Business ethics group assignment case studyis zara fast fashion or ethical and sustainable

NATIONAL ECONOMICS UNIVERSITY -*** - BUSINESS ETHICS GROUP ASSIGNMENT CASE STUDY: Is Zara Fast Fashion? Or Ethical and Sustainable? Instructor: Dr Nguyen Bich Ngoc Class: Advanced Accounting 63 Students: Nguyen Thi My Anh – 11210625 Le Chi Mai – 11219088 Hoang Thanh Thao – 11215372 Nguyen Hoai Thu - 11215540 Hanoi, 2023 Table of Contents A Abstract B Company introduction .2 C Company’s ethics issue Green Washing 1.1 Situation 1.2 Danger of Greenwashing Fast Fashion 2.1 Situation 2.2 Ethical issue in Zara’s supply chain and labor abuse 2.3 Stakeholders relevant 10 2.3.1 Supplier 10 2.3.2 Employees 11 2.3.3 Community 11 2.3.4 Shareholders 11 2.3.5 Government 11 2.3.6 Customers 12 D People's awareness and Zara's reactions .12 People’s awareness 12 1.1 Protest 12 1.1.1 Extinction Rebellion activists 12 1.1.2 “Zara detox your fashion" campaign 13 1.2 Customers movement on fast fashion 14 Zara CSR (Corporate social responsibility) 18 Zara positive movements 19 E Our opinion .21 F Conclusion .21 G References .22 This is a preview Do you want full access? 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Log in A Abstract Zara is the leading fashion brand for children and adults of the Spanish company Inditex Zara isn’t just producing the most elevated overall revenues for association yet in addition, is the most renowned and perceived by clients in the market Zara is headquartered in La Coruña, Spain and was founded in 1975 by Amancio Ortega The marketing concept of Zara is to offer for sale, at prices typical of the mid-range, items of this same range in an environment resembling high-end shops Zara is able to successfully sell their brand by promoting fast fashion rather than high fashion, which allows them to quickly adapt to changing fashion styles and market their products more efficiently to their customers The collections are renewed every week In this project, we will also talk about ethics Ethics are the moral principles that govern a person’s behavior or the conduct of an activity We will first discuss the way to make the articles and then in the second part, analyze the ethical problems posed by this situation After a conclusion, we will discuss the solutions put in place by Zara to overcome these situations as well as what we could in addition B Company introduction Zara is a Spanish clothing and accessories chain based in Arteixo, Galicia The company was founded in 1975 by Amani Ortega and Rosalía Mera It is the main brand of the Inditex group, the world's largest fashion retailer The fashion group also owns brands such as Massimo Dutti, Pull and Bear, Bershka, Stradivarius, Oysho, Zara Home, and Uterqüe Zara has both men's and women's clothing, as well as children's clothing (also known as Zara Kids) Zara products are designed and manufactured based on consumer trends The highly responsive supply chain brings new products to the store twice a week After completing the design, the product will be delivered to the stores in about 10-15 days The distribution center in Spain processes all clothes New products are inspected, sorted, labeled, and loaded into trucks In most cases, clothes are sent within 48 hours Zara produces more than 450 million products each year There are more than 2249 Zara stores located in 88 countries Zara often chooses the most prime locations and the most expensive locations to open its main store Zara has main stores on Fifth Avenue in New York, Oxford Street in London, Calle Serrano in Madrid, Via del Corso in Rome, Champs-Elysees in Paris, Corso Vittorio Emanuele in Milan, Nevsky Prospect in Saint Petersburg, GUM in Vladivostok, Shibuya and Ginza in Tokyo, Myeong dong in Seoul, and others Figure 1: Zara’ s stores global presence C Company’s ethics issue Green Washing 1.1 Situation Greenwashing is the practice of misleading consumers about the environmental friendliness (more natural, healthier, free of chemicals, recyclable, less wasteful of natural resources, etc.) of a product or company in order to increase sales Zara has been accused of greenwashing in the past due to lack of transparency about their supply chain and sustainability practices In 2019, Zara announced their sustainability goals, outlining plans to use 100% sustainable fabrics and achieve zero waste by 2025 For this clothing line, the brand used LanzaTech’s technology to create new fabrics from carbon emissions instead of using virgin materials Zara claimed that the capturing and using of carbon emissions would lower the release of these emissions into the atmosphere and also reduce the amounts of virgin materials But in fact, their current offerings still largely consist of fast-fashion materials like polyester, which is harmful to the environment With the use of LanzaTech’s technology around 20 percent of the