A challenging economy, coupled with the need to focus on sustainability, are driving change within fashion companies.

On one hand, we’re witnessing a market that’s roiled by fluctuating inflation, causing some brands to slow down or cease sustainability initiatives — even as digital channels develop, and new supply chain models emerge. On the other, new regulations on sustainability and environmental responsibility are increasing consumer demand for transparency, especially by younger buyers.

The economic aspect of the fashion supply chain and its environmental footprint can no longer be considered as opposites, but complementary priorities that contribute equally to business success, in terms of both brand image and revenues. Companies today are signaling a willingness to merge corporate social responsibility (CSR) and economics, so much so that a new term is emerging to define this approach: Econogy.

Introduced in the context of the wider fashion supply chain during the Techtextil and Texprocess fairs in Frankfurt in 2023, the concept combines “economy” and “ecology.” It promotes a vision of economic and ecological perspectives as fundamentally interconnected, so that brands no longer need to choose between sustainability and profitability. 

The advantages of an approach based on econogy are multiple. In addition to directly influencing sustainability, it allows for process efficiency, cost savings and long-term brand competitiveness. It also helps companies meet changing customer needs, including a desire for products with a low environmental impact, at an affordable price.

Industry 4.0 Solutions 

Technology is key to making this possible. The fashion industry needs Industry 4.0 applications that provide full connectivity and visibility throughout the supply chain. The cloud, internet of things, big data and artificial intelligence are among the modern-day tools that optimize processes and increase performance, while also improving the use of energy and natural resources and limiting carbon footprint.

In the fashion industry, the econogy approach can start right at the beginning of garment production. Raw materials make up approximately 60%-70% of production cost, and intelligent and connected technologies — deployed, for example, in the cutting room according to eco-design principles — allow for significantly reduced material waste.

Furthermore, technologically advanced systems that support on-demand production improve warehouse management, limit excessive material consumption and reduce the risk of unsold items. 

Sustainable Business Models

Such actions aren’t limited to the production phase. It’s important to take a broader view of opportunities in addressing CSR concerns.

New technology platforms can trace and monitor the origin of fabrics, from fiber to consumer. They guarantee compliance with increasingly stringent regulatory requirements, while giving brands the information needed to make well-informed decisions about the use of sustainable, certified and recycled materials.

This path to change is driven by the introduction of standardized sustainability evaluation tools and regulations. In the EU and North America, new laws call for each garment to have a digital product passport (DPP) or digital ID. The EU DPP is expected to be adopted by the end of 2025. While the law won’t come into force until 2027, we’ll likely see adoption by numerous European brands as early as 2025.

The implementation of DPPs allows for the entire lifecycle of products and materials to be tracked, with far greater transparency to companies and consumers. For this reason, companies need to be aware of the potential impacts of new regulations, and adapt their business models accordingly. They must adopt a paradigm shift toward circular economy practices, sustainable materials, carbon neutrality, social responsibility, consumer awareness, and compliance. 

Organizations today are expected to be flexible and fluid. They must possess skills for dealing with multiple complexities, including a constantly changing regulatory landscape. They also need to seize the opportunities offered by new technologies that promote, among other things, traceability and sustainability. Systems that centralize data and make it available in real time can aid in the making of rapid and well-informed decisions.

Brands are adopting various strategies moving toward the econogy concept. Some are concentrating on production and design, while others are investing massively in their omnichannel sales strategy, or exploring how the concept can lead to the adoption of solutions based on Industry 4.0 precepts. 

Many fashion companies are still at the beginning of the transition toward sustainability, which is why the support of expert providers will continue to be fundamental. Brands need to view sustainable practices as an opportunity for paving the way to innovation, costs savings and enhanced productivity.

While requiring short-term investment, an econogy approach promises to allow fashion businesses to offer a whole new value proposition to consumers. The way forward is an industry that’s capable of embracing transformation and the whole ecosystem of organizations, people, skills and technology.

Leonard Marano is president, Americas, for Lectra.