As Cop27 comes to a close on Friday, government negotiators remain bogged down in technical details and competing geopolitical issues. But the fashion industry was keen to set its own agenda, with a series of announcements from industry players that focused on the important role of using private sector money to channel resources and tackle climate change.
Forest protection NGO Canopy announced a joint commitment with fashion companies H&M, luxury group Kering, Stella McCartney and Zara parent company Inditex to purchase about 500,000 tons of low-carbon fibers to replace viscose sourced from ancient and endangered forests.
It was one of the few big announcements to come from the fashion industry at Cop27, along with a new biodiversity project from LVMH Moët Hennessy Louis Vuitton and an initiative from the Global Fashion Agenda and UNFCCC to harmonize carbon reduction targets across the industry.
“The fact that brands are now treating Cop as part of their schedule and their annual calendar I think is indicative of the importance they’re attaching to climate action, and the recognition that we can’t just rely on governments to solve this,” said Canopy founder and executive director Nicole Rycroft. Fashion can take the lead in transforming its supply chains, she said, citing viscose and paper packaging industries, which are responsible for razing more than 3.2 billion trees a year, as two areas that can demonstrate real gains.
“Oftentimes it’s easier for governments to step into the space once businesses have helped resolve some of the thorny parts of the issue,” she said. “But no one company can solve this by themselves, so I think they’re very proudly saying that collective action is the only way that we are going to get there.”
Rycroft said in addition to the overall Cop27 agreement, partnerships such as NGO-business initiatives and other bilateral agreements are an important aspect to come out of the conference.
H&M called Cop27 “the annual milestone for the most influential leaders in climate action.” During the conference, the Swedish group announced its target to reduce its scope 1 through 3 carbon emissions by 56 percent in total terms by 2030 from 2019 numbers, and pledged nearly $287 million annually to invest in phasing out coal throughout its supply chain.
Bringing money to the table highlights a key piece for the fashion industry at this year’s Cop27.
“Sustainability becomes extremely difficult because it’s also about planning investments,” said Simone Cipriani, chair of the U.N. Alliance for Sustainable Fashion and the Ethical Fashion Initiative.
“The involvement of the private sector is an involvement in investment capacity, and this requires the business model to take care of sustainability through the supply chain. The supply chain has been divided into so many different bases, we have to bring things together again,” he told WWD. Cipriani said the industry needs to build new systems and rethink ways to integrate sustainable and business goals.
“Maybe it’s impossible to have a complete financial case, if you measure things in the short term. But in the long term, it is possible. Because if a bad environment threatens your business in the long term, that has a financial materiality,” he said. “We are entering an age in which the financial case for sustainability becomes viable. It’s not so abstract, it’s not the thing of some dreamers anymore.”
The Canopy announcement aims to show there’s a strong market appetite for tangible solutions. “The fact that there’s more than half-a-million tons of committed purchases already in place, basically brands are putting themselves on the line to say, ‘Investment community, we are ready to buy these products,’” said Rycroft. “We need investment, and equity in particular, to help unlock these game-changing solutions.”
She emphasized that it was important to bring luxury brands and volume retailers associated with fast fashion together to create these agreements and achieve collective goals. The group is starting to work with investors and encourage them to be active in funding new technologies at early stages, even if they are unproven.
“VC-level investments” in the $150 million to $300 million range are needed to build new, energy-efficient technologies or retrofit existing facilities, which smaller brands cannot finance on their own.
“The investors need to be investing in first-generation and second-generation applications of technology that perhaps before they would have stood on the sidelines and waited for somebody else to do it,” Rycroft said. The Canopy announcement “was geared toward sending that signal to the investor community. We, as the customer brands, are ready to step in and now we need you to step in as well.”
Cipriani said discussions among the fashion industry executives on the ground at Cop27 centered on impact investment, supply chains, standardizing reporting systems and creating different business-to-consumer models.
Some numbers were also circulating, demonstrating that the industry is still lagging on its emissions reductions targets.
A report from NGO Stand Earth released just before Cop found emissions from fashion brands signed to the United Nations Framework Convention on Climate Change, or UNFCCC, are still rising, despite their pledges to get to net-zero emissions by 2025. The 10 companies included H&M, Inditex, Kering, Lululemon and Nike. The group looked at companies’ self-reported data on their supply chain emissions from 2018, when the UNFCCC was proposed, through 2022.