polyester comes from carbon emissions So then does that mean that the collection is greenwashing? Similar to the other collections of Zara the collection still has a very short lifecycle, and it will end up in a landfill creating more pollution The brand is responsible for overconsumption and with this collection that does not lessen Conversely, collections like these can even lead to more consumption because consumers believe the products to be “good”, and thus feel like they can buy more Zara also has been criticized for making grand sustainability claims without providing evidence of their actions There is no evidence the brand minimizes textile waste when manufacturing its products And, although Zara has set an absolute target to reduce greenhouse gas emissions generated from its operations and supply chain, there is no evidence it is on track to meet its target For example, they claimed to have reduced their carbon emissions by 20% but did not share specific details about how they achieved that reduction It is also important to remember that Zara has fast fashion traits such as on-trend styles and regular new arrivals This business model is inherently harmful to the environment, and energy-efficient stores can’t change that This is a preview Do you want full access? 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Log in Zara’s Join Life Collection is all a big greenwashing lie Zara prints Join Life in some of its products, claiming that 25% or 30% of the polyester used in these garments is recycled Zara does not give any clear information about where this supposed recycled polyester comes from, what controls are established to verify the recyclable fibers, and does not give the customer the information to verify any of its supposed sustainable practices Though the retailer does show some progress towards sustainability, its entire business model goes against these sustainability goals An NPR article calling out Zara’s greenwashing efforts summarizes it perfectly: “When a business is built on a fast turnover of styles, making those products still swallows a lot of energy, regardless of whether it's using organic cotton or selling products in more eco-efficient stores” Figure 2: Zara’s Join Life tags claim they use “ecologically grown cotton” but offer no certifications to back up these claims Critics point out that Zara's parent company Inditex is one of the largest fast-fashion retailers in the world, and the fast-fashion industry itself is notoriously harmful to the environment due to the high volume of clothing produced, the use of synthetic and nonbiodegradable materials, and the exploitation of cheap labor Even though the company said it is planning to slow down production, critics feel Zara is still not doing enough to address its current business model and the consequent heavy carbon footprint caused by its supply chains Additionally, Zara has been accused of not being transparent about their supply chain, which makes it difficult to verify their sustainability claims In particular, they have not shared details about the working conditions in their factories or the environmental impact of their production methods While Zara has made some efforts towards sustainability, it is up to consumers to decide if they believe those efforts are genuine or simply a form of greenwashing no evidence that the brand minimizes textile waste when manufacturing its products And, although Zara has set an absolute target to reduce greenhouse gas emissions generated from its operations and supply chain, there is no evidence it is on track to meet its target It is also important to remember that Zara has fast fashion traits such as on-trend styles and regular new arrivals This business model is inherently harmful to the environment, and energy-efficient stores can’t change that Overall, Zara has made some attempts to be more sustainable, but they have been accused of greenwashing through vague or exaggerated claims, lack of transparency, and continuing to engage in practices that are harmful to the environment So, unless Zara and many other brands start actively working on reducing consumption it is not unlikely to assume that they are greenwashing As Orsola de Castro, co-founder and creative director of Fashion Revolution, said “brands need to address the root cause of its impact, not just its effects…” 1.2 Danger of Greenwashing • Toxic Profit: It is used to maximize profits by selling plastic or products and services that have an environmental footprint that is toxic • Huge Environmental Impact: It is a way to hide a non recyclable production, that pollutes the planet for centuries, creating an opposite storytelling, of the dramatic reality generated • Hiding Huge Environmental Impact: Greenwashing has become a business model itself, maximizing profits while polluting, and hiding real environmental impacts • Intoxicating Language And Messages: It has become a business as usual, with a more green showcase, intoxicating language and messages Making the consumer believe plastic is sustainable and eco-friendly material, while helping diminishing other natural materials and helping to erase the knowledge and real innovation of other biodegradable and cheap materials • Blocks Real Solutions With Less Profit: It hurts companies that offer products and services that are truly sustainable, inhibiting real solutions to the environmental crisis, acting as a carnivorous business environment The more profit plastic based fashion companies make, the more they invest to control logistics, communication and traffic, to destroy the traditional or/and sustainable sectors in the industry • Digital Greenwashing: Most of the greenwashing is made in the digital sphere, hiding environmental crimes reports, sick people, or environmental damage, while paying newsrooms and influencers to market toxic products and make the brands look cool, trendy, and elegant Great investments in all social media to make plastic based fashion brands look green companies Fast Fashion Different from the traditional fashion retail model, Zara operates its own "fast fashion" business philosophy with three perspectives: • Short Time: It takes Zara just two weeks to bring a design concept to the consumers So, Zara always keeps up with the latest fashion trends • Small quantity: Each model of Zara product will be produced in a minimum quantity This both avoids inventory risk and creates a feeling of "exclusivity" • Variety of designs: With a short lead time and small quantity, new Zara models always receive immediate response from the market with minimal inventory From there, more new designs will increase Zara's chances of success One of Zara’s main strengths is its agility in churning out new products based on consumer demand It can take just a few weeks for consumer feedback to reach designers and for the product to then make its way to the retail floor As trends change faster than ever with the prominence of social media and fashion influencers, fast fashion companies like Zara are forced to speed up its turnaround in order to keep up with ever-changing demand As a result, the number of times a clothing item is worn to Detox Zara, and many tens of thousands of people emailed and tweeted directly to the company for an ambitious Detox commitment More than 700 Greenpeace volunteers in 20 countries were out at Zara stores on Saturday In the days before, climbers and other activists delivered the Detox message at Zara flagship stores and HQ buildings in Hong Kong, Budapest, Geneva, Hamburg and Madrid Photos and videos of the actions have been trending on Twitter for days for searches like “Zara” and “Fashion” Figure 4: Greenpeace climbers hang a huge banner in front of a Zara store in Geneva reading “Zara DETOX your fashion” 1.2 Customers movement on fast fashion Marketing research and surveys have found that most young consumers care about sustainability They are avid thrift store-goers and secondhand shoppers Gen Z wants similar commitments from the companies they buy from and aren't afraid to demand it This has fueled an oft-repeated narrative that Gen Z’s green habits have “killed” or significantly down fast fashion’s global expansion While fast fashion is a relatively 14 young phenomenon, it's part of a centuries-old industry that has adjusted to its current pace of growth Zara has been criticized as still promoting the concept of over-production and overbuying Amongst critics was Alice Murphy, journalist for The Independent, who has highlighted that the fast-fashion company should be focused on reducing waste as much as introducing any re-commerce initiative Murphy stresses the irony of the fact that the Inditex-owned Zara main business model is that of running a fast fashion strategy producing over 500 new styles a week and is therefore paying for “lip-service” with its intended repair and replace concept Even though the company said it is planning to slow down production, critics feel Zara is still not doing enough to address its current business model and the consequent heavy carbon footprint caused by its supply chains The brand is also under fire for failing to offer an exhaustive list of manufacturers and for not disclosing the audit results, which raises concerns about transparency For Lauren Singer, environmental activist, Trash Is for Tossers blogger, and founder of Package Free Shop in Brooklyn, New York, one of the biggest examples of this is the use of recycled plastic in clothing “[This] is one of the worst materials clothing could be made [out of], besides virgin [plastic], because of a problem that’s still not talked about as much as it should be, which is microfibers,” Lauren says “That inherently is something that’s greenwashing because