“It’s partly this colossal irresponsibility that sparked the idea for Veja, the footwear industry’s Parisian darling that has been at the vanguard of the sustainable fashion sphere long before the word ‘sustainable’ was even a buzzword. In 2005, while other brands were being born online, Francois-Ghislain Morillion and Sebastien Kopp saw opportunity with a physical emblem of their generation: the sneaker. Unlike the big names in the category that spend 70% on advertising and 30% on raw materials and production, they devoted all their resources to a sustainably manufactured product (that costs five to seven times as much to make as other sneakers cost) and the people who make it.” (“Beautiful and Sustainable,” Fortune, 1/1/19, p.50)

Sneakers that cost five to seven times as much to manufacture?

A good question is whether this is an average or marginal cost measure, though most likely average cost. If so, then it is a good question what the potential returns to scale might be. Are they being limited by the typical yearly cycle for fashion?

At the same time, returns to scale are probably limited, as textiles are a labor-intensive industry and most of the costs are likely at the margin, i.e. average and marginal cost are relatively close to each other.

Three points from this:

First, “sustainable” is costly. Of course, it is contrary to all economic logic that green or sustainable technology should be costless, but the falsehood is repeated so often that the evidence needs to be pointed out in every case as well.

Second, “sustainable” is a luxury. Half of the world lives in severe poverty, and one sixth of it in extreme poverty. They cannot afford to pay five- to seven times more to get a pair of shoes.

Third, “sustainable” isn’t really sustainable. How can any company compete in an industry that can produce a nearly identical product for five- to seven times less? Once the “sustainable” premium fades, so will the company as well. And as the middle class steadily disappears, so will its willingness to pay for the luxury of “sustainability.” (See the feature in the same issue of Fortune on the disappearing middle class.)