Why the fashion industry must tackle these three challenges

27 August 2020

Collaboration across the entire fashion value chain is essential to drastically reducing the industry’s greenhouse gas (GHG) emissions, according to a report. 

The report, by the Global Fashion Agenda (GFA) and McKinsey, said if the fashion industry continues to embrace decarbonisation efforts at its current pace, emission levels would still be nearly double the maximum required to limit global warming by 1.5C by 2030.

In 2018, the global fashion industry produced around 2.1bn tonnes of GHG emissions, equalling 4% of the global total, it said. 

Around 70% of the industry’s emissions came from upstream activities such as materials production, preparation and processing, and the remaining 30% was associated with downstream retail operations, the use-phase and end-of-use activities.

The report said the fashion industry must “intensify its efforts” in order to reduce emissions by 1.1bn tonnes to align with the 1.5C pathway.

“The immediate focus of accelerated abatement should be upstream operations, where around 60% of emissions savings are possible, in particular from increased use of renewable energy, through collaborative efforts supported by brands and retailers,” it said.

Brands have the potential to reduce emissions in their own operations by 20%. By 2030, these efforts need to have created a “significantly reformed fashion landscape” with one in five garments traded through a circular business model, it said. 

Despite the scale of the required actions to reduce GHG emissions, the report said this could be delivered at a “moderate cost”, with 90% of the accelerated abatement delivered below a cost of $50 per tonne.

“Around 55% of the actions required will lead to net cost savings on an industry-wide basis. The remaining actions will require incentivisation in the form of consumer demand or regulations to deliver abatement. 

“Additionally, around 60% of the abatement will require upfront capital, where brands and retailers will need to support and collaborate with value chain players to invest for the long-term benefit of society and the environment,” it said. 

The GFA and McKinsey identified three priority action areas for the industry to collaborate across the value chain: 

1. Reducing emissions from upstream operations. 

Decarbonising materials production and processing, minimising production and manufacturing waste, and decarbonising garment manufacturing could deliver 61% of the accelerated abatement, the report said.

Improvements in energy efficiency and a transition from fossil fuels to renewable energy sources could deliver about 1bn tonnes of emissions abatement by 2030. 

2. Reducing emissions from brands’ own operations. 

Improving material mix through greater use of recycled fibre, increased use of sustainable transport, improvements in packaging, and minimising returns are all drivers of emissions abatement within brands’ operations. Firms must also reduce overproduction as only 60% of garments are currently sold without a markdown.

“Following these measures could result in 308m tonnes of CO2 equivalent abatement in 2030,” the report said. 

3. Encouraging sustainable consumer behaviours. 

The adoption of a more conscious approach to fashion consumption and the introduction of radically new business models could contribute 347m tonnes of emissions abatement in 2030, the report said.

“The main levers in this effort are an increase in the uptake of circular business models promoting garment rental, resale, repair, and refurbishment, a reduction in washing and drying, and an increase in recycling and collection to reduce landfill and move the industry toward an operating model based on closed-loop recycling.”

Katie Burrows, energy services solutions manager at Haven Power, added that unsustainable supply chains was an issue felt across every industry, as major firms outsource their environmental impact to other companies.

“Supply chain emissions are up to 5.5 times greater than a company's direct operations – but until recently, a lack of transparency and accurate data prevented us from seeing the full picture.”

Burrows added that the urgency for increased transparency in supply chain sustainability had never been greater as firms wrestle with the financial and social impact of Covid-19.

“Widespread disruption to manufacturing and logistics has seen many companies rush to reroute or find alternative sources, running the risk of partnering with the wrong suppliers. On-site audits are being cancelled due to travel restrictions and quarantine rules, and so sustainability standards are now at a risk of being compromised to meet new demand,” she said.

“Companies must be proactive in their due diligence and mitigation strategies to ensure that any progress made so far has not been in vain. At the same time, they must encourage/enact change across their operations and accelerate progress towards a zero carbon economy.”

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