Recently, one of our Senior Consultants, Joe Poon, presented at the Cobalt FW23 Yarn Expo in Hong Kong. Joe is an experienced environmental consultant who focuses on developing corporate carbon inventory (particularly scope 3), establishing science-based targets, and performing data modelling and analysis. This keynote speech was presented to key scope 3 suppliers in the apparel industry, including representatives from prominent yarn mills and knit factories. Here are our key takeaways.
Every few years, the Intergovernmental Panel on Climate Change (IPCC) publishes an assessment report on the state of climate change. Last year, the report was clear. With extreme weather swings, lengthy droughts, and wildfires tearing through multiple parts of the world, climate change isn’t just on its way — it’s already here.
But what’s the link between climate change and the apparel industry, and how can apparel brands and their suppliers become part of the fight against climate change?
1. Climate action is urgent everywhere
In 2015, 196 countries met in Paris as part of the UN’s Framework Convention on Climate Change. There, it was agreed that the world needed to limit global temperature rises to well below 2° Celsius (preferably 1.5°) above pre-industrial levels — an ambitious target given our current trajectory.
To limit warming to 1.5°, the world needs to get to net zero by 2050. Net zero is a state where any emissions released are balanced out by an equivalent amount of carbon that is absorbed or captured from the atmosphere. The only way to achieve net zero globally is if every government, person and company radically reduces their greenhouse gas (GHG) emissions, and then offsets the small percentage of unavoidable emissions that remain.
2. The private sector is stepping up
A net zero target requires collaboration and participation from every part of society, including the private sector.
To guide their journeys to net zero, many companies are adopting science-based targets to reduce their emissions. These targets are designed in line with what the latest climate science says is required to limit global warming to 1.5°, and they are outlined by the Science Based Targets Initiative (SBTi).
Science-based targets: what are they?
As of 13 July 2022, there are 3,336 companies committed to science-based targets (SBTs). The science-based targets reduction pathway gives companies both a near-term goal and a long-term goal. In the near-term (by 2030-2035), companies must aim for a ~40-45% reduction in operational emissions (Scope 1 and 2), and a ~25-30% reduction in value chain emissions (Scope 3). In the long-term (before 2050), companies must achieve more than a 90% reduction in both operational and value chain emissions (Scope 1, 2 and 3).
The benefits of science-based targets
Beyond doing their part to combat climate change, there are multiple benefits available to companies that set and work towards SBTs. Setting SBTs addresses stakeholder expectations, thus proving the long-term sustainability of a company’s business model. They also increase competitiveness by minimising energy and emissions-related costs, mitigate transition risks by anticipating regulatory, policy and market development, and allow companies to seize the opportunities of the low-carbon transition, such as low-carbon products and services, which are becoming increasingly popular among a new generation of conscious consumers.
Climate change and the apparel sector
The fashion industry is one of the biggest GHG-emitting industries in the world. Several organisations offer targets and guidelines to help the apparel sector reduce their environmental impact. In particular, the UN Fashion Industry Charter for Climate Action sets a 50% emissions reduction target by 2030.
Already, several well-known fashion brands have signed the charter and committed publicly to emissions reduction targets, including:
● Gap (reduce absolute scope 1 and 2 emissions by 90% and scope 3 emissions from purchased goods and services 30% by 2030, from a 2017 base year)
● NIKE (reduce absolute scope 1 and 2 emissions 65% and scope 3 emissions 30% by 2030, from a 2015 base year)
● Target (reduce absolute scope 1, 2 and 3 greenhouse gas emissions by 30% below 2017 levels by 2030)
3. Achieving science-based targets requires radical and collaborative action
Achieving science-based emissions reduction targets of any meaningful amount won’t be easy. Most science-based targets are highly ambitious, and they require the inclusion of scope 3 emissions. To achieve their targets, the companies that commit will need to take radical action in the way they operate, and who they partner with.
