Nduka Amadi, Investment Specialist, Baillie Gifford
As with any investment, capital is at risk.
In a time filled with major events and headlines, you might wonder why an investment firm like Baillie Gifford is interested in how many new or used jeans you have in your closet. I’ll come back to that.
In the UK, the average person owns seven pairs of jeans, and in the Netherlands, the average person buys 14 kilograms of clothing per year. Every single pair of jeans and every piece of clothing in your wardrobe tells a complex story of resource use, labour conditions, and global supply chains. But the fashion industry’s challenges also present opportunities for us as investors.
The fashion industry has an annual value of $2.4 trillion and employs 300 million people globally. However, the industry is also responsible for 10 percent of global greenhouse gas emissions — more than all international flights and shipping combined.
Fast fashion has only worsened these problems. Some producers now release new collections weekly, operating with up to 52 “micro-seasons” a year.
At Baillie Gifford, we have a listed equity impact strategy - Positive Change - which aims to invest in high quality growth companies that contribute towards a sustainable world while delivering attractive investment returns.
U.S.-based Savers Value Village is one such example. It’s the largest chain of thrift stores in North America. With an innovative business model and a loyal customer base of 5 million members, Savers has prevented nearly 1.5 billion kilograms of clothing from ending up in landfills between 2018 and 2024. Despite its size, the company holds just a 2 percent market share in North America, signalling strong growth potential.
Recycling is good for the climate and the environment. But new ways of producing clothing are just as important. Danish company Novonesis is a leading player in this area with its biosolutions.
Novonesis offers enzyme-based technologies that drastically reduce water and chemical use in the production of denim and cotton — in some cases cutting water usage by between 67 and 90 percent. Their solutions eliminate harmful chemicals such as those used in traditional stonewashing, while ensuring high quality with lower environmental impact.
The effects are significant: Better production methods lead to more durable clothing, aligning with consumer demand for long-lasting and sustainable products. Biosolutions are a rapidly growing market. In the long term, biosolutions like those Novonesis provides could take market share from the fossil fuel-dependent specialty chemicals market, which is currently worth $1 trillion.
No matter how many pairs of jeans you have in your closet, it’s worth remembering that there are companies out there working to reduce the fashion industry’s environmental footprint. There are also investors out there looking to identify and invest in them for the long-term.
Nduka Amadi, Investment Specialist
Nduka joined Baillie Gifford in 2020. Prior to this, he worked at University of Nottingham for six years as a senior international relations manager. Nduka graduated MSc (Hons) International Business from the University of Nottingham in 2013 and LLB (Hons) Law from University of Northampton in 2009.
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This article does not constitute, and is not subject to the protections afforded to, independent research. Baillie Gifford and its staff may have dealt in the investments concerned. The views expressed are not statements of fact and should not be considered as advice or a recommendation to buy, sell or hold a particular investment. |
Baillie Gifford Investment Management (Europe) Ltd (BGE) is authorised by the Central Bank of Ireland as an AIFM under the AIFM Regulations and as a UCITS management company under the UCITS Regulation. BGE also has regulatory permissions to perform Individual Portfolio Management activities. BGE provides investment management and advisory services to European (excluding UK) segregated clients. BGE has been appointed as UCITS management company to the following UCITS umbrella company; Baillie Gifford Worldwide Funds plc. BGE is a wholly owned subsidiary of Baillie Gifford Overseas Limited, which is wholly owned by Baillie Gifford & Co. Baillie Gifford Overseas Limited and Baillie Gifford & Co are authorised and regulated in the UK by the Financial Conduct Authority.
