Liontrust Sustainable Investment Annual Review 2021 - International - Report - Page 16
Fashion
Fashion, by definition, is among the fastestmoving industries and one that has presented
many challenges for sustainable investors
over the years. Our work since 2001 on
the industry also highlights how our thinking
on themes can change and, in this instance,
shines a light on our substantial engagement
efforts as an active owner of companies.
Clothing supply chains have lengthened
under relentless pressure on costs over
recent decades as emerging economies
offered lower wages, weaker labour laws
and tax breaks to win valuable contracts
from major brands.
2001
2002
Climate change
The natural disasters and climate strikes over
the past year have served to highlight the
growing urgency of the climate crisis. It feels
like a step change that will translate into real
action worldwide but how did we get here?
2006: Labour standards
Since the earliest days of the SF range,
labour standards in supply chains has been
one of our most important engagement areas
and we have seen several major projects
designed to improve this, from Oxfam
launching Better Returns in a Better World in
2006 to Fashion Revolution, formed in the
wake of 2013’s Rana Plaza disaster.
2009: Supply chains
We assessed the fashion industry’s supply
chains and the working conditions within
them in 2009. We concluded that conditions
were unacceptable in a significant number
of supply chains, that change was coming,
and there were opportunities available
to companies which could drive
improvements. We focused on
the need for decent work
and wages throughout
the chain and positively
identified Inditex, the
owner of the Zara
brand, as we believed
its proximity sourcing
model allowed for a
more sustainable form
of manufacturing.
2003
2004
2005
2006
2001: Exposure
In November 2001, the third major report on
climate change (from the Intergovernmental
panel) stated clearly that “global warming
was very likely with highly damaging future
impacts”. We had launched our range earlier
that year with a clear focus on avoiding
carbon-intensive industries, which meant no
exposure to companies involved in coal, oil
or (internal combustion engine) autos.
This approach meant our clients avoided
exposure to industries involved in some major
events over this time – from BP’s Macondo
blowout to the German car industry’s
Dieselgate – and our strategies avoided the
financial losses from these events.
16 - Liontrust Sustainable Investment: Annual Review 2019
2013: Accords established
This issue of unsafe working conditions came
into sharp focus with the 2013 collapse of
the Rana Plaza complex in Bangladesh,
a disaster that resulted in the loss of more
than 1,100 lives. Many of those killed
were employed in the garment industry and
change was urgently required.
We saw the Accord on Fire and Building
Safety in Bangladesh and Alliance
for Bangladesh Worker Safety quickly
established, notable wins for an industry
that had previously been slow to respond
to these issues. The Liontrust Sustainable
Investment team was part of a coalition of
shareholders representing around US$1
trillion in AuM that engaged with companies
following the disaster, with Adidas signing
the Fire & Safety Accord in 2013 being
particularly important.
We also visited Bangladesh on a fact-finding
tour in 2014, and legislation such as the
Modern Slavery Act continues to improve
working conditions around the word.
2007
2008
2009
2010
2006: Efficiency and economic sense
The Stern Review came out in 2006, telling
us the cost of reducing emissions would be
far less than the cost of the damage these
emissions would cause. This backed up our
original thinking that investing in companies
helping to cut emissions makes economic
sense. By then, we had already started
investing in companies like Kingspan,
whose products improve the energy
efficiency of buildings.