people will feel like they’re purchasing something that’s supposed to have a positive impact by consuming and washing synthetic clothing, [but] it’s terrible for the ocean” She encourages those interested in sustainable fashion to instead turn to secondhand purchases as there’s “enough clothing already in existence,” to rent for one-off occasions, and to avoid synthetic fabrics or use a washing bag to prevent microfibers from ending up in the ocean This would help combat the 15.1 million tons of textile waste generated in 2013 alone, according to the Environmental Protection Agency, 12.8 million of which was discarded With Gen Z already using their purchasing power to make the shift, in the near future we could see secondhand-clothing sales overtake those of fast fashion outlets According to a report based on figures from online store ThredUp and analytic firm GlobalData, used clothing sales last year sat at $24 billion, following closely behind fast fashion retailers accounting for $35 billion For example, sixteen-year-old Maddie 15 Bialek does her best to avoid fast fashion, but she can’t remember a time without plentiful, cheaply produced clothes When Bialek was born in 2005, the likes of Zara, Forever 21, and H&M were annually raking in billions of dollars in sales, and proliferating in malls across America and the world The ultra-fast fashion brands most shoppers Bialek’s age would recognize either were in their infant days or had yet to exist at all But the speedy groundwork for their later success was firmly established in the aughts Figure 5: Total Secondhand Appeal Market From 2017 to 2019, millennial and Gen Z secondhand sales increased by 37 percent and 46 percent, respectively In total, the secondhand clothing market is expected to double in the next five years, and, while being driven by the younger generations, growth is happening in all age groups 16 This is a preview Do you want full access? 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Log in Figure 6: Percentage of each group that bought secondhand apparel, footwear, or accessories ThredUP’s research found that at all price levels in the sector a consistent proportion of shoppers are buying secondhand At the luxury retail end, 26% also buy resale items In the mid-market, it stands at 25% and 22% at the discount end Millennials are the most likely age group to embrace the trend, closely followed by boomers – with 33% and 31% respectively buying secondhand The generation stuck between those two, Gen X, is a long way behind at 20%, with Gen Z, the new kids on the block, at 16% But it’s the Gen Z crowd where most growth is expected One in three people aged 18-24 are forecast to buy secondhand items this year, making them the resale world’s biggest fans 17 Figure 7: The rise of the secondhand Clothes The secondhand clothes market in the United States has grown 21 times faster than retail sales of new clothing over the past three years It’s currently worth in the region of $24 billion and is expected to reach $51 billion by the middle of the next decade Zara CSR (Corporate social responsibility) The relationship between CSR and benefit, Zara’s CSR practices: Corporate social responsibility (CSR) is a developing issue that has gained more attention from businesses, as well as increased demand from consumers about the company's impact on the environment and society Jhunjhunwala (2014) explains the significance of incorporating CSR into a company's strategies for long-term success Some organizations utilize CSR because it is right, not as a strategy, given that organizations have a major influence on society and it is crucial that they execute actions that reduce the negative environmental impacts of their operations (McAlister & Ferrell, 2002) Moreover, Carroll (1999) describes CSR as " the conduct of a business so that it is economically profitable, law-abiding, ethical and socially supportive." and encompasses environmental obligations, it is essential to balance corporate benefits 18 with socially responsible behaviors The CRS policy of Zara is developed based on Zara’s Code Of Conduct to Manufacturers and Suppliers Although the policy was created to help Zara comply with the standards it should follow in its supply chain, however, the policy was created with the intention of blinding consumers to its unethical practices Zara has introduced the Code which prohibits child and forced labor, protects workers' rights and is committed to a safe working environment To demonstrate the commitment to the code, there will be annual quality assessment surveys through the working facilities and remedial planning Furthermore, each year Zara publishes an annual report that includes revenue, suppliers, operating policies, the country in which they develop, audited and verified by the authorities Lastly, Zara “spends over USD 50 million annually on social