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The IADS is at a crossroads when it comes to helping its members, by addressing their most operational questions and helping them to address current and future challenges. Being sustainable is certainly a critical one and it requires means, energy and time, which is even more difficult in crisis moments. The IADS invited Andrea Baldo, CEO of the Danish responsible brand GANNI, to share his views on the best ways to make true impacts and maintain a responsible vision.

Shareholders are usually not happy to reduce profits to fund sustainable changes, customers ask for sustainable products but are not ready to pay the price for them, and businesses are not happy to see governments talking about taxing people to fund the green transition. However, Baldo argues that this is the responsibility of CEOs to address the future, even if this means making sure investors are aligned on this vision too. For him, becoming sustainable in the future is much more important than digital transformation. He explains how CEOs can fight sustainability systemic issues by taking risks, choosing realistic actions over hollow claims and always favouring adaptation and innovation.

Fighting a systemic issue: ESG credibility and taking risks

First of all, for Andrea Baldo, the fashion industry cannot become a sustainable industry as it is in essence consuming the planet’s resources. True sustainability will only be achieved with significant technological advancement. Second of all, when it comes to acting more responsibly, very little development happened in 10 years (between the 2009 COP meeting and the Copenhagen Fashion Summit in 2019). Illustrating this fact, organic cotton only represents 1% of the global production, which shows how slow progress is.

This issue is systemic. On one hand, CEOs of fashion companies have to generate return on investments for their shareholders who are not always in favour of the development of more responsible products as this is equivalent to reducing profits. On another hand, the fashion industry asks consumers to pay 25% to 30% higher prices for sustainable products to help companies in their transition towards more responsible operations. Finally, people and companies are also voters who might refuse to vote for candidates advocating for additional taxes funding sustainability efforts.

Besides being responsible for their company strategy, culture and people, CEOs can choose to drive change, knowing that this is adding responsibilities on their shoulders. This means taking the risk of disagreeing with shareholders. But the good news is investors are increasingly looking at ESG credibility when considering investments. This has been the case at GANNI when Baldo was looking for investors for the company.

Still, despite great results in the past years, how to maintain the company vision when the growth rate decreased from 2-digit to 1-digit in one year? Tactically, being B Corp-certified does help as it forces shareholders to accept change, look at the impact on the planet, keep it as a strategic priority and pursue the company vision. In that regard, GANNI has a second responsibility board that helps prevent shareholders from back-peddling.

Being responsible rather than sustainable: the path to true transformation?

Embracing responsibility as part of the company culture means accepting that it is impossible to be sustainable. So, rather than claiming a ‘make believe’ sustainability, GANNI focuses on innovation, transparency and creating visibility for stakeholders and consumers through various honest and rather small initiatives such as:

• Using recycled materials for store props (rugs made of fabric waste for instance),
• Having a team dedicated to scouting fabric innovations,
• Recycling coffee waste to grow mushrooms.

These examples show a realistic path on the journey to becoming a more responsible version of the company in a very honest and transparent way. Consistency is also a key value at GANNI. When they decided to discontinue leather as a decision truly reducing the accessories and shoe businesses’ carbon footprint, they showed consistency by not offering beef at their cafeteria or not paying for expenses involving beef consumption anymore. This is a matter of adding credibility to the company's actions.

Even though some initiatives might look minor, not only the big projects are impactful in changing the culture and being more responsible: smaller initiatives (which are most of the time zero-cost) bring change and are necessary to drive transformation within and outside of the company.

GANNI also explored rental and second-hand models with varying results: while they didn’t find the key to success for rental, second-hand is already profitable for them. Finally, in terms of marketing, they opened a second Instagram account called GANNI Lab to highlight responsible efforts and to provide consumers with more information than the ones they find on the label.

Equivalent to digitalisation, sustainability has become a synonym for transformation and Baldo mentioned similarities in changing consumer behaviour and uncertain returns on investment. Circling back on the low share of organic cotton in the fashion industry, Baldo stressed the need for an improved supply chain, especially on the production side so that suppliers are paid more, allowing them to develop technical innovations and increase the usage of responsible materials.

Adaptation to markets and innovation: the keys to maintaining the vision

With an advanced contemporary positioning competing both with affordable luxury (Jacquemus, Acne Studios) and premium brands such as Sandro and Maje, 40% of GANNI’s customer base is 25 to 35 years old. 16 to 25-year-old customers account for 30%. Those groups usually declare they are interested in sustainability efforts.

In terms of territories, the brand has a strong presence in various European countries and the US, and it entered the Chinese market before COVID-19. After 2 years of presence in China, GANNI realized customers were primarily interested in their “scandi-cool” style and that was their entry point into the brand. They were also susceptible to the notion of woman empowerment. The responsibility credentials were coming at the bottom of the list. Actually, while the notion of sustainability appeals to communities in the West (we are all in the same boat and need to change our behaviour collectively), it is more of a personal choice in China (with the mindset of ‘I do it for myself and to feel better’), plus the notion of wellness is closely connected. For that reason, for instance, the alternative responsible materials required a lot of explanation to make sure customers understood them and liked them.

In Japan, the situation was different. It appears that when they entered the market, there were already a significant number of local players doing what GANNI was doing. However, they were not communicating these efforts as transparently as GANNI did, which is why many Japanese customers liked the relationship the brand proposed to create with them.

Evolving materials is also a key step towards responsibility. Discontinuing the use of leather is the number one priority and GANNI won’t use leather any longer from 2024. This is no easy task as challenges exist in that area. Non-leather materials are still perceived as cheap or plastic-like.

Andrea Baldo's insights offer a compelling vision for the future of sustainability in the fashion industry. Baldo's approach, as demonstrated by GANNI, emphasizes the importance of CEOs in taking risks to drive change, even in the face of shareholder resistance and market challenges. His focus on ESG credibility, embracing responsibility over hollow sustainability claims, and integrating innovative and transparent practices showcase a realistic path towards transformation. According to Baldo, sustainability is not about solving every big topic but taking a step-by-step approach: this could be done both by making sure shareholders are aware of what is at stake, but also by collaborating with other companies in frameworks such as what the IADS is.

GANNI's initiatives, from using recycled materials to discontinuing leather, and exploring rental and second-hand models, reflect a commitment to a more responsible business model. This approach is not just about environmental impact, but also about adapting to different market sensibilities and consumer behaviours, acknowledging the diverse perceptions of sustainability across cultures.

About Ganni

Based in Copenhagen, GANNI has developed exponentially over recent years thanks to a unique Scandinavian sense of style. Acting responsibly is seen as a moral obligation at the company which is on a journey to minimise its social and environmental impact. In 2020, they launched the GANNI Gameplan setting 44 tangible goals to be reached by 2023 across four main pillars: People, Planet, Product and Prosperity. The company is B Corp certified and has been elected one of the Time 100 most influential companies in 2023.

Credits: IADS (Christine Montard)