THE HAGUE – A Dutch impact investor, which manages assets worth around €4.2 billion ($4.7bn), has announced a decision to divest from the fashion industry due to sustainability concerns.
ASN Impact Investors has put a halt on investments in companies including H&M, Inditex, Asics and VF, saying that none of them meet its newly tightened investment policies.
It had originally invested in all of these companies but has divested a share package valued at approximately €70 million ($77.8m).
The decision was driven by updated policies that exclude companies producing ‘fast fashion’, particularly those that do not take sufficient steps towards adopting a circular business model and fail to ensure living wages for workers in their supply chains.
ASN director San Lie said: “The companies have failed to take sufficient steps to improve the situation in recent years.”
He believes these companies are now competing with Chinese competitors, such as Shein and Temu, which produce clothing at an even faster pace.
Admitting divestment was a ‘devil’s dilemma’, because it meant that ASN could no longer use its influence as an investor, Lie emphasised the importance of sending a strong signal to the clothing industry to “not go backwards, but forward”.
ASN has not ruled out future investments in fashion companies, but says they would need to adhere to its stricter requirements.
The decision coincides with the rapid development of a new regulatory framework in the European Union, aimed at holding fashion companies more accountable for issues such as human rights in supply chains and textile waste.
Current or proposed directives include regulations prohibiting greenwashing (Green Claims Directive) and products made with forced labour (Forced Labour Regulation). Additionally, there are requirements for products to last longer and a ban on the destruction of unsold clothing and footwear (Ecodesign for Sustainable Products Regulation – ESPR).
Furthermore, companies are now mandated to identify and address potential and actual adverse human rights and environmental impacts in their value chains (Corporate Sustainability Due Diligence Directive – CSDDD).
ASN is not the first investor to abandon fast fashion companies over sustainability concerns. Aberdeen Standard Investments divested from Boohoo in its responsible investment funds in 2020 following slavery allegations at UK factories.
In 2022, Norway’s sovereign wealth fund sold off its stake in Li Ning due to the company’s exposure to forced labour in Xinjiang, China.
But ASN’s decision goes further and underscores increasing pressure on the fashion industry to adopt more sustainable practices.
This story was provided by Stephen Frost, the editor of Kyna Intel.
Ecotextile News has approached H&M, Inditex, Asics and VF, offering them the opportunity to comment.