“All the people I’ve met from this industry, everybody is speaking about it,” said Cipriani of the report. “We see that we talk the talk, but we have to see results.”
Stand Earth corporate climate campaigner Rachel Kitchin told WWD: “They are failing to decouple the growth that they’re seeing in their revenue from a growth in carbon emissions.” As companies continually increase their volumes of production, “their growth means emissions growth.”
“A big part of that commitment is to seriously address their supply chain emissions, which is where upward of 90 percent of emissions are coming from,” Kitchin said. “We can see that, overall, that is not happening, and that is a huge, huge problem for the industry. They are just failing to get to grips with it all.”
During Cop27, Stand Earth hosted a panel alongside advocacy organizations Changing Markets Foundation and Zero Waste Alliance Ukraine, which found that Russian oil is still seeping into the supply chain through the world’s two largest polyester manufacturers in India and China, despite companies cutting off business ties with the country in the wake of its invasion of Ukraine.
(WWD reached out to Boohoo, Inditex, Levi’s, The North Face and Uniqlo, all of whom declined to comment or did not respond to requests for comment.)
It’s just one example of how complex fashion’s global supply chains are, and the challenges facing multinational corporations to bring their actions in line with their intent.
H&M aims to phase out coal from its supply chain by 2025. “But it’s a very challenging target to be honest,” said head of sustainability impact Hendrik Alpen.
Through a sustainability-linked bond, H&M can finance carbon reductions and facilities upgrades for its suppliers. “For us the business case is not to earn money, but actually to achieve carbon emissions reductions,” he said. “We will invest in our supply chain to build it into a more resilient supply chain.”
Alpen said H&M has built long-term relationships with suppliers to foster improvements, as opposed to the “shop around for the cheapest price by agents” model used long ago.
Cipriani at the U.N. Alliance for Sustainable Fashion emphasized that the language of “loss and damage” — a term that addresses who should pay for catastrophes caused by climate change and was set as a key point in this year’s negotiations — is not on the agenda for single sectors such as the fashion industry, and is ultimately the responsibility of the governments and other multilateral institutions.
However, he encouraged the fashion industry to personally examine its role in impacted countries and how it can use the language as a framework. “This industry has a huge supply chain in the global south [and the concept of ‘loss and damage’] is a tool that can be used to implement renewables and green technologies in the supply chains, and to have socially fair supply chains and labor conditions.”
Global Fashion Agenda’s call for input initiative is key to getting the industry on the same page regarding carbon-reduction targets, as well as social issues including fair wages for workers. The GFA’s consultation will last until February, with its results released in June.
“The one important point is that the consultation will not be the end game,” said GFA chief executive officer Federica Marchionni. “It’s not just saying, ‘OK, here are some targets for the fashion industry,’ but most importantly it is what are the actions that the industry is taking to get there. The road map will help people to prepare and accelerate.
“I’m seeing an enormous momentum of understanding, so now finally it looks like we are speaking the same language, and people understand what they need to do. We are passing from pledges to real action,” she added of the mood coming out of Cop27.
Marchionni noted that it’s important to have all of the apparel industry at the table, including fast-fashion brands.
“When you change them, you change a huge amount of carbon reduction,” she said. “In terms of innovation, in terms of materials that are being used, in terms of circularity projects that they are embracing, I’m also positive on the fact that they are showing business ‘We’ll still be profitable, not based on growth of volume but more based on profit’ and circularity is one of the solutions.”
Stand Earth’s Kitchin cited H&M’s commitment to phasing out coal at factories by 2025 as “really important,” but called for additional transparency as to how it will be carried out.
“Words are just words, and we need to see real action and movement from brands,” she said. “It’s very clear to me that we haven’t reached the turning point yet.”
Cipriani reflected on the urgency of industry change. “There is now clear scientific consensus that we are not going to meet the 1.5 degree threshold in 2030,” he sad, referencing the soon-to-be-missed target to keep global heating in check set out in the Paris Climate Agreement. “We have to start thinking about this in the testing of our systems and experiment with new ways to meet this challenge. We have a huge responsibility.”
While positive, Marchionni tempered her own mood coming out of the conference, citing a cautious optimism. “What I was proud to see is that the fashion industry is giving a good example of at least trying to unite, trying to do more. There are some industries that are far behind us.”
As the fashion industry continues to talk about targets, follow-through is more important than ever. Marchionni added: “This year will be crucial.”