Many fashion brands structure their impact reports in a way that mirrors their sustainability strategy. Tom Wood, for example, follows the people, planet, and product pillars. But circular fashion services take a different approach. “We don’t have a value chain. We don’t own a production line. We don’t use natural resources. We are a facilitator between two consumers that have already purchased something and want to exchange it online. It’s a totally different line of business,” says Vinted sustainability and strategy lead Marianne Gybels. “Of course, Vinted is also creating emissions. We have an office, warehouses, shipping and data centers, all of which add up. But in general, we use the impact report to dig into the assumptions people have about our business, and back them up with proper insights we can use to steer the business forward.”
Impact can also help keep the sector in check as it grows, documenting shifts that might undermine its core mission, such as the trend towards drop-shipping fast fashion or selling counterfeit products on secondhand platforms, or using the availability of resale as an excuse to shop more. For credibility, it’s important that these claims and methodologies are verified by an independent third-party, continues Gybels. “We never want it to read as Vinted claiming Vinted is sustainable.”
Today, the key challenge for impact reports is to balance accuracy, comparability and clarity, says Fried. “Those three things are constantly pulling in different directions,” she says. “The science improves, supplier data gets better, emissions factors get updated. All of that strengthens the work, but it also means that what looks like a setback in year-on-year progress might actually be a measurement improvement, not a real-world increase in emissions. Communicating that accurately, without losing the reader, is one of the harder parts of this work.”
Bigger changes ahead
Until now, impact reports have been entirely voluntary for both public and private companies, but incoming regulation will soon force a reckoning. Moving forward, there will be certain data points companies are required to report on annually, providing a new framework for impact reporting with less leeway for brands to cherry-pick the most favorable insights. “We greatly miss standards in impact reporting,” says Bernstein luxury goods analyst Luca Solca. “The risk is that impact reports become a PR exercise, showing the side you look best.”
Under the revised ESRS rules the EU just adopted, larger businesses will have mandated data points to report on annually, in line with their financial reports. But this is primarily aimed at investors, and doesn’t apply to the SMEs that make up around 90% of the European market, says Andreas Rasche, professor of business in society at the Copenhagen Business School Center for Sustainability.
Still, there are best practices all businesses can learn from. One of the hotly debated elements was double materiality — despite pressure from lobbyists to remove this clause, the EU voted to keep it, which means businesses need to report on their impact as well as the financial risks it poses. CSRD also requires limited assurance, meaning an independent third party has to verify at least some of the methodologies and claims — an attempt to boost investor trust in sustainability reporting, which has historically been quite low.