and community programs and initiatives” (Martin Roll, 2021).There are still controversies involving Zara's suppliers, so the reality may not be as excellent as they claim, but they are developing the right way, maybe as a plan to boost their brand, but undoubtedly driving actual change toward a more ethical and sustainable company Zara positive movements Having reached the top thanks to its logistics, the Spanish fast fashion giant Zara intends to stay there by playing the eco-responsible company card "We have to be a force for change, not only in the company, but for the whole sector," said the CEO of the global fashion giant In support of this commitment, Zara is committed to implementing more ethical and environmentally responsible processes First, Zara announces that by 2025, 100% of their cotton will be recycled, BCI (Better Cotton Initiative), or organic; 100% their viscose and wood-based fibers will be sourced from responsibly-managed forests and all synthetic fibers will be 100% recycled Often criticized for their shortcomings in terms of recycling, the brand assures that here too, it puts the turbo According to a Zara spokesperson, it has invested $3.5 million in textile recycling technology and is pushing research to meet the challenges of a more sustainable future Zara thus becomes the first international brand to make such a commitment The other brands of the inditex group, including Zara Home, Massimo Dutti and Pull & Bear, will follow 19 This is a preview Do you want full access? 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Log in By 2023, 100% of the waste used by the brand will be sent to local centers for reuse or recycling The fast fashion giant also wants to work on a circular system Inditex has collected more than 34,000 tons of used clothing since 2015 through 800 stores worldwide Its service of collecting used clothes from customers, has already proved its worth To redistribute these used clothes, the company has partnered with charities like the Red Cross The brand also says it is developing an extensive in-store recycling program It also says that by 2024, its factories would no longer release hazardous chemicals By 2025, 80 percent of the energy consumed at Inditex's headquarters, factories and stores will come from renewable sources, and its facilities will produce no waste The company plans to reduce its energy and water consumption in 100% of its stores, as well as ensure that at least 20% of clothing is included in their sustainable collection, named Join Life The Join Life campaign allows shoppers to bring clothing they no longer wear to a Zara location They then distribute the clothing to organizations that will recycle, donate, sell, or transform used clothes so that they are given a longer lifespan, not just thrown out and put in landfills A year ago, the Spanish brand launched Zara SRPLS, a collection inspired by utilitarian clothing, all made from recycled materials It's desirable and ethical Zara is really going from nothing to everything, and many doubt the sincerity of the Spanish brand Some speak of greenwashing, an action that uses eco-responsible projects for communication purposes, and not a real shift to eco-responsible fashion If the doubt persists, there are now applications that analyze our clothes to know their impact on the environment We can only hope that Zara will keep its promises Promises that come at the right time In a fashion world destabilized by digital and e20 This is a preview Do you want full access? 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Log in commerce, consumers are increasingly demanding that brands adopt ethical production and responsible retail behavior Zara does not mention in these commitments the working conditions, which remains a big point to improve E Our opinion In our opinion, the proposals of the brand Zara to be more responsible and ethical are mainly greenwashing The big brands like this one have understood that consumers are looking for products that are more environmentally responsible with flawless transparency Zara has therefore found its strategy by aligning itself with the demand of consumers who are now ready to buy more expensive but more responsible products So far, Inditex shows no signs of slowing down production Instead, the group plans to change some of its processes to reduce its impact on the environment, while sticking to its strategy of continuously launching new clothing models The focus of the plan is on using recycled fibers, cutting down on the use of water, energy and raw materials This would explain why they not communicate on the working conditions of their employees Although according to many analysts, the fast fashion business model of Zara in particular and many fashion brands in general will be permanently harmful to the environment But any efforts by fashion brands to reduce