Friday, 21 July 2023

How "Impact Intelligence" Will Cut Emissions In Fashion

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Eight years ago, the Paris Agreement set challenging yet critical goals to limit global temperature increase to 1.5°C, with a reduction of emissions by 45% by 2030 to reach net zero by 2050. Undoubtedly, net zero is a big challenge for the fashion and apparel industry.

James Schaffer, Chief Strategy Officer of Worldly, brings us an insight into the importance of impact intelligence to achieve emissions cut by 2030.

Why Is Meeting Net Zero Is Important For the Fashion Industry

With up to 20% of carbon emissions coming from consumer goods and their supply chains, there is an urge for the fashion and apparel industry to be visionary and set ambitious goals, while also addressing the GHG challenges they are currently facing.

For Wordly's Chief Officer, James Schaffer, this real-time change in a rapidly evolving global climate disclosure landscape is changing the game for the apparel industry. Brands and manufacturers need to “Prove their improvement”, or substantiate their goal progress with actionable data and insights, and they need to comply with these rapidly emerging regulatory frameworks.

James Schaffer On "Impact Intelligence" For A Sustainable Industry

“After years of collaboration and resource efficiency programming, the needle hasn't really moved. According to WRI’s recent update of its Roadmap to net zero report, it even appears that we are now approaching the 1.5-degree threshold years before forecasted. In this context, the public’s demand for brands to take responsibility and understand their own emissions and abatement levels are all critical catalysts needed to respond to the climate crisis in terms of impact reduction, compliance, and disclosure. All indications are that market and regulatory pressure will continue to push the sector toward authentic transparency. Companies need to prepare for some of the most pressing regulations across the globe, such as the U.S. SEC Climate Disclosure Act, pending legislation in California and New York, and the EU Corporate Sustainability Reporting Directive.

However, to understand the progress they need to make to reduce emissions, businesses need to understand their current impact. In other words, they need ‘’impact intelligence’. There’s an enormous data gap today in the fashion and apparel industry, and the first step in scaling improvements that address climate change is gathering data, to begin with. Collecting high-resolution primary data deep within the value chain, at tiers 2, 3, and beyond, frequently and at scale, is critical to enable businesses to make real-time decisions, understand their baseline and quantitatively track and report progress towards 2030 goals and beyond, and to build a clear view of year over year intervention and improvement opportunities to meet stakeholder expectations.

According to the World Resources Institute, 96% of a fashion brand’s footprint is in its manufacturing supply chain, and a report by McKinsey found that more than 70% come from upstream activities, such as energy-intensive raw material production, preparation, and processing. Although scope 3 emissions are the vast majority of emissions for brands and retailers, companies are generally using a mix of primary and secondary data to calculate their GHG footprints. To enable action and help transform the industry at scale, there is an urgent need to focus on high-impact areas at all levels of the entire value chain such as carbon emissions, water waste, energy and human rights.

Going further, significant investment in the supply chain is and will be needed to reduce emissions, such as transitioning to renewable energy, replacing old equipment with more efficient systems or adopting a ‘circular by design’ approach with product reuse, end-of-use, and regeneration in mind from the start. To achieve this, more comprehensive, reliable and actionable data is needed to clearly identify opportunities for improvement and motivate investment decisions. By extension, capital markets will reward businesses that are de-risking their supply chains, and employees will choose to work where purpose and responsibility matter.

Beyond regulatory and compliance requirements, brands and manufacturers must work hand in hand towards the achievement of these emission reduction goals. They can mutually incentivise business partners to implement GHG reduction strategies and optimise data access and sharing to promote B2B transparency and accurate reporting. To this extent, brands that ask their manufacturers to share data with them should in turn share their own data with manufacturers to foster greater trust and transparency in the industry. Today, 90% of carbon emissions can be curbed by improvements that require investments that amount to 7 or 8 figures. Manufacturers cannot, on their own, be expected to take full responsibility for these transformations.

Transparency is a key lever to address the challenges of climate change the apparel industry is facing, and only a holistic view of data across a product’s value chain will give companies the intelligence they need to prioritise and make decisions to reduce environmental impact at a large scale. A critical part of this process includes getting more facilities to provide their data to make it more accurate, accessible, and actionable. With this data collection and sharing process in place, including scope 3 information, businesses will be most prepared to address customers' and investors’ expectations and to face the myriad legislation emerging. And as science and technology evolve and systems become more sophisticated, the data will become even more nuanced, granular and actionable.”