Samantha Vasquez

Professor Jacobs

BCOR 4910-01

April 26, 2021

Sustainability/CSR Analysis: Zara

I. Background

To say that Zara is one of the most popular brands in all of fashion,

especially higher-end retail fashion, is an understatement. The clothing giant

can be found by way of 2,250 retail stores and almost 600 Zara home stores in

over 96 countries worldwide ("Number of Zara And Zara Home Stores, By

Region Worldwide 2020 | Statista" 2019). Zara remains one of the biggest

market holders within the fashion retail industry; in 2018, Zara was one of the

most valuable clothing brands on the planet. Backed by the Inditex group, Zara

seems to be on the trajectory of gaining more market share within the fashion

industry.

II. Stakeholder & Social Issues

With the current climate of social awareness, it is nearly impossible for any

company, that wishes to cultivate a profitable market share within its industry,

to not be aware of the global requirement for sustainability and social

responsibility. For a company to thrive and succeed, they need to be aware of

 consumer behaviors and trends, and right now, the trend seems to be headed

directly towards the alignment of social responsibility in the form of

sustainability and global environmental awareness (Holgate 2019). More and

more customers are becoming aware of their own environmental footprint, thus

raising the demand for products and services that match this new awareness.

With that being said, it is no secret that the fashion industry is perhaps one of

the most wasteful and least sustainable industries, specifically due to its over

manufacturing and excessive use of energy resources and raw materials. Zara is

fully aware of this and, over the years, has worked to ensure that it is among

one of the most sustainable brands within the fashion industry by reducing their

own carbon footprint and inviting customers who share the same value to come

along for the journey. They are cognizant of their responsibility as a corporate

citizen, understanding that for it to exist, it needs to serve the community that

allows it to thrive and succeed.

III. Zara CSR/Sustainability Program

The trend towards Corporate Social Responsibility [CSR] has been at the

forefront of the spotlight in recent years; this is because of the undeniable harm

that humans are currently causing planet earth, the earth's natural resources are

becoming scarcer day by day, and the challenges of climate change require

organizations to actively participate in ensuring that relative change is feasible. In

Inditex's (2021) report, the mother company that houses the brand Zara pledged its

commitment to combating the sustainability war the earth is currently in. Inditex

has pledged to implement a wide range of measures to protect biodiversity, to

avoid resource waste by reducing the company’s consumption of water energy and

other resources and combating climate change. The company is aware that the road

to sustainability is a long one. Having pledged through signing the United Nations

global compact in 2001, Inditex has been actively working for ways to bring this

pledge to fruition. According to Holgate (2019), one of the best ways to see

whether CSR strategy is rooted in accountability is by analyzing who the company

has partnered with to realize its goals. Holgate (2019) further elaborates that

collaborative CSR strategies are some of the most efficient as they are aware that

they do not possess all the answers. Through continuous intentional effort, Inditex

has been able to achieve great strides in furthering its CSR initiatives through

collaborative efforts. This style of implementing CSR has been praised and

recognized, with Inditex being named the most sustainable company in the retail

industry for three years in a row in 2018 and being named Fortune magazine's

fourth-best international company that is changing the world.

What is exceptionally impressive with Inditex and how it runs its brands,

including Zara, is the pride taken in implementing sustainability and making it a

corporate culture; analyzing Inditex's sustainability strategy, it is easy to tell that

CSR initiatives are not a burden but rather an integral part of operations. This

commitment to making CSR initiatives a DNA factor of their culture is evident in

how SSR is planned out, implemented, and subsequently monitored. In 2002

Inditex designed a four consecutive multi-year environmental plan; since then, the

company has gradually improved this plan and continued to pivot two to make it

what it is today. In their plan, Inditex sought to integrate sustainability in all phases

of the product lifecycle; this included all stages within the supply chain, starting

from designing products and sourcing all the way to manufacturing and quality

control. The company did not just stop there; they felt it necessary to implement

sustainability strategies within their logistics as well as their sales strategy both in

brick-and-mortar stores and online (Sitaro 2020). This comprehensive game plan is

what has made in detects and all its brands, including Zara, the current leaders of

sustainability within the fashion industry.

It would be amiss to discount research and development contributions and

innovation in implementing an effective and efficient CSR strategy. Inditex and

subsequently Zara is aware that to move forward and become more sustainable, it

is necessary to invest in innovation and R&D to find the newest solutions to

sustainability. Since 2002, Inditex has invested (Inditex 2021) into the new

technologies process and the sustainable extraction of raw materials used in the

manufacturing of their clothes (Inditex 2021). With Inditex as the mother ship, it is
no surprise that Zara as a brand has been able to execute sustainability and

corporate social responsibility at the highest level.

