1. Business model overview
Reformation is a women’s fashion brand based in the United States. It designs and manufactures limited edition clothing collections using sustainable methods and materials, and it tracks and reports on its environmental and social impact. Reformation has been carbon neutral since 2015.
The company draws on a number of operational, informational and financial levers to minimize its environmental impact.
- Supplies and Production:
- Reformation works with its suppliers to ensure that only safe and non-toxic materials are used throughout its supply chain.
- The company sources materials locally whenever possible and works with dye houses and printers that use certified systems to reduce the environmental impact of the process.
- It is actively searching for partners with whom to test additional advanced technologies to help remove ink-induced chemicals from fabric, or to allow chemical re-use.
- In addition, it has developed Reformation Fibre Standards, which it applies to its sourcing criteria and process. It works directly with its suppliers to help them achieve target standards, and even commits risk (such as investing / committing to orders and co-sharing cost if necessary to drive improvements).
- The company also employs Environmentally Preferred Purchasing Policies for indirect supplies such as office cleaning materials and manufacturing equipment and uses sustainable packaging for all of its clothes and hangers.
- Distribution: Reformation only sells in its own stores and online (over 50% of sales), so it is better able to control the environmental impact of its distribution. Its retail stores are constructed using sustainable materials wherever possible, and its L.A. outposts are all green business certified.
- Offsets: Alongside Reformation’s efforts to minimize the carbon footprint of its operations, the company takes proactive steps to offset carbon emissions or replace the resources it has used, for example by investing in water restoration programs and purchasing landfill gas offsets. The company even offers $100 gift cards to customers who switch to wind energy!
In sum, we characterize the company as an excellent practitioner of environmental efficiency, who is in the early innings of rolling out environmental effectiveness practices. Currently, sustainability practices are mostly aimed at minimizing the impact of fashion, which – as Reformation makes clear through its marketing and packaging – is the world’s third most polluting industry. Through some of its limited scale clothes-recycling programs, it is beginning to pivot from “being less bad” to “being good”, and this evolution may better serve it in the face of culminating climate change.
2. Effect of climate change on business model
Reformation has invested in green building infrastructure to minimize its energy, water and waste footprint. Power is already sourced from renewable energy and uses energy-efficient appliances in its stores and offices, which means this input will not be largely impacted by climate change. Although Reformation attempts to minimize the water usage used by itself and its suppliers, Reformation and its suppliers are not yet able to fully recycle water, making this input vulnerable to climate change in the form of increased costs and potential shortages. Reformation currently recycles c.75% of its waste, composts organic waste and recycles or donates textile scraps wherever possible. Climate change is likely to increase the cost of unrecycled waste for Reformation.
More broadly, as alluded to in section 1, despite its impressive efforts to minimize the negative environmental impacts of its business, it is still a player in a heavily polluting industry, and certain operations, such as the clothes-dying process, continue to cause hard-to-reverse negative impacts (such as introducing chemicals to otherwise recyclable materials). If climate change leads to further taxes or other policies on polluting companies, Reformation could still suffer financially due to these aspects of its business.
Notwithstanding these areas for improvement, the company has positioned itself as a clear leader in efficient fashion production, and on a relative basis, would possibly “benefit” from climate change in the sense that competitors would likely face high costs and operational challenges in order to reduce their impact, while Reformation has already moved along the learning curve.
3. Steps company is taking to mitigate these effects
Reformation uses a ‘RefScale’ to track its environmental footprint throughout the lifecycle of garments – from growing textile fibres to recycling the clothing at the end of the lifecycle. The RefScale adds up the amount of carbon dioxide emitted, water used, and waste generated by the company. The impact that each garment has on the environment is available to see on the website. A ‘Totals’ of resources used, saved and offset is calculated and compared to the RefScale. The concept of ‘offsets’ refers to investments Reformation makes in programs to replace the resources (water, energy and waste) that they’ve spent. Reformation approaches sustainability as an evolving goal, striving for continuous improvement in sustainability. Evidence of the is the Sustainability Framework were the company has mapped its sustainability goals for the next 5 years (2023) and publishes a sustainability report each quarter to report its progress.
4. Additional steps company should take
As mentioned earlier in this post, Reformation could take steps to gradually evolve from eco-efficiency (improving current industrial practices to reduce negative impacts) to eco-effectiveness (creating new processes that do not decrease natural resources further), to become a crade2cradle (C2C) player.
Reformation has already identified a number of steps in this direction in its Sustainability Framework, highlights of which include:
- Recycling customers’ used clothing
- Solidifying partnerships with suppliers and water mills to ensure fabric standards and qualities are met, and that all materials can be broken down and reused (as totes, towels etc.)
- Investing in suppliers who need to support in order to meet standards
- Expanding RefRecycling program to responsibly recycle garments
- Conducting design for circularity training with product development and design teams
- Exploring repair service to extend life cycle of garments
Solidifying partnerships with suppliers and manufacturers will represent a particularly important step in the transition to C2C, and Reformation will also need to further invest in its IT systems to better track the after-sales life of each garment, and maximize its ability to collect, break-down, and re-use each item.
