Transcript by Kensho.

Lindsey Hall: I'm Lindsey Hall, Head of Thought Leadership at S&P Global Sustainable1.

Esther Whieldon: And I'm Esther Whieldon, a Senior Writer on the Sustainable1 Thought Leadership team.

Lindsey Hall: Welcome to ESG Insider, a podcast hosted by S&P Global, where we explore environmental, social and governance issues that are shaping investor activity and company strategy.

It's Climate Week NYC and we're doing something a little different here at ESG Insider for the next couple of episodes. Now if you listen to our recent episode on what to expect from Climate Week, you'll know that this week includes thousands of stakeholders gathering for hundreds of events across New York City. And as you might be able to hear from the background noise where I am, I'm currently at one of those events. 

At ESG Insider, we're thrilled to be an official media partner of the Nest Climate Campus, which is taking place here September 19, 20 and 21 at the Javits Center. So over the next couple of days, we'll be bringing you short interviews from the sidelines of the climate week to give you a sense of the conversations that are taking place. Okay. Let's dive into today's Interview.

Amina Razvi: My name is Amina Razvi, and I'm the CEO of the Sustainable Apparel Coalition. We are a global multi-stakeholder nonprofit alliance, and we basically work with businesses to transform the industry for exponential impact. We have over 280 members across the globe, representing the entire value chain from brands, retailers, manufacturers, to NGOs, stakeholders and academics. And we represent almost 50% of the industry.

Lindsey Hall: Okay. Great. So what can you tell me about your presence here at Climate Week? What are you planning to attend? What are you hoping to see?

Amina Razvi: Yes. So the apparel industry accounts for anywhere between 2% and 8% of emissions given the data that we currently have. And so not only does the apparel industry have a huge responsibility, but we also have a huge opportunity to drive decarbonization. 

When you think about fashion, most people maybe don't totally understand exactly where all the carbon is, but the carbon is really in the supply chain, right? And so most of the emissions when you talk about apparel production come from Scope 3 emissions and the supply chain. And so it's critically important for our brands, retailers and manufacturers to actually be working together to drive towards those science-based targets that they've set or net zero targets that they have set. 

So our presence here is really to, one, raise awareness around who the SAC is and the work that we've been doing for over a decade with regards to measuring social and environmental impact. It's also to drive home this idea that collaboration and partnership and really collective action are critical and needed to tackle not just the apparel industries issues with climate change and decarbonization but every sector.

Lindsey Hall: Okay. And earlier today, you spoke on a main stage panel about fashion climate advocates, and I was here at the Nest Climate Campus. What can you tell our audience for the podcast about that panel?

Amina Razvi: Yes. So that panel was really focused on why is collective action and collaboration so critical. I think the Sustainable Apparel Coalition is a really good example of a precompetitive collaborative organization, right? 

Thirteen years ago, when we started, we actually brought companies from across the value chain together, brands who were actually fierce competitors with one another, alongside their partners, their suppliers, NGOs and academics, bringing the entire value gain together to essentially help determine how we assess social and environmental impact end to end. 

And at the panel today, what we were talking about was why that type of collaboration is so important and even more critical now than ever. From my perspective, I talked a little bit about how we were actually leveraging the work that we've done for a decade and moving into this new era of collective action. 

We just launched an update to our strategic plan, which we're really excited around that focuses on 3 pillars. So looking at climate, looking at decent work and looking at nature positive, 3 areas that we believe are critical, not only for our industry but for all sectors, and we talked a little bit about why collaboration and collective action are critical on each of those areas.

Lindsey Hall: Okay. Great. A couple of follow-up questions there. So you mentioned pre-competitive. For any listeners, you might not be familiar with that concept, what does that mean?

Amina Razvi: Yes. So what it means is that you can have apparel companies who essentially compete in the market. So let's say, Nike and Adidas, who actually come together from a precompetitive standpoint to work on issues that don't have anything to do with product or pricing or market, et cetera. 

We're looking at sustainability and 13 years ago, when we started the SAC, it was really around how companies could work together around things like sustainability, like social and environmental issues in which no individual company could do it on their own, but that collaboration was critical. 

And so that is kind of the basis in the founding of the SEC. And over the past 13 years, we've developed the Higg Index, which actually helps companies to assess their social and environmental impact end to end. And we've done that from a pretty competitive standpoint. So you have, again, brands, retailers and manufacturers who might otherwise be competing for whether it's on product, whether it's on market, whether it's on consumers, et cetera, who have actually come together to develop these tools over the past decade.

Lindsey Hall: Okay. Great. And you mentioned that, that history there. For anyone who's not familiar, what can you tell our listeners about how SAC as sustainable apparel coalition was founded?

Amina Razvi: Yes. So it was actually founded back in 2009 when 2 really unlikely organizations, Patagonia and Walmart actually came together and brought their competitors, other industry players together to figure out how we actually address this issue of social and environmental impact. 

At the time, it was recognized that companies were pretty much working in silos. They had proprietary programs. They had proprietary tools. They were doing good work, but it wasn't actually moving the needle. And that realization that for 10-plus years, 20, even in some cases, companies have been trying to work on these issues and not making enough progress was really the impetus for the SAC. 

