Zara owners are stepping up sustainability goals as fast fashion feels the heat

MADRID/LONDON, July 11 (Reuters) – Owner Zara Inditex (ITX.MC) said on Tuesday it would recycle and grow crops sustainably to reduce its environmental impact by 2030, as the fast fashion retailer faces growing pressure to reduce waste.

By the end of the decade, around 40% of the Spanish group’s fiber will come from conventional recycling and 25% from sustainable agricultural crops, said Chief Executive Oscar Garcia Maceiras, unveiling the new sustainability targets at the annual shareholders meeting in A Coruna, northern Spain.

The other 25% will come from “next-generation” materials in which the group invests, and the remaining 10% from other sustainable sources, the company said.

The new targets come as the European Commission drafts regulations to make clothing retailers pay for the waste they generate, arguing that fashion companies “encourage customers to shop on impulse and provide incentives to buy clothing in larger quantities”.

Inditex previously had targets to use cotton, linen, polyester and more sustainable fibers made from wood pulp, but did not have an overall goal for recycled fibers.

“Moving forward on sustainability is natural for us,” said Inditex Non-Executive Chair, Marta Ortega, in brief comments to investors at the AGM. He called the new target a “big challenge”.

Inditex has achieved record sales, margins and profits since Ortega, heir to the family business, took over the chair in April 2022. Its shares are up 38% this year.

Inditex is showing no signs of slowing production. The company placed 621,244 tons of garments on the market last year, according to its 2022 annual report, 10% higher than in 2021.

“In the longer term, we expect Inditex to move to a circular model for fashion, the pace of which will be measured by customer demand and regulation,” said Adam Gofton, portfolio manager at Mackenzie Investments in Toronto, which holds a stake in Inditex.

“Inditex’s scale puts the company in a good position to respond to regulatory pressure (scale means any additional fixed costs can be spread over a larger number of units),” he adds.

Reporting by Corina Pons and David Latona in Madrid and Helen Reid in London; Edited by Andrei Khalip, Mark Potter and Sharon Singleton

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