Fast fashion is leaning into resale, but it may do little to reduce emissions, new study says

Fast-fashion retailers like Zara, Shein and H&M are using resale platforms to reduce their carbon footprints, but the programs are projected to do little to reduce emissions, a new study released Tuesday found. 

The brands could more effectively reduce their toll on the environment if they redirected those efforts to their supply chain, such as by using more sustainable materials or investing in recycling innovations, according to the analysis.

The study was conducted by Trove, which helps brands like Lululemon and Canada Goose implement resale programs, and Worldly, a data analytics firm that focuses on ESG, or environmental, social and corporate governance. The study’s methodology was validated with third parties and reviewed by Deloitte, McKinsey and University of California, Berkeley, among others, Trove’s founder and one of the study’s authors Andy Ruben told CNBC.

The study analyzed five brand archetypes, spanning fast fashion to premium apparel, and how reselling previously owned items could affect their overall carbon emissions between 2023 and 2040.

It found that fast-fashion retailers, which create about 11.5 kilograms (25.3 pounds) of carbon dioxide for every item they make, will only reduce their emissions by 0.7% with resale programs.

In comparison, premium apparel brands like Tory Burch and Ralph Lauren create about 16 kilograms of CO2 for every item they make, and could reduce those emissions by 14.8% with resale programs, the analysis said. Outdoor brands, like Patagonia and the North Face, create about 12.5 kilograms of CO2 per item and could reduce emissions by 15.8%, according to the study. 

The projections factor in lower production of new items, which would help to cut emissions. Companies could offset decreased sales of new products with revenue gained from reselling a previously owned item. 

The findings come as a slew of companies – from apparel retailers like Gap to home goods companies like The Container Store – implement resale programs to capture customers who care about sustainability, or might just be looking for a deal. The initiatives allow companies to make money off of items they’ve already sold and show investors and consumers they’re focused on sustainability, especially as they prepare for new ESG reporting requirements from the U.S. Securities and Exchange Commission. 

Ruben said it takes a lot of work for fast-fashion retailers to implement resale programs, but “you’re not getting a lot of juice for the squeeze.” 

“It really comes down to how many people want your items after you’ve sold them the first time,” Ruben said in an interview with CNBC. “So if you sold an original T-shirt for $8, and you resell it for 20 cents, you’re not offsetting much revenue and you’re doing a lot of activity that adds to the carbon footprint to move it back around.”

Fast-fashion retailers have faced broad criticism for the negative impacts they can have on the environment. Some of the largest players in the space – H&M, Zara and Shein – have started resale programs in a bid to be more sustainable. 

Earlier this year, H&M announced it was partnering with ThredUp to debut a resale program that allows customers to shop for pre-owned items. Zara and Shein both announced peer-to-peer resale platforms last fall. 

The programs, which some criticized as insufficient, help the environment in the sense that it’s more sustainable to buy a used item than it is to buy a new product. However, the programs can be difficult for fast-fashion retailers to scale profitably, which could limit investments in the efforts. Further, the study indicates resale platforms aren’t enough to meaningfully increase sustainability at fast-fashion companies.

“It’s misplaced effort,” said Ruben. “What they’re basically doing is moving around items that hold none of their value, which is a marketing program.”

Both Zara and H&M are working to achieve net-zero emissions by 2040 and have disclosed some of the progress they’ve made in reducing their water consumption and using more sustainable materials, among other initiatives. 

In a statement, an H&M spokesperson said the company agrees with Trove’s report, which is why it’s “working with different levers” to reduce its impact on global carbon emissions.

“We are working towards decarbonizing our supply chain and logistics operations by strengthening the availability and usage of renewable energy and funding the innovation and distribution of technology needed,” the spokesperson said.

The spokesperson said the company is increasing its use of recycled and more sustainably sourced materials, and aims to increase its use of recycled fibers to 30% by 2025.

Zara didn’t return a request for comment from CNBC.

Shein, for its part, often touts its inventory-light model as a crucial factor that reduces waste on the back end. The company has invested in strategies that reduce water use throughout its production process and launched its “evoluSHEIN” product line, which features garments made with recycled polyester, forest-safe viscose and other materials that are more eco-friendly.

“We continue to scale SHEIN’s on-demand business model, which allows us to achieve average unsold inventory rates in the low single digits, dramatically reducing waste, and invest in building circular systems and accelerating sustainable solutions through sustainably focused materials, technologies and production processes,” a Shein spokesperson told CNBC.

“As a fashion leader, we acknowledge our role in creating a more sustainable and responsible fashion industry, and SHEIN Exchange is just one step we are taking as part of our larger commitment to prioritizing waste reduction and circularity,” the spokesperson said.

To reduce their impact on the environment, fast-fashion retailers are better off redirecting their resale investments into recycling innovations and sustainable materials, among other practices that can reduce emissions, said Gayle Tait, Trove’s CEO. 

“What the research is underpinning is that brands have to demonstrate meaningful investment into shifting their model,” said Tait. “When they’re kind of skirting around the edges, by doing either a branded peer-to-peer site or working closely with a marketplace, they’re not actually shifting their model. They’re continuing to do the things that got their carbon emissions.”