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Two people in a clothing store

Description automatically generated with low confidenceMore and more brands are incorporating environmental concerns into their business models, in response to consumer demand and also because they have reached the obvious conclusion that there is only one Earth. But a group of companies trying to coordinate sustainability efforts finds themselves in trouble with European regulators over possible antitrust concerns—and they’re not alone.

Some clothing executives and designers began talking in the spring of 2020 about ways to reshape some of fashion’s most common practices, to make the fashion business itself more sustainable, eliminate unprofitable waste, and exhibit greater environmental consciousness. This consortium—which began with about 40 members but has now grown to hundreds of fashion representatives from around the world, involving major brands and retailers like Gucci, Chloé, Rodarte, Nordstrom, and Bergdorf Goodman—published a sort of manifesto in May 2020, laying out their “shared vision” to achieve “more environmentally and socially sustainable and ultimately align them more closely with customers’ needs.”

Their proposals included shifting the fashion seasons to better align with actual seasons to create more demand and less garments ending up on sales racks and in landfills. They also proposed using more digital showrooms and making additional changes that would enable them “to become more responsible for our impact on our customers, on the planet and on the fashion community, and bring back the magic and creativity that has made fashion such an important part of our world.” This manifesto was followed by another letter published two days later, laying out more specifics.

It all sounded pretty good, until May 2022, when European Union antitrust regulators conducted a series of raids against signatories to the letters. The EU—which did not name the subjects of the raids; the Reuters news service found and published these names—said their targets had violated rules against restrictive business practices, including price fixing, and that the companies may have formed an illegal cartel.

“The inquiry is raising questions about how a notoriously cutthroat industry can make itself more efficient and sustainable without violating antitrust regulations aimed at preventing collusion,” wrote The New York Times—which also went on to note that U.S. law makes it tricky, and perhaps even dangerous, for companies to coordinate their environmental (and other) practices. In the United States, Republican officials at the state and federal level have raised concerns about, and levied threats toward, companies cooperating on environmental issues.

As good intentions push up against the law, a group of climate finance researchers from Oxford University, Harvard University, and IMD Business School in Switzerland, recently published on this issue in the Harvard Business Review, offering one black-and-white piece of advice for companies wanting to collaborate, in a world of murky gray: “Discuss with your lawyers.”

Discussion Questions:

  1. Do you think it is good for companies to collaborate on environmental issues?
  2. How might consumers be affected, if companies work together to create less waste?
  3. Should the law should allow these collaborations, or should they be banned—or treated skeptically—under the law?

Sources: Elizabeth Paton, Ephrat Livni, and Jenny Gross, “When Does Collaboration Become Collusion?” The New York Times, November 7, 2022; “Antitrust: Commission Carries out Unannounced Inspections in the Fashion Sector,” ec.europa.eu, May 17, 2022; Foo Yun Chee, “EU Cartel Raids Target Fashion Designers Proposing Sales Periods, Discount Changes–Sources,” Reuters, June 14, 2022; “Open Letter to the Fashion Industry;” forumletter.org, May 12, 2020; “#rewiringfashion,” rewiringfashion.org, May 14, 2020.