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Fashion Goes Sustainable
Anouk Coxon, Samie Li Shang Ly, Cameron Welsh, Ruane Remy

CASE INTRODUCTION

This is the voice of Anouk as she reflects on the sustainability issues of the fashion industry. 

About six months ago, four close friends and I had an unexpected stroke of luck — we won the New York Mega Millions lottery. After taxes, we were left with a shared total of $50 million. Naturally, the question that followed was: what could we do with this kind of money? What should we do with it?

We are a diverse group with unique experiences, ranging from fashion design and global retail to supply chain operations and sustainable investing. My own journey spans more than two decades in the industry, having witnessed how trends evolve, how markets shift, and how globalization has impacted every layer of apparel production. We had all been grappling with the troubling realities behind fast fashion for some time—mounting textile waste, underpaid labor, environmental degradation, and greenwashing campaigns. In our work, we had seen what innovation could achieve, but also how rarely it gets scaled in a meaningful, measurable way.

This windfall offered us a rare opportunity: not just to build something profitable, but to do it differently—to reimagine the fashion system from the ground up with sustainability and ethics at its core.

With this in mind, we turned our attention to the wider landscape. The fashion industry, though vibrant and culturally significant, is also fraught with systemic problems. It contributes disproportionately to pollution and climate change and depends on opaque supply chains that are often linked to human rights abuses. We knew the solutions would have to be both visionary and grounded in operational feasibility.

Faced with this reality, our group decided to reimagine what a responsible, regenerative fashion future might look like—and whether our $50 million could help build it. — we won the New York Mega Millions lottery. After taxes, we were left with a shared total of $50 million. Naturally, the question that followed was: what could we do with this kind of money? What should we do with it?

With diverse professional backgrounds in the fashion industry—and myself bringing over 20 years of experience—we found ourselves reflecting deeply on the industry’s evolution. We’ve witnessed firsthand how the rise of fast fashion has reshaped the sector, prioritizing speed and scale over quality and ethics (McFall-Johnson, 2020). At the same time, increased media coverage has continued to expose the industry’s troubling environmental footprint and human rights violations, leaving many of us questioning whether we’ve truly made progress at all.

The challenges are stark. Just last year, nations including the United States, Canada, and the Netherlands formally accused China of committing genocide in the Xinjiang region. As a response, sanctions were introduced against companies sourcing materials from the area—a region responsible for more than 20% of the world’s cotton supply (BBC, 2021). Around the same time, over 50 investors, coordinated by the Interfaith Center on Corporate Responsibility, began reaching out to more than 40 companies—including H&M, VF Corporation, and Zara—demanding greater transparency and accountability across their supply chains (Reuters, 2021).

Faced with this reality, our group decided to reimagine what a responsible, regenerative fashion future might look like—and whether our $50 million could help build it.

THE STATE OF FASHION TODAY

The global clothing and textile industry contributes $2.4 trillion to manufacturing and employs 86 million people, mostly women. However, with 80 billion garments produced annually and a massive reliance on resource-intensive processes, it stands as the second-largest polluter after oil (UN Alliance for Sustainable Fashion, n.d.).

Examples include:

  • Cotton requires up to 20,000 liters of water per kg. (Watch how cotton is made)
  • Greenpeace (2020) found hazardous chemicals in 63% of garments tested across 20 major brands.
  • The industry accounts for 10% of global GHG emissions and 20% of industrial wastewater pollution.

Sustainability efforts have been slow to catch up. Transparency, emissions, materials sourcing, and waste management remain material issues across top brands such as Nike, H&M, LVMH, and Zara (Kent, 2021).

Our investment

approach aligns with the six Principles for Responsible Investing (PRI), focusing on ESG integration, active ownership, transparency, industry collaboration, and impact measurement.

CHALLENGES OF FAST FASHION: WHY CHANGE IS HARD

Despite mounting evidence of the environmental and social harms caused by fast fashion, the industry continues to grow at a rapid pace. Several key challenges explain why sustainability is still lagging:

1. Consumer Habits and Price Expectations
Consumers have become accustomed to extremely low prices and rapid trend cycles. Fast fashion thrives on this demand, offering new styles every week at rock-bottom prices. A 2022 McKinsey study found that 60% of global consumers consider price a top purchasing factor, even when sustainability concerns are present.

2. Complex Global Supply Chains
Most clothing is produced in developing countries with weak labor protections. These fragmented, opaque supply chains make traceability and accountability difficult. Brands often outsource production across multiple tiers, making it challenging to enforce ESG standards consistently.

3. Greenwashing and Lack of Regulation
Many brands market products as “eco-friendly” or “sustainable” without third-party verification. According to the Changing Markets Foundation (2021), 60% of environmental claims in fashion were found to be misleading or unsubstantiated.