Although Zara benefits from Inditex’s commitment to corporate social

responsibility, the fashion retailer still has many strides to take before realizing its

own full complete CSR strategy. When it comes to reading a corporate social

responsibility strategy, one of the best ways to evaluate just how well a company is

doing is measuring its performance and sustainability strategies within various key

industries and factors that yield effective CSR when implemented at the highest

level. These key indicators are environmental impact, labor conditions, animal

welfare, and social awareness. These four factors are the pillars of effective

sustainability.

IV. Analysis of Zara’s CSR/Sustainability Program

Given that Inditex has pledged to reduce its carbon footprint by committing to

certain sustainable behavior, it is interesting to match up just the way Zara

implements this larger corporate vision. As already established, one of the key

detriments and criticisms of the fashion retail industry is its incredibly high

wastage levels. The fashion industry is a fast-moving one, changing and

rearranging based on current fashion trends and seeking to always be the first to do

something creative. This fast pace of operations leads to excessive amounts of

clothes being manufactured and when the new trend is discarded for further
manufacturing. To combat this detriment, Zara’s parent company Inditex

implemented what they coined as a repair and reuse program named Closing the

Loop ("Closing the Loop - Inditex.Com" 2021).

The brainchild of Inditex aims to offer customers an opportunity to return their

used clothes. This is an attempt to implement a fully complete and efficient cycle

of their process. The company recognizes that what is done with things that are no

longer of use is essential in implementing waste reduction and pollution. They

want to ensure a natural balance between the inception of their products, and their

decay, ensuring nothing is wasted. The goal is to close the loop by ensuring that all

their products are recycled and efficiently reused in future manufacturing

initiatives. The parent company of Zara has pledged that “we will not send

anything to landfills in 2023” ("Closing the Loop - Inditex.Com" 2021). This goal

extends towards anything produced within their headquarters, logistic centers,

retail stores, and manufacturing centers ("Closing the Loop - Inditex.Com" 2021).

Another area that Inditex has pledged themselves is to reduce their energy

consumption; the company is aware that the industry in which they operate in that

uses a lot of textile materials and requires an incredible amount of resource

consumption, such as water usage that is used in the production of cotton nylon

and other fibers ("Water - Inditex.Com" 2021). Due to its commitment to corporate

social responsibility, the company has pledged to reduce its consumption and
ensure that a large chunk of whatever they consume comes from clean energy and

clean sources.

As of 2021, Inditex reported that 80% of their global energy consumption came

solely from clean sources. The company has implemented a global water-saving

strategy that requires all of its subsidiaries, including Zara, to oblige all policies

related to reducing water consumption. The company has pledged to collaborate

with governments, non-profit organizations, and educational institutions to

implement these environmentally impactful strategies ("Climate Change and

Energy - Inditex.com" 2021). The organization has pledged to implement within all

their subsidiaries, including Zara, a reduction of water usage in all manufacturing

activities within their stores, offices, and factories ("Water - Inditex.Com" 2021).

Inditex and Zara also aimed to bring their own consumers along by educating them

through their website and various advertisements on the importance of efficient

energy and resource consumption.

Furthermore, the company has pledged “a zero discharge of hazardous

chemicals," and has met this goal in 2020. This very pledge is a step beyond what

is currently required of fashion retailers. It has required the collaboration with

relevant supply chains, fellow international retail brands, scientists and researchers,

and the chemical industry itself (Dockrill 2020). Some, however, are a lot more

skeptical of Inditex’s claims, most specifically that of reducing their water

consumption by 9%, pointing to COVID-19 and its ramifications on all industries

as the sole reason this was achieved (Dockrill 2020). What is undeniable, though,

is Inditex’s and Zara’s ecofriendly stores, specially designed environmentally

friendly stores use at least 20% less electricity and 40% less water than normal

stores. Since 2020, the company reported that 100% of their stores worldwide now

conform to these very standards.

Another crucial element of a good CSR strategy is labor practices. Many retail

fashion brands and producers have been caught up in scandals of forced labor and

child labor being implemented in third-world countries while offering abysmal

minimum wage rates and gruesome working conditions as well as working hours.

Consumers are now extremely socially aware and do not wish to align themselves

with companies that pretend as though they live in a vacuum and do not care for

the world around them. This sentiment has been clearly exhibited within the last

few years, more specifically in 2020, when certain companies were boycotted for

their refusal to talk about social issues such as the Black Lives Matter movement,

child and forced labor, and the current concentration camps of the Uyghurs in

China. Perhaps one of the biggest scandals to come from the apparel and fashion

retail industry was that of Xinjiang cotton, where many western brands, including

Nike, were boycotted for using forced labor to acquire cotton for their product
manufacturing. The average consumer is concerned about social issues and

demands that those companies with whom they spend money are just as concerned.

With this awareness in, Inditex and its subsidiaries, including Zara, have

pledged to employees to engage in safe labor practices. The company aligns itself

with the United Nations Universal Declaration of Human Rights and follows the

guidelines of the UN's Principles on Business and Human Rights mandate (Sitaro

2020). The company has an extremely detailed human rights policy that is

downloadable from their website as well as guidelines for all their subsidiaries,

including Zara, on how employees should be treated and the acceptable working

conditions best practices. The company claims that it is embedded within its

business model and remains open to critique and feedback, and continuous

improvement; the company wishes to foster a system and culture of open dialogue

where employees can voice their concerns without fear of retaliation (Colombia

Business School 2002). However, these are Inditex’s plans; they have yet to be

implemented in some areas within Zara’s production model. One of the main

production centers for Zara's garments occurs in Spain, which has a medium risk

rating for labor abuse, with the retail brand earning a score of only 51% to 60%

according to the fashion transparency index (Lopez and Fan 2009). However,

Sarah takes from its mother company its ability to be transparent, so it has proven

itself open to all kinds of audits and willingly supplies all necessary information
for audits to be completed (Colombia Business School 2002). When it comes to

social issues, Inditex and subsequently Zara is active. In 2020, Inditex released a

press announcement denouncing racism, their commitment to combating it within

their own organization, and support for the Black Lives Matter movement. Zara,

however, did come under fire for their employment policies within the USA and

have been accused of racial profiling; in a survey conducted by the Center for

Popular Democracy, results showed that Zara’s American corporate culture was

embedded with favoritism. The study also revealed that black and brown customers

were more frequently denied exchanging or return items compared to their white

counterparts, with employees of color stating that they were frequently observed

with stricter surveillance from their managers (Sitaro 2020).

Finally, Inditex and Zara seem to be doing exceptionally well within their

animal welfare and animal rights policies. The company has aligned itself with the

five freedoms, a guideline for corporates on what is acceptable in terms of animal

rights. Zara has also pledged itself to impose a strict ban on angora, fur, and on

selling any products that have being tested on animals; however, they do utilize

leather, exotic animal hair, and wool (Dockrill 2020).

V. Conclusion & Investment Decision

All in all, the corporate social responsibility strategy at Inditex and

subsequently at Zara can serve as an adequate blueprint for companies wishing to

successfully implement social corporate responsibility initiatives within their

organizations. Inditex seems committed to transparency, collaboration, and

environmental transformation in all their business dealings, which is commendable

considering the industry in which they operate. With that being said, I highly

encourage my client to invest in Zara according to both their current and proposed

CSR/sustainability program.
 Works Cited

"Climate Change and Energy - Inditex.Com". 2021. Inditex.Com.

https://www.inditex.com/en/our-commitment-to-the-environment/climate-
change-and energy.

Inditex. 2021. "Water Management Strategy".

https://www.inditex.com/documents/10279/241820/Global+Water+Manage
ment+Strate y_Inditex.pdf/a128125c-4874-47cf-beab-7e65385b923e.

"Closing the Loop - Inditex.Com". 2021. Inditex.Com.

https://www.inditex.com/ourcommitment-to-the-environment/closing-the-
loop.

Colombia Business School. 2002. "Zara". Colombia Business School.

https://geographyfieldwork.com/ZARA%20Case%20INSPECTION.pdf.

Dockrill, Maddie. 2020. "How Ethical Is Zara?". Good on You.

https://goodonyou.eco/howethical-is-zara/.

Holgate, Mark. 2019. "As Zara Announces Its Latest Sustainability Goals, Three of
Its Design Team Weigh in On Going Slower and Creating
Responsibly." Vogue.
https://www.vogue.com/article/zara-sustainable-initiatives.

Inditex. 2021. "INVESTMENT IN RESEARCH & DEVELOPMENT". Inditex.

https://www.inditex.com/documents/10279/249245/Dossier_JGA_2019_EN.
pdf/1664de f-ca77-3a40-2b78-cace74c06c82.

Lopez, Carmen, and Ying Fan. 2009. "Internationalisation of The Spanish Fashion
Brand Zara". Journal of Fashion Marketing and Management: An
International Journal 13 (2)

Sitaro, Tatiana Destiny. 2020. "Fast Fashion and Sustainability - The Case Of
Inditex-Zara".
https://research.library.fordham.edu/cgi/viewcontent.cgi?
article=1044&context=international_senior.
"Number of Zara And Zara Home Stores, By Region Worldwide 2020 | Statista".
2019. Statista.
https://www.statista.com/statistics/674434/number-of-zara-stores-
worldwide-by

"Water - Inditex.Com". 2021. Inditex.Com.

https://www.inditex.com/en/our-commitment-to-theenvironment/water.