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The fashion sector is estimated to be responsible for up to 8% of global emissions
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Sustainable Apparel Coalition plans a 45% reduction in emissions by 2030
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Fashion Pact brands pledge to have 100% renewables in own operations by 2030
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But emissions in supply chains and consumer use account for 96%, and are going in opposite direction
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Procurement practices focused on cheapest prices hampering suppliers’ ability to meet climate targets
The records are tumbling this year as the world keeps getting hotter. Industries aren’t doing enough to cut greenhouse gas emissions, and fashion is no exception. A plethora of labels and pledges hide the bitter reality that this influential industry isn’t making anywhere near enough progress on taking carbon out of the catwalk.
This is put at anywhere between 2% and 8% of global emissions, depending on factors such as the energy mix of grids and whether consumers washing and drying their clothes is taken into account.
Yet the technologies to make a big dent in emissions inventories already exist and could be added to by materials efficiencies and cutting over-production. An analysis by McKinsey suggests reducing by just 15% the volume of stock that gets sold at a discount would see emissions fall 10% without impacting on value.
Indeed, McKinsey’s analysis sets out a whole range of measures across the supply chain that would generate cost savings that would more than pay for investments in renewables and materials recycling. It estimates that almost 90% of abatement will cost less than $50 per tonne – that’s about half the recent price of a tonne of carbon on the EU emissions trading system.
There’s no shortage of industry groupings that could move the sector forward, although with many of the same members. The 160 brands who’ve signed up to the Fashion Pact have pledged to have 50% renewables in their own operations by 2025, and 100% by 2030.
The collective target is within reach, but it’s down to the efforts of about of a third of members, who already achieved the target in 2020. There is also a range of early-stage pilots aimed at developing lower-impact raw materials. The Sustainable Apparel Coalition (SAC) has a decarbonisation plan to realise a 45% reduction in the sector’s emissions by 2030. From this year, it is asking brands and retailers to commit to setting science-based targets – something it says half have already done.
Setting a science-based target “should be non-negotiable for this industry”, says Richard Wielechowski, who heads the textiles programme at financial think-tank Planet Tracker. But, he adds, then comes the challenge of delivering. The Science Based Targets initiative (SBTi) requires emissions reductions of at least 4.2% a year to stay on a pathway aligned with keeping global heating within a limit of 1.5 degrees Celsius.
Some 96% of the total emissions of the fashion brands are in Scope 3, which occurs in the industry’s supply chain, and in their products’ use and eventual disposal.
However, the SAC has agreed that manufacturers must set targets only for Scope 1 and 2 emissions – those under their direct control or from the generation of electricity which the company consumes.
Some of the big manufacturers, like YKK, have set science-based targets, but Andrew Martin, SAC’s executive vice president, says many small to medium enterprises (SMEs) do not have the knowledge, skills or resources to set them. It plans to support them to do so, but Martin notes that “many manufacturers have a very limited ability to influence their Scope 3, which is largely determined by brand choices.”
The coalition, which has been criticised in the past for a lack of transparency, says it will publish members commitments next year, although there’s no final decision on whether to disclose progress. Martin acknowledges that real change won’t come without “ambitious, harmonised regulation … that will level the playing field for the whole industry.”
One brand that has been transparent about its commitments is Swedish fast fashion chain H&M, which is now considered a sustainability leader on many indices. It ranked sixth on Fashion Revolution’s latest Fashion Transparency Index, scoring 71%.
H&M’s target is a 56% reduction in Scopes 1 and 2; as well as a 56% reduction in Scope 3 emissions by 2030, compared with a 2019 baseline. As is the case in most companies, H&M’s Scope 3 emissions are 90 times emissions in its own operations. Its latest report, for 2022, shows it’s so far cut them by 7% to around 5.6 million tonnes, compared with its 2019 baseline. And this progress doesn’t include the consumer use phase, which adds another 1.4 million tonnes.
Keeping track of what’s going on in the industry and making comparisons is made harder by a lack of good-quality data, and a failure of many industry players to disclose what’s included, for example in Scope 3 emissions, or use of renewables in the supply chain.
Some companies report emissions intensity, which can mask an increase in carbon emissions as the business grows. Luxury brand Kering recently announced a shift away from this practice. Its chief executive François-Henri Pinault said: “if we want to truly decarbonise our global businesses, we need to move from carbon intensity reductions to absolute reductions.”
The supply chain that sits behind the shop window is divided into tiers. Tier 4 at the bottom, produces raw materials such as polyester (derived from fossil fuels) and cotton, where fertiliser inputs (also from fossil fuels) ramp up emissions. More than half of all fibres now used are polyester – arguably its dominance has enabled the rise of fast fashion. Polyester recycling isn’t at scale, so the industry can only claim emissions reductions by turning to polyester made from recycled food-grade PET bottles. Hardly circular.