pollution need to be responded to because they are only responding to the needs of consumers themselves F Conclusion Worldwide clothing consumption is predicted to rise by 63% by 2030, so there's no better time than now to rethink our habits and work on being more conscious consumers Shoppers like fast fashion because it's affordable and accessible, but those items are low-quality and don't last long, resulting in more waste in landfills Despite the numerous attempts to appear more sustainable, the ethical issues of Zara are many With over 450 million items per year and 500 new designs each week, Zara continues to promote the mass consumerism that feeds into fast fashion’s narrative which further affects our planet and all its inhabitants So is Zara fast fashion? The answer is yes If you need to consume fast fashion, options for brands working on becoming more ecofriendly Otherwise, consider investing in a smaller amount of high-quality items from sustainable fashion brands Or, thrift your favorite non-eco brands instead of buying new ones Fast fashion isn't going anywhere anytime soon But if we vote with our dollars and opt for more sustainable options, fast fashion brands will eventually have to 21 This is a preview Do you want full access? Go Premium and unlock all 24 pages Access to all documents Get Unlimited Downloads Improve your grades Upload Share your documents to unlock Free Trial Get 30 days of free Premium Already Premium? Log in rethink their current business practices in favor of a system that supports people and the planet G References [1] Saha, N (2023, January 11) Is Zara Fast Fashion? Or Ethical and Sustainable? Retrieved from Your Sustainable Guide: https://yoursustainableguide.com/iszara-fast-fashion/ [2] International, G (2012, November 29) People! Zara commits to go toxic-free Retrieved from GREENPEACH: https://www.greenpeace.org/international/story/7554/people-zara-commits-togo-toxic-free/ [3] Nguyen, T (2021, July 19) Gen Z doesn’t know a world without fast fashion Retrieved from Vox: https://www.vox.com/thegoods/2021/7/19/22535050/gen-z-relationship-fast-fashion [4] How the United States is falling in love with secondhand clothes (2019, April 3) Retrieved from WORLD ECONOMIC FORUM: https://www.weforum.org/agenda/2019/04/united-states-loves-secondhandclothes/ [5] Millennials and Gen Z Causing Surge in Used Clothing Demand (2019, March 27) Retrieved from Plant Aid For People and the Planet: https://www.planetaid.org/blog/millennials-and-gen-z-causing-surge-in-usedclothing-demand [6] Glover, S (2019, December 06) XR activists glue themselves to Zara windows Retrieved from Ecotextile: https://www.ecotextile.com/2019120625394/fashion-retail-news/xr-activistsglue-themselves-to-zara-windows.html [7] Chana, A (2021, June 21) Is Zara Ethical and Sustainable? Retrieved from Attiremedia: https://www.attiremedia.com/popular-brands/is-zara-ethical-andsustainable [8] Zara - Fast Fashion and Forced Labour (2022) Retrieved from Studocu: https://www.studocu.com/vn/document/british-university-vietnam/businessmanagement/zara-business-ethic/41891575 [9] Is Zara Ethical or Sustainable? + Alternative Brands (2022, Agugust 22) Retrieved from Imperfect Idealist: https://imperfectidealist.com/is-zara-ethical/ 22 This is a preview Do you want full access? Go Premium and unlock all 24 pages Access to all documents Get Unlimited Downloads Improve your grades Upload Share your documents to unlock Free Trial Get 30 days of free Premium Already Premium? Log in [10] Hardcastle, K (2022, October 26) Zara’s Pre-Owned Launch Met With Mixed Reactions As Fast-Fashion Tries To Go Green Retrieved from Forbes: https://www.forbes.com/sites/katehardcastle/2022/10/26/zaras-pre-ownedlaunch-met-with-mixed-reactions-as-fast-fashion-tries-to-gogreen/?sh=639e6fdf1193 [11] Zara Accused of Plagiarism by Cuban Brand (2019, August 20) Retrieved from Brands Protection News: https://www.brandsprotectionnews.com/en/zaraaccused-of-plagiarism-by-cuban-brand/ [12] Lieber, C (2018, April 27) Fashion brands steal design ideas all the time And it’s completely legal Retrieved from Vox: https://www.vox.com/2018/4/27/17281022/fashion-brands-knockoffscopyright-stolen-designs-old-navy-zara-h-and-m [13] Zara Stores Global Presence (2022, October 27) Retrieved from Wikimedia Commons: https://commons.wikimedia.org/wiki/File:Zara_stores_global_presence.png [14] Segran, E (2019, July 24) Zara built a $20B empire on fast fashion Now it needs to slow down Retrieved from Fast Company: https://www.fastcompany.com/90379824/zara-built-a-20b-empire-on-fastfashion-now-it-needs-to-dismantle-it [15] Hoskins, T (2017, June 13) H&M, Zara and Marks & Spencer linked to polluting viscose factories in Asia Retrieved from The Guardian: https://www.theguardian.com/sustainable-business/2017/jun/13/hm-zaramarks-spencer-linked-polluting-viscose-factories-asia-fashion 23