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A closer look at Zalando’s sustainability plan

By Weixin Zha

12 Dec 2019

Business

Zalando, one of Europe's largest online fashion retailers, is expanding its business with “green” apparel. By 2023, sustainable articles are expected to account for up to 20 percent of the gross volume of goods - which corresponds to a value of 4 billion euros. In the future, the Berlin-based company will focus on a sustainable private label, second-hand fashion and the support of the fashion brands on its platform.

By 2020, Zalando aims to become a leading platform for sustainable fashion, as announced already in the company's 2017 annual report. Now Zalando has published further steps and targets for 2023 for the first time. An advertising campaign with an ecological focus was launched at the end of October, claiming the company would be climate-neutral from now on. An overview of the progress made towards current targets will only be published - as every year - with the annual report in January.

Minimum standards for fashion brands using the Zalando platform

By 2023, Zalando expects that up to 20 percent of its gross volume of goods will come from articles marked "sustainable," said co-CEO Rubin Ritter at a presentation in Berlin. This parameter includes the total expenditure of customers on the Zalando platform - i.e. for both goods from the online retailer's inventory and from the partner program.

In fiscal year 2023/2024, Zalando expects its gross volume of goods to reach 20 billion euros - products marked “sustainable” would then account for up to 4 billion euros. Zalandos' new director for global sustainability, circularity & corporate social responsibility, Kate Heiny, emphasised that this goal would also include products from partner brands. Zalando plans to measure the minimum standards for its brands using a sustainability tool developed by the Sustainable Apparel Coalition based on the Higgs Index. "We are prepared and are preparing our partners to use this," she told Fashionunited. "It's not ready yet; it will be launched next year as a B2B tool for evaluating brand partners."

Should commercially successful brands not comply with these minimum social standards and should Zalando decide to end these partnerships, this could have an impact on profitability, Ritter said in Berlin. "For issues we take a stand on - carbon dioxide emissions, plastics, social standards and production - we are prepared to make short-term compromises on profitability because we believe it is necessary to move ahead with the company.” But in the long run, sustainability has to be part of Zalando, otherwise the company's existence could be at risk as customers would shop elsewhere, he added.

Currently, Zalando offers a range of more than 2,000 brands and has already had initial talks and held two workshops to prepare fashion brands, said Sara Diez, vice president category women at Zalando, at a panel.

Photo: Zign products with sustainability tags | FashionUnited

Private label Zign is going completely green

Zalando is planning to develop Zign into its main sustainable private brand, the online retailer announced at the end of October. The private label’s product range was expanded from shoes to clothing. Starting with the spring/summer collection, all Zign products will be labelled "sustainable" in Zalando's online shop. There are already sustainable items among Zalando's private labels but Zign is the first one where this is the case for the entire collection.

In 2016, Zalando started to label children's products as sustainable for the first time and introduced the label for other product groups in the following years. By now, 20,000 articles of Zalando’s range carry a “sustainable” label. Considering that Zalando offers more than 400,000 items, this means around 5 percent of the entire range, which puts the e-tailer above market average. A recent survey conducted by the consulting firm McKinsey with data provider Edited showed that only 1 percent of articles from 235 online shops in Germany, France, USA and Great Britain were labelled as sustainable in the first half of the year.

Zalando expands sustainability attributes for the online shop

In order to obtain a “sustainable” label, an article has to meet at least one of 14 standards. These include established certifications such as Fairtrade Cotton or the Global Organic Textile Standard, and the list of possible certifications has recently been extended by seven new ones. The new labels include, for example, the Responsible Down Standard or standards defined by Zalando itself such as "eco material". Zign's products will meet different certifications of the 14 established standards. For the coming year, Zalando intends to completely stop using critical heavy metals in its own production process; but there was no progress report on this yet in the communication about the new targets.

Fashion resale platform Wardrobe is set to grow

As part of its increased focus on ecological issues, the Berlin-based group also plans to expand its resale platform Wardrobe. Via the app, customers can resell their used clothing to other consumers or hand them over to Zalando and in return receive a shopping voucher in the online shop. Not only items purchased from Zalando can be submitted, but also those from other fashion retailers - such as Asos or Zara.

The mobile app was introduced in July 2018 and seems to have been very well received: The number of products whose life span has been "extended" by Wardrobe is expected to rise to 50 million in 2023. In 2019, there are already 1 million articles. This figure includes all clothing items collected by Zalando via Wardrobe; the largest share of which went to third-party companies and one part was also sold via Zircle on a trial basis. At the end of October, the pilot project with a pop-up store in Berlin's Alexa shopping mall ended. How and whether Zalando’s own sale of second hand fashion will continue has not yet been decided.

Zalando is committed to climate neutrality

At the beginning of last month, the online retailer also committed to climate neutrality across its own businesses, deliveries and returns. This year, 90 percent of the power supply at company locations was converted to renewable energies. However, these are only responsible for 3 percent of the company’s total carbon dioxide emissions. The majority of CO2 emissions come from orders (80 percent) and packaging (17 percent). As a result of business growth and the resulting increase in orders, Zalando's greenhouse gas emissions rose by 29 percent from 2017 to 2018 to 287,161 metric tons of CO2 equivalents.

Although Zalando's goal is to reduce its carbon dioxide emissions per order by 10 percent by 2020 compared to 2017, this does not automatically mean a reduction in total emissions. All CO2 emissions that cannot be eliminated by operational measures will be offset for the time being to become climate neutral as announced. According to Zalando, the company is working primarily with a reforestation project in Sodo, Ethiopia, to achieve this. This means planting trees for emissions that cannot yet be reduced.

By 2023, Zalando wants to minimize packaging waste and use recyclable materials instead. In the 2018 annual report, the online retailer had already set itself the goal of using only sustainable materials by 2020. At present, Zalando cartons are made of 100 percent recycled materials, while mailing bags are made of 80 percent recycled plastic.

FashionUnited was invited by Zalando to visit its Sustainability Day.

This article was originally published on FashionUnited DE. Edited and translated by Simone Preuss.

Photos: Zalando | FashionUnited

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