Social Responsibility In Fashion Industry

Corporate Social Responsibility (CSR) initiatives seem to be a business imperative nowadays. In a survey done by McKincey (2009), over 80% of interviewed CFOs claimed that corporate social responsibility is included in their evaluation standards of business projects. And the majority of respondents believed in remarkably positive contributions of CSR to shareholders’ value, especially long term benefits. Apparently, fashion industry has realized this trend as well as a growing demand of socially responsible business behavior from consumer and other stakeholders. For example, H&M has been releasing annual conscious actions & sustainability reports since 2002, in which a wide range of dimensions of CSR initiatives are demonstrated carefully and

This frequently quoted definition suggests that five dimensions should be incorporated in CSR: environmental, social, economic, stakeholder, and voluntariness (Dahlsrud, 2008), which requires fashion industry to address several environmental and social issues in supply chain and local markets, and to maintain business profitability simultaneously. Therefore it is crucial to demonstrate why CSR engagement will add value to the

As demanded by common business projects, CSR initiatives require additional capital expenditure, higher-cost intermediate goods and higher labor inputs (McWilliams & Siegel, 2001). Inditex (2014), the owner of Zara and other fashion brands, reported to have spent 25.8 million euros and 37,760 working hours on CSR in 2014, which are not trivial numbers. The rising costs will be ultimately apportioned to selling price, triggering a potential risk of losing part of the consumers. Above all, consumers’ main concern is price and style while CSR is given a lower priority (Joergens, 2006). Another downside that is frequently ignored is whether CSR is consistent with brand concepts. A recent study shows that conveying CSR messages of luxury brands like Rolex causes consumers to lower the evaluation of the brand (Torelli, Monga & Kaikati, 2012). The rationale behind the surprising result is that luxury brands tend to propagate “self-enhancement concept”, which emphasizes on the dominant possession of resources, while the essence of CSR is welfare for all (Torelli et al., 2012). The dilemma is fairly challenging for luxury brand managers when general public demands disclosure of CSR but their target consumers disrelish