Most of the world’s biggest fashion companies have committed to radically reduce their greenhouse gas emissions. Though it’s a complex challenge, how to deliver is no mystery.
That is, in part, because there is a cottage industry of consultants advising brands on decarbonisation strategies. As but one high-profile example, trade group Global Fashion Agenda (GFA) and McKinsey co-authored a report in 2020 laying out a comprehensive roadmap to cut fashion greenhouse gas emissions by just over 50 percent by 2030. The analysis shows that more than half the recommended actions will also result in cost savings.
And yet, the industry’s greenhouse gas emissions continue to trend in precisely the opposite direction.
That’s because the plan is equal parts analytically sound and a pipe dream. At its root, the problem is that each of the three groups with the most leverage to tackle decarbonisation remains structurally and stubbornly unwilling to change.
Consumers Are Sold on Design and Price More Than Sustainability
GFA and McKinsey detail that changes in consumer behaviour could reduce emissions by 20 percent, largely through the adoption of circular models like rental and resale, and by reducing washing and drying and increasing recycling.
According to the report, for each one percent increase in circularity, carbon emissions are projected to drop by 13 million tonnes. The math is promising but the trend is not: The proportion of materials in the global economy getting a second life through recycling declined twenty percent over the past five years.
Meanwhile, ultra-fast-fashion companies like Shein remain among fashion’s most successful businesses, defying an array of consumer surveys touting increasing interest in sustainable fashion, especially amongst younger consumers. Dig deeper and the contrast between sentiment and behaviour becomes clearer: When asked to rank buying motivations, it turns out that sustainability is generally not that important to consumers. In fact, social and environmental factors didn’t even make the top five purchase criteria for fashion in a recent analysis by consultancy Bain & Co.
It doesn’t help that sustainable fashion doesn’t have an accepted definition, and different from other categories such as food or electric vehicles, more responsibly produced clothing offers no personal health benefit or performance advantage. Successive greenwashing scandals have made many consumers rightly skeptical of eco-claims that brands operating on short product cycles, itinerant sourcing models and obscure processing practices do not always back up.
Thus, instead of embracing a culture of “less” or “longer-lasting” fashion, consumers are buying ever more cheap plastic apparel and footwear and wearing these items for less and less time, then tossing them to be incinerated or diverted to landfills in the developing world.
Capital Allocation Is Scarce, Hampered by Structural Challenges
There is no doubt that decarbonising the fashion industry requires upfront capital investment to reduce emissions deep in brands’ supply chains, where 60 percent of the industry’s climate impact can be found, according to the GFA and McKinsey report.
Still, one might think progress would be possible given the size of brand and retailer balance sheets, their high-profile decarbonisation commitments and the positive returns associated with at least half of the initiatives outlined in the roadmap put together by the trade group and consultancy. One would be wrong. Most solutions embedded in upstream supply chains continue to go unfunded.
Here, too, structural impediments obstruct progress. For their part, brands are reluctant to fund investments where they may not reap the benefits. Suppliers are most often shared and can change frequently. Further complicating matters, these carbon-reduction investments are most often based in developing countries like Pakistan or Bangladesh where the cost of capital can be three times that of Western markets.
Efforts to overcome these challenges have been ongoing for years through initiatives like Clean by Design, a cross-brand programme to support supplier decarbonisation and efficiency efforts set up by environmental advocacy group The Natural Resources Defense Council (NRDC) in 2007. According to Linda Greer, the former head of the effort, “the math worked, but the motivation to undertake the program did not follow, and uptake was far lower than we expected. Competing priorities for use of capital on the manufacturing side and brand engagement from the sustainability staff rather than the sourcing department led to tepid program adoption.”
Undaunted, this work has now been revived by multi-stakeholder initiative Apparel Impact Institute. AII is seeking to raise $250 million to advance decarbonisation in the most carbon-intensive parts of fashion supply chains. Though this round of fundraising sums to less than one tenth of one percent of the capital needed, the goal is to unlock more sources of funding.
Companies Prioritise Profits Over Planetary Welfare
Brands have a role to play in influencing both investor and consumer behaviour. Decisions around things like material selection, returns, retail and distribution operations, packaging and transport also contribute nearly 20 percent of the over 2 billion tonnes of greenhouse gases emitted by the industry every year, according to the GFA and McKinsey report. Action on each of these various drivers of decarbonisation is governed by distinct economics and technology.
For example, many brands have successfully engineered solutions to reduce the carbon emissions connected with their retail and distribution operations by switching to renewable energy. Here, the incentives align because renewable sources of primary energy are typically less expensive than fossil fuels in consumer markets like the US and Europe, yielding both improved profitability and public benefit. However, when private profit and public welfare do not align, progress has been far slower.
Consider materials selection as a case in point. Though a variety of emerging lower-carbon solutions are demonstrating technological feasibility, uptake amongst brands remains limited. This is, in large part, because new solutions lack the scale and rock-bottom pricing of fossil-fuel-derived synthetics since externalities like pollution, microfibre shedding and carbon emissions remain unpriced.
Said differently, based on current system rules, planetary welfare is not able to compete with the pursuit of profit.
To be sure, a small number of companies, including H&M Group, Nike and Tapestry, have begun investing in materials and recycling solutions. Unfortunately, none of these actions are likely to result in appreciable decarbonisation this decade because of the time required to scale, misaligned incentives, advantages for incumbent solutions and infrastructure gaps.
Responsibility for the industry’s failure to decarbonise is shared. Fashion industry inaction and misleading sustainability claims are certainly to blame. So, too, are the consortia and consultants who continue to peddle fanciful win-win solutions through concepts like circularity that work in theory but not in practice.
That said, the challenge of decarbonisation is primarily structural: So far, system rules and incentives have neither forced nor sufficiently encouraged any of the industry’s key actors to prioritise climate action.
But that will change as the industry’s impact becomes more consequential. Open dumpsites piled high with discarded garments in Chile’s Atacama desert are now big enough to be seen from space. Microplastics, which shed from sources including synthetic clothes, have been found in clouds. Meanwhile, this year is on track to be the hottest on record, contributing to incidents of wildfire and flooding. These are impacts that consumers, investors and brands can no longer ignore.
As a result, some regulators are making changes that begin to price the damage associated with carbon emissions into the market. And many policymakers are taking direct aim at fashion.
The fashion industry already has a credible map to deliver progress. That said, the longer that companies delay, the more costly that action becomes — both financially and environmentally.
With regulatory and climate pressure mounting, the industry’s responsible leaders ought to proactively support rules changes, recognising that the moral imperative to decarbonise is set to become a business imperative.
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