The fashion industry is one of the biggest contributors to global carbon emissions – making it imperative that fashion supply chains find more environmentally friendly ways of operating. The journey starts with the first step of understanding and measuring the impacts, as Roit Kathiala explains.
For years, the focus of fashion supply chains has been to fulfil customer demand in the most cost-effective way. This journey has utilised lean systems, processes, use of capital and sourcing from low cost countries to drive better service and agility along with reduced cycle times. Global fashion supply chains have done such a great job that we have seen a long period of price deflation in fashion products despite process and cycle timelines getting shorter and shorter.
However, this measure of solely focusing on costs and cost-driving efficiencies is proving one-dimensional and out of tune with today’s consumers and shareholders. Customers increasingly prefer to spend their money with companies that either have a strong sustainability programme or offer sustainable products – or preferably both.
Even banks and investors are shifting their lending and investments towards more sustainable businesses. A good example of this is the Fossil Free movement, an international network of campaigns and campaigners working towards freeing communities from fossil fuels. It has been able to garner divestment commitments from over 1200 institutions representing over $14 trillion in assets and over 58,000 individuals to either reduce or shift their investments away from fossil fuel companies, and this list is only getting longer.
The pressure is also intensifying on fashion companies to reduce the negative impacts of the industry on the environment, the communities where goods are made, and how these goods are transported. The need for a greener and more sustainable supply chain has been reverberating both upstream and downstream. And rightly so, since fashion supply chains – encompassing direct and indirect suppliers – account for by far the majority of the industry’s natural resource usage and greenhouse gas emissions, along with a business model that sometimes encourages a short lifecycle “use and throw” behaviour in the pursuit of further sales.
According to the United Nations Environment Program (UNEP) and the Ellen MacArthur Foundation, the fashion industry is responsible for 10% of annual global carbon emissions, which is more than all international flights and maritime shipping combined. At the current pace of growth, the industry’s greenhouse gas (GHG) emissions are expected to surge more than 50% by 2030.
The impact of greenhouse gases on climate change is growing. According to scientists, global carbon dioxide emissions must be cut by as much as 85% below 2000 levels by 2050 to limit the global mean temperature increase to 2 degrees Celsius above pre-industrial levels. A temperature rise above this level will lead to increasingly unpredictable and dangerous impacts for people and ecosystems.
Cooped up at home amidst stay-at-home orders and lockdowns, the devastation caused by one virus is clear to see. This in an age when we pride ourselves on having the best medical science and technology ever. Should we tamper with our planet’s delicately balanced ecosystems?
Which makes me wonder: Can we do better?
Rather: We must do better!
Green supply chain management
Hence it is imperative that fashion supply chains rise to the challenge of reducing greenhouse gas emissions across the value chain. While no company manages every aspect of the fashion value chain, shifting the blame or focus upstream or downstream to “out of control” or external factors will not solve the problem.
Instead, green supply chain management is about integrating environmental thinking into product design, material sourcing and selection, manufacturing processes, delivery of the final product, as well as end-of-life management of the product after its useful life.
The fashion industry has significant impacts on the environment:
- Consuming natural resources like water;
- Creating waste including water (from fabric dyeing and treatment) and landfill waste; and
- Greenhouse Gas (GHG) emissions.
A good greenhouse gas emission management strategy starts with understanding current emissions and then partnering across the extended value chain – both upstream and downstream – to find more environmentally friendly ways of operating.
It is also imperative to understand these in the context of fashion supply chains. Not only is this the proactive and responsible thing to do, but it is surely only a matter of time before regulations with binding enforcement and limits start being applied to businesses by various countries.
However, because the whole industry is a chaos of conflicting and mostly unsubstantiated claims, it is extremely hard for stakeholders, customers and even regulators to compare emissions from one company to the other. Which is why it is necessary to have a standard way of accounting, measuring and reporting to improve and track our progress.
This void has been filled by the Greenhouse Gas Protocol, the most widely used greenhouse gas accounting standards that enable companies to develop comprehensive and reliable inventories of their GHG emissions and have been adopted by over 92% of Fortune 500 companies. It is imperative for fashion and supply chain professionals and companies to understand these as a step towards measuring, managing and reporting emissions throughout the value chain.
The Greenhouse Gas Protocol categorises direct and indirect emissions into three broad scopes.
Scope 1 Emissions: Emissions from operations that are owned or controlled by the reporting company. For most fashion companies this includes the emissions from their own facilities (offices, warehouses etc), any owned vehicles and any production facilities that they own.
Scope 2 Emissions: Emissions from the generation of purchased or acquired electricity, steam, heating, or cooling consumed by the company to run its facilities and/or production in its facilities.
Scope 3 Emissions: All indirect emissions (not included in Scope 2) that occur in a company’s value chain, including both upstream and downstream emissions. This includes production of purchased products, transportation of purchased products, or use of sold products. For fashion companies this is by far the largest part of their emissions and includes emissions from growing/making/moving the fibres to dyeing, processing of fabrics to production of garments to then shipping/air freight to get products to the end customer. Also included are the emissions during use, care and disposal of the products – in essence every emission not included in Scope 1 and 2. There are further consolidation approaches to measure Scope 3 emissions based on equity share, financial control or operational control exerted over parts of the value chain.
GHG Protocol has created various standards to help industry and companies to measure their emissions. There are protocols for cities, projects, corporates etc.
For the fashion industry, the three standards that are most appropriate are:
Corporate Standard: This standard covers the accounting of seven greenhouse gases covered by the Kyoto Protocol – carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PCFs), sulphur hexafluoride (SF6) and nitrogen trifluoride (NF3) – to help measure, manage, report and reduce GHG emissions within the activities under full control of the company.
Corporate Value Chain (Scope 3) Standard: This standard provides requirements and guidance for companies and other organisations to measure, prepare and report a GHG emissions inventory that includes indirect emissions resulting from value chain activities (that is, Scope 3 emissions). It builds upon the Corporate Standard to promote additional completeness and consistency in the way companies account for and report on indirect emissions from value chain activities.
Product Life Cycle Standard: This standard can be used to understand the full lifecycle emissions of a product and focus efforts on the greatest GHG reduction opportunities. This is considered the first step towards more sustainable products. Using the standard, companies can measure the greenhouse gases associated with the full lifecycle of products including raw materials, manufacturing, transportation, storage, use and disposal.
How these three Scopes and Standards interact with each other can be understood by the chart below.
Overview of the scope of the GHG Protocols across the business value chain
The Paris Agreement, adopted within the United Nations Framework Convention on Climate Change (UNFCC) in December 2015, commits participating countries (so far over 190 with the United States being the only one that has opted out) to limit the global temperature rise, adapt to changes that are already occurring, and regularly increase efforts over time.
What has begun as a voluntary effort for countries is increasingly likely to be reflected in legislation and company regulation. The fashion industry can’t be left behind to catch up on regulations and customer expectations, and must lead from the front to drive changes to accomplish a better way of doing things. And with better carbon footprint reporting it will be easier for consumers and stakeholders alike to compare the amount of carbon generated per item of clothing being sold.
As the saying goes: “What can’t be measured, can’t be managed.”