4. High Upfront Costs of Innovation
Switching to sustainable materials, AI technology, or green infrastructure (like LEED-certified buildings) involves high initial costs. Smaller brands struggle with financing these transitions, while larger players often resist them due to profit margin risks.

5. Lack of Incentives or Standards
Globally, there are few regulatory frameworks requiring sustainable practices in fashion. Voluntary initiatives such as the UN’s Sustainable Development Goals (SDGs) or PRI are often inconsistently adopted, and enforcement is rare.

6. Volume-Driven Business Models
Fast fashion profits are rooted in mass production and overconsumption. With 80 billion garments produced each year, even minor reductions in volume would challenge core business models like those of H&M or Shein.

Together, these challenges create a system where short-term gains often outweigh long-term sustainability, both economically and operationally. For true change to happen, any new investment must address these systemic barriers while offering scalable and competitive alternatives.

DUAL-TRACK LEARNING OBJECTIVES

Commerce StudentsEngineering Students
Understand ESG investing and fashion business modelsExplore sustainable materials, supply chain design
Analyze global trade and consumer trendsEvaluate production efficiency, nearshoring strategies
Create go-to-market strategies and ROI projectionsDesign scalable, traceable systems and tech stacks

GUIDING QUESTIONS FOR STUDENT DISCUSSION

The following questions are designed to guide your analysis and can be answered using only the case information provided, without requiring external research. Each question builds on the facts, data, and frameworks presented in the case.

Overarching Case Question:

How can a $50 million investment reshape the fashion industry to be both financially viable and environmentally regenerative?

Think about long-term profitability, how to integrate sustainability into every step of the supply chain, and how to respond to consumer and regulatory pressures—all while staying competitive.

Guiding Questions (Explained):

  1. What unmet consumer needs or market gaps could this investment address in sustainable fashion?
    • Use data in Exhibit 3 to identify the needs of Gen Z, Millennials, Gen X, and Boomers. Which group is most likely to support a new sustainable fashion brand? What do they care about most—price, ethics, or resale value?
  2. Should we invest in AI, circular logistics, facility innovation, or sustainable materials to create long-term impact?
    • Refer to the Engineering Framework section for ROI projections, industry examples, and case data on each type of innovation. You will need to consider scalability, cost, environmental footprint, and alignment with consumer behavior.
  3. How do sourcing decisions influence emissions, ethics, costs, and brand image?
    • Use Exhibit 2 to compare sourcing regions. Consider shipping lead times, renewable energy projections, labor cost index, and political risk. Which region supports the most ethical and efficient production model?
  4. What is the optimal balance between financial return and ESG performance in this sector?
    • Think about how the Principles for Responsible Investment could shape decision-making. Use examples from major companies like Zalando or ThredUp (mentioned in the case) who have implemented profit-generating sustainability measures.
  5. How could we measure success—through carbon reduction, circularity, market penetration, or ROI?
    • Refer to the metrics provided in the materials innovation, supply chain, and circular logistics sections. Suggest at least 2 KPIs per initiative.
  6. What partnerships (tech, resale, manufacturing) would accelerate our vision?
    • Think about potential collaborators like Constructor.ai for tech, ThredUp/Vinted for resale, or solar energy providers in Mexico. What expertise or infrastructure can be leveraged instead of building from scratch?

Key Questions for Student Teams to Solve (Must Answer During the 3-Hour Session):

  1. Which innovation should the group prioritize: Tech systems, material innovation, or manufacturing redesign—and why?
  2. What sourcing model (offshore, nearshore, hybrid) should be implemented for speed, cost, and ESG alignment?
  3. How can a circular economy model (e.g., resale, repair, recycling) be financially and logistically viable?

ENGINEERING PROBLEM-SOLVING FRAMEWORK

1. Tech Systems Design
Should the team build an AI-powered product recommendation engine to reduce overproduction and inventory waste?

  • Return rates are 20–30% in online fashion
  • Zalando credits 15–20% profit growth to AI integration
  • Tools: Constructor.ai, Bloomreach, GPT-4o
  • Understanding AI in Fashion

2. Supply Chain Engineering
Compare emissions, labor cost, and risk for sourcing in Vietnam, Bangladesh, and Mexico

3. Materials Innovation
Evaluate recycled polyester, bamboo, and mycelium leather for sustainability and scalability

4. Facility Design
Build a LEED-certified factory in North America or retrofit abroad?

5. Circular Logistics
Build a reverse logistics system for garment reuse and resale

  • $70–140B in excess fashion waste (2023)
  • ThredUp/Vinted: profitable resale models
  • Tools: Ellen MacArthur Foundation, TerraCycle
  • How ThredUp Works | Vinted Explained

 

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