be used in combination with excess materials from other industries to allows old football boots to be restyled to make new ones.

Taking the wraps off sustainable packaging

 

Another important aspect associated with the consumer sector is packaging. With an exponential rise in online shopping, from clothes to food to household goods to books, there has been a direct correlation in the increase in waste in the form of packaging.

This has been exacerbated by the impact of COVID-19, where a large proportion of global consumers have relied on online retail, food delivery and personal protective equipment (PPE). According to the United Nations Conference on Trade and Development, historical data tells us that 75% of plastic used because of the coronavirus pandemic will ultimately clog our landfills and end up in the sea.9

This is another area that is under scrutiny for its detrimental environmental impact and the pressure is on companies to address this issue.

Morgan Stanley recently carried out research which showed that 90% of respondents from a survey are already buying products with sustainable packaging or intend to start doing so.10

UK based packaging company DS Smith has been pivoting its business to provide customers with more sustainable packaging products. DS Smith runs three business operations that offer sustainable solutions for their customers in packaging, paper and recycling.

The core purpose of its business model is ‘Redefining Packaging for a Changing World’. Within the packaging arm, DS Smith provides sustainable corrugated packing solutions where the fibres in the corrugated system can be recycled up to 25 times.

Food packaging is another component of DS Smith’s business. Plastic is vital to increase the longevity of shelved food products and, given that the need to reduce food waste is so imperative, it is important to balance the need for packaging with the environmental consequences of using it.

DS Smith has tackled the need for single-use plastic head on by developing fridge-box wraps with carefully designed air vents to keep produce fresh.

In June 2020, DS Smith launched its Circular Design Principles in collaboration with the Ellen MacArthur Foundation to ensure that more of its products are sustainably designed, backed by their team of 700 packaging designers.

Now, 98% of the packaging it manufactures is reusable or recyclable and 100% of the paper used come from recycled or chain of custody certified sources.

The company has also made a series of commitments to tackle environmental issues including the goal of manufacturing 100% reusable or recyclable packaging by 2025.11

The environmental impact of consumer products is twofold; in the way that products are made, and in the way that products are consumed. As the strain of human consumption on the environment becomes ever more apparent, it is pleasing to see companies change the way that products are designed and to incentivise consumers to change their behaviours.

By making conscious decisions about the materials and processes used in designing a product, the world’s finite raw materials will remain in use for longer rather than being sent to landfill, reducing excess carbon and water waste.

Click here to read the first article in the series on sustainable design: Deconstructing sustainable design

 

Footnotes

1 McKinsey & Company – Fashion’s new must-have: sustainable sourcing at scale, October 2019

2 Ellen McArthur Foundation – What is the circular economy

3 Nike News – 5 Ways the Nike Air VaporMax 2020 Flyknit Celebrates Circular Design, 14 July 2020

4 Adidas website – Sustainability, Parley Ocean Plastic

5 Climate Action news: Adidas reinforces sustainability commitment with use of recycled polyester, January 2020

6 Reebok blog – Reebok Takes You on a Run With its First Plant-Based Shoe, January 2020

7 Wrap.org – Valuing Our Clothes: the cost of UK fashion, July 2017

8 Adidas press release – Messi’s Boots Today, Recycled Into Yours Tomorrow, September 2015

9 United Nations Conference on Trade and Development – Growing plastic pollution in wake of COVID-19: how trade policy can help, July 2020

10 Morgan Stanley – Growing Demand For More Sustainable HPC Products and Packaging, June 20 2020

11 DS Smith Sustainability Report 2020: Redefining Packaging for a Changing World

These are the views of the author at the time of publication and may differ from the views of other individuals/teams at Janus Henderson Investors. Any securities, funds, sectors and indices mentioned within this article do not constitute or form part of any offer or solicitation to buy or sell them.

Past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.

The information in this article does not qualify as an investment recommendation.

For promotional purposes.

Glossary

child trust fund

Top tips for teenagers receiving a Child Trust Fund windfall

savings and investment

Money Basics: Savings tips for 30-somethings

Leave a Response

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Be informed as this exciting sector develops and receive DIY Investor Magazine free to your inbox – take control of your financial future