And from that, they brought their competitors together. And one of the stories that Rick Ridgeway who was at Patagonia at the time and it's kind of like the -- one of the founders of the SAC. He loves to tell that he sent this letter to several competitor organizations. And many of them said it was the strangest letter they had ever gotten, right, around coming together and sitting around the table and actually talking about these issues in a way that the industry never had to that point. But they went to the meeting because not only was it the strangest letter they'd ever received, but it was also one of the most intriguing ones. 

And so you had a group of 10 or 15 companies to start off with, who sat around the table and essentially said, if we were really going to move the needle on these issues, we can't be comparing things apples to oranges. We have to be talking about social and environmental impact in the same way. We need to make sure that the metrics that we're looking at are the ones that really matter, and we need to be measuring them in the same way. And that was essentially what created the Higg Index, which is a suite of 5 tools, which looks at social and environmental impact end to end. 

So it looks at the materials that go into our product. It looks at how those products are manufactured and where they're manufactured, and it also looks at brand management processes themselves. So over the past 10 years, our members have collaborated and actually developed all of these tools together. 

Lindsey Hall: As we're wrapping up here, I would love to hear from you, what are the biggest challenges that you see on the horizon for the apparel industry?

Amina Razvi: So there are a couple of things. One is policy is right around the corner. This is an industry that hasn't been regulated in ways that a lot of other industries have. And there is industry kind of across the board, if you look at what's happening in California, here in New York, much of it is actually being advanced in the EU. There are several regulations that are set to take -- to go into effect in 2024. So policy is right around the corner and companies need to be measuring their impact, both from a Scope 1, Scope 2 and Scope 3 perspective. It will be legislated at some point. 

So I think that's both a challenge and it's an opportunity. I think it's a challenge for companies who haven't started and who haven't actually begun to measure their impact yet. For many of the companies we work with, I mean, that's what we've been doing for a decade, right? So there are those who are further ahead. But legislation is going to require companies to do a lot and I think that there are a lot of companies who are just not prepared for it. So that's number one. 

The second thing I think is really important is how we finance this work, right? So here at Climate Week, there's a lot of conversations also going on around the financial instruments and how you incentivize decarbonization. And where is the funding going to come from? And how does it work? And those are really critically important conversations because unless you can actually figure out how to fund the transition and do it in a way that's just an equitable, I think there's a lot more impact that will be had if we don't think about those things, right? 

Who actually bears the brunt of this. For us, it's -- much of it is within the supply chain, and we work with manufacturers on a regular basis. So if we're not talking about how this is funded and how we actually share the burden, then I think it becomes a critical barrier to really achieving change and the kind of change that's needed. 

And the third thing I will say is what I also talked about on the panel is why collaboration and partnership is so critically important. So we say a lot that partnership is the new leadership, and we believe it because it's core to our DNA as the Sustainable Apparel Coalition, but it's also what we've seen actually moves the needle. When you can bring competitors, partners around the table to actually talk about the issues and figure out how you move this forward, we know that it works and we've done it, and we feel like more of that needs to happen, not just within our sector, but actually cross-sectorialy as well.

Lindsey Hall: One follow-up question. I just sat in on a panel discussion about circularity and sustainable fashion was a big part of that discussion. How does your organization think about circular practices like secondhand clothing, fashion rentals, apparel repair as opposed to the new clothing side of things?

Amina Razvi: So for us, a circular product design is a key component of this entire transition for the industry. It's within one of our core pillars of our new strategic plan around a nature-positive future, which includes circular design. And that means thinking about the product at the very beginning.

So how do you actually design for circularity is a really key component that I think all companies need to be thinking about and embracing, but it is also looking at other business models, things like rental, right, things like secondhand. 

And so for us, when we talk about some of these issues, it's very much an all of the above. I do not think that companies are going to be able to like meet their goals and meet those targets without actually looking at both innovative solutions such as maybe new products, maybe new materials, but also looking at how they actually designed from the beginning for it to be reincorporated back into the supply chain and/or how they're looking at new business models that supplement what they already do.

Lindsey Hall: So last question for you here today, and I know you've got a very busy agenda. But from your perspective, what do you think needs to happen to make this Climate Week NYC a success?

Amina Razvi: That's a really good question. I mean, from my perspective, I would say that we're starting to connect the dots more between what I think has been maybe really well intentioned, but sometimes disparate conversations. 

So earlier, we were talking a little bit about how do you get organizations to work together? How do you get the financing to where it needs to go. And what I would really love to see is more of that happening. So how are we connecting the funding to the organizations that need that funding to decarbonize. How are we actually incentivizing things even maybe from a policy standpoint that really move the needle towards the actions that we want companies to be able to take? And how are we actually fostering and forging partnerships that ultimately will drive the needle and create exponential positive impact on the ground? So from my perspective, I would see those as some milestones for success.

Lindsey Hall: Thank you so much for sitting down with me. We will definitely be doing future episodes focused in on sustainable apparel, sustainable fashion. So I hope you'll come back and be a guest again.

Amina Razvi: Absolutely. Thank you so much for having me.

Lindsey Hall: So as you heard, a big focus on collaboration across the supply chain, and this is a theme we'll continue to tease out throughout climate week and in the weeks ahead. Please stay tuned.

Thanks so much for listening to this episode of ESG Insider, and a special thanks to our producer, Kyle Cangialosi. Please be sure to subscribe to our podcast and sign up for our weekly newsletter, ESG Insider. See you next time.

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