The fashion industry has the third largest emissions footprint

The fashion industry has the third largest emissions footprint

Tackling supply chain emissions can be revolutionary in the global fight against climate change, a new report has found, with the fashion industry among the eight supply chains accounting for more than half of all global greenhouse gas emissions.

New research published by the World Economic Forum and Boston Consulting Group (BCG) shows that decarbonising supply chains is an opportunity for corporate climate action. Emissions created along the supply chains of most consumer-facing industries can far outweigh emissions created in their own operations.

The report says addressing Scope 3 emissions is fundamental for companies to realise credible climate change commitments. It enables companies in customer-facing sectors to use their influence in supply chains to speed and support rapid decarbonisation throughout the economy, and it can put pressure on suppliers in regions where governments do not yet do so.

The fashion industry has the third largest footprint, behind food and construction, respectively, with 85% of emissions upstream, or Scope 3.

The report suggests less than 2% of all emissions in fashion can be reduced by recycling. Some 15% can be abated by putting pressure on suppliers to increase process efficiency – with upgrades to less energy-consuming machinery for sewing, spinning, weaving and knitting.

Switching production to renewable power sources alone abates an additional 45%, the report notes, as emissions within the textile and garment production process are mainly driven by the high shares of fossil-derived energy within the domestic energy mix of production countries.

The remaining heat consumption would need to be shifted to renewable heating, saving another 20%. While introducing new processes, such as moving from wet towards dry processing technologies, can save another 10%.

An additional 10% of all fashion emissions – part of those from agriculture – need to be addressed via nature-based solutions, such as growing cotton more sustainably. The last 2% or so can be tackled via fuel switches for low-carbon transport, the report suggests.

"This report shows how companies have the opportunity to make a huge impact in the fight against climate change by also decarbonizing their supply chains," says Dominic Waughray, managing director, World Economic Forum. "The interaction between governments and companies to seize this opportunity is an important one. We welcome more leaders to join and help build momentum on this important agenda."

The report suggests consumer-facing companies can use their buying power to push for rapid decarbonisation and help fund the transition by co-investing with upstream raw-material producers, which struggle to finance the transition alone.

"The argument that costs are a major barrier to reducing emissions is increasingly flawed—around 40% of the emissions across the eight major supply chains we analysed can be eliminated with measures that bring cost savings or are at costs of less than EUR10 (US$2.16) per tonne of CO2 equivalent," adds Patrick Herhold, a report co-author and managing director and partner at BCG's Centre for Climate Action. "Increasing process efficiency and the use of recycled materials, as well as buying more renewable power, provides companies with major climate gains at very low costs."

The report points to nine major actions that CEOs should take today to address supply chain emissions, including:

  • Build a value-chain emissions baseline and exchange data with suppliers
  • Set ambitious reduction target on Scopes 1–3 and publicly report progress
  • Redesign products for sustainability
  • Design value chain/sourcing strategy for sustainability
  • Integrate emissions metrics in procurement standards and track performance
  • Work with suppliers to address their emissions
  • Engage in sector initiatives for best practices, certification, traceability, policy advocacy
  • Scale-up "buying groups" to amplify demand-side commitments
  • Introduce low-carbon governance to align internal incentives and empower your organisation

Click here to access the full report.