Sustainability, The New Mantra For The Swedish Fashion Industry

The Swedish fashion industry is facing a serious crisis. The ongoing paradigm shift driven by the climate crisis, digitalization and a rapid change in consumer behavior has already created enormous challenges for the fashion industry, and all under the extraordinary circumstances brought by the COVID-19 pandemic. The Swedish fashion industry is facing serious problems to survive this crisis and to still be operating in the future. The future of many Swedish fashion companies needs to be sustainable.

In an initiative by the Swedish Fashion Council and Åsa Eriksson (S) member of the Swedish parliament, led by Mats Hedenström, Business Policy Manager at Svensk Handel, representatives from the fashion industry and the members from the Swedish parliament met to discuss the current Corona crisis.

”The overall picture from yesterday’s meeting reflects the alarming situation. We are in the middle of a crisis with little knowledge on the forthcoming consequences, the fashion industry is in desperate need of support to survive.” – Jennie Rosén, CEO, Swedish Fashion Council

The Swedish fashion industry has a turnover of more than $37 billion (SEK 320 billion) and is allied with other primary industries in Sweden. Over the past seven years, the industry has experienced a growth of 60% and exports have increased by almost 90%.1 The fashion industry is a large industrial force that employs just under 60,000 people in Sweden. Today H&M accounts for around 60% of its total turnover. The rest of the industry consists of small and medium-sized companies. Through innovation and innovative thinking, a strong sustainability pathos and knowledge, Swedish fashion has taken its place in the Swedish business sector and the global market. A position that is now at the risk of completely vanishing as a consequence of Corona.

”We have passed the stage when liquidity support is sufficient. Now, significant reductions in the costs of fashion companies are required, and this is primarily about personnel costs and rents. The government has made commendable efforts regarding both the so-called short-term jobs and the central banks loans to the banking system. However, the support does not meet the needs of the fashion companies. Thousands of jobs are at stake and the situation is urgent. For many companies, revenue has fallen by 80-90 percent in recently. Without substantial support efforts, the fashion industry is facing a total financial disaster.” – Mats Hedenström, Business Policy Manager at Svensk Handel, Board Member of Swedish Fashion Council.

Swedish Fashion Industry map

The importance was highlighted in quickly implementing actions that affect business’ revenues within two areas. Personnel costs where short-term jobs are lifted. The cost burden for businesses within fashion retail is high and in order to reduce the costs the general payroll taxes need to be abolished and solutions regarding short-term jobs offering up to 100% cost support by the government need to be implemented. The terms for owners of businesses and their family members need to be clarified. The rental costs represent a total or close to a total revenue loss for businesses. Suggestion is to offer a complete subsidization for corporates’ rental costs for initially three months. Postpone new excise or preferably abolish them.

The need for liquidity support still remains but it needs to be modified. Because of the banks’ credit worthiness, the central bank’s support package of $58 billion (SEK 500 billion) does not conclude the vulnerable businesses. Therefore a loan guarantee from the government is required. The interest rate on the deferral of tax payments must be abolished. Without targeted measures like the above the Swedish fashion industry will be severely damaged, perhaps irreparably, with a high risk of severe socio- economic consequences.

Recently, Sweden’s most important fashion event, the Stockholm Fashion Week, took a leap into the ‘new normal’ in fashion, discussing digitisation, climate action, circularity and diversity throughout the three-day programme. Experts, editors, innovators, brands and scientists featured in Zoom talks as well as in live webinars, sharing insights and ideas on how to keep global warming below 1.5 degrees, and what we all can do to make the world of fashion inclusive and accessible for all.

“It is extremely important that we as an industry take a holistic view on the big topics about sustainability in fashion, and we need to work together, globally. Together with Swedish Design Movements and the Swedish Institute we organise three talks focusing on solutions for a more sustainable future in fashion,” said Swedish Fashion Association’s Secretary General Catarina Midby.