Beware of the Plastics… We Wear

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Happy December!

The holiday season is in full swing, evidenced by the energetic crowds that filled their favorite stores over Black Friday weekend. If you were among the 122.7 million Americans to visit a store in person, you might have even felt a bit of pre-2020 vibes as you navigated the swarming masses. Online shopping was up too, with retailers pulling in a record $11.3 billion in sales on Cyber Monday alone.

So, do the throngs of shoppers point to a strengthening economy, or is it evidence that everyone is searching for bargains amid rampant inflation? Mixed economic signals are making it hard to answer that question. On Tuesday, the Conference Board announced that US consumer confidence dropped in November to its lowest level since July. But then on Wednesday, the Commerce Department said that real gross domestic product (GDP) spiked 2.9% in Q3 — higher than previously estimated.

The mixed signals are just another sign of our wonky economy. Thanks to uncertainty, combined with protests in China, the looming potential of a rail worker strike, and tea leaf reading every time Fed Chair Jerome Powell speaks, stocks continue to wobble. In times like these, many investors find peace of mind by maintaining a steady focus on the long term. As we point out in our long-term investing guide, historical returns show the benefit of sticking it out through market dips.

Amid all the uncertainty, it’s inspiring to see that charitable giving remains strong, according to new numbers from Vanguard Charitable (not to mention the unofficial evidence in our social media feeds on Giving Tuesday). One particular stat from Vanguard caught our eye — Americans who included charitable giving in their annual budgets gave nearly four times more than those who did not budget. If you want to start giving more intentionally, including it as a line item in your 2023 budget is one way to stick to that goal.

Asking for a friend….

We know there is a lot to think about these days, and it can sometimes be a bit overwhelming. To help with those nagging questions and so you have useful resources at your fingertips, here are few links to resources and past stories relevant in these turbulent times:

• How to Practice Faith-Based Investing
• Some of our favorite inflation-fighting strategies (and a few more)
• Unpacking the ESG Alphabet Soup (including a link to our ever-growing glossary of common terms)
• FWIW Guide to Cleantech Investing: Sectors to Watch (covering a dozen innovative sectors to anchor your research on sustainable investing options)
• “Siri, What Is a Recession?”

News you can use

• Are you ready for flask-to-table dining? The FDA has declared a lab-grown meat safe to eat for the first time. Bill Gates-backed Upside Foods, which is developing cultivated meat, poultry, and seafood, got the green light this month for the “chicken filet” they produced in a lab and will now work with the USDA to secure the remaining approvals before it’s sold to US consumers. So far, the only place you can eat what’s being called “clean meat” is Singapore.
  
• Americans may soon have more options to align their retirement savings with their values, thanks to the Labor Department. Just before Thanksgiving, the agency issued a rule clarifying that employers can take into account ESG factors when selecting 401(k) investments and exercising proxy voting. Just 13% of 401(k) plans offer socially responsible investment options today, but industry experts expect demand for such investments to grow.
  
• If you need more evidence that corporate culture is shifting, The New York Times reports that elite B-schools are adding ESG to their curriculums. Examples include Harvard’s Institute for the Study of Business in Global Society and the Wharton School’s new MBA majors in diversity, equity, and inclusion, along with ESG factors for business. Plus, nearly half of the Yale School of Management’s core curriculum is devoted to ESG.

Sustainable fashion

If your Black Friday and Cyber Week wish lists looked anything like ours, there were a few items for your closet you couldn’t wait to get at half price. Who buys cashmere or alpaca wool at full price in this economy anyway? Besides cost, another factor influencing purchases these days is sustainability. Survey after survey shows people are considering the impact of their shopping habits on the planet, workers, and their own health.

It’s hard to think of clothing, among the most basic of human needs and a big part of culture and expression, as a polluter. But the data shows it is.

