Decarbonization Priorities for Brands

Background

Under the 2015 Paris Agreement – the latest legally binding international treaty on climate change – 195 countries are committed to limit global temperature increase to well below 2.0 degrees Celsius (°C) and to strive for 1.5° C above pre-industrial levels. In 2018, the Intergovernmental Panel on Climate Change (IPCC) released a report that provides evidence that limiting warming below 1.5° C will significantly reduce climate impacts including drought, sea level rise, flooding, and extreme heat.

This level of ambition will require significant reductions in greenhouse gas (GHG) emissions across the global economy leading to net zero emissions by 2050.

According to a recent joint report of the Global Fashion Agenda and McKinsey, the fashion sector contributed with around 2.1 billion tons of CO2, equal to 4.0% of the global GHG emissions in 2018. More than 70% of GHG emissions of the global apparel and footwear value chain result from upstream activities such as materials production and processing (Tier 2 and Tier 3 supplier stages). The remaining 30% are generated during downstream activities such as logistics, packaging, retail, product use, and end-of-use.

Definitions

In the following section, the definitions for emission categories according to the GHG Protocol Corporate Accounting and Reporting Standard are being used.

Scope 1 GHG Emissions (direct emissions)

Scope 1 emissions are GHG emissions that occur from sources that are directly controlled or owned by the organization, i.e., emissions associated with on-site stationary fuel combustion or mobile fuel combustion (vehicle fleet).

Scope 2 GHG Emissions (indirect emissions)

Scope 2 emissions are indirect GHG emissions associated with the purchase of electricity, steam, heat, or cooling. Although scope 2 emissions physically occur at the facility where they are generated, they are accounted for in an organization’s GHG inventory, because they are a result of the organization’s energy use.

Scope 3 GHG Emissions (indirect emissions)

Scope 3 emissions are the result of activities from assets and services not owned or controlled by the reporting organization, but that the organization indirectly impacts in its value chain. Scope 3 emissions include, in total, 15 categories not within the organization’s scope 1 and 2 boundaries.

Decarbonization Priorities

In this context, identification of decarbonization priorities and “low hanging fruits” should be in line with accurate calculated emission inventories. Measures with high leverage effects, low investments, and without big operational changes, along with reasonable assurances of cost recovery for new infrastructure, should be prioritized first. Awareness should be raised beforehand regarding any possible conflicts with stakeholders and customers. Therefore, it is worthwhile to mention that GHG emissions should not be the single criterion in decision-making.

The following subchapters provide information regarding opportunities for brands and retailers to have an influence on their Scope 1-3 emission inventories, with the focus on four key areas:

• Brand policies and strategies
• Product management
• Materials selection
• Upstream activities and supply chain management

Brand Policies and Strategies

• Build awareness for the latest climate science and politics, e.g. Paris Agreement, EU 2030 Climate Target Plan, UNFCCC goals.
• Set Science-Based Targets (SBTs) in alignment with latest climate science.
• Break down SBTs into milestones and own targets in accordance with SMART principles.
• SMEs should start reporting energy-related CO2 emissions from fuels and electricity, adding other types of emissions later.
• For Scope 1 and 2 emissions, identify responsibilities and resources for data collection and GHG inventory calculations annually.
• Identify priorities in Scope 1-3 emission inventories considering >70% of emissions in Scope 3, energy-intensive operations, renewable energy, business travel, fleet, and service providers.
• Check for compensation programs/CO2 offsetting aligned with SDGs and local standards.
• Improve corporate reputation via public disclosure of decarbonization goals.
• Evaluate strategies for product end-of-life (returns, resale, second-hand).
• Monitor innovations and new technologies responsibly.

Product Management

• Consider sustainable design, extending product life, repairability, and reuse.
• Limit color shades, materials, and improve virtual sampling to reduce carbon footprint.
• Match product quality to end consumer requirements.
• Consider LCAs for selected products using recognized software or consultancy.

Materials Selection

• Prefer dope dyed and recycled fibers.
• Prefer single substrates and organic materials.
• Prefer responsibly sourced biobased polyester.
• Use energy-efficient dyeing and finishing processes and sustainable packaging.
• Prefer materials with a calculated CO2e footprint according to standards.

Supply Chain Management (Scope 3 Emissions)

• Know Tier 1-3 suppliers and production units.
• Check for continuous improvement programs (CIP).
• Assess energy use, electricity mix, CO2 footprint, boiler efficiencies.
• Promote partnerships with renewable energy and energy-efficient suppliers.
• Follow Best Available Techniques (BAT) and BREFs.
• Optimize logistics and transport to reduce emissions.
• Document all data for monitoring and benchmarking.

Conclusions

Upstream operations such as Tier 2 and Tier 3 suppliers are the most energy-intensive. Improvements in energy efficiency, transition to renewable energy, decarbonization of material production, and circular business models are key levers. Supplier evaluation should include environmental parameters alongside conventional ones. Streamlined data collection, close supplier partnerships, and decarbonization measures are essential.

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