Following a recent McKinsey study, fashion labels of all sizes have boldly pledged to craft more eco-friendly clothing by 2030. Yet, aligning with their ambitious goals to reduce carbon emissions is proving to be a widespread struggle within the sector.
Roughly two-thirds of labels are lagging in their carbon reduction timelines, as per recent findings by McKinsey, with 40% experiencing a rise in emissions since announcing their eco-friendly goals.
Currently, the fashion sector is responsible for approximately 3 to 8% of the globe's total carbon emissions. Without additional measures, this figure is projected to surge by 30% by 2030. The urgency for the industry to cut down emissions is underscored by the fact that the countries facing the most severe impacts of climate change are also crucial to the fashion supply chain. Countries like Bangladesh, China, India, and Vietnam, which are prone to severe weather events, export around $65 billion in clothing annually.
There's a viable pathway to significantly reduce emissions without compromising the industry's growth. Surprisingly, it might cost less than many executives assume. Research indicates that the majority of fashion companies could slash their carbon emissions by over 60% for a mere 1 to 2% of their revenue. This calculation does not include adjustments in reselling, renting, or repairing items, which, while potentially reducing a brand's carbon footprint further, hinge on changing consumer behaviors.
There are six challenges that need addressing for the industry to advance in its carbon reduction efforts, alongside six cost-effective strategies to hasten the decarbonization process.
The journey towards fulfilling these carbon reduction commitments is fraught with obstacles.
With growing expectations from regulators, consumers, investors, and their own employees, fashion companies have publicly committed to significant cuts in their greenhouse gas emissions. The study shows that, on average, these commitments include a reduction of about 55% in Scope 1 and 2 emissions, and around 35% in Scope 3 emissions by 2030. However, maintaining the momentum to meet these targets is a struggle for many.
Findings indicate that 40% of brands have seen an uptick in emission levels, with only 37% on track to achieve their 2030 goals at their current rate of reduction.
The other 63% need to ramp up their efforts significantly to meet their objectives, with 23% needing to boost their reduction efforts by up to ten percentage points annually, and the remaining needing even more substantial efforts. This urgency comes as 40% of brands have reported increased emission levels since pledging sustainability.
Six challenges for fashion brands in achieving sustainability
The survey has pinpointed six key obstacles that fashion companies face in their journey to become more sustainable. Addressing these is crucial for meeting their goals.
1. Maintaining focus on sustainability during hard times can be challenging. Despite many executives' commitments to eco-friendliness, putting these pledges into action can falter, especially when resources are tight and the focus shifts to profit margins, relegating sustainability to a lower priority due to its perceived immediate cost.
2. Embedding sustainability into every aspect of the business is essential. For genuine impact, sustainability must be integrated into the company’s entire operating model, which demands significant changes in working methods and increased cross-department collaboration.
3. The complexity of creating an effective decarbonization strategy cannot be understated. It requires a deep understanding of the company’s supply chain, emissions hot spots, and innovative solutions like biofuels and renewable energy sources.
4. Enhancing supply chain transparency is necessary for accurate emissions measurement and baseline setting, demanding direct access to primary data which many brands lack beyond their immediate suppliers.
5. Underestimating the implementation of large-scale changes can hinder progress. Similar to digital transformations, decarbonization strategies require a comprehensive approach including clear roadmaps, reporting structures, and the cultivation of necessary capabilities.
6. Navigating a fragmented supplier landscape is complex, with many brands working with numerous suppliers, complicating collaborative efforts toward sustainability. Suppliers, facing their own financial constraints, often depend on the brands to lead the way in making the required investments.
Despite these challenges, the fashion industry is in a prime position to achieve its decarbonization targets. This optimism is based on the fact that most of the industry’s costs—and consequently its value—are derived from low-carbon activities like design and marketing, with a significant portion of emissions coming from a few high-impact activities. This means accelerated decarbonization could be realized at a relatively low cost, simultaneously enhancing a brand's appeal and encouraging consumer support.
