Sportswear Industry ESG Thematic Report, 2023

Environmental, Social, and Governance (ESG) in the Sportswear Industry

The risks associated with the sportswear Industry are directly and indirectly linked to all key ESG areas. In our further research of this topic, we will be discussing areas of improvements, impacts, and initiatives taken by this industry.

The sportswear industry includes a range of sporting accessories and equipment from apparel, shoes, protective gear, and many more. As they use complex materials and in order to provide better quality products, manufacturing facilities tend to have a negative impact on the environment. When analyzed further, every aspect from the design stage to the end of the product life cycle has a significant impact on ESG. The solution to this is sustainability. This refers to adhering to nature, optimal utilization of resources, conserving resources such as water, soil, and air, and working in a responsible manner that is less harmful.

Furthermore, like every industry sportswear also contributes to positive and negative impacts. Similarly, when assessing further it has been highly evident that the fabrics used during the production phase have adverse effects on the climate, while the sneaker industry has around 85% of its products ending up in landfills while only 3% of its sneakers are eco-friendly. In addition to the negative aspects, the industry is pursuing multiple solutions to minimize the harmful impacts which will be discussed further.

Necessity Of Sustainable Sportswear

The transition towards sustainability has been the key positive aspect in the last few years. This has led to increasing awareness of sustainability and incorporating a sustainable approach on a day-to-day basis. Speaking about the sportswear industry, consumers have shown a growing interest in sustainability. Further research revealed that opting for sustainability can assist in saving energy and also reduce the consumption of water. Organic cotton, for example, is used to produce sportswear and requires less water to manufacture. Additionally, choosing sustainable active wear ensures that the product is produced by a brand that follows ethical business practices and utilizes recycled materials that reduce carbon emissions.

Sustainable Efforts by Top Brands

The top companies have incorporated their sustainable efforts by introducing programs that assist in eliminating waste and also by reusing shoes and making them sports surfaces. In addition to using recycled polyester made from plastic in shorts, the brands have rethought the packaging of their shoes to use recyclable materials. Several targets are set in order to replace conventional cotton with more sustainable cotton. Additional efforts to reduce emissions were observed, including the use of 100% recycled polyester.

ESG Risks

According to our research, the following risks were identified: the first and foremost was the fabric that was used, including cotton, polyester, spandex, and nylon, where cotton requires a huge amount of water which is not a positive thing considering the environmental perspective. Furthermore, the impact can also be seen on biodiversity, where the resources extracted are often harvested with fertilizers which can cause health problems in rural areas. Various synthetic fabrics derived from petroleum, such as polyester, spandex, and nylon, also contribute to the increase in carbon emissions. Furthermore, the chemicals released will cause risks to the marine environment.

Additionally, the sportswear industry is energy-intensive and is often considered to be non-biodegradable. Additionally, while many top brands do business globally, many of them don't have their own factories. This leads to the issue of factories working for these brands following unethical practices. This leads to low wage crises, child labor, poor working conditions, lack of suppliers' adherence to human rights standards, and a lack of factory audits. The brand's global image is harmed by all these critical risks. Moreover, corruption is also a major concern for the brand owners because the suppliers don't adhere to the rules.

Growth of the Sportswear Market

According to the forecast, the global sportswear market will be valued at USD 479.63 billion by 2025, and the CAGR is estimated to be 10.4%. The market is expected to grow due to increased awareness about exercise and fitness activities, such as swimming, yoga, running, and aerobics. Furthermore, the research also highlights key pointers about the Industry.

Key Companies in this theme

    • Nike, Inc.

    • Adidas AG

    • LI-NING Company Ltd

    • Umbro Ltd.

    • Puma SE, Inc.

    • Fila, Inc.

    • Lululemon Athletica Inc

Scope of the Sportswear Industry ESG Thematic Report 

    • Macro-economic and ESG-variable analysis of the industry, including regulatory, policy, and innovation landscape

    • Key insights on infrastructure developments and ESG issues affecting the theme

    • Identify key initiatives and challenges within the industry

    • Identify ESG leaders within the industry

    • Understand key initiatives and the impact of companies within the sector to fuel an informed decision-making process.

    • Analysis of industry activities based on multi-media sources, including significant controversies and market sentiment

Key Benefits of the Sportswear Industry ESG Thematic Report

    • Developing a comprehensive understanding of macro-economic, Policies & Regulations and innovations affecting the sportswear sector, globally

    • Key insights into Infrastructure developments and ESG issues affecting the theme

    • Identifying ESG risks and opportunities to business among leading players in the industry

    • Obtaining a clear and relevant understanding of company actions, progress, and impact and finding opportunities for investment.