To reach net-zero, more and more businesses are looking beyond the carbon footprint of their own operations and starting to address Scope 3 emissions. Defined by Greenhouse Gas Protocol, Scope 3 emissions occur from sources owned or controlled by other entities in the value chain (i.e. materials suppliers). CDP (formerly known as Carbon Disclosure Project) found that GHG emissions in a company’s supply chain are, on average, 11.4 times higher than its operational emissions, which equates to approximately 92% of an organisation’s total GHG emissions in 2020.
Decarbonisation within the supply chain is crucial for fashion brands to realise net-zero ambitions. According to McKinsey’s Fashion on Climate report, around 70% of the fashion industry’s emissions come from upstream activities such as materials production, preparation and processing. The remaining 30% are associated with downstream retail operations, the use-phase and end-of-use activities. The fashion industry – from material sourcing through supply chains to washing and waste – has an enormous carbon footprint. In the fashion supply chain, all stakeholders and participants have a role to play in driving decarbonisation.
As brands stepped up their climate ambition with a renewed fashion charter at COP26, pledging to set science-based targets or cut their emissions by half by 2030 to join the net-zero pathway, many today still face the challenges related to how to achieve their goals and work together with the other players in the supply chain.
Green Story recently hosted an exclusive webinar event, “Decarbonising the fashion supply chain”, featuring James Chamberlayne, Senior Manager of Supply chains, UK & WW at CDP, Kurt Kipka, Vice President of Apparel Impact Institute, Adam Shedletzky, Head of Business Development from Invert Inc., moderated by Akhil Sivanandan, Green Story CEO. Joined by sustainability and supply chain professionals of leading fashion brands, we dove into the world of decarbonisation and carbon offsetting, shared tips on stakeholder and supplier engagement and best practices on getting started with carbon offsets. In addition, our panelists shed light on the importance of target setting, reporting and impact measurement in the path to net zero.
Here are the 3 key takeaways from the insightful discussion on “Decarbonising fashion supply chain”.
1. The role of carbon offsetting in decarbonisation strategies
Decarbonisation is about reducing CO2 emissions resulting from human activity, with the eventual goal of eliminating them. Carbon offsets are used to compensate for greenhouse gas emissions by reducing the emissions somewhere else. It is a decarbonisation tool that helps brands reduce their carbon footprint towards the net-zero goal. When talking about the role of carbon offsets in decarbonisation strategy, Adam from Invert Inc., stressed the importance of having an overall approach and “focusing on reducing the emissions of your own operations and supply chains and then finding the right use for carbon offsets. And, what’s really important is being authentic in how you communicate your carbon offsets.”
For more on how to incorporate carbon offsets in your sustainability strategy, check out our January webinar, “Demystifying carbon offsets”, with Naomi Swickard, Chief Program Officer at Verra and Guy Turner, Founder & CEO of Trove Research. When speaking about carbon offsets as part of a bigger climate solution, Naomi shared how having a decarbonisation strategy in place gives brands guidance to contribute to carbon reduction over time, and Guy advised “having a credible decarbonisation communication plan where one needs to assess the options available, show progress wherever possible”. Therefore, it is essential to understand and communicate how carbon credits fit into your decarbonisation strategy over time and your journey to net zero.
To find quality offsets, Adam suggests working with projects that are going through approval processes with credible registries such as Verra and Gold Standard, as these registries have agreements with third party verifiers. Another important criteria is additionality. To qualify as a genuine carbon offset, the reductions achieved by a project need to be ‘additional’ to what would have happened if the project had not been carried out (e.g. continued as business-as-usual). Additionality is essential for the quality of carbon offset credits.
2. How to engage with suppliers from Tier 1 to Tier 4
More and more brands feel the need and pressure to take their suppliers on the net-zero journey. As the tiers of fashion supply chains are becoming increasingly complex, “at each layer you get less and less visibility as a brand or as a user of that supply chain into those depths of their supply chain,” Kurt from the Apparel Impact Institute shared. The good news is,” the industry itself, for a number of reasons, is increasing the transparency and traceability back to the origins of products. And, along that line, you can also increase the awareness and the influence of the types of decarbonisation activities that a brand or retailer can take on for themselves. In most cases, the first step or the initial step is really just rolling up your sleeves and starting mapping your supply chain.”
Indeed, gathering information and data on your suppliers and their suppliers is an important first step. “Once a brand has a good map of those production facilities or even an initial list of those that are most important to them, there’s a number of resources available for conducting synthesis of supply chains or essentially understanding perhaps which other organizations may be in those locations as well,” Kurt elaborated on “the synthesis process” among brands who can work together with the same suppliers to leverage financial opportunities and accelerate decarbonisation. Ultimately, it’s about “strategizing against what are the most important decarbonization efforts that these facilities or your suppliers can do on a path to net zero.” To learn more about fashion’s decarbonisation opportunity, check out the latest report by Apparel Impact Institute and Fashion For Good (FGG), “Unlocking The Trillion-Dollar Fashion Decarbonisation Opportunity.”
For James from the CDP, supplier engagement is also about raising awareness and having conversation with suppliers about your decarbonisation KPI’s. “But, ultimately the important thing is data. At CDP, we firmly believe – you can’t really manage what you don’t measure.” Make sure you communicate with your stakeholders and suppliers about the importance of data and use that data as a baseline for target setting. When mapping out your supply chain, keep in mind that transparency and visibility to data as to how it’s being sourced is incredibly important, especially from a legal and regulatory standpoint over time.
3. Tackle the challenges along the net-zero path
The most common challenge in brands’ journey to net zero is competing business priorities. “All companies struggle with quantifying their sustainability efforts. And, as there are no clear instructions, companies and sustainability managers need to link sustainability to a business case,” Lavina, former Corporate Responsibility Manager at the German sustainable fashion brand ARMEDANGELS recognized the same challenge in her experience. Indeed, the goals to net zero may not always align with the business goals for the given organisation.
The second challenge along the net-zero path is setting a baseline. Given the complexity of the fashion supply chain and its constantly shifting nature, it is challenging for brands to get the right data, in order to inform the first baseline of where the organisation stands and what the next steps are. Finally, brands find setting reduction targets (i.e. Science Based Targets) across multiple suppliers and manufacturers are difficult. Reducing supply chain emissions isn’t simply a matter of financing and applying technological solutions — it’s a matter of building and maintaining relationships.
How can brands tackle these challenges? Here are a few expert tips shared by our panelists:
Firstly, brands ought to set a long-term strategy to sort through the opacity of supply chains of this industry in general, with the tactics that they can incorporate into their buying practices and also their communication methods with their suppliers.
Then, translate the targets (or SBTi) into what it would mean for your brand, and specifically how it ties into your own strategy. And communicate it in a way that is relevant to your brand, specifically for the supply chain.
What’s next, identify and focus on certain areas where improvements can be made. While gathering data and setting your baseline, continue to drive these improvements.
Last but not least, data is going to improve over time as you get more and more information. Part of that capacity building is the education internally for your organisations to build a story in a way that says “this is what we know now and here is why that has changed.”
If you’d like to find out more about how to calculate and offset the footprint of your products, as well as communicate your carbon offset efforts, feel free to reach out and book a demo with us today!