Raw materials become fibres at tier 3, fabric at tier 2 and garments at tier 1, with visibility on who supplies what becoming poorer the further down the chain. That’s why extensive efforts are underway to map supply chains in order to enable collaborations at a facilities level, and to understand workers’ rights and water and chemicals discharges. It’s also critical to tackling deforestation in supply chains, for example in Cambodia, where UK researchers identified garment factories fuelled by wood from natural forests.
It’s at tier 2, where fabrics and trims are produced and finished that the lion’s share – 52% –of emissions derive. Here, pre-treatment, dyeing, printing and finishing treatments get carried out in water kept at high temperatures, usually fuelled by burning coal. Petroleum-derived chemistries, such as dyes, also contribute to emissions. There are two angles of attack: improving energy efficiency alongside the transition to renewable energy, as well as moving from wet to dry processes. As their name suggests, dry processes use very little water. A wide range of innovators are working on advances, from digitally controlled spraying and dyeing to ozone and laser finishing techniques.
If these could be scaled not only could coal be phased out, but along with it some of the chemicals that harm humans and ecosystems. Last year Fashion for Good launched a new consortium bringing together Adidas, Kering, PVH and Indian companies Arvind and Welspun to test these solutions with innovators.
Scope 3 emissions occur in factories and workrooms, many miles and continents away from where brands design and sell their clothing and, crucially, make their money.
“It’s a challenge to deal with the supply chain emissions, because they (brands) don’t own the companies and a lot of the pressure is still very much on price, rather than it being on delivering sustainable textiles,” says Planet Tracker’s Wielechowski.
He and colleagues recently began to untangle the industry supply chains to assess where profits are made compared to where environmental impacts occur. It wants to see investors start to pressure brands to invest in their supply chains, not only to improve their environmental footprint but to be able to substantiate sustainability claims – now coming under the spotlight of regulators in the U.S. and EU.
Getting investment to where it’s needed has been challenging for a myriad of reasons. These include concerns around due diligence and governance in manufacturing countries of the Global South, the fact that many facilities are too small to attract the significant capital required, and aversion to foreign-exchange risks. The opacity of supply chains makes it harder for investors to know where to apply pressure, says Wielechowski. Commitments to have suppliers use a proportion of renewables may be meaningless if enough clean energy isn’t available on the local grid.
“This whole topic of decarbonisation has to be linked to purchasing practices,” asserts Ruth MacGilp, fashion campaigner at pressure group Actions Speak Louder. “If we continue to allow brands to have these irresponsible purchasing practices where they just flit around, finding the cheapest prices, and no responsible exit policies from contracts, it means that their suppliers aren’t necessarily willing or bale to make an upfront investment to brands’ climate targets.”
She and Wielchowski agree that giving suppliers a guarantee of future volumes that would allow them to make the investments needed to swap out coal boilers (for example) would, in turn, encourage brands to risk-share because they will get a return on their investment by sticking with that supplier.
Actions Speak Louder is campaigning to get fitness brand Lululemon (a member of the SAC) to commit to phasing out coal and source only renewables across its supply chain by 2030. “That sort of public commitment sends a signal to the sector,” says MacGilp. “We know it’s not an overnight switch, but these big brands have a lot of influence” in countries like Cambodia and Vietnam.
While Lululemon says it’s committed to achieving net zero emissions by 2050, its most recent sustainability report shows Scope 3 emissions going in the opposite direction – almost double its 2018 baseline year.
But the brands won’t cut emissions by working alone. The Sustainable Apparel Coalition is bringing brands, retailers and manufacturers together in peer groups to learn from each other as part of its decarbonisation plan.
“Their science-based targets will only be achieved in partnership with the supply chain,” says Martin at SAC. That means taking a much more holistic approach across a company. “So how are your buyers involved with decisions on purchasing related to the energy of a factory. It cannot be just the sustainability people looking at their supply chain, you need to broaden it out. You need C-suite buy-in; you need purchasing teams to be trained.”
MacGilp wants to see more initiatives such as Apple’s supplier clean energy programme, where the company has issued almost $5 billion in green bonds for renewables development, as well as making direct investments.
Some fashion brands have followed – VF Corp, Chanel and Burberry, for example. Most recently, H&M’s 500 million euro sustainability linked green bond was seven times over-subscribed. Interest payments are linked to meeting 2025 targets on cutting greenhouse gas emissions and using more recycled materials.
Fashion for Good and the Apparel Impact Institute estimate that just over $1 trillion will be required to help the industry reach net zero by 2050. Around half of that figure is required to finance existing solutions. It says it is critical that all stakeholders, including industry and governments, work together so that investors are presented with opportunities that both have attractive returns and make a climate impact, as well as being understandable.
But investors seem unwilling to take risks on disruptive but untested technologies, which is why Fashion for Good has a developed a $19 million blended finance initiative. It has so far made three investments in companies in Bangladesh and India. The Apparel Impact Institute is trying to raise a $250 million fashion climate fund. So far six investors have committed $60 million, and the first grants are expected to be announced soon.
The upfront investments can’t come soon enough. When a brand openly acknowledges “we made too much”, as Lululemon does on the sales page of its website, it’s time to imagine a new world where brands can boast “we made less” products, of higher quality and value.