80% of fashion's carbon emissions occur in Scope 3, however many brands fail to address beyond the corporate level in their ESG initiatives. In this excerpt from the TrusTrace Traceability Playbook for Fashion Supply Chains, we explore the business case — both from internal and external influences — of going beyond the corporate level to implement true, measurable sustainability throughout the supply chain.
Sustainability policies have become commonplace over the last decade, but have failed to make any tangible dent in the industry’s environmental and social impact. This is because true sustainability goes beyond corporate social responsibility and touches every part of the supply chain, down to the fibre level.
“When it comes to beyond tier one of the supply chain, traceability can prove challenging,” says Maeve Galvin, global policy & campaign director at Fashion Revolution. “However, this is precisely why we believe that brands need to look beyond their own singular supply chain and examine the wider system their product is a part of. Investing in direct relationships can help traceability where existing technology lacks.”
Calculating Business Emissions
The 2021 Fashion Transparency Index by Fashion Revolution reported a 4% year-on-year increase in brands disclosing the annual carbon footprint of their own facilities and operations (known as Scope 1 and 2); however, up to 80% of the sector’s carbon footprint occurs in Scope 3, where the raw material sourcing, processing, and assembly occurs.
By failing to account for Scope 3 emissions in carbon footprint analysis, brands aren’t giving the full picture of their environmental impact. In April 2022, the Guardian revealed that brands that work with the CDP (formerly known as the Carbon Disclosure Project), an independent environmental performance organization,
were calculating carbon emissions against total revenue. “This means that as long as their emissions increase less than their revenue increases each year, the total emissions are scored as a decrease,” wrote Guardian journalist Rachel Donald.
Calculating Scope 3 emissions is clearly a huge challenge for brands, one that revolves around procuring large amounts of data from their suppliers. A leading body in helping brands understand how to track their emissions is the Greenhouse Gas Protocol, which sets the standards by which brands can measure their emissions. In 2016, 92% of Fortune 500 companies used The Corporate Accounting and Reporting Standard (Corporate Standard) from the GHG Protocol to calculate their Scope 1 and 2 emissions. The GHG Protocol has also published Scope 3 Calculation Guidance in partnership with the Carbon Trust, which they say is “the only internationally accepted method for companies to account for these types of value chain emissions.”
Internal Drive
A 2020 census from Unily of 2,000 UK workers reported that 65% of respondents wanted to work for a company with a strong environmental policy, however, 83% believed their employers weren’t doing enough to fight climate change. As environmentally conscious Millennials and Generation Z begin to dominate the workforce, it’s important that businesses align with their values and expectations in order to attract and retain talent.
External Pressure
In recent years, sustainability has become an increasingly important consideration for consumers. 63% of shoppers have made “modest to significant shifts towards being more sustainable in the past five years,” according to a 2021 Global Sustainability Study by Simon Kucher & Partners. This is driven by Millennials, 32% of which have made significant lifestyle changes to be more environmentally conscious.
In 2021, IBM found that the pandemic had a significant impact on 9 in 10 consumers' views of environmental sustainability — even more so than natural disasters. 34% of those surveyed by Simon-Kucher & Partners were also willing to pay more for eco-friendly products, further proving that investment
in sustainability is good for business.
Organizations like Fashion Revolution have also been instrumental in pressuring legislators and brands. “As activists, we need to convince consumers that the problem can only truly be resolved by transforming our entire relationship with clothing consumption and ultimately the functioning of the entire fashion industry,” says Galvin.
To read more insights from the TrusTrace Traceability Playbook for Fashion Supply Chains, click here. To read our Glossary of Traceability Terms, click here.