While these initiatives would be costly and profit-dilutive in the short run, they would theoretically eradicate the need for Reformation’s current “offset” program (given the business will generate far fewer emissions to offset in the first place), and this would reduce associated expenditures.
Finally, it should be mentioned that Reformation has the potential to play an important role in shifting consumer mindsets. Its clothes are not only sustainable, but have become a huge commercial success (favored by influential celebrities like Taylor Swift). Through scaling up marketing efforts with regards to its environmental practices (particularly if these become fully circular) Reformation could have significant trickle effects on to the rest of the industry’s environmental impact: it may hold the power to compel a critical class of fashion-conscious buyers to think more critically about fast-fashion, and develop a willingness to shop less frequently, and to favor recyclable products.
Laura Noorani, Danielle Watling
All information sourced directly from company’s website at https://www.thereformation.com/pages/we-are-reformation.
I like how they package and emphasize the sustainability in their labels… but I hope they can reach scale? Would be good to see how this can apply to the massive global retailers.
Great to see Reformation taking these steps! Another fashion/clothing company that Reformation may compete with in sustainability measures is Amour Vert which is also based in the US. I hope to see Reformation take further steps to reduce the footprint of their products, such as switching the raw materials they use to more sustainable ones (e.g. organic cotton, alternative fabric from sustainably-grown plants, recycled materials such as rubber or plastic that can be turned into fabric).
Reformation is doing a great job evolving into a more eco-effective system. They have reached sustainability levels above the average of the market. Similarly other companies have done so but they are still lacking the scale to have a business to compete directly with “fast fashion”. To do this, I believe it is key to add not only the sustainability attribute but also a value added service that will make consumers shift towards the brand. An example of this is Misha Nonoo. A brand that not only is focusing on sustainability but also sells the idea of simplicity: “with eight pieces of clothes you can create 22 different looks”. This is an additional angle to attract customers which I consider key to grow the brand from the fashion perspective. In this sense I believe that sustainability is a relevant attribute that needs to be accompanied with other characteristics to address customer needs.
I like all the businesses that make the fashion industry less bad. It is huge the amount of waste they normally generate, and consumerism is only possible with completely circular economies. In that case, consumption is not a problem any more thanks to close loops. Do you know if Reformation is doing or thinking about doing something similar? Maybe they could help to restore used products or promote a second-hand market to increase the useful life of their products.
Interesting to see how Reformation is addressing the environmental impact of the fashion industry by rethinking their supply chain. With initial steps taken and potential future steps mentioned I am curious to see if the fashion industry can be fully carbon neutral and whether such a business model can ba implemented on scale at other fashion brands as well.
Reformation is an impressive company doing a great job in improving the sustainability in the fashion industry. I would be curious to know more about the last step of the chain: distribution. As mentioned in your post, they only sell in their own stores or online. How do they assure their distribution to the end consumers who bought online is as sustainable as reasonably possible? Are the plastic bags biodegradable? Do they use paper where possible and generally reduce the use of bags?
Do you know what they do when they cannot find replacement for components they can recycle.
Also, for the C2C model, how do they plan to raise awareness on the costumers?
Fashion and clothing in general is highly visible, providing a great platform for promoting ideas around sustainability – with Reformation clearly leading the way. How does it track whether clothes are being recycled by consumers or simply given away to charity shops (as I assume most people do with unwanted clothing), and does the latter count positively or negatively to their Refscale?
Great to see efforts in the fashion industry towards sustainability! I was wondering what company’s are considered to be reformation’s direct competitors? Is the environmentally-friendly group (e.g. patagonia) or some of the fast fashion retailers? It would be good to avoid sustainable companies competing between themselves
I was wondering about how collaborative sustainable fashion brands are, since what they have created (brand and supply chain) acts as their competitive advantage. At the same time, if there was some sort of collective or innovation hub where sustainable brands shared their know-how, the impact on the environment would be lower and the growth of these brands would accelerate.
Sustainable fashion is definitely trendy and can be hugely successful, especially in countries like Switzerland where per capita consumption of anything organic and fair trade is huge. However, I think unless these companies manage to get sold in the mainstream stores, the positive impact on the environment is really limited. Therefore, I’d welcome it if sustainable fashion brands would not exclusively sell through their own stores, online and select retailers, but rather partner with some major chains to maximize their reach.
I agree with this point – the challenge I have with sustainable brands is the distribution is limited, either hard to get at in physical stores or I pay a large premium on shipping. I get that in efforts to maintain margins this is the cheapest form, but it often builds barriers. I wonder if more brands could form a co-operative that could gain scale in distribution.
Sustainable fashion is the new LBD. I am impressed at their environmental mission as well as their gorgeous designs! I hope they scale much quicker and perhaps consider Asia where fast fashion is still the staple. It’s about time shoppers gain an awareness that looking good can be equated to helping the environment. Two thumbs up for stunning quality clothing that can last across seasons and for several years.
I am very curious about their collections and would love to buy from them. I wonder if they can expand and roll-out their RefScales and expertise to other companies in the clothing industry as a change in the clothing industry is very necessary. Not only in terms of climate change but especially also for the safety and equality of the workers.