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How the fashion industry can cotton on to sustainable supply chains
16 November 2022

How the fashion industry can cotton on to sustainable supply chains

5 minute read
Corporate climate action Net zero
Karine Basso Global Head, Agricultural Value Chains

The climate cost of fashion is high. The apparel industry is said to account for around approximately 4% of global carbon emissions.

The industry's business model involves long and often complex supply chains; from raw material sourcing to textile manufacturing, production, transport, retail, use and disposal in scenarios that span the globe. How can this industry worth between $1.7 and $2.5 trillion in terms of revenue make rapid changes to decarbonise, improve efficiencies and change its relationship with waste?

Fortunately, the scale of the challenge is proportional to the industry's huge potential to leverage change. A growing number of consumers, millennials foremost among them, want to know more about the environmental and social impacts of their clothes, and are expressing their willingness to pay for quality and sustainability.

How does the fashion industry seize this opportunity? There is already valuable momentum towards sustainability, spurred on by knowledge-sharing and discussion of best-practices. Growing environmental concerns, consumer sentiment and, increasingly, commercial opportunity have prompted a number of leading fashion brands to come together and launch sustainability initiatives such as the UN Charter for Fashion, which includes a net zero target for 2050 for its 100+ signatories.

As targets are being set, the question is how companies like yours can translate ambition into detailed implementation plans. What action should be prioritised? And what guidance should you be following?

We have summarised some of the key initiatives and levers of action in the market for companies that want to stay fashionable in times of change.

1. Align ambition with science

Leaders in the industry who really want to make an impact need to define ways to reduce their corporate greenhouse gas emissions in line with the Science Based Targets initiative (SBTi). As of today, there are over 260 apparel and footwear companies that have approved science based targets (SBTs) or commitments to set them. That is up from a dozen in 2018. But establishing a real roadmap for reaching those targets can be complicated, as the latest South Pole net zero report outlines. Where should companies start?

The first step on any company's journey to increased sustainability is assessing your current impact and risks. Understanding hotspots can help you identify the exact measures to take to help you achieve your targets and stay on a 1.5°C trajectory. An important, recently launched resource to consider is the Forest, Land and Agriculture (FLAG) guidance by the SBTi. From September 2022, companies planning to set SBTs will be required to set a 'FLAG science-based target' (or FLAG target) if they belong to a FLAG-designated sector, or to any other sector where more than 20% of revenue or total emissions across scopes 1, 2 and 3 are attributable to FLAG. We will further explore how this relates to the fashion industry below.

2. Take action within your supply chain

To achieve material progress towards reaching net zero, companies need to take action across their whole supply chain, from product design to material sourcing and material production, all the way to retail and products' end of life. You will need to make bold changes. Switching to renewable energy across your production sites represents a high-impact strategy for reducing emissions within your value chain. To further address one of your emission hotspots, you can support your suppliers in transitioning to clean electricity, too, thereby reducing their scope 2 and your scope 3 emissions.

But what about your raw materials and targeting your sourcing strategy? Dependent as it is on cotton, wool and leather, the apparel and textiles industry is classed as land-intensive and belongs to the Forest Land and Agriculture (FLAG) sector. This makes it critical to engage with the new SBTi FLAG Guidance which requires companies in this sector to set FLAG targets to reduce their land-based emissions. Importantly, the new guidance also gives you the opportunity to account for your on-farm removals for the first time: a key incentive to work with your suppliers on regenerative agriculture.

What does this look like? Examples of regenerative agriculture projects include the development of low-emission cotton through field-level, farm-level, and/or community-level projects, such as cover cropping or on-farm agroforestry, that increase soil water retention and increase soil fertility. This not only decreases your cotton's global warming impact compared to regular cotton, but also helps your brand achieve its sustainability targets and creates co-benefits for your suppliers. There are also financial wins; if implemented correctly, interventions like this directly correlate with improved financial performance.

3. Design to last for a circular economy

A key challenge for the fashion industry is the sheer volume of garments that are worn for a short time before becoming disposable. Considering the amount of resources that go into producing each single item, this has a huge environmental impact. Designing for longer durability, both in terms of functionality as well as timelessness is a great way to take action. Another one is designing for a circular economy. The circular economy is a key concept in the future of sustainable fashion. Instead of products being made, used, then thrown away (in the traditional 'linear' economy), products in the circular economy are designed to be reused, repaired, recycled or upcycled. This means, for example, that instead of clothes being made from new, virgin materials, they are made from recycled or upcycled materials. And when they are no longer wanted, they re-enter the cycle to be reused, repaired or recycled again, instead of becoming waste.

A fully circular economy provides an immense opportunity for the fashion industry to keep producing at a similar rate but with a much lower impact on the planet. Explore ways to introduce circularity principles into your supply chain today to stay ahead with your materials strategy.

4. Engage your customers by sharing your true climate action

Against the backdrop of a sound sustainability strategy, you should also engage your customers along the journey. As awareness continues to grow of the environmental impact of our purchases, consumers are attaching increasing importance to sustainable products. They are also becoming more loyal to brands that enable them to make a difference in the fight against climate change.

A meaningful way to engage your customers is to start communicating your climate journey. However, following the huge rise in green claims within the industry and the hike in public scrutiny of those claims, fashion companies have started downscaling their sustainability communications for the fear of getting called out for greenwashing. But the key to winning and retaining climate-conscious customers is to keep them aware of what you are doing to tackle the climate crisis. How do you do this in a credible and authentic way in a world where public scrutiny reaches unprecedented levels and companies are attacked from left and right for their actions?

South Pole recommends businesses follow the core principle of radical transparency and integrity, that can help them navigate the crossroads of climate communications. The first step down this path is moving away from ambiguous sustainability statements and towards making credible and future-proof claims that are aligned with a science-led climate journey.

Consumers today want more than just promises; they want to see fashion brands in action. They are seeking instant and transparent information from brands as they are becoming increasingly aware of the climate impact of their purchases. To meet the growing demand for radical transparency in the constantly evolving climate space, brands need to start showcasing that they are taking responsibility for their emissions and are contributing to climate action within and beyond their value chains.

Communicating credible climate action and empowering stakeholders with transparent information can help fashion brands withstand scrutiny, differentiate themselves and grow their business – but also strengthen customer loyalty. More importantly, they can lead the way in ensuring that environmental values are embedded in business models, and by transparently disclosing their quantifiable climate commitments. This can also encourage other brands towards making positive environmental progress.

The global, multi-billion dollar fashion industry needs to go through a sustainability transformation; the next few years will reveal the true trendsetters, as well as those who've fallen out of fashion. Who will be the ones to stay in vogue?

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Karine Basso, Global Head of Agricultural Value Chains
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