ASN Impact Investors, a Netherlands-based impact investment firm, has joined the growing trend in the investment community and divested from all its holdings in the clothing industry, amounting to approximately $75 million. The divestment aligns with the firm's newly tightened sustainability criteria, which now exclude companies engaged in fast fashion and those failing to adopt a circular business model.
The divestment affects a range of well-known brands, including H&M, Next, Marks & Spencer Group, Puma, Lojas Renner S.A., Gildan Activewear, Asos, Kontoor Brands Inc., Asics Corporation, Inditex, HanesBrands, and VF Corporation. These companies, previously part of ASN's Sustainable Equity Fund, Sustainable Small & Mid-cap Fund, and Sustainable Mix Funds, were deemed non-compliant with ASN’s enhanced sustainability standards.
“Despite commitment, the companies have not taken sufficient steps to improve the situation in recent years," said San Lie, Director of ASN Impact Investors. He highlighted the increased competition from Chinese fast fashion companies such as Shein and Temu, which has further impeded sustainability efforts in the industry, driving these companies to compete to stay relevant. "That is why we have taken the drastic decision to no longer invest in these clothing companies," Lie added.
San Lie emphasized the broader responsibility of the financial sector in driving sustainable practices. “As a financial sector – from banks and investment funds to pension companies – we have a great responsibility to contribute to a more sustainable world. We can and must ensure that the money goes in the right direction, towards a more sustainable future. With this divestment, we are sending a strong signal to clothing companies and other investors to really speed up the process of making the clothing industry more sustainable. We don't have to go backwards, we have to move forwards.”
ASN Impact Investors continues to view clothing as a basic need but insists that future investments in the sector will depend on companies meeting its stricter sustainability requirements. The firm encourages other investors to join in accelerating the transition towards a more sustainable clothing industry.
The decision comes amidst growing evidence of the negative impacts of fast fashion on the environment and society. According to the European Environment Agency, the clothing industry is responsible for approximately 10% of global greenhouse gas emissions. Additionally, the sector is a significant contributor to land use and water pollution, including the release of microplastics from synthetic fabrics. Despite industry promises, only 1% of discarded clothing is currently recycled into new textiles, highlighting the sector’s slow progress towards circularity.