Globally, we produce 80-100 billion garments per year. About 60% of the material is plastic fibers, like nylon and polyester, which come from fossil fuels. On average, Americans wear a garment fewer than 50 times, after which it is likely to end up in a landfill or waterway. According to the Ellen MacArthur Foundation textile production, the majority of which is for clothing, produces more greenhouse gas emissions than all international flights and maritime shipping combined. There are other concerns as well, like water consumption and pollution, soil degradation, child labor, etc.

With the window to secure a green future rapidly closing, it’s clearly time for a “change of clothes.”

Fast fashion to slow fashion

It’s safe to say that the majority of people reading this email own something from a “fast fashion” giant — like Shein, H&M, Zara, Forever 21, or Fashion Nova — that sells the latest designer trends at affordable rates.

While this has made fashion more accessible, the products don’t last long, and the factories are rife with exploitation. A 2021 UK study of these websites found that, on average, 80% of their items contained first use plastic, while 49% were wholly produced with it. While fast fashion retailers and the consumers who purchase from them attract most of the blame, luxury brands aren’t always so sustainable either — take the crisis in cashmere, for example.

Many buyers these days are expressing a desire for slow or circular fashion, which involves considering both the initial sourcing and the entire supply chain, along with quality and classic appeal. Recycling, reselling, renting, and reusing are becoming the norm in certain circles with social media playing a major role. We never thought we’d see Dennis Quaid’s outfits from Meet the Parents recreated with thrift store buys, but here we are. We are big fans of donating through our local religious and community organizations, but startups like Save Your Wardrobe are making services like eco-friendly dry cleaning, repairs, and donations easier than ever for communities across the country.

How to invest in sustainable fashion

If you believe an apparel company belongs in your portfolio for its great business fundamentals, there are a few ways to know whether it aligns with your sustainability goals and values. (These tips can work for your closet too!)

Sustainability reporting and targets: Check whether the company publishes an annual sustainability report in accordance with international standards like the Global Reporting Initiative (GRI) and Sustainable Accounting Standard Board (SASB).

You can also see who’s making a real effort to reduce their emissions by looking up individual brands on the Science Based Targets initiative (SBTi) website. There are currently 13 North American companies with net-zero commitments, including public ones like American Eagle Outfitters, PVH, Ralph Lauren, Under Armour, and VF Corporation.

Certifications: Ecolabels show that a brand is conforming to sourcing and other standards verified by a third party. For example, an article with the OEKO-TEX STANDARD 100 label was tested for harmful substances, the Recycled Claim Standard/Global Recycled Standard are assurances that it actually contains recycled content made responsibly without harmful chemicals, and Fair Trade certification means the supply chain is ethical. Some other ecolabels are the Better Cotton Initiative, Bluesign, and Responsible Wool Standard.

Beware of greenwashing — brands have been known to slap “eco” onto items for insignificant claims and create their own unaudited ecolabels. Dutch authorities recently pulled over H&M for using claims such as “Conscious” and “Conscious Choice” without explaining what they mean.

ESG and other ratings: You can look up specific ESG ratings by companies on the public resource pages from Sustainalytics and MSCI. The former, which allows you to filter by industry, says those with low ESG risk include Canada Goose, Capri Holdings, Hanesbrands, Levi Strauss, Nike, and Kontoor Brands.

Good On You is also a great resource for breakdowns on brands’ approaches to the environment, labor, and animals.

Rentals and thrifting platforms: Rent the Runway, ThredUp, and Poshmark are some of the companies focusing on the circular fashion economy, but their stock prices have plummeted this year.

Bonus tip for shopping

There are many B Corps like Patagonia that aren’t publicly listed but are great options if you’re looking to buy.

Remember, the most sustainable wardrobe is the one you already own.

Before you go -

Having trouble finding the perfect gift? Google has revealed the top searches of 2022, including sustainable picks like hydroponic gardens, e-bikes, and countertop composters.

** FWIW team members own shares of Levi Strauss and Under Armour.

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