The challenge of scope 3
Reducing scope 3 emissions is a crucial part of getting to net zero. For apparel brands in particular, these emissions can account for an enormous amount of overall emissions; in 2018, retail business C&A reported that its scope 3 emissions accounted for 95.86% of its total GHG emissions.
Scope 3 emissions in the apparel sector include:
● Tier 1 – Assembly and manufacturing of final products (approximately 9% of emissions)
○ Cutting, sewing, stitching, embroidery
○ Screen printing
○ Stock fitting and lasting for footwear
○ Product packaging
● Tier 2 – Production and finishing of materials (such as fabric and trims) that go directly into the finished product (approximately 52% of emissions)
○ Knitting and weaving textiles
○ Fabric bleaching, dyeing, finishing, washing
○ Production of footwear mid- and outsole components (extrusion, moulding, vulcanisation)
● Tier 3 – Processing of raw materials into yarn and other intermediate products (approximately 15% of emissions)
○ Yarn production (extrusion, spinning, etc.)
○ Production of dues, inks, adhesives, resin, etc.
○ Conversion of wood products into pulp
○ Leather preparation (including tanning)
● Tier 4 – Cultivation and extraction of raw materials from the earth, plants, or animals (approximately 24% of emissions)
○ Bottle recycling (for recycled polyester)
○ Conversion of oil/gas into polymers
○ Cultivation of cotton, wood and natural rubber products
○ Cattle grazing
How apparel brands can achieve their science-based targets
From a brand perspective, there are two keys to achieving SBTs: measurement, and reduction.
Measurement, verification, and reporting
Brands will need to move from limited data collection (e.g., only scope 1 and 2 emissions and tier 1 suppliers) to producing a complete picture of their emissions data, including data from upstream suppliers, and rigorously verifying all the data they collect and disclose.
At the same time, brands will need to move from a limited focus on operational emissions reductions (such as energy savings and other low-hanging-fruit projects) to an expanded approach to emissions reduction across the entire value chain. This kind of expanded approach will require significantly greater capital investments.
But despite the additional investment and effort required, there are many opportunities for apparel brands to reduce supply chain emissions, including:
- Energy efficiency improvements: implement energy-saving technologies and solutions
- Onsite photovoltaic (PV): install onsite PV panels to reduce dependence on grid electricity or fuel oil consumption by generators
- Offsite RE procurement: identify, plan and execute offsite RE procurement strategies (e.g. EACs, offsite PPAs) in major sourcing markets
- Coal phase-out: replace coal boilers with low-carbon fuel alternatives
- Low-carbon materials: increase the use of sustainable materials (e.g. recycled polyester, organic cotton)
For apparel brands, SBTs are an opportunity to become market leaders
Although setting science-based targets and working to reduce them is a complex undertaking, the good news for apparel brands is that there are plenty of resources out there to use as guidance, and dozens of high-profile fashion brands are already publicly modelling the journey to net zero. The benefits of setting SBTs far outweigh the risks of ignoring public sentiment, stakeholder expectations, and the material financial risks of a changing climate. For apparel brands yet to make their first move, the time to act is now.
Suppliers play a crucial role in helping brands achieve SBTs
While SBTs are becoming more popular and apparel brands are setting serious targets, suppliers will need to prepare for the new requirements and expectations. The onus for delivering scope 3 reductions lies not with brands, but with their suppliers – so suppliers must move quickly and be prepared to take radical action in order to help their customers achieve their targets.
What is RESET Carbon?
RESET Carbon works with leading businesses to resolve the environmental crisis by making meaningful reductions in their carbon, water, and waste footprint. We use a ‘collaborative empowerment approach’ to our consulting services, with the intention to guide and coach our clients to truly integrate sustainability in their operations and business decisions.
Since 2009, RESET Carbon has delivered in-depth sustainability strategy and implementation programs to clients in a wide range of sectors, and scaled major environmental programs across key Asian markets.