Sustainable practices and financial performance in fashion firms

PurposeThe purpose of this paper is to determine the relationship between sustainable practices and financial performance in fashion firms.Design/methodology/approachA statistical analysis (fixed effects and ordinary least squares) of publicly available financial data combined with sustainable pract...

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Bibliographic Details
Published inJournal of fashion marketing and management Vol. 26; no. 1; pp. 141 - 158
Main Authors Medcalfe, Simon, Miralles Miro, Eva
Format Journal Article
LanguageEnglish
Published Bradford Emerald Publishing Limited 01.03.2022
Emerald Group Publishing Limited
Subjects
Accounting
Business metrics
Employees
Empowerment
Environmental impact
Fashion
Fast fashion
NGOs
Nongovernmental organizations
Social responsibility
Stakeholders
Statistical analysis
Sustainability
Sustainable development
Sustainable practices
Workers
Working conditions
Ethical practices
Return on equity
Financial performance
Sustainable fashion
Sustainable practices
DuPont analysis
Fashion industry
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Summary:PurposeThe purpose of this paper is to determine the relationship between sustainable practices and financial performance in fashion firms.Design/methodology/approachA statistical analysis (fixed effects and ordinary least squares) of publicly available financial data combined with sustainable practices taken from the Baptist World Aid Australia Ethical Fashion Reports to determine if companies with better sustainable practices have significantly better financial performance.FindingsThe research shows that there is a strong positive correlation between sustainable practices and financial performance in fashion firms. There is stronger evidence that better sustainable practices lead to better financial performance and vice versa.Research limitations/implicationsThe sample size is limited to publicly available financial data and may not be generalized to all fashion firms. A quarter of firms were unresponsive to Baptist World Aid Australia's requests for information on sustainable practices creating potential selection bias.Social implicationsConsumers, employees, government and non-governmental organizations are advocates for greater corporate responsibility in fashion firms. Given the positive relationship between sustainable practices and return on equity, shareholders can be added to this list.Originality/valueThis research is the first to analyze objective financial performance with a range of sustainable indicators to determine if certain practices are more valuable than others.
ISSN:1361-2026
1758-7433
DOI:10.1108/JFMM-10-2020-0217