Lewis Perkins, president of the Apparel Impact Institute (Aii), describes the fashion industry’s “daunting goal” of achieving net zero as almost akin to “building a plane as we’re flying.”
And that’s O.K., but “we have a lot you can do to get started,” Perkins said at the launch of “Roadmap to Net Zero,” a new report that seeks to muster the system-wide collaboration needed to halve the sector’s carbon emissions by 2030 and zero them out by 2050, as recommended by the updated United Nations Fashion Industry Charter for Climate Action.
Together with the World Resources Institute (WRC), Aii identified several “interventions” or “levers” that can bring about more than 60 percent of the necessary reductions to limit global temperature rise to 1.5 degrees Celsius above preindustrial times, including maximizing material efficiency, scaling sustainable materials and practices, improving energy efficiency, accelerating the development of “next generation” materials, transitioning to renewable electricity and eliminating coal in manufacturing.
A 50 percent shift to a zero-carbon source for thermal energy and electricity alone can save 105 million tons of carbon dioxide equivalent. Switching to 100 percent renewable energy for all manufacturing from Tiers 1 through 3 can knock out a whopping 424 million tons.
As fear and urgency around the climate crisis continue to grow, brands, retailers and suppliers alike are facing mounting pressure to decarbonize their supply chains. Three years ago, just a dozen apparel and footwear companies had approved Science Based Targets or commitments to set them. Today, the number exceeds 100.
“We know what we have to do, but we don’t know how to get there, and so we decided to work together to put this roadmap out to the world to bring together the best thinking that we have about how the industry can deliver on these ambitious targets,” said Michael Sadowski, a research consultant with WRI and a co-author of the report. “And it’s good timing with COP26 because we see all these commitments and it’s really time to get to action.”
Using data from Higg Co, the Sustainable Apparel Coalition and Textile Exchange, the report pegged the fashion industry’s 2019 emissions at just over 1 gigaton of carbon dioxide equivalent, or roughly 2 percent of the world’s annual greenhouse-gas output. While the estimate is notably lower than the 4 percent to 10 percent range suggested by previous studies, Sadowski said no one can really “know for sure” how polluting the sector is because different analyses can employ disparate data sets or assumptions.
If nothing is done, however, Aii and WRC estimate that the industry’s emissions will balloon to 1.6 gigatons by 2030, which is “well off pace” to deliver the 45 percent absolute reduction needed to limit warming to a 1.5-degree-Celsius pathway.
“The data is imperfect, and thus our estimate should really be viewed as directional,” he said. “But we believe that by using Higg data and Textile Exchange data, we’re using widely accepted data that is most widely used by industry participants [and] that is going to get better over time, [since] the [Materials Sustainability Index] and Facility Environment Module are designed to be improved as vendors are measuring the footprints of their materials and processes.”
“It’s kind of obvious to state, but without 100 percent primary data coming from every manufacturing facility on the planet, there’s no way to get the real number everybody wants,” Perkins added. “But the best way to get there is to continue to double down on the tools that we have that collect that primary data.”
Neither should the dearth of quality information stop the industry from flagging emissions hotspots or working to mitigate their impact.
“What’s really interesting is if you look at all those reports, the action that they’re telling the industry to take is all the same,” said Emily McGarvey, who helms strategy and stakeholder engagement at Aii. “They’re telling people to look at efficiency, renewables and more preferred materials. And so that shouldn’t be lost, even though the numbers may be different from the baseline.”
What’s important, McGarvey said, is for the industry to work together in concert to ramp up investments in the “white spaces” that still exist. “One thing that became crystal clear for me is that there isn’t a magic bullet; there isn’t one lever you can pull and therefore that’s what you can focus on,” she said. “It’s not like I’m at an organization and I’m going to focus on renewables, or I’m at an organization and I’m going to focus on materials. You really do need to focus on all the levers.”
Still, Aii currently focuses its water, energy and chemical-improvement efforts on wet-processing facilities such as textile mills for good reason. More than half (52 percent) of a supply chain’s carbon emissions are generated by Tier 2, or material production, according to the organization’s 2020 annual report, which it published last month. The stage is followed by Tier 4 (raw material extraction) at 34 percent, Tier 3 (raw material processing) at 15 percent and Tier 1 (finished product assembly) at 9 percent.
In fact, a recent study that Aii produced in collaboration with financial think tank Planet Tracker found that a one-time investment to improve the environmental footprints of wet-processing facilities can cut water use by 11.5 percent and greenhouse-gas generation by 10.8 percent, not to mention save an average of $369,500 with a payback period of under 14 months.
Often easy to implement, changes such as installing meters, reusing cooling water and wastewater, maintaining steam traps and improving insulation can produce significant reductions in water consumption, energy use and greenhouse-gas emissions, amounting to industry-wide cost savings of $6.1 billion annually, the study noted. Based on a 10-year payoff period and an average investment of $455,000 per wet-processing facility, the present-day value of savings exceeds $25 billion, it added.
At the same time, a lack of awareness, access to knowledge, financing instruments and regulatory and consumer pressure means such improvements have lagged, creating a “huge opportunity” for investors to take up the charge, said Catherine Tubb, senior investment analyst at Planet Tracker and author of the report. Many of the changes examined in the report are “low-hanging fruit,” yet the reality is that funding remains a bottleneck for Tier 2 facilities that are “a bit further down the supply chain.”
But impact investors can easily fill this breach, she told Sourcing Journal, either by investing directly into the wet processors themselves or by backing a vehicle that is doing so. They can lean on brands to be more transparent about their supply chains and encourage them to invest in supply-chain improvements.
“Part of the thing [about] investors [is] they want to know about opportunities, right?” Tubb said. “It’s all very well to talk about risks, but actually how do we get people to invest? It’s through opportunities and the ability to make money. These really good opportunities with really fast payback periods are actually an opportunity for financial markets.”
Brands and retailers can help close the gap, too, by issuing ESG-labeled bonds such as sustainability-linked bonds or other green, social or sustainable bonds. They can cultivate longer-term relationships with suppliers to enable them to secure financing, as well as push for “active and consistent” environmental transparency from their operations and those of their suppliers.
“This is a real opportunity with money to be made with pretty low risk,” Tubb said. “Water, energy, chemicals, waste—they are all interrelated. If you want to reduce the amount of water you use, you may have to increase the amount of energy. If you want to reduce the amount of chemicals you use, you have to increase the amount of water. So [it] suddenly becomes a much more multifaceted problem. And I don’t think the financial industry necessarily quite yet understands that [but] I think they are getting there.”