Analysis: How Zalando is shifting the sustainability gears

Standing up and admitting you are part of the sustainability problem is brave – but that is exactly what Zalando co-founder and chief executive Rubin Ritter did.

Flights to Japan, living in an old-build apartment and his choice of clothes have all contributed to Ritter’s yearly carbon footprint of 40 tonnes – the EU average is 12 tonnes per person and the global average is just two tonnes. Ironically, he pointed out, “the people who are aware of climate change are the worst offenders”.

Because the fashion industry accounts for around 8% of global greenhouse gas emissions, Ritter also knows Zalando is a contributor to the climate crisis, which has prompted a global uprising, epitomised by Greta Thunberg and Extinction Rebellion’s protests. He has decided to do something about it.

“Eleven years ago [when Zalando started] we were there to survive and make money. We weren’t thinking about sustainability, but that all changed in 2015,” Ritter explains. That was when the issue started to become front of mind and Zalando really began to think about the part it played.

Despite recognising the problem, Ritter says Zalando has not done enough over the last five years and 2020 will be the year the online fashion platform “shift gears significantly”.

“We want to give back more than we take from the environment,” says Ritter.

Zalando has committed to a net-zero carbon footprint in its own operations, all deliveries and returns, and has revised its sustainability initiatives by launching its ‘do.MORE’ strategy.

New strategy

“From today onwards”, Ritter maintains, Zalando will not just be carbon neutral but will raise ethical standards and eliminate single-use plastics from its packaging and materials.

Zalando says 20% of its gross merchandise volume will come from sustainable products, it will extend the life of 50 million garments and provide training for its workforce to align with its future work practices.

To hit the targets set and become fully responsible for its carbon footprint, Zalando has also boldly pledged to cut ties with any brands that do not comply with its sustainability guidelines, but so far has not disclosed any details.

Ritter says: “Sustainability is growing very fast and there are a lot of brands that are commercially successful but if they don’t match our values they will be cut. We are not willing to compromise on these things. This has to be part of our company otherwise it will be at risk, and people will choose other companies.”

To be sold on the platform Zalando vice-president of womenswear Sara Diez says: “There will be a code of conduct brands have to follow focused on materials and processes, but it will soon include environmental and social criteria.

“If [brands] want to work with us, that’s how they have to work – there is no going back.”

Zalando has already labelled 240 retailer and brand partners and 20,000 products sold on its platform with a sustainability flag, which will also be included on every item on its own private label, Zign by spring/summer 2020.

With 2,000 brand partners, there is still a lot of work to be done, but Zalando sees that as an opportunity as standards are raised and the businesses therefore become more appealing to shoppers.

“It will make us a stronger business and more relevant for the consumer of the future,” Ritter says.

Zalando director of corporate responsibility Kate Heiny says: “We must all take action on our own carbon footprint but as the starting point for fashion we play a unique role bringing together brands and customers and we’re helping them do the same.”

Will it work?

Encouraging the reduction of carbon footprints by setting an example is commendable, but will potentially limiting the brands customers have access to on Zalando and encouraging them to shop sustainably be viable from a business point of view?

Stuttgart International School for Management professor of international management and sustainability Professor Dr Andre Reichel, who appeared at the Zalando event, says: “It’s not just about minimising carbon footprint, you have to sacrifice some growth and change today or you won’t have a business left tomorrow.”

Reichel says those changes might include higher-priced items that are meant to last longer, and more retailers launching rental or subscription services.

Not everyone will see things in a black-and-white way, however. Last week, H&M boss Karl-Johan Persson told The Independent there is a lack of understanding of the complexities of sustainability and warned that restricting consumers’ behaviour may “lead to a small environmental impact but it will have terrible social consequences”.

“The climate issue is incredibly important. It’s a huge threat and we all need to take it seriously – politicians, companies, individuals. At the same time, the elimination of poverty is a goal that’s at least as important,” he said.

“We must reduce the environmental impact. At the same time, we must also continue to create jobs, get better healthcare and all the things that come with economic growth.”

Can others do the same as Zalando?

Although Zalando’s new strategy is designed to encourage retailers and shoppers alike to think twice about their choices, GlobalData analyst Emily Salter warns it could cause some bumps along the road.

“It’s a very bold move and it will probably lose some popular brands, depending on how stringent the standards are that it sets.

“The brands will be assessing whether if it’s worth their while changing what they do to be sold on Zalando,” she says.

But with nearly 30 million active customers and third-quarter revenues up 26.7% to €1.5bn, brands are likely to sit up and listen – many, of course, are actively addressing sustainability issues themselves.

Salter says Zalando’s setting the sustainability bar so high will be a good thing for both in the longer term.

“It might gain [shoppers] in the long term because of [those] who wish to shop more sustainably, as long as they communicate this well. If they don’t, shoppers might want to know why X brand isn’t on the website anymore and not realise why.

“A lot of retailers are focusing on sustainable fashion ranges, but that’s not just what Zalando is focusing on. It is looking at carbon emissions and packaging too, so it could help retailers focus on those things as well as just the materials they are using.”

Fear and anger about the climate crisis are unlikely to go away. Zalando’s initiative is a timely reminder to brands and retailers that have not yet acted that it is their own sustainability, as well as the planet’s, which may be at stake. And that is likely to focus minds as never before.