Behind the Pretty: The Business of Sustainable Fashion

By Aida Sykes

When most people hear the word “fashion,” they think of catwalks, social media influencers, or trendy celebrity outfits on red carpets. But every single item of clothing was once an abstract idea in a designer’s head — and its journey to the consumer depends on complex production and distribution strategies. As with all businesses, the fashion industry’s operations and supply chains require public infrastructure, capital expenditure, and working capital.

While there is some global awareness of the fashion industry value chain as it stretches from New York to Paris to Guangdong and back again, it can be harder to conceptualize a fashion value chain in developing economies where public infrastructure is often lacking, and fashion is not a priority for economic development for the public and the private sector.

Trinidadian designer Meiling. Photo courtesy: Meiling

To better understand the potential of fashion as a business in emerging markets, IFC Insights spoke to two industry leaders in Latin America and the Caribbean: legendary Trinidadian designer Meiling, who goes by one name, and a fashion retailer turned brand owner, Mexico’s Patricia Govea. These two women-led companies create handmade pieces by women artisans and garment workers. Their brands are part of a movement called slow fashion, which values better-quality garments, fair treatment of workers, and more sustainable practices.

Q: How has financing for your business evolved? How did you get your initial investors, and what has helped your business grow?

Meiling: I returned to Trinidad and Tobago in the late 1960s after four years in the UK, studying fashion in London and working small jobs in boutiques, learning the business of fashion. In Trinidad I first worked in a garment factory to learn about production, and after 10 months I opened my own boutique with TT$ 1,000 (equivalent to TT$ 48,000 or US$ 7,000 today). Though Trinidad was behind in fashion compared to London, it was great timing because my peers were returning from abroad and wanted fashionable clothes.

I worked hard, creating and showing two collections a year. As my business grew, I was able to get bank loans, even though they had to be guaranteed by my father at first. My business continued to grow over the decades, and in addition to a thriving domestic customer base I was also exporting regionally on the back of tourism, mainly. Of course, the COVID-19 pandemic brought immense difficulty, halting all tourist-driven business in 2020. Fortunately, as part of the economic recovery efforts for the region, I had the opportunity in 2021 to attend my first major trade show, Cabana Resort. This opened up the U.S. market for me, which helped keep my business open during the pandemic. It was a major pivot, but I needed it because I was committed to paying my staff. That adaptation helped us through crisis and has widened our horizons.

“Because we were small and new, it was easier to pivot,” says Patricia Govea. Photo courtesy: Patricia Govea

Patricia Govea: My company officially launched in 2020, just before COVID-19. I was and am still funded by personal funds, my own and that of family, as well as personal credit cards. While it was hard to launch just before an unprecedented pandemic — we only had 15 customers in 2020 and had a lot of inventory leftover — we were forced to get creative to survive. At the same time, because we were small and new, it was easier to pivot. My sons helped me rework my strategy — in addition to e-commerce and Saks 5^th Avenue in Mexico, we took advantage of tourism’s recovery in Mexico by selling in Four Seasons [hotels] across the country. In 2021, our sales grew by 120 percent to 34 clients, and we reinvested all the additional cash flow into the business. My business is too young to qualify for bank credit, but we also know that traditional banking doesn’t understand the financial needs of social impact ventures. We still hope to access external financing once we are bigger.

Increased tourism in Mexico helped Patricia Govea’s company grow by 120 percent in 2021. Photo courtesy: Patricia Govea

Q: How have you structured and managed your production process, including the supply chain, equipment, technical skills, and sustainability? What types of jobs has your company created or supported?

Govea: When I decided to launch this venture, building a work program for indigenous Mexican women to create high-value fashion pieces, I knew that training and capacity-building for entrepreneurship was a priority. The women needed to get training on their [legal] rights, [register for] the national identification [process] so they can be integrated into the formal economy, be taught how to create business plans, and perform quality control on what they produced. I couldn’t do it alone, so as part of my pre-launch phase starting in 2015, I worked with the government to train 300 women in 12 communities, and that relationship has become a bridge for the government to deliver literacy and health services, too. Once we launched, the women became partners and stakeholders in the brand. I see this as sustainable fashion with a purpose — by producing and selling beautiful pieces, we help reduce forced economic emigration, maintain family structure, preserve traditions, and bring opportunity. In terms of supply chain, all my fabric is sourced from Japan, and certified sustainable.

Meiling: The caché of my line is the handmade, artisanal aspect. To do this, my pieces are made by eight to 10 seamstresses, all women that have been trained by me. Some of them have been with me for over 40 years, retired, and came out of retirement during the pandemic. Some are full-time, some are part-time, some work from home, and with the pandemic, many have had to switch to contract work because the business was strained. But the dedication, teamwork, fair labor, and fair pay keep us together.

With regards to sourcing and sustainability, I have come to accept that our industry is just very, very hard on the environment. Early in the pandemic I did an online course on sustainability, and while I found the first day of lessons heartbreaking as I learned about the impact on the environment of dyes and plastics, I was also encouraged because I realized my business was actually doing well on many indicators. I mentioned fair labor, but we also work with natural fabrics as much as possible, and I don’t over-produce. So, rather than try to be a sustainable company, I’m at peace with being a responsible company.

Before Govea’s company launched, she trained 300 women in 12 communities. Photo courtesy: Patricia Govea

Q: As your business grows, what do you need from investors and policymakers? Do you think investors and policymakers have a good understanding of what the fashion industry needs?

Meiling: Banks don’t understand fashion as a business, and it shows in how they engage creatives and the financial support they offer. I should be able to get short-term financing to attend trade shows, which are a legitimate business expense that can drum up business. There should also be financing for machinery, workspace, and inputs. Fashion is a business, an industry, like any other. The financial services industry should learn about it and serve it better. Of course, it can be hard for new designers to set up an operation like mine, so I would also like to see a manufacturing hub of some kind, where designers can bring their visions and produce them as a one-stop shop. Additionally, government and donors need to fund trade schools, to increase technical skills and create new jobs.

Govea: Public policy should create an enabling ecosystem for social entrepreneurship, to optimize impact. Specifically for fashion, there are still barriers, like the lack of regulation and legal frameworks for artisans, who can be forgotten completely by the economy because of their location and lack of education. Additionally, the business case for social impact should be better understood by banks and other funders.

Q: What advantages do you see in the American and European fashion industries that you wish you could benefit from in Mexico and throughout Latin America and the Caribbean?

Govea: In my opinion, the U.S.A. and the E.U. have great supply chain management, supply chain financing, more support from government, and more flexibility in business models. The advantages that we should capitalize on at home are our incredible culture and history. We have something relevant to say through our collections about our roots, our heritage. With this history we can compete.

Aida Sykes is a private sector development specialist at IFC, focused on financial services, gender, and the creative industries. She is based in Dar es Salaam, Tanzania.

Published in